NY State & NY City Lead the Pack in Regulating Debt Collection

Statue of Liberty in New York CityJust two years ago, on March 18, 2013, The National List of Attorneys published the white paper on debt collection law in New York State, written by Scott E. Wortman, Esq., then Partner at Mel S. Harris & Associates, LLC (MSH). The firm has been a member of The National List since 2002. At that time, Scott told NL, “One of the unique aspects of New York State debt collection law is that New York City has far more rules and regulations than the rest of the State, and that the consequences for not precisely following them are punitive and could be quite severe. Many of our clients apply the New York City rules Statewide to avoid any incongruity or miscalculation.” Scott’s paper is enlightening as to what many of those rules were then.

Today, an InsideARM.com search on “Changes to NY debt collection regulations” yields about 516 results! Checking out just the first three of the results pages, I found 15 articles (see list below) that specifically refer to bills submitted or passed in the past two years, including the most recent one published on Feb. 23rd, 2015, Monday of this week: State Bill Would Specifically Ban Debt Collectors from Using Social Media. It seems that all eyes are on New York and anxious to see if regulations passed there will have a ripple effect across the country, especially this one.

NY Senate bill 3803 was introduced February 17, 2015, and immediately referred to the Senate’s Consumer Protection Committee. Sen. Kevin Parker (D-Brooklyn) noted in the bill’s “purpose” language that the measure is meant to specifically “prevent debt collectors from using online contact information as a means to collect on a consumer debt.” Part of the bill attempts to define a “social networking website.” Under this bill, email is specifically not considered a social network.

InsideARM author and Editor Patrick Lunsford, tells us, “The ARM industry has long explored the use of social media for collection efforts, mostly using certain sites for location purposes. But rules governing the practice are either vague or nonexistent. New York’s bill may the first attempt to codify a restriction against using social media in debt collection.”

Comments on the InsideARM article already show a difference of opinions as to exactly what the “purpose language” means and what the measure will try to prevent with regards so social media:

  • Will debt collectors be prohibited from using social media for location information?
  • Is it really possible to stop people from getting information that is on the internet?
  • Will personal messages sent via social media (e.g., on LinkedIn) be considered an invasion of privacy?
  • Will any attempt to contact and communicate with a debtor via social media be subject to censure?
  • If someone protects their information by limiting who can view it, does that fall in a different category from someone who leaves their information wide open?
  • Can it possibly mean that using any information collectors can gather from someone’s social media posts/pages is off limits?

Lunsford concludes the article with a broad statement applying to the debt collection industry in general: “Until the CFPB addresses social media in debt collection rules — or even more unlikely, the FDCPA is amended to include social media language – debt collectors should be extremely careful in the way they approach consumers on public social networks.”

In the coming months, there is sure to be much more on this topic on all the e-newsletters, websites, groups, and social media channels viewed by debt collection professionals. Given past history, it’s not likely that this bill will be the last attempt at debt collection regulation we’ll see coming out of New York! Be alert for similar measures legislators will put forward in other states.

By Marti Lythgoe, NL Editor

InsideARM Articles covering new NY Debt Collection rules and regulations since April 2013:

Apr 25, 2013: New York Assembly Passes Debt Collection Bill; Also Lowers 

Jul 26, 2013: New York Proposes Tough New Debt Collection Rules

Oct 21, 2013: New York Regulator Proposes Strict New Standards for Debt 

May 1, 2014: New York to Change Rules for Debt Collection Lawsuits

May 13, 2014: New York Bill Would Require Statewide License for Debt Collectors 

Jun 12, 2014: New York Assembly Passes Package of Debt Collection Bills

Jul 16, 2014: New York Regulator Proposes Debt Collection Rules Based on

Jul 22, 2014: Debt industry responds to new york’s new rules for collectors, buyers

Sep 17, 2014: New Rules for Debt Collection Suits Finalized in New York Courts

Oct 31, 2014: Challenge to New York City Debt Collection Law Moves to High Court

Dec 3, 2014: New York Adopts New Statewide Regulations on Debt Collection

Dec 10, 2014:New York Debt Regulations Create Chaos

Jan 8, 2015: Working with New York’s Latest Debt Collection Regulations

Jan 12, 2015: New York Legislature Making Even More Debt Collection Changes 

Feb 23, 2015: State Bill Would Specifically Ban Debt Collectors from Using Social Media.

Categories: Compliance, Debt Collection, NL Insider

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