January 9, 2015
by Robert H. King
Rosicki, Rosicki & Associates, P.C. – USFN Member (New York)
On December 3, 2014, the New York State Department of Financial Services (DFS) adopted new regulations applicable to the debt collection industry.
The majority of the regulations go into effect on March 3, 2015. A prior USFN e–Update (Sept. 2014 ed.) article by this author addressed these regulations in their proposal stage. The adopted regulations amend the New York Code of Rules and Regulations (N.Y.C.R.R), adding a new section published in the New York State Register found at 23 N.Y.C.R.R 1.
Important provisions require debt collectors to ensure that they have processes to determine whether the statute of limitations on the debt may have expired, and to send a specific notice if the debt collector knows (or has reason to know) the statute expired on that debt. The debt collector must also provide disclosures to consumers after making initial contact with them. Further, the regulations require debt validation/substantiation processes, and provide rules as to when (and under what circumstances) debt collectors can contact and communicate with consumers by email.
Under the New York Financial Services Law, after proper notice and hearing, penalties for violations of these regulations can amount up to $1,000 for each violation. Also, there is a possibility that DFS could institute a lawsuit to obtain an injunction to prevent future violations.
©Copyright 2015 USFN. All rights reserved.