The New York Department of Consumer and Worker Protection (DCWP) has proposed changes to the rules regarding debt collection activities.
The proposals cover many aspects of the management and recovery process with a particular focus on medical debt exposures.
The DCWP will hold a public hearing to discuss the proposed new rules on November 29, 2023.
Among the new features, it will require the keeping of registers and monthly reports, in which there will be a series of mandatory fields including reports relating to complaints submitted to any entity, disputes, etc. This reporting system must be easily consultable and include dates, times, people involved, etc. All reported in easily understandable and consultable language.
The proposed amendment also focuses on the correct practices carried out by debt collectors. Among the main points, the maximum number of telephone calls which cannot exceed three in the space of seven days; the contact methods which exclude the use of e-mail or SMS unless numbers and email addresses have been provided with explicit revocable consent in writing or that type of contact has been used to communicate with the debt collector in the last 30 days.
It will be prohibited to communicate information on the debt to credit bureaus without a communication informing debtor of this upcoming action having been sent to the debtor. For communications prior to the new legislation, the agencies will have 5 days to notify the counterparty to inform them of the report made. Debt positions cannot be passed to a lawyer for legal collection if the agency has not been able to serve a previous letter to the debtor. The communications must also include a new information on consumer rights.
In the event of a dispute or request for information made by the counterparty in any written or oral manner, the debt collection agency will have a maximum of 45 days to respond and detail the debt. If it is not possible to exhaustively detail the debt position, it will be the debt collector’s duty to provide adequate information in this regard. Further operational restrictions and obligations will also concern the management of prescribed credits.
As anticipated, much attention has been paid to the management of credits relating to unpaid medical expenses which in the USA represent very high volumes of debt together with student loans, issues on which the Biden administration is trying to intervene to support the millions of consumers and young people involved
The new rules forces debt collectors to carry out careful checks on the entire process that gave rise to the debt exposure and to
Verify that the medical institution commissioning your recovery has complied with its obligations under federal, state, or local law and financial assistance policy.
Additionally, debt collectors are prohibited from collecting if they know or should know that the collection violates a covered medical entity’s financial assistance policy or that the patient has an open claim for financial assistance.
Debt collectors must take reasonable corrective action after obtaining information that has not been disclosed to a financial assistance policy.
Managing Director of Credit Village, Roberto Sergio has more than 20 years of experience in NPL and distressed debt in the Italian and International market. He is the editor of the NPL column in Credit Village Magazine and the director of Credit Village's National NPL Market Observatory.