As an employee of a major credit issuer, I led collection teams responsible for recovering debts for the Bank. The Bank maintained that these teams were not classified as debt collectors under the FDCPA. However, our collection strategy adhered to FDCPA guidelines to ensure fair treatment of consumers. At the time, I believed that transitioning to full compliance with the FDCPA, if required, would be relatively straightforward for our organization.
While I no longer lead creditor collection teams, it may be time for creditors to adopt policies and procedures that strictly align with the FDCPA. This shift is particularly relevant as the New York City Department of Consumer and Worker Protection has proposed a new definition of “debt collector,” effective April 1, 2025.
The proposed definition states:
“Debt collector” includes any person or organization engaged primarily in the business of debt collection or regularly collecting debts owed to another or themselves. This also applies to entities using a name other than their own that suggests a third party is collecting the debt, as well as debt buyers collecting directly or indirectly on purchased debts.
How Does this Impact Creditors Collection Teams?
When cities or states implement unique rules and regulations regarding debt collection, it creates significant operational challenges. Managing a collection team while ensuring compliance with varying policies and procedures across consumer segments is no easy task. For instance:
- How do you ensure collectors avoid soliciting postdated payments in states like Massachusetts or Rhode Island?
- Another example is managing call recording disclosures. Should collectors provide the disclosure on every call, or only in states requiring dual-party consent?
The proposed changes in New York City may pose even greater challenges for creditors not already adhering to FDCPA requirements in all policies and procedures. How can a creditor strictly comply with New York City’s collection requirements while managing different rules for other cities or states?
Next Steps
It is unclear whether New York City’s new definition of a debt collector will influence regulations in other cities or states. A similar precedent can be seen with California’s Consumer Privacy Act, which rolled out in 2020 and has since inspired privacy laws in 20 other states.
For banks and credit unions, it would be wise to proactively consider potential regulatory trends when updating policies and procedures. Incorporating the proposed debt collector definition into decision-making processes now could help organizations prepare for future compliance challenges.
Conclusion: Preparing for the Future of Debt Collection
The evolving definition of a debt collector, as proposed by the New York City Department of Consumer and Worker Protection, signals a potential shift in how creditors may be classified and regulated. While it remains uncertain whether this definition will gain traction across other jurisdictions, the trend toward stricter oversight in areas like privacy and debt collection is clear.
For creditors, the key takeaway is to adopt a proactive approach. Updating policies and procedures to align with FDCPA standards and integrating the new debt collector definition into compliance frameworks can help mitigate future risks.
As regulatory landscapes continue to evolve, planning ahead ensures not only legal compliance but also the fair treatment of consumers, building trust and resilience in an increasingly complex environment.
Author: Ken Evancic
Ken.Evancic@ResourceManagement.com
As a consultant for Resource Management Services, Ken provides consulting, training and mentoring in all phases of collection and recovery, in addition to auditing third party vendors.
Ken Evancic is a Vice President at Resource Management Services, Inc. Ken Evancic is a collections veteran with over 25 years experience. He has managed all phases of collection, including all levels of delinquency, automated dialer units, early out agency management, recovery, and skip tracing. In addition to collections operations management, he has lead initiatives in the areas of performance management, collections strategy development, collector and manager training, collector desktop design, collections reporting systems, and risk and compliance.
As a consultant for Resource Management Services, Inc., Ken has specialized in developing and completing third party compliance and performance audits for collections agencies and collection attorney firms for many top credit grantors and debt buyers. He has leveraged his 25 years of experience to develop multiple collector and collection management training classes designed to maximize collector performance. In addition to collection training, Ken helped develop and facilitates the RMS Third Party Vendor Auditing training.
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