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Financial Services Law Insights and Observations

NYDFS issues proposed amendments to debt collection rules for third-parties

State Issues State Regulators NYDFS Bank Regulatory Debt Collection Third-Party Agency Rule-Making & Guidance

State Issues

On October 29, NYDFS issued draft proposed amendments to 23 NYCRR 1, which regulates third-party debt collectors and debt buyers. Among on things, the proposed amendments:

  • Define “communication” as “the conveying of information regarding a debt directly or indirectly to any person through any medium.”
  • Amend the definition of a “debt collector” to include “as any creditor that, in collecting its own debts, uses any name other than its own that would suggest or indicate that someone other than such creditor is collecting or attempting to collect such debts.”
  • Require collectors to clearly and conspicuously send written notification within five days after an initial communication with a consumer letting the consumer know specific information about the debt, including (i) the name of the creditor to which the debt was originally owed or alleged to be owed; (ii) account information associated with the debt; (iii) merchant/affinity/facility brand association; (iv) the name of the creditor to which the debt is currently owed; (v) the date of alleged default; (vi) the date the last payment (including any partial payment) was made; (vii) the statute of limitations, if applicable; (viii) an itemized accounting of the debt, including the amount currently due; and (ix) notice that the consumer “has the right to dispute the validity of the debt, in part or in whole, including instructions for how to dispute the validity of the debt.”
  • State that disclosures may not be sent exclusively through an electronic communication, and that a formal pleading in a civil action shall not be treated as an initial communication.
  • Prohibit collectors from communicating by telephone or other means of oral communication when attempting to collect on debts for which the statute of limitations has expired.
  • Require collectors to provide consumer written substantiation of a debt within 30 days of receiving a written request via mail (consumers who consent to receiving electronic communications must still receive substantiation via mail).
  • Limit collectors to three contact attempts via telephone in a seven-day period. Only one conversation with a consumer is permitted unless a consumer requests to be contacted.
  • Permit collectors to communicate with consumers through electronic channels only if the consumer has voluntarily provided consent directly to the debt collector.

Comments on the proposal are due November 8.

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