New York Regulator Proposes Debt Collection Rules Based on Previous Comments

The New York State Department of Financial Services (NYSDFS) today published a proposed rule in the New York State Register on debt collection by third-party debt collectors and debt buyers. The proposal is subject to a 30-day comment period which began July 16.

The proposed debt collection rules, entitled “Debt collection by third-party debt collectors and debt buyers,” are the end result of the comments the agency received in response to the original debt collection rule changes published last year.

Among those rules included provisions for email communication, better disclosures in collection communications, protections and disclosures involving time-barred debt, and stronger debt verification procedures.

The updated rule proposals, now subject to another round of comments, make more explicit debt collectors’ and debt buyers’ requirements to provide information, especially if an account has been charged off. The update also clarifies that only the consumer has the right to initiate electronic communication and that emails will not be allowed to employer-operated addresses. Consumers must explicitly affirm that they are not providing a work-based email address.

Numerous other definitions were changed and provisions struck, such as explicitly excluding from the definition of “debt collector” any person taking collection action relating to or during litigation.

The full proposal is available in the July 16 edition of the New York State Register beginning on page 10.

The comment period will close on August 15.