The New York State Department of Financial Services recently issued the attached regulations relating the debt collection practices in the State.
The new regulations apply to “any person engaged in a business the principal purpose of which is the collection of any debts, or any person who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another,” including without limitation debt buyers. The new regulations also contain exceptions similar to the FDCPA, including among other things as to debts not in default when obtained.
Among other things, the new regulations require:
(1) early disclosures similar to those under 15 USC 1692g, but requiring extensive additional information and a specific notice;
(2) clear and conspicuous disclosures as to debts the debt collector “knows or has reason to know” are time-barred;
(3) specific information as to charged off debts to substantiate the debt when the consumer disputes it;
(4) specific written disclosures as to payment plans and other debt settlement agreements; and
(5) specific disclosures as to email communications with consumers.
The new regulations were promulgated through the Department of Financial Services’ first use of so-called “gap authority” that was included in the 2011 law creating the Department. Violations are punishable by civil monetary penalties, and in addition the Department of Financial Services also has the authority to impose civil penalties on collectors that violate the state and federal Fair Debt Collection Practices Acts.
The new regulations are scheduled to become effective 90 days after publication in the State Register, except that section 1.2(b) (early disclosure requirements) and section 1.4 (disclosure and substantiation of “charged off” debts) are scheduled to become effective 270 days after publication in the State Register. The new regulations were published in the State Register on Dec. 3, 2014.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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