NYDFS and CFPB Sample Request for Substantiation Letters are Awfully Complex

We noticed recently that the New York Department of Financial Services (NYDFS) has posted on their website a Sample Request for Substantiation of Account letter for consumers to use.

As you may also know, the Consumer Financial Protection Bureau (CFPB) also provides a sample letter for consumers to use to ask for more information about their debt.

The NYDFS letter is straightforward. Here’s what it asks for:

The signed contract or application that created the debt, or, if neither exists, a copy of a document given to the alleged debtor while the acount was active, demonstrating that the debt was in fact incurred by the debtor. If the debt was incurred under a revolving credit account, this could include the most recent monthly statement showing a purchase, payment, or balance transfer; and
The account statement at charge-off, or equivalent document, that the original creditor issued to the consumer; and
A statement describing the debt’s complete chain of title from the original creditor to the present creditor, including the date of each assignment, sale and transfer; and
Records showing the amount and date of any prior debt settlement agreement in connection with the debt agreed to after the effective date of these regulations.

The CFPB letter is far more detailed, covering a lot more bases:

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Why you think I owe the debt, and to whom I owe it, including:

The name and address of the creditor to whom the debt is currently owed, the account number used by that creditor, and the amount owed.
If this debt started with a different creditor, provide the name and address of the original creditor, the account number used by that creditor, and the amount owed to that creditor at the time it was transferred. When you identify the original creditor, please provide any other name by which I might know them, if that is different from the official name. In addition, tell me when the current creditor obtained the debt and who the current creditor obtained it from.
Provide verification and documentation that there is a valid basis for claiming that I am required to pay the debt to the current creditor. For example, can you provide a copy of the written agreement that created my original requirement to pay?
If you are asking that I pay a debt that somebody else is or was required to pay, identify that person. Provide verification and documentation about why this is a debt that I am required to pay.

The amount and age of the debt, specifically:

A copy of the last billing statement sent to me by the original creditor.
State the amount of the debt when you obtained it, and when that was.
If there have been any additional interest, fees, or charges added since the last billing statement from the original creditor, provide an itemization showing the dates and amount of each added amount. In addition, explain how the added interest, fees or other charges are expressly authorized by the agreement creating the debt or are permitted by law.
If there have been any payments or other reductions since the last billing statement from the original creditor, provide an itemization showing the dates and amount of each of them.
If there have been any other changes or adjustments since the last billing statement from the original creditor, please provide full verification and documentation of the amount you are trying to collect. Explain how that amount was calculated. In addition, explain how the other changes or adjustments are expressly authorized by the agreement creating the debt or permitted by law.
Tell me when the creditor claims this debt became due and when it became delinquent.
Identify the date of the last payment made on this account.
Have you made a determination that this debt is within the statute of limitations applicable to it? Tell me when you think the statute of limitations expires for this debt, and how you determined that.

I have asked for this information because I have some questions about this debt. Because of my questions, please consider the debt to be disputed at this time. If you stop your collection of this debt, and forward or return it to another company, please indicate to them that it is disputed. If you report it to a credit bureau (or have already done so), also report that the debt is disputed. In addition, you should state in any report that you have failed to fully verify the debt in response to my request (unless you have already provided all the necessary information).

If you fail to provide any of the information or documentation I have asked for, please say why. If you do not provide it, and do not adequately explain why, I will understand that you are unable to confirm or document your claims.

Details about your authority to collect this debt.

I would like more information about your firm before I discuss the debt with you. Does your firm have a debt collection license from my state? If not, say why not. If so, provide the date of the license, the name on the license, the license number, and the name, address and telephone number of the state agency issuing the license.
If you are contacting me from a place outside my state, does your firm have a debt collection license from that place? If so, provide the date of the license, the name on the license, the license number, and the name, address and telephone number of the state agency issuing the license.

Please let me know whether you are prepared to accept less than the balance you are claiming is owed on this account. If so, please tell me in writing your offer to accept less than the full balance.

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insideARM Perspective

My first thought is that these letters are pretty sophisticated. Does the consumer understand what they are requesting? According to the Gunning Fog index the CFPB letter is at the level of a college freshman; the NYDFS letter is written at grad student level (ironic, since the CFPB letter is much longer and more complex). Regulators are typically focused on ensuring that rules are in plain language, and understandable to the least sophisticated consumer. It seems that neither of these letters meets this standard.

The CFPB letter sounds like it was written by a consumer advocate. Not that this is inherently a bad thing. But in this case, the letter is so complex that it seems to practically bait the collector into an error. For instance, the second bullet point under “details about your authority to collect this debt” — is this over reaching or even relevant?

There are also many opportunities to comply with some but not all of the requirements. “If you fail to provide any of the information or documentation I have asked for, please say why. If you do not provide it, and do not adequately explain why, I will understand that you are unable to confirm or document your claims.” This is an awfully subjective statement, given how many questions are posed.

Finally, how many things can one letter accomplish? While at once serving as a request for more information and clarifying that communication should cease until the debt is validated, the CFPB letter also introduces the concept of negotiation.