April 7, 2022

To: Debt collectors governed by 23 N.Y.C.R.R. Part 1

Subject: Compliance with 23 N.Y.C.R.R. § 1.3(b) and the new Consumer Credit Fairness Act

The Department is issuing this guidance to address potential confusion about how to comply with notice requirements of 23 N.Y.C.R.R. § 1.3(b) in light of a recent amendment to the New York Civil Practice Law and Rules (“CPLR”) taking effect April 7, 2022. That amendment, set forth in § 4 of the Consumer Credit Fairness Act (“CCFA”) (L.2021, c. 593), adds a new section 214-i to the CPLR that provides, in relevant part, as to the statute of limitations applicable to actions arising out of consumer credit transactions, “Notwithstanding any other provision of law, when the applicable limitations period expires, any subsequent payment toward, written or oral affirmation of or other activity on the debt does not revive or extend the limitation period.” 23 N.Y.C.R.R. § 1.3(b) of the Department’s regulation governing debt collectors requires that, “[i]f a debt collector knows or has reason to know that the statute of limitations for a debt may be expired, before accepting payment on the debt, the debt collector must provide the consumer with clear and conspicuous notice, in the same medium (such as via telephone or electronic communication) by which the debt collector will accept payment, that,” among other things, “if the consumer makes any payment on a debt for which the statute of limitations has expired or admits, affirms, acknowledges, or promises to pay such debt, the statute of limitations may restart.” Debts addressed by the new CPLR 214-i are collected by debt collectors subject to the Department’s regulation, and as to those debts, under the new law, it is no longer true that a consumer’s making or promising to make a payment on, or admitting, affirming, or acknowledging such time-barred debt can restart the statute of limitations period. In November of 2021, the Department proposed amendments to the regulation that, among other things, would address this issue and is now reviewing public comment on the proposal, but because the amendments are not yet final, the Department is advising entities subject to 23 N.Y.C.R.R. Part 1 that it does not expect such entities to advise consumers incorrectly as to those debts whose statute of limitations periods can no longer be restarted as provided by CPLR 214-i. The Department advises that debt collectors provide accurate information to consumers, consistent with all applicable laws and regulations, and notes that 23 N.Y.C.R.R. § 1.3 does not prohibit debt collectors from adding explanatory language to the model disclosure language set forth in § 1.3(c) or using their own language to comply with § 1.3(b). Exclusively for the purposes of the Department’s enforcement of its own regulation, an example of a statement that addresses each of the requirements of § 1.3(b) is:

Additionally, as to debts covered by CPLR 214-i about which debt collectors have initiated communication with a consumer prior to the effective date of CPLR 214-i and have already notified consumers as required by 23 N.Y.C.R.R. § 1.3(b)(5), for debts not yet paid, the debt collector should notify such consumers that because of a change in the law, the consumer’s acknowledgement of, making any payment on, or taking other action on the debt will not revive the statute of limitations period. For clarity, the debt collector should also remind recipients that it is a violation of the Fair Debt Collection Practices Act to sue to collect a debt for which the statute of limitations has expired. An example of a statement to this effect is as follows:

Any questions about this guidance may be sent to [email protected].