New York State’s Department of Financial Services has announced new regulations governing third party debt collectors and debt buyers that will go a long way in protecting the rights of consumers who are being unfairly harassed and often defrauded by unscrupulous debt collectors.

In a statement issued December 3, Governor Andrew Cuomo said, “Here in New York we will not tolerate debt collectors who wrongfully take advantage of consumers. That’s why we’re rolling out tough new regulations that protect borrowers and help crack down on illegitimate debt collection practices. These new tools and disclosures will protect New Yorkers across the state, and I am pleased that our administration is leading the way on this issue.”

The State reports it has received more than 20,000 complaints about debt collection practices this year. Many stem from problems in the debt buying industry, where a collection agency buys defaulted debts for pennies on the dollar and then tries to collect, sometimes from the wrong person or for the wrong amount.

“NYLAG is all too familiar with the tactics of third party debt collectors, who have victimized thousands of New Yorkers, including many who are poor or working poor,” said Yisroel Schulman, NYLAG’s President and Attorney-in-Charge. “We applaud the Governor and Benjamin Lawsky, Superintendent of the Department of Financial Services, for taking steps to protect the rights of all consumers, but especially the most vulnerable New Yorkers.”

In March 2014, NYLAG filed a class action complaint against Asta Funding, one of the nation’s largest debt buyers, and their attorneys claiming that they engaged in a massive debt collection scheme that used a strategy of aggressive and improper litigation to wrongfully obtain and enforce millions of dollars of default judgments against approximately 15,000 New York City residents. The case is ongoing.

The new regulations will require debt collectors tell debtors their rights and the details of their debt, substantiate that a debt is actually owed if the consumer disputes it, provide written confirmation of settlement agreements, and tell them if the statute of limitations has expired on their debt, among other provisions.

In the case of the statute of limitations requirement, if debt collectors believe that the debt may be beyond the statute of limitations (usually six years) they must inform the consumer that she or he has the option to not pay the debt, but that if they do pay, a new payment cycle may begin and the consumer will again be liable. Debt collectors must also provide debtors with a list of funds exempt from collection, such as Social Security payments, and inform consumers of the steps they can take to receive validation that the claimed debt is legitimately their responsibility.

Initial provisions will go into effect in March 2015, with others to follow in August 2015. The new rules can be found here.