Attorney General James Urges Consumers To Be Aware Of Rights When Faced With Attempts To Collect Debt

New York Attorney General Letitia James today issued a consumer alert, informing New Yorkers of their rights when contacted by a debt collector. Consumers facing debt collection now have added protections under federal and state law. New nationwide rules adopted by the Consumer Financial Protection Bureau (CFPB) — that took effect yesterday — limit how and when debt collectors are allowed to contact consumers. These rules also require debt collectors to give consumers detailed information about the origin and history of the debt they seek to collect. Additionally, a new state law — the Consumer Credit Fairness Act, which was signed into law on November 8, 2021 — gives New Yorkers rights when sued in regard to consumer debt.

“New Yorkers have the right to know how much they owe without smoke and mirrors,” said Attorney General James. “No consumer should be sued over a debt they do not legally owe or which a creditor has no right to collect, but as we recover financially from COVID-19, we are seeing more and more debt collectors come out of the woodwork with outrageous claims. These simple tips should help protect our state’s consumers from deceptive and abusive debt collection practices. My office will continue to take the necessary actions to protect New Yorkers’ wallets.” 

For years, the Office of the Attorney General (OAG) has brought dozens of enforcement actions and obtained numerous settlements against debt collectors that engaged in improper debt collection tactics. In 2019, Attorney General James partnered with the Federal Trade Commission to obtain court orders halting a scheme to distribute and collect on millions of dollars in “phantom debts” — fake debts that consumers did not owe. Earlier, the OAG reached agreements with four of the nation’s major debt buyers, which regularly pursued untimely lawsuits against New York consumers, often obtaining default judgments when the consumers failed to respond to the lawsuits. As a result of the OAG’s actions, many companies and individuals have been permanently banned from engaging in debt collection in New York. 

The OAG reminds consumers that they should be aware of their rights under federal and state law:

Right to Know What You Owe — Debt collectors must provide you with key information about your debt within five days of their first communication with you. This is called a “validation notice” and typically includes:

• • The name of company or person you originally owed the debt to;
  • The date and amount of the original debt; and
  • An itemization of fees, interest, payments, and credits that have been added to or deducted from the original debt.

Right to Dispute the Debt — You have a right to dispute the debt. The validation notice must include information on how you can dispute the debt. The CFPB also has a sample dispute letter available for use. Once you dispute a debt, the collector must stop all attempts to collect from you until they provide information supporting their claim to the debt.

Debt Collectors Must Follow Limits on How and How Often They Contact You — Limits have been put in place to avoid harassment by debt collectors:

• • Debt collectors cannot call you more than seven times in any seven-day period;
  • Debt collectors must wait seven days before calling again after they make contact with you by phone;
  • Debt collectors cannot call you between 8 PM and 9 AM in the time zone where you are located;
  • You have the right to tell debt collectors not to contact you by email or text message or any other means of communication, and you may tell them not to contact you at all (You can use this sample letter from the CFPB to make that demand);
  • Debt collectors generally cannot try to reach you at your work email address, through a public social media post, or through third parties, like friends, family, neighbors, or co-workers (under some circumstances, debt collectors may be allowed to contact third parties simply to obtain information about your location);
  • Debt collectors cannot contact you at your workplace if your employer prohibits such contacts (for example, you are not allowed to take personal calls at works); and
  • You can also tell a debt collector you cannot take calls at work.

You Cannot Be Sued for Old Debts — Debt collectors are required to notify you, before accepting a payment from you, if they are contacting you about a debt that is beyond the time limit for bringing a lawsuit:

• • After April 7, 2022: Creditors cannot sue you, or threaten to sue you, on debt that is older than three years; and
  • Until April 7, 2022: Creditors cannot sue you, or threaten to sue you, on debts that are older than six years. That time limit may be even shorter if the original company or person you owed the debt to is incorporated in or has its principal place of business in a state with a shorter time limit. For example, Delaware has a three-year limit. Consumers are cautioned that until April 7, 2022, if they make a payment on a debt that is too old for a lawsuit, the payment may renew the creditor’s ability to sue them for the full amount of the old debt.

New Rights for Consumers Facing Debt Collection Lawsuits in New York —

If you are sued for a debt in New York, the court clerk must mail a notice of the action to you;

The court clerk must send a notice advising you of how to oppose any request by the creditor or debt collector to enter a judgment against you; and

A debt collection lawsuit filed in New York must include detailed information about the debt, including:

• • • The name of the original person or company you owed the debt to;
    • The last four digits of your account number;
    • The date of your last payment; and
    • An itemization of the amount sought.

Attorney General James urges New Yorkers to be vigilant consumers and to report debt collectors to her office if they fail to follow the law or if they engage in conduct that is deceptive, harassing, or abusive. Consumers who are having these experiences with debt collectors are urged to file complaints with the OAG online or to call the OAG’s consumer helpline at 1-800-771-7755.