Is there a law in NYC that protects consumers and debtors from debt collecting agencies, businesses, and their attorneys? Suppose you are under constant pressure from these agencies and their legal representatives to settle your debt. In this case, you should uphold your consumer rights to ensure ethical practices during the debt collection process. Gain insight from an attorney’s perspective to educate yourself on preserving your rights, especially if you feel they are threatened.
Overview of NYC Law on Debt Collection
Most people might not be aware of it, but New York has some of the strictest regulations and laws regarding debt collection and debtor protection. Therefore, NYC residents (especially those facing debts) can get added protection not offered by the other existing state and federal laws. 
Here is an overview of the NYC law on debt collection:
- The consumer or debtor can ask the debt collector or attorney to verify the debt or show proof of verification upon collection. Consumers must be aware that the debt they are being collected for is valid.
- Only licensed debt collectors from the NYC Department of Consumer Affairs can perform debt collection.
- Debt collectors are prohibited from contacting debtors and consumers about their debt more than twice a week.
- The debt collector must reach a settlement agreement with the debtors and put it into writing within five business days.
- Consumers have the right to ask for specific information regarding debts that are collected beyond the statutes of limitations.
Why is Debt Verification Important & Why Debtors Should Care?
Debt verification is a crucial step during the debt collection process. Therefore, it is the primary regulation specified by the NYC law.
Asking a debt collector to verify a debt on your behalf signifies that you want them to double-check their data to ensure the debt exists. The NYC law requires debt collectors to provide any pertinent information you require to verify that debt. They must stop any debt collection activity if they cannot provide such verification documents.
There are many ways to request debt verification, such as writing a request letter. The letter must detail the specific information you require, such as proof of agreement with the original creditor, a final account statement issued by the creditor, and a breakdown of the debt (due dates, interest rate, and principal amount).
If the debt collector cannot provide these verification documents, they must cease their debt collection activities, including contacting you about the debt owed. Only if they can comply with such information can they proceed with the activity.
New York’s New Debt Collection Regulations
As mentioned, New York already has strict guidelines on debt collection to protect the rights of consumers and debtors, especially from abuse and harassment by debt collection agencies. To avoid violation, attorneys, especially those representing businesses that these consumers are indebted to, must understand these new regulations. Otherwise, you could face stiff penalties and legal consequences due to your actions and debt collection activities.
The following is a detailed guide on the new regulations, which all debt collection attorneys in New York must fully understand and implement.
- You must inform consumers of their rights during the debt collection process.
The attorney or debt collector must explicitly identify the debt collection activities allowed by the Fair Debt Collection Practices Act. In addition, the attorney must provide a list of income types protected from collection should the court grant the debt collector a judgment on the case.
- You must inform consumers about the debt specifics.
Debt buying is a common practice in New York. Therefore, many companies into debt buy debts that the debtors have already paid. Debt collectors must validate this information with the original creditor to avoid harassing consumers who don’t owe any debt.
- You must not employ caller ID spoofing.
Using caller ID spoofing in New York during debt collection is illegal, especially for agencies and attorneys. Many debt collectors use this tactic to hide their identities from debtors and consumers who might evade their calls. For example, debt collectors will “spoof” the number of a family member, prompting the debtor to respond to the call wherein they would’ve dismissed an unknown number.
- You must not offer payday loans or a credit card to collect debt payments.
First, payday loans are illegal in New York. Therefore, it is unethical for a debt collector or business to hire attorneys to collect debt payments using this method.
Moreover, offering a credit card in the guise of a “balance transfer program” or other similar strategies is illegal in New York. It is a common tactic by credit card companies, especially given the high level of credit card debt in the US.
Final Word
Debt collection is an intriguing subject, especially as there is a blurring of lines between debt collectors’ rights (and the companies they represent) and consumers. Knowing how to juggle these two can make it easier to manage the debt collection process ethically and legally.
