On February 26, the New York City Department of Consumer and Worker Protection (DCWP) announced it has adopted, effective September 1, a rule expanding compliance obligations for third-party collectors, debt buyers, and original creditors once they initiate debt collection procedures. Under the revised definitions in the rule, an “original creditor” becomes a “debt collector” when it attempts to collect after stopping periodic statements or bills, or after accelerating the unpaid balance. The rule limits communications to no more than three attempts within seven consecutive days per account and bars further contact during that period after a consumer responds, with certain exceptions such as mailed communications. Under the rule, collectors may use electronic channels only with revocable consent, and a “stop” request would apply only to that specific channel. The rule further provides that validation notices must include specified consumer rights language, disclose when a debt is time-barred, warn that making a payment may restart the statute of limitations, and outline protections related to medical debt. Notices must also inform consumers about available language access services.

Under the rule, consumers may dispute debts at any time through any channel used for collection and collectors must verify disputes within 60 days or send a “notice of unverified debt,” after which third-party collectors must stop collecting. The DCWP will require the notice to state why verification could not be completed, note cessation in account records, and advise consumers to keep it for use with other collectors. Medical debt provisions prohibit credit reporting, require financial assistance policy disclosures at all stages and mandate verification of related accounts from the same episode of care within three months when disputed. DCWP will require agencies to keep logs of complaints, disputes, communications, cease requests, credit reporting notices, and policies on time-barred debt, verification procedures, and medical debt handling for up to six years. The rule also prohibits false or misleading representations about debts, excessive contact beyond legal limits and applying payments in a manner contrary to a consumer’s instructions.