On December 19, New York Gov. Andrew Cuomo announced his intent to advance a legislative proposal to license debt collectors operating within the state. Announced as the 8th proposal of the 2020 State of the State agenda, it “would give the state new tools to regulate debt collectors – stopping unscrupulous practices and strengthening our consumer protection laws.” Along those lines, the proposal would provide the New York Department of Financial Services (“DFS”) with “more powers to regulate, investigate, and take enforcement actions against debt collectors.”
While the DFS already regulates debt collectors in New York, the debt collectors are not subject to licensure. According to a press release from the Governor’s office, the DFS currently possesses “limited authority to compel debt collectors to provide data that regulators typically collect to ensure compliance with consumer laws and regulations, resolve or even acknowledge consumer complaints, or appear before administrative hearings.”
Under the proposal, the DFS would seek to “create a licensure program that prevents problematic practices and consumer abuse.” As part of this, the DFS would receive the authority to examine and investigate licensed debt collectors, including seeking debt collectors’ submissions of information and conducting onsite exams at their offices. The DFS also would receive the authority to subject licensed debt collectors to “punitive administrative actions,” such as “significant fines or the loss of their licenses” within New York.
Beyond permitting the DFS to create and enforce a licensure process, the legislative proposal would provide for the creation of a public tool to enable individuals to confirm the validity of a debt collector’s license and aid in preventing fraudulent debt collection activities.
The Governor’s proposal also would stop certain confessions of judgement within New York. According to the Governor’s press release, “[r]ecent reports found that ‘cash-advance companies have secured more than 25,000 judgments in New York since 2012,’ exploiting New Yorkers.” To address this, the proposal would “codify a Federal Trade Commission rule that prohibits confessions of judgment in consumer loans.”
We will continue to monitor and report on any development related to licensure of debt collectors operating in New York.