The New York Department of Consumer and Worker Protection (DCWP) is proposing to amend its rules relating to debt collectors. The lengthy proposals cover many aspects of the debt collection cycle, including validation, verification, consumer communication, credit reporting, monthly reporting, and recordkeeping. The proposal also includes specific provisions relative to medical debt and time-barred debt.
The DCWP will hold a public hearing to address the proposed rules at 11 a.m. ET on Wednesday, November 29, 2023. Details regarding the hearing and the rule can be found here.
Recordkeeping and Monthly Reports
The proposed amendment requires debt collectors to submit monthly reports with required fields, including reports for complaints (whether filed with DWCP or another entity), disputes, and cease and desist requests. (page 5). Additionally, it requires debt collectors to keep the following records:
- Communications and attempted communications must be searchable and easily identifiable by time and duration, medium of communication, names and contact info of people involved, and include a contemporaneous plain language summary (page 4)
- The consumer's preferred communication method. (page 6)
- Certain disclosures the debt collector made to consumers regarding credit reporting or unverified debt. (page 6)
- Copies of policies addressing hospital financial assistance programs related to medical debt. (page 7)
New and Updated Definitions
The proposed amendment includes updated and newly added definitions for the following terms (pages 7-10):
- Attempted communication
- Clear and conspicuous
- Covered medical entity
- Electronic communication
- Electronic record
- Financial assistance policy
- Itemization reference date
- Language access services
- Limited-content message
- Original creditor and originating creditor
- Debt Collector
An excerpt of the complete definitions section with all the above terms can be found here.Unconscionable and Deceptive Trade Practices
The proposal includes significant and numerous updates regarding what is unfair and unconscionable when dealing with New York City consumers. Here is a non-exhaustive list of the proposed new requirements and prohibitions:
- Debt collectors can place only three calls to a consumer within seven calendar days (page 12)
- Debt collectors cannot contact consumers via email or text unless the consumer has provided revocable consent in writing or has used that communication method to communicate with a debt collector within the past 30 days. (pages 13-14)
- Debt collectors cannot provide information to consumer reporting agencies (CRAs) without sending the consumer a notice stating clearly and conspicuously that the debt will be reported. Debt collectors will have five days from the rule's effective date to send notice to consumers whose information has been previously furnished to a CRA. (page 18)
- Debt collectors cannot sell, transfer, or place with an attorney for collection an account where the debt collector was previously unable to provide written verification of the debt. (page 19)
- Validation Notices must include information beyond that required in Reg F and a new disclosure about the consumer's rights. (page 20-21)
- Verification of a debt must be provided within 45 days of receiving a dispute or request for verification (orally or in writing). If the debt cannot be verified, the debt collector must send the consumer a notice of unverified debt with specific pieces of information included. (pages 23-24)
- Debt collectors pursuing time-barred debt must comply with certain disclosures and waiting periods (page 26).
In addition to specific disclosures regarding medical debt (page 28), requirements regarding what a debt collector should treat as a dispute regarding medical debt (page 25), and how a debt collector must respond (page 25), the proposal states that a debt collector must:
- Treat all unverified accounts related to a discrete hospitalization or treatment within a six-month period the same. (page 25)
- Verify that the covered medical entity on whose behalf it is trying to collect met its obligations under federal, state, or local law and the financial assistance policy. (page 25)
Instructions regarding how to participate or comment on the proposed rules can be found on the first page of this document; all proposed changes can be found on pages 4-29
This is not the DWCP's first attempt to amend its debt collection rule. When a similar proposal was published in late 2022, the DWCP was not very receptive to industry comments. The 2022 proposal was not finalized, and now we have the 2023 version, complete with arduous, difficult to comply with requirements that will ultimately harm consumers.
There is a danger that other cities or states might copy this proposal. Therefore, everyone in the ARM industry is encouraged to file a comment with the DWCP, even if your organization does not collect from New York City consumers. Perhaps an abundance of comments will help the DWCP see the significant flaws in the proposal.