Debt collectors warned of new state regulations

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ALBANY — State Attorney General Letitia James has sent letters to the largest credit card companies and major debt collectors operating in New York, warning them of new state regulations that prevent them from suing consumers for old debts. The Consumer Credit Fairness Act of 2021 — which was signed into law last November — will go into effect in April and reduces the statute of limitations for consumer debt collection from six years to three years.

The new state regulations come on the heels of similar nationwide regulations from the Consumer Financial Protection Bureau that came into effect late last year. James said the letter makes it clear that her office stands ready to enforce these regulations to protect vulnerable New Yorkers.

“For too long, debt collectors used unfair and abusive tactics to improperly collect debts,” said James. “Abusive debt collection practices of the past hurt low- and moderate-income New Yorkers the most and buried them deeper into financial struggles. These new regulations will give us stronger tools to protect the most vulnerable New Yorkers from predatory debt collectors.”

“My office has reached out to all the major debt collectors in the state and the largest credit card companies to ensure that they comply with the new laws starting on day one without excuses,” she said. “I urge any New Yorker who feels that they have been a victim of improper debt collection to contact my office. Consumers have rights and my office is committed to protecting them.”

The Consumer Credit Fairness Act of 2021 strengthens consumer protections by requiring debt collectors to be more transparent and honest when communicating with consumers.

In her letter to the industry, Attorney General James warned debt collectors of their duties under federal and state law:

Limit Communications With Consumers. Debt collectors have for years had a duty under state and federal law to avoid harassing communications; the new regulations now add bright line rules to that general obligation:

• Debt collectors may not call consumers more than seven times in any seven-day period;

• After making contact with a consumer by phone, debt collectors must wait seven days before calling again;

• Debt collectors cannot call between 9 p.m. and 8 a.m., local time; Debt collectors cannot contact consumers by any or all means of communication (email, text, phone, and so on), or at a consumer’s workplace, if a consumer asks them not to;

• Debt collectors generally cannot contact consumers via work email address, public social media postings, or through third parties (though they may under some circumstances contact third parties to obtain information about a consumer’s location).

Tell Consumers the Facts — Debt collectors must provide consumers with key information about their debt within five days of their first communication. These “validation notices” must include:

• The name of company or person the consumer originally owed the debt to; and

• The date and amount of the original debt; and An itemization of fees, interest, payments, and credits that have been added to or deducted from the original debt.

James urges New Yorkers to know their rights and to report debt collectors to her office if they fail to follow the law or if they engage in conduct that is deceptive, harassing, or abusive.

Consumers who are having these experiences with debt collectors are urged to call OAG’s consumer helpline at 1-800-771-7755.

Be Aware of New, Shorter Statute of Limitations Applicable to Consumer Debts. From April 7, 2022, creditors cannot sue or make a threat to sue consumers (implicitly or explicitly) on debts that are older than three years, down from six years in most cases. Moreover, any payment a consumer makes after that three-year period cannot be used to revive the time-barred debt. Consumers are cautioned that until April 7, 2022, if they make a payment on a debt that is too old for a lawsuit, the payment may renew the creditor’s ability to sue them for the full amount of the old debt.

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