N.Y. Governor Signs Law Requiring New Disclosure in Initial Communications

A new law is scheduled to go into effect in New York next month that will require collectors to provide an additional disclosure on initial letters sent to consumers, letting consumers know that the letter can be requested in an alternative format, such as large print, braille, or audio compact disc.

S737A was signed by New York Gov. Kathy Hochul last week and will go into effect on November 7. The bill was introduced in January by state Sen. Alessandra Biaggi, a Democrat.

The new law applies to principal creditors and debt collectors and needs to be included on initial communications in a clear and conspicuous manner. Under the law, creditors and collectors who are already providing “reasonable accommodation” in compliance with the Americans with Disabilities Act shall not be deemed to have violated the new law. Creditors and collectors must also provide a phone number that consumers can call to request the letter in an alternative format.

The law defines debt collectors as individuals who, as part of his or her job, regularly collects or attempts to collect debts: (a) owed or due or asserted to be owed or due to another; or (b) obtained by, or assigned to, such person, firm or corporation, that are in default when obtained or acquired by such person, firm or corporation.

The first time a creditor or collector violates the law, a civil penalty of up to $250 may be assessed. Subsequent violations can be fined up to $500 each.

Going into effect three weeks before the enactment of Regulation F could throw a wrench into the process for collectors building their versions of the Model Validation Notices, including what disclosures to include and where to include them. Anyone collecting debt in New York would be wise to check out this new law and make the appropriate changes to their letter templates.

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