In a joint letter yesterday, the American Bankers Association and Consumer Bankers Association urged a New York City agency to withdraw a proposed rule to expand the procedural requirements for creditors collecting debts in their own name. Barring that, the associations said that at a minimum, the agency should suspend the effective date of the rule and reopen it for public comment.
On Nov. 11, the New York City Department of Consumer and Worker Protection proposed an amendment to their August debt collection final rules to clarify that the term “debt collector” includes original creditors. In the proposed rule, DCWP maintained that its rules have always been intended to apply to collectors of their own debts, setting an effective date of April 1, 2025. “Nowhere in that 24-month rulemaking record did DCWP state that the proposed or final rules would apply to creditors collecting their own accounts and doing so using their own names,” ABA and CBA said in their letter.
The proposed rulemaking does not give required notice to affected creditors, the associations said. They added that the amendment would harm and confuse consumers while imposing illogical obligations on creditors, and that it is likely preempted by federal and state law.
“We strongly urge the DCWP to withdraw its extension of procedural requirements to first-party creditors, as these requirements are ill-suited, operationally burdensome, and conflict with existing federal and state regulatory frameworks,” the associations said. “The rulemaking process also failed to provide adequate notice or time for stakeholders to evaluate the wide-ranging implications of these changes.”
