The city of Yonkers, N.Y., has amended its Consumer Protection Code to include revised requirements for debt collection agencies.
The changes include the following sections: definitions, license requirements, required collection practices, prohibited collection practices and penalties for non-compliance.
The revisions expand definitions of key terms such as consumer, debt, and "debt collection agency. The definition of "debt collection agency" now specifically include buyers of delinquent debts and excludes attorneys as long as they are acting in a legal capacity.
Required Collection Practices
New provisions have been added to the code concerning requirements for communications and payment arrangements.
A collection agency must include the following in all communications with consumers:
- A call-back number to a phone that is answered by a natural person;
- The name of the collection agency;
- The originating creditor of the debt;
- The name of the person to call back; and
- The amount of the debt at the time of the communication.
The New York City Ordinance imposes a requirement identical to the one above. Debt collection agencies that already are subject to New York City requirements likely already have practices in place to meet with this requirement.
License RequirementsThe city of Yonkers requires debt collection agencies to obtain a license. Similar to past requirements, licenses are valid for one year. The annual fee for a license or renewal is $150. Applicants who are non-residents of Yonkers must provide the name and address of a registered agent within the city or designate the Yonkers Director of the Office of Licensing as his agent.
The Debt Collection License Application is available on the Yonkers Consumer Protection Bureau website. The city recently sent out a license renewal letter to licensees outlining what information is required for renewal.
Debt collection agencies must confirm in writing to the consumer, within five days, any debt payment schedule or settlement agreement reached regarding the debt. A similar provision exists under New York State law as well.
Prohibited Collection Practices
The revised Code contains new provisions related to verification of consumer debts and disclosures for debts in which the statute of limitations has expired.
A debt collection agency may not attempt to collect or contact a consumer regarding a debt after the consumer requests verification of a debt, until the agency provides the consumer with:
1. Written documentation identifying the creditor who originated the debt and,
2. An itemization of the principal balance of the debt that remains due and all other charges that are due or alleged to be due. Unlike the verification requirements found on the federal Fair Debt Collection Practices Act, this requirement does not limit verification requests to a 30-day period.
Statute of Limitations
A debt collection agency may not contact a consumer or attempt to collect a debt in which the statute of limitations for initiating legal action has expired, unless the agency first provides the consumer information about the consumers legal rights. While the Yonkers Code does not provide a model disclosure, collection agencies may want to look at the model language provide by the State of New York for guidance.
Penalties for Non-Compliance
Failure to comply with the Consumer Protection Code of the city of Yonkers may result in suspension or revocation of a debt collection agencys license. However, a license cannot be revoked without notice, and a licensee is entitled to a hearing. Additionally, violations of the Code constitute a Class II offense.
The amended Code requirements for debt collection agencies became effective immediately at the time of signing General Ordinance No. 16-2014 on Dec. 12, 2014.