Effective March 3, 2015, the New York Department of Financial Services (DFS) will start enforcing new regulations against debt collectors who contact NY consumers.
The DFS regulations mark the first time New York has implemented state-wide oversight of debt collectors- currently, only 2 NY municipalities, Buffalo and New York City, have such regulations. The DFS rules cover a variety of topics including initial written disclosures, statute of limitations notices, debt itemization, dispute handling, debt validation and the use of emails with consumers.
Under the rules, third party debt collectors and debt purchasers must provide special disclosures in initial and subsequent communications with a consumer.
In its initial communication with a consumer regarding any debt, the collector must provide notice that collectors, pursuant to the FDCPA, are prohibited from engaging in abusive, deceptive, and unfair debt collection efforts, including using threats of violence or obscene language, and making repeating phone calls with the intent to annoy, abuse, or harass. The collector must also include a notice stating that, in the event of a judgment against the consumer, state and federal laws may prevent seizure of eleven different types of income, including supplemental security income, public assistance, social security, and others.
In its initial communication with a consumer regarding charged-off debt, the collector must include a written notification of the following:
· The name of the original creditor; and
· An itemized accounting of the debt, including:
o the total amount of the debt due as of charge-off;
o the total amount of interest accrued since charge-off;
o the total amount of non-interest charges or fees accrued since charge-off;
o the total amount of payments made on the debt since the charge-off.
When communicating with a consumer regarding time-barred debt, the collector must include a statement saying that the collector believes the debt to be time-barred; that suing on time-barred debt is a violation of the FDCPA; that a consumer can stop a lawsuit regarding time-barred debt by telling the court that the statute of limitations period has expired; that the consumer is not required to provide the collector with an acknowledgement of the debt; and that such acknowledgement or new payment could restart the statute of limitations period. DFS has provided model language covering the time-barred disclosure.
Going forward, collectors must include written confirmation of settlement agreements (similar to NYC), agreed-upon payment schedules, and debt satisfaction. With a settlement agreement or agreed-upon payment schedule, the collector will also be required to give the consumer a regular accounting of the debt while it is being paid down.
The regulations include a process as to how a consumer may dispute and request validation for charged-off debts. This provision, along with the disclosure required when communicating regarding charged-off debts, will not be effective until September 3, 2015.
A more welcome provision in the rules allows a debt collector to email a consumer at his/her personal email address provided the consumer consents in writing. An electronic signature documenting the required consent is permitted.
We expect the DFS to carry out robust enforcement of these regulations.
► Back to News & Resources
