Consumer Relations Consortium Comments on NYDFS Proposed Alterations to Debt Collection Rule

On February 14, 2022, the Consumer Relations Consortium (CRC) submitted comments to the the New York Department of Financial Services (NYDFS) regarding the proposed amendments to its debt collection rules. The proposed amendments seek to update disclosure requirements, statute of limitations disclosures, substantiation requirements, and telephone and electronic communications.

The CRC's comments were prepared by Legal Advisory Board (LAB) members Joann Needleman of Clark Hill, Jim Schultz of Sessions Israel & Shartle, Brit Suttel of Barron and Newburger, John Rossman of Moss and Barnett, PA. as well as non LAB member Abigail Pressler, General Counsel of NCB Management Services, Inc. 

In its comments, the CRC asked NYDFS to consider the following:

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• Allow debt collectors to continue to use the charge-off date as the itemization date. The proposed amendment would prohibit debt collectors from using the charge-off date as the itemization date..” This conflicts with Regulation F.  It is also likely to uniquely disadvantage New York consumers who are accustomed to debt itemization based on the charge-off date by suddenly forcing collectors to use older or less predictable dates for itemization and increasing the likelihood of consumers receiving letters reflecting different itemizations based on different reference points over time.

• Remove the requirement to disclose the applicable statute of limitations for the debt, and allow debt collectors to use the previous time-barred debt language. The proposed amendment would require debt collectors to make a definitive determination regarding the statute of limitations, and disclose that determination to the consumer. The proposed amendments create a serious risk of violating rules prohibiting the unlicensed practice of law by requiring non-attorney debt collectors to analyze the law to determine which statute of limitations applies (an extremely complex legal question involving in-depth analysis), applying the law to the facts of a specific consumer’s account, and then advising the consumer about the law that applies to their accounts. Such legal analysis and advice should be given by a licensed attorney, not a layperson.

• Clearly outline the disclosure required for each type of debt. The proposed amendment has conflicting requirements for certain types of debt.

• Eliminate calling restrictions aimed at time-barred debt. The proposed amendment seeks to ban calls to collect time-barred debt. While there are limited exceptions, they are unclear and unlikely, rendering them functionally non-existent. Banning calls would increase the cost of collection, incentivizing creditors to sue New York consumers earlier and more often than consumers in other states where calls are allowed. 

The comment period ended on February 14, 2022. 

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

Learn more at www.crconsortium.org.