ALBANY, N.Y. (NEWS10) — New York Attorney General Letitia James sent letters to the biggest credit card companies and debt collectors operating in the state, warning them of new state regulations that prohibit lawsuits for old debts. The Consumer Credit Fairness act of 2021 will go into effect next month and will reduce the statute of limitations for consumer debt collections from six years to just three years.
The new state regulations come as similar nationwide regulations from the Consumer Financial Protection Bureau went into effect in late 2021. Attorney General James’ letters made 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 Attorney General 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.
The Consumer Credit Fairness Act of 2021 requires debt collectors to be more transparent and honest in their communications. 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 always had a duty to avoid harassing consumers. The new regulations now add more clear rules to that general obligation.
- Debt collectors may not call consumers more than seven times in any seven-day period.
- After talking on the phone with a consumer, collectors must wait seven days before calling again.
- Debt collectors cannot call between 9 p.m. and 8 a.m. local time.
- Debt collectors may not contact consumers by any method of communication, or at a consumer’s workplace, if the consumer asks them not to.
- Consumers cannot be contacted through work email address, public social media postings, or through third parties.
Tell consumers the facts
Debt collectors must provide consumers with key information about their debts within five days of their first communication. These “validation notices” must include:
- The name of the company or person the consumer originally owed the debt to.
- The date and amount of the original debt.
- An itemization of fees, interest, payments, and credits that have been added or removed from the original debt.
Take debt disputes seriously
Consumers have a right to dispute their debt and debt collectors must provide information on how to do so in their validation notice. Once a consumer disputes the debt, the collectors must stop all attempts to collect from that consumer until the collector provides information supporting their claim.
Debt collectors must also
- Give consumers full information about any debt lawsuit a collector files.
- Avoid suing or threatening consumers for time-barred debts.
- Be aware of the new, shorter statute of limitations that applies to consumer debt.
Consumers are cautioned that on April 7, 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. Attorney General James urges New Yorkers to know their rights and report debt collectors to her office if they engage in deceptive, harassing, or abusive behaviors. Consumers who are having these experiences with debt collectors can file complaints online or call the Office of the Attorney General’s consumer helpline at (800) 771-7755.