Yesterday, we discussed the constitutional legal challenge against New York City’s recently amended debt collection rules, which were scheduled to go into effect on December 1, 2024. These rules would stringently regulate various debt collection activities by debt collectors operating in the city. Today, the New York City Department of Consumer and Worker Protection (DCWP) announced a delay in the enforcement of these new rules until April 1, 2025.

The announcement comes just two business days after ACA International, Inc. and Independent Recovery Resources, Inc. filed a complaint in the Eastern District of New York against New York City Mayor Eric Adams, the DCWP, and the DCWP Commissioner. The plaintiffs seek declaratory and injunctive relief to prevent the enforcement of the rules, arguing that they are unconstitutional and preempted by federal and state law. Specifically, the plaintiffs argue that the rules’ requirements will impose significant financial and operational burdens on debt collectors. For instance, the rules mandate detailed record-keeping and communication logs, which will allegedly require substantial investment in new systems and processes. Additionally, the rules’ expanded debt validation requirements and several other vague provisions make it difficult for debt collectors to understand and comply, increasing the risk of unintentional violations.

While the effective date of the new rules remains December 1, 2024, the DCWP’s decision to delay enforcement provides a grace period for compliance. According to the DCWP’s website: “This delay is in response to industry requests and acknowledges the significant financial and operational burdens that the new rules would impose on debt collectors. The DCWP will address this grace period for compliance during their ‘DCWP 101: Free Webinar on New Rules for Debt Collectors’ on Thursday, November 7, 2024, at 2:00 p.m.”

While the delay in enforcement is a welcome development, it should not be confused with a delay in the enactment of the rules. Debt collectors must still comply with the new rules starting December 1, 2024, to avoid potential issues under the Fair Debt Collection Practices Act and other applicable laws.

Troutman Pepper will continue to monitor this situation and provide updates as they become available.