New York City announced new collection regulations designed to stop abusive collection tactics.
The regulations state that any collection agency attempting to collect from a New York City resident must provide proof the debt is owed at the consumer’s request. The collector must offer a copy of the original debt documentation, a copy of the final account statement of the originating debt, a document itemizing the remaining amount due – including any additional fees or charges claimed to be due – and the basis of the consumer’s obligation to pay them.
The New York City Department of Consumer Affairs (DCA) has received over 2,600 collection complaints in the past three years. In that time, the agency restored $4.2 million in wrongful debt, charging back on average $1,559 per violating company. DCA has forced some violating companies to pay fines or surrender their licenses. Between January 2008 and March 2010, at least 32 paid a median fine of $300. During that time, at least 11 had their licenses revoked.
Other provisions of the new regulations include disclosing the consumer’s rights regarding the statute of limitations and providing written confirmation of the debt payment schedule or settlement within 21 days of the agreement. Also, collection agencies must provide New Yorkers with a phone number that must be answered by a live operator and not an answering service.
During 2009, the DCA erased more than $1 million in debt that New Yorkers didn’t legally owe but were pressed to pay anyway. Wrongful debt collection topped the list of complaints to DCA for the second consecutive year. Last year, the city received more than 830 complaints against collectors.
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