New York Attorney General Letitia James today released a guide to help New Yorkers use the state’s Exempt Income Protection Act (EIPA) to protect their money from debt collectors.  The EIPA is a state law that prevents debt collectors from draining consumers’ bank accounts, leaving them unable to cover the costs of basic needs.  The law automatically protects a certain amount of money in people’s bank accounts from being frozen or seized, and also protects vital government benefits like Social Security, disability benefits, and veteran’s benefits.  The Office of the Attorney General’s (OAG) guide comes after Attorney General James recently secured $1 million from Netspend, a financial services company that illegally turned over its customers’ funds to debt collectors when those funds should have been protected under EIPA.  The OAG’s guide will help New Yorkers use their rights under EIPA to protect their money and report debt collectors who are breaking the law to OAG.

“When banks allow debt collectors to wipe out New Yorkers’ bank accounts, they’re not only throwing vulnerable people into financial chaos, they’re breaking the law,” said Attorney General James.  “New Yorkers should know how to protect their money from debt collectors so they can continue to pay their bills while they manage their debt.  My office’s helpful guide provides valuable tips for New Yorkers to protect their funds and hold banks and debt collectors accountable when they break the law.  I encourage anyone who has had their hard-earned money illegally seized or frozen to report it to my office.”

The EIPA automatically exempts a certain amount of money in people’s bank accounts from being frozen or seized.  This protected amount is based on the minimum wage and is $3,960 for those in New York City, Long Island, or Westchester, and $3,720 for those anywhere else in New York as of January 2025.  The EIPA also protects 90% of wages or salary earned in the 60 days before a debt collector attempts to seize funds.  Crucially, EIPA also protects government benefits and retirement funds from being frozen or seized, ensuring New Yorkers have enough money to pay their bills.  These funds include:

• Social Security;
• Supplemental security income;
• Disability benefits;
• Unemployment insurance;
• Workers compensation;
• Veterans benefits;
• Spousal support, alimony, or child support; and
• Payments from public or private pensions and retirement accounts, such as 401(k)s or individual retirement accounts (IRAs).

Attorney General James has successfully secured restitution for New Yorkers whose funds were illegally seized by debt collectors.  In April 2024, Attorney General James secured more than $700,000 from Pathward Bank for unlawfully freezing customer accounts and illegally transferring money to debt collectors in violation of EIPA.  In February 2024, Attorney General James secured more than $650,000 from a debt collection law firm for filing frivolous lawsuits against vulnerable New York City tenants.  In May 2022, Attorney General James and the Consumer Financial Protection Bureau shut down a predatory debt collection operation that used deceptive and abusive tactics to illegally collect millions of dollars from hundreds of thousands of consumers.  The OAG’s guide includes the steps New Yorkers must take to use EIPA to protect their funds from being seized, as well as instructions on how to report violations to OAG.  Any consumer who has had their money frozen or seized in violation of the law should report the violation to OAG’s Consumer Frauds Bureau online or by calling 1-800-771-7755.

This matter was handled by Assistant Attorneys General Ben Fishman and Chris Filburn, under the supervision of Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, all of the Consumer Frauds and Protection Bureau.  Also assisting in this matter were Irene Kim of the Public Information and Correspondence Unit, under the supervision of Brandon Kennedy, Deputy Director of Public Information; Vanessa Ip, Deputy Chief Operating Officer, Lucas McCullough, of the Office of the Chief Operating Officer; Jodi Burick, Kiersten Burns, Michaela Simmons, and Lisa O’Hara of the Information Technology Bureau.  The Consumer Frauds and Protection Bureau is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and is overseen by First Deputy Attorney General Jennifer Levy.