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Friday, July 26, 2013

NY Department of Financial Services Seeks to Reform Debt Collection Practices

Yesterday, Benjamin M. Lawsky, Superintendent of the NY Department of Financial Services (DFS), announced "nation-leading reforms to help protect consumers against abusive and deceptive debt collection practices."

According to the DFS' press release, "The reforms are included in a new proposed regulation that the New York State Department of Financial Services (DFS) is issuing through the first use of its ‘gap authority.’ This ‘gap authority,’ which was included in the law that Governor Cuomo signed in 2011 creating DFS, gives the Department the ability to regulate and enforce rules against previously unregulated providers of financial products and services that could otherwise fall through the cracks and hurt consumers."

The proposed regulation includes the following reforms:
  • Better Disclosures and Transparency by setting "high standards for the information that must be provided to a consumer when debt collection activities begin."
  • Protections against Collection of Zombie Debts "for which the statute of limitations has already expired."
  • Verifying the Debt Is Actually Owed, "anytime a consumer disputes the validity of the debt, even on the phone, debt collectors will need to provide documentation proving that the debt is valid, including a copy of the signed contract and final account statement, and that the collector has 'chain-of-title,' proving that the collector has the right to collect on the debt."
  • Making Sure You Get It in Writing.  Consumers will receive written agreement of any debt settlement agreement and written confirmation that the debt has been satisfied. 
  • Cutting Down on Harassing Phone Calls by giving consumers the option of communicating with collectors through email.
Read the NY DFS Press Release.