NYC Debt Collection Rules in Line with CFPB Finalized

Update 11/5/2024:

The effective date has been pushed back five months from December 1, 2024 to April 1, 2025. 

Original Article:

In early August, 2024, NYC debt collection rules were finalized and amended by the city’s Department of Consumer and Worker Protection (DCWP) in response to the changes the Consumer Financial Protection Bureau (CFPB) made to federal regulations. They will take effect on December 1, 2024, and apply to actions after that date.

The NYC debt collection rules were created to expand current record retention and reporting requirements for collection agencies, revise validation and verification procedures, and seeks to inform consumers about language access services. Some of the significant changes include:

• The revisions to the NYC debt collection definition in section 5-76 clarify the meaning of the terms “debt collector” and “itemization reference date. It also adds the term “pre-charge-off period.”
• The definition of “debt collector” is revised to include organizations, as well as natural persons, in order to clarify that debt collectors remain liable for any violations of section 5-77 that are committed by their employees.
• Revisions to the proposed NYC debt collection amendments in section 5-77 include clarifications on communications, required disclosures to the consumer at the onset of collection practices, dispute and verification practices, obligations by debt collectors to transfer certain information with an account, and practices required when collecting on expired debt and medical debt. These changes include specifying that:
  • Total communication frequency allowed across all media are to be applied per consumer, not per account, unless the debt collector is collecting multiple debts from a single consumer for separate creditors.
  • Debt collectors are allowed to send an initial electronic message to a consumer for the sole purpose of obtaining permission to communicate electronically with the consumer.
  • Debt collectors are permitted to communicate with a consumer at their place of employment if the consumer gave prior consent directly to the debt collector.
  • The itemization of the debt as proposed may be simplified, except if any amount is added to the debt by the debt collector.
  • If there is a dispute or request for verification, all collection activity must stop and cannot be resumed unless and until the consumer is provided a timely verification of the debt.
  • Any amount that is disputed on the original debt itemization requires the debt collector to provide a second expanded itemization. They are also to treat such disputes in accordance with the verification of debt provision.
  • If a debt is expired, the initial written notice is also the validation notice with the required expired debt disclosure, which can be combined with the state’s disclosure. If such a validation notice must be provided to the consumer before contact by any other means.
  • Regarding medical debt, information about the debt cannot be reported to a consumer reporting agency, and this information must be disclosed to the consumer in the validation notice. If a consumer disputes or requests verification of one medical debt account, any related accounts must be noted as disputed, but the debt collector is only required to provide verification of the debt for the specific account requested by the consumer.

The full NYC debt collection rules can be found here.

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