On June 16, 2015, the New York State Department of Financial Services (“DFS”) released additional guidance related to its recently enacted debt collection regulations. The new clarifications supplement DFS’ initial set of “Frequently Asked Questions” released in February, with new guidance beginning at Question #17. DFS announced publication of the supplemental guidance during a “Debt Collection Dialogue” hosted by the Federal Trade Commission on June 15 in Buffalo, N.Y. The debt collection regulations were adopted in December 2014, with most of the new requirements becoming effective on March 3, 2015. Requirements related to itemization and debt substantiation will become effective on Aug. 30, 2015.
The new guidance answers 12 additional questions, including questions related to “substantiation” requirements, purchased debts, and whether federally required disclosures can be combined with the New York disclosures.
If the consumer requests substantiation but substantiation cannot be provided, violation of the regulation may be avoided by forgiving the consumer’s debt. Debt collectors incapable of forgiving the debt may avoid a violation by: (1) ensuring that the debt can be substantiated before commencing collections; or (2) receiving assurance from the creditor that the debt can be extinguished if substantiation is requested but cannot be provided.
The original creditor may provide the substantiation, but the debt collector is still responsible for ensuring that the information is provided within the time frame required by the rule. A debt collector cannot satisfy the obligation to provide substantiation by merely returning the debt to the creditor.
DFS also clarified that Fair Debt Collection Practices Act disclosures and New York State disclosures may be provided in the same communication as long as the disclosure required by DFS is timely and presented in a clear and conspicuous manner.