The New York Department of Financial Services (“DFS”) has updated its FAQ on the debt collection regulations that took effect on March 3, 2015. We analyzed the regulations in a client alert and covered an earlier version of the FAQ in a previous blog post.
Responding to industry questions about New York’s new debt collection regulations, most of which take effect on March 3, 2015, the Department of Financial Services has published a detailed FAQ on its website. We previously analyzed the regulations in a client alert.
As we anticipated in our alert, the FAQ confirms that “debt servicers, including companies that service student loans, home equity loans or mortgages … who collect or attempt to collect a debt that was not in default at the time it was obtained for collection are not” subject to the regulations. This parallels how the federal Fair Debt Collection Practices Act (“FDCPA”) is interpreted.
Last month, the New York Department of Financial Services (“DFS”) finalized a regulation with a number of novel requirements affecting debt collection (including servicing delinquent loans) in New York. Previously, debt collection in New York was subject to (1) relatively limited requirements set by New York statute and several municipal ordinances, and (2) the federal Fair Debt Collection Practices Act (“FDCPA”). While parts of the new DFS regulation are modeled on the FDCPA, other requirements depart drastically from the federal framework. Areas of novel regulation include disclosures to consumers regarding statutes of limitations and charged-off debts, as well as restrictions on sending emails to consumers. The Consumer Financial Protection Bureau (“CFPB”) is drafting a debt collection regulation to supplement the FDCPA, and it remains to be seen whether the New York regulation becomes a bellwether of changes at the federal level or by other states.
To read the full alert, click here.
On December 10, 2014, Superintendent Benjamin Lawsky of the New York Department of Financial Services (the “DFS”) announced a “New Cyber Security Examination Process” (the “New Examination Process”) for New York-chartered and licensed banking institutions (“Regulated Entities”). Pursuant to the New Examination Process, the DFS will expand its information technology (“IT”) examination procedures to focus more attention to cybersecurity, and will schedule these IT/cybersecurity examinations following each institution’s comprehensive risk assessment. Even if you are not a financial institution regulated by the DFS, the key takeaways discussed below provide insight into the types of questions regulators are asking with respect to cybersecurity practices and offer practical guidance for assessing the framework of a cybersecurity compliance regime.
The New Examination Process includes both sample examination topics and information requests that the DFS will use in future examinations. A review of these topics and information requests provides understanding of the DFS’ cybersecurity expectations for Regulated Entities, as well as practical cybersecurity considerations for financial institutions not regulated by DFS. Below we discuss five key takeaways related to the New Examination Process.
To read the full alert, click here.
By: David L. Beam, Christopher Shelton*
*Mr. Shelton is a law clerk and not admitted to the practice of law.
The Internet has been with us for about two decades, and financial service companies have been offering products over the Internet for nearly as long. One would have thought that there would be final resolution by now on the question of whether, and under what circumstances, a state may regulate an online lender with no physical presence in the state. However, this issue continues to be a thorny one.
A recent decision by the United States District Court for the Southern District of New York touches on this issue. In Otoe-Missouria Tribe of Indians v. New York State Department of Financial Services, 2013 U.S. Dist. LEXIS 144656, 2013 WL 5460185 (S.D.N.Y. Sep. 30, 2013), the State of New York successfully argued that it can regulate online loans made by Native American tribes to New York residents. The case primarily involved the question of whether a state could regulate an enterprise owned by a Native American tribe located in another state. But the decision potentially has implications for other situations where a company offers financial services over the Internet. Moreover, it is part of a wider campaign by New York authorities to target online lenders for alleged usury.
Force-placing insurance could be a hazardous practice if not done appropriately. The Consumer Financial Protection Bureau (“CFPB”) has made force-placed insurance a main focus of its desired mortgage servicing reforms and new rules on the issue are expected to be released by the CFPB as soon as this week. This is in addition to high-profile investigations into force-placed insurance by New York and California. Therefore, it should be no surprise that a significant section of the March 2012 Global Foreclosure Settlement lays out new force-placed insurance standards for parties to the settlement agreement. Read More