On February 14, 2022, the Consumer Relations Consortium (CRC) submitted comments to 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, prescription disclosures, substantiation requirements, and telephone and electronic communications.
The CRC 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 Abigail Pressler, general counsel for NCB Management Services, Inc.
In its comments, the CRC asked the NYDFS to consider the following:
- Allow collections agents to continue to use posting date as detail date. The proposed amendment would prohibit debt collectors from using the posting date as the detail date. This is contrary to Regulation F. It is also likely to uniquely disadvantage New York consumers who are accustomed to itemizing their debts by charge date. suddenly forcing collectors to use older or less predictable dates for detailing and increasing the likelihood that consumers will receive letters reflecting different details based on different reference points over time.
- Remove the requirement to disclose the statute of limitations applicable to the debt and allow debt collectors to use the old wording of the statute-barred debt. The proposed amendment would require debt collectors to make a final decision about the statute of limitations and disclose that decision to the consumer. The proposed amendments create a serious risk of violation of the rules prohibiting the unauthorized exercise of law by requiring non-lawyer debt collectors to analyze the law to determine which statute of limitations applies (an extremely complex legal question requiring in-depth analysis ), applying the law to the facts of a specific consumer’s account, and then advising the consumer on the law that applies to their accounts. Such analysis and legal advice should be given by a licensed attorney, not a layperson.
- Clearly describe the disclosure required for each type of debt. The proposed amendment contains conflicting requirements for certain types of debt.
- Eliminate appeal restrictions on statute-barred debts. The proposed amendment seeks to prohibit appeals to collect the prescribed debt. Although there are limited exceptions, they are unclear and unlikely, making them functionally non-existent. Banning appeals would increase the cost of collection, prompting creditors to sue New York consumers sooner and more often than consumers in other states where appeals are allowed.
The comment period ended on February 14, 2022.
Learn more about www.crconsortium.org.