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Dear New York City Department of Financial Services, What's Your Deal?

 I wanted to give you an update on this outstanding issue/question regarding New York City and its language requirements. This is an email I sent to the NYC Department of Consumer Affairs. When I receive an answer, I will be sure to share it with all of you.

 To whom it may concern:

 

New York City Department of Consumer Affairs published language rules for debt collectors that went into effect in June, but has a grace period of 1 October before they go into full effect.

 

One of the items listed in the Notice of Adoption (https://rules.cityofnewyork.us/sites/default/files/adopted_rules_pdf/notice_of_adoption_-_debt_collection_language_access_2.pdf) is a list of commonly-used debt collection terms that collection agencies must link to in their communications with consumers:

• "Inform consumers—in any initial collection notice and on any public-facing websites maintained by the collector—of the availability of any language access services provided by the collector and of a translation and description of commonly-used debt collection terms in a consumer’s preferred language on the Department’s website;" (p. 1)
• "(viii) a statement that a translation and description of commonly-used debt collection terms is available in multiple languages on the Department’s website, www.nyc.gov/dca." (p. 7)
• "(2) a statement that a translation and description of commonly-used debt collection terms is available in multiple languages on the Department’s website, www.nyc.gov/dca." (p. 8)

With the grace period soon to end, I was hoping you could tell me where on nyc.gov/dca a collection agency could send consumers to find the list of commonly-used debt collection terms in multiple terms.

 

Our worry is that, after 1 October, collection agencies will be including information on their letters that is either incorrect or confusing to a consumer, who, on visiting www.nyc.gov/dca, will not be able to find that list of commonly-used debt collection terms.

 

Could you please advise?

 

Regards

 

Mike Bevel

A Healthcare Provider & a Collection Agency Walk Into a Terrible Situation

 A member asks:

Are you aware of any lawsuits regarding a hospital sending statements while the account is with a collections agency? We have a hospital that wants to continue to contact their patients while we, a 3rd-party collections agency, sends statements.

The situation has Bad Idea Jeans written all over it. I ran this question by our General Counsel, Katie Neill. What she says isn't legal advice and may not be used as legal advice, especially since she's our General Counsel here at insideARM, and not your General Counsel, wherever you are, which I'm sure is a lovely place.

Katie said, "I don't think I've seen cases like that. But it sounds like it is ripe ground for confusion for the consumer." This would be especially true if the statements an agency is sending out don't agree with the statements the provider is sending.

So, the quick answer is: talk to your client and convince them to stop this activity.

1) It's confusing to the consumer, and could put you afoul of the FDCPA

2) Two entities are trying to collect on the same debt -- or that could be the perception

3) Unless your appetite for lawsuits is ravenous, this seems a likely way to find yourself in court and you should shy away from this practice -- especially, as one commenter said, if your client isn't offering you indemnification

Here are what other members of Research Assistant had to say on this question:

1) We wouldn’t move to third-party if they were still wanting to send statements. There are too many potential issues that come up that make it not worth the risk, including harassment under the FDCPA, contingency fee eligibility, balance discrepancies due to interest, customer confusion, etc. The client needs to be done before it rolls to third party. If the statements were working, the customer would already have paid. Why would they want to waste more money on postage?

2) If the hospital sends a bill with a different balance, then the collection agency maybe exposed to a FDCPA claim for trying to collect a different balance. Same, if patient calls the hospital and settles or pays in full and the agency continues collection efforts not knowing the account has been resolved.

3) There have been cases over the years involving the confusing of a consumer on this topic. We just checked into this a fresh a few months back because of Covid and creditors resetting their billing cycles and wanting to send special Covid statements. This is clearly not legal advice as I do not have a law degree. The FDCPA does not address it specifically but addresses it under the harassment and confusion issues. Our legal counsel and ACA etc has always maintained that this would be two parties trying to collect the debt at the same time and should not be done.

4) Not aware of suits but I think that practice is high risk and that what you paying the collection agency to do. Accounts are either in collections at a agency or in the hospitals active AR. Why increase your costs?

5) I suggest the inquiring party run as fast as they can from this practice. (Also see: https://www.ontariosystems.com/this-first-party-thing-is-heating-up/)

6) I am not certain I fully understand the question, but in the scenario, is the debt designated as “in default” at placement with the agency, and are both the hospital and 3rd party agency actively pursuing collection of the debt? If more than one entity, such as a creditor and an agency, attempts to collect the debt it could confuse the consumer as to who is actually collecting the debt and also lead to misapplied payments. If a collection agency is also credit reporting the debt, it may run afoul of the Fair Credit Reporting Act FCRA if another entity is also reporting the debt at the same time.

If a creditor continues to collect on an account after it has been forwarded to a debt collector, the consumer will likely be confused as to whether the account is in collections and who to contact for payment, complaints or other inquiries. With the creditor continuing to pursue the account, the amount of the debt may be misrepresented because the collection agency may be seeking collection costs while the creditor is not. Creditors should cease any internal collection activity when forwarding an account to an agency for collection because of the potential to mislead or confuse consumers, which may potentially violate § 807 of the FDCPA

If this is more of a “precollect” process where the debt is not designated as in default, and the agency is serving as a mailing service, not meaningfully involved in the collection process, nor being paid on the percentage of debts collected?

7) The hospital is not subject to the FDCPA. However, the agency is going to have a hard time arguing their potentially conflicting statements are not causing confusion. And, I’m guessing the hospital is not providing any indemnification.

8) Not aware of a lawsuit, and I’m certainly not providing legal advice, but they would also need to be cognizant of jurisdictions that have contact attempt restrictions beyond just calls. Besides that, agree with your Counsel – if any disclosures, balance, information is different, it seems it would be an easy complaint, and just providing different contact information can be confusing. Multiple statements at the same time could also be construed as harassment. I wouldn’t be comfortable with this approach.