New Regulations To Set Some Limits On New York Debt Collection Activity

American consumers are in debt. And some debt collectors go to great lengths – lengths that violate the Fair Debt Collection Practices Act (FDCPA) – in order to collect. As CNBC reports, around 30 million Americans owe an average of $1,500, making this sizeable population the target of aggressive debt collection activity.

With an eye toward reducing abuse and harassment perpetrated against consumers, the newly-formed federal Consumer Financial Protection Bureau (CFPB) has taken steps to regulate the largest debt collectors – those with annual revenue of more than $10 million from debt collection activity.

Regulating the Largest Collectors

The New York Times reports that the number of complaints filed in 2011 against collectors numbered 180,000, up significantly from the 13,950 filed in 2000. With millions of Americans facing phone calls and letters from debt collectors every day, the CFPB decided it was time to exercise its consumer protection authority by supervising certain collectors. This began Jan. 2, 2013.

There are approximately 4,500 debt collection firms throughout the U.S., with industry receipts of $12.2 billion. With the new rules covering only those collectors over the $10 million or higher threshold, only about 175 (out of 4,500) will come under regulation. But these larger collectors represent around 63 percent of the industry.

New Regulatory Law Might Have Some Teeth

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the wake of the Great Recession, regulates non-bank financial companies (like debt collectors). Under Dodd-Frank, the CFPB is authorized to supervise collection firms to ensure that they don’t go out of bounds.

These rules require firms to:

  • Identify themselves when speaking to consumers
  • Disclose an accurate accounting of the debts owed
  • Have an established process to deal with disputes honestly

While the new regulations may help discourage abuse and harassment from the larger debt collectors, smaller collectors will still be operating without direct supervision. If a New York resident is the victim of abusive activities, he or she has the right to seek legal recourse through the help of an attorney.