InfoBytes Blog

NYDFS addresses “potential confusion” over new consumer credit transaction SOL

On April 7, NYDFS issued guidance to debt collectors addressing potential confusion about how to comply with the notice requirements of 23 N.Y.C.R.R. § 1.3(b) that went into effect April 7. The new amendments are set forth in Section 4 of the Consumer Credit Fairness Act (which was enacted last November and was covered by InfoBytes here), and address the statute of limitations (SOL) applicable to actions arising out of consumer credit transactions. Specifically, Section 214-i provides that “when the applicable limitations period expires, any subsequent payment toward, written or oral affirmation of or other activity on the debt does not revive or extend the limitation period.” The amendments also decreased the SOL period to three years and requires additional notices to be made. While the guidance provides sample disclosure statements that address each of the requirements under § 1.3(b), NYDFS states that “23 N.Y.C.R.R. § 1.3 does not prohibit debt collectors from adding explanatory language to the model disclosure language set forth in § 1.3(c) or using their own language to comply with § 1.3(b).”

NYDFS’ guidance follows letters sent last month by the New York attorney general to several large credit card companies and major debt collectors operating in the state, which reminded entities about the new obligations and disclosures that will be required when filing collection lawsuits against consumers starting May 7. (Covered by InfoBytes here.)

State Issues State Regulators NYDFS Debt Collection New York State Attorney General Consumer Finance Consumer Credit Fairness Act Disclosures

NY AG warns debt collectors of new state regulations

On March 29, the New York attorney general announced that letters were sent to large credit card companies and major debt collectors operating in New York, providing a warning regarding new state debt collection regulations. As previously covered by InfoBytes, the New York governor signed S.153 in November 2021, which enacted The Consumer Credit Fairness Act and expanded consumer protections against abusive debt collection by, as explained by NYDFS acting Superintendent Adrienne A. Harris, “address[ing] known predatory debt collection practices, [and] barring an abusive common tactic engaged by predatory debt collectors which is to sue on time-barred consumer debts for which they lack even the most basic of documentation.” The letter noted that its recipients are “aware of these obligations and that [they] are taking appropriate steps to comply with the new requirements.” The letter stated that beginning April 7, the statute of limitations on consumer debt collection actions in the state will be decreased to three years, a period of time that cannot be extended by partial payments made after the statute of limitations has expired, and that “debt collectors must ensure that validation notices for debts that will become time-barred on April 7, 2022 include this disclosure if the notice is likely to be received after that date.” The letter also reminded debt collectors of new disclosures that will be required when filing collection lawsuits against consumers starting May 7. Complaints are required to include an itemization of the debt and include more information about the chain of ownership, including providing a copy of the original contract on which the debt is based. Collectors must also begin utilizing a “more comprehensive” notice that is provided to the clerk of the court and subsequently passed on to consumers and must use a new form when filing for summary judgments. Lastly, the letter requested information on how the companies are complying with Regulation F and the new disclosure requirements.

State Issues New York Debt Collection NYDFS Consumer Finance State Attorney General Consumer Credit Fairness Act Disclosures