New York City DCA Issues Covert Regs Governing Interactions with Consumers Who Do Not Speak English

On June 11, 2020, the New York City Department of Consumer Affairs (“DCA”) released amendments to its debt collection regulations aimed at addressing communications with consumers who may have limited English proficiency (the “Amendments”).  While this is an issue on many regulators’ minds, these NYC Amendments appeared to come out of left field.

The Amendments were originally proposed by DCA on March 5, 2020, just as New York City (and the rest of America) was beginning to grapple with COVID-19.  A public hearing on the Amendment was held on April 10^th (four days before New York City hit its peak of COVID-19 cases); nobody attended the public hearing and, likewise, no public comments were submitted.  Fast forward to June 11^th when, to the industry’s surprise, these Amendments were published.  Currently, the Amendments are scheduled to become effective on June 27, 2020, giving the industry just over two weeks to digest and implement the Amendments.

Overall, the Amendments will pose operational problems to industry members including new letter requirements, data processes, and record retention and reporting requirements.  While there are very few clear answers at the moment, this article seeks to move through the Amendments and raise pertinent issues which should be carefully considered when implementing the Amendments.

Putting aside issues this article cannot solve (like the undefined term “language preference” and the likely Due Process implications of rushing publication of the Amendments), the Amendments seek to standardize debt collectors’ abilities to note a consumer’s preferred language.  Specifically, debt collectors are now required to list not only the fact that the consumer has limited English proficiency, but also what other language that consumer prefers to English.  6 RCNY § 62-193(b)(5).  While some collection software has specific fields to denote whether a consumer speaks Spanish (being the most-common non-English spoken language in the United States), the software does not typically have the ability to denote languages other than Spanish.  The field may include an “other” option, but there is not a correlating free-form field where the consumer’s preferred language can be noted.

Notably, this information is required to be transferred when the account is transferred to another debt collector.  See 6 RCNY § 5-77(d)(19).  Since accounts are not typically transferred directly between debt collectors, this means debt buyers and original creditors must be able to both receive the information and provide it to the subsequent debt collector.  Thus, even if a debt collector is able to manipulate or re-code their debt collection software in such a way to contain the required information, can the recipient creditor or debt buyer even properly receive and then re-transmit that information?

The Amendment also includes new disclosures which debt collectors must include in their initial validation notice:

• “A statement informing the consumer of any language access services available, including whether the consumer may obtain from the debt collector a translation of any communication into a language other than English;
• “[A] statement that a translation and description of commonly-used debt collection terms is available in multiple languages on the Department’s website, nyc.gov/dca.”

6 RCNY § 5-77(f)(2)(vii) and (viii).

Since DCA does not prohibit having the disclosures on the back of the notice, we believe it would possible to include this information on the back.  If a debt collector chooses this option, it must remember to include the phrase “Please see the reverse for important information” (or something to that effect) on the front of the notice.  Unfortunately, however, the requirement of further disclosures is likely only to be lost in the sea disclosures already required, not only by DCA, but by New York and other states.

While the inclusion of these disclosures certainly will create operational hurdles, the larger implication is that the Amendments consider it is an “unfair practice” “after institution of debt collection procedures, collecting or attempting to collect a debt without first requesting and recording the language preference of such consumer.”  6 RCNY § 5-77(e)(9).   There are several problems with this Amendment.  First, “debt collection procedures” are specifically defined and mean, generally, that the creditor has either stopped sending periodic statements, taken or threatened legal action, or has accelerated the balance.  Based on the definition, does that mean that debt collectors must be able to comply with the Amendments prior to sending the initial validation notice?  Probably not.  In fact, the first point at which the debt collector can comply with the Amendment is likely in sending the initial validation notice.  Therefore, we recommend that the safest way to comply with this requirement is to add (another) statement in the initial validation notice requesting that the consumer provide their preferred language.  This may prompt a response (more likely it will not), but a debt collector must request it and this satisfies that requirement.  Of course, the Amendment says, “request and record”, but we are not sure how a debt collector can record a preferred language if the consumer does not tell you.

The larger implication is that when a debt collector speaks to a consumer for the first time, they will need to be trained to ask for the consumer’s preferred language and record it properly.  Of course, this only adds to the litany of requirements collectors correctly face before even attempting to collect a debt.  However, the Amendment is clear – the debt collector must collect and record the consumer’s preferred language before continuing with any debt collection activity.  Of course, once the preference has been recorded, this specific Amendment has been satisfied.

Once the debt collector requests, receives, and records the consumer’s preferred language, what should the debt collector do if the preferred language is not one in which the debt collector can communicate.  For instance, what if the preferred language is Tagalog and the debt collector does not have a Tagalog-speaking collector?  Or is unable to translate the letters into Tagalog?  Unfortunately, this probably means that debt collector cannot continue collecting and likely will need to close their file.

But, for the sake of argument, let’s say that preferred language is Spanish.  The debt collector is able to both communicate with the consumer in Spanish and provide Spanish notices and letters.  Great!  Now to burst that bubble, the Amendments say it is a “false or misleading representation” if a “false, inaccurate, or partial translation of any communication” is provided.  6 RCNY § 5-77(d)(18).  However, the DCA is not going to provide templates of translations, so it is up to the debt collector to “accurately” translate the information.  This could be burdensome to debt collectors because they will need to find someone who can accurately translate the information.  Furthermore, what if the person who is translating speaks a particular dialect (i.e. Spanish from Spain) such that the translation may be confusing to another speaker of the same language, but who speaks a different dialect (i.e. Spanish from Latin America)?  It is not a far stretch of the imagination to think that an enterprising consumer attorney will use such a discrepancy to file a lawsuit against the debt collector.

Furthermore, attorneys are considered “debt collectors”, whether these Amendments extend to litigation is unanswered.  Based on the ruling in Eric M. Berman, P.C. v. City of New York, 796 F.3d 171 (2d Cir. 2015), DCA does have the ability to regulate debt collectors, but the question of regulating litigation activity was unanswered.  The failure of the Amendments to provide an appropriate scope regarding the use of non-English languages may have put these Amendments on a collision course with debt collection law firms.

In addition to the new disclosures required on the initial validation notice, the Amendments also required debt collectors place the following two statements on their websites:

• “[A] statement informing the consumer of any language access services available, including whether the consumer may obtain from the debt collector a translation of any communication into a language other than English; and
• “[A] statement that a translation and description of commonly-used debt collection terms is available in multiple languages on the Department’s website, nyc.gov/dca.”

6 RCNY § 5-77(h).  From an operational perspective, a debt collector should easily be able to add these two statements to their website.  The Amendment does require that the statements be posted “clearly and conspicuously”, thus it would be recommended to include it on the front page of any website.  However, there are several problems with these two particular Amendments.

First, who must provide the language access services references in statement (1)?  Does the debt collector have to provide a list of languages to consumers or can the debt collector simply point the consumer to the language access services provided by the City?  Of course, this question walks right into the problem with the statement (2): DCA says it will provide “translation and description of commonly used debt collection terms” on its website.  However, as of the date of this article, DCA has yet to provide a timeline as to when such a glossary will be available.  Thus, debt collectors are possibly trapped – if they do not provide the required statements on their websites, they have violated the Amendment; but if the statement is provided, but the consumer goes to DCA and DCA has not published the list, has the debt collector now made a false and misleading statement?

The last requirement relies on the debt collector’s ability to maintain records of the number of consumer accounts where the debt collector attempted to collect a debt in a language other than English and the number of employees who attempted to collect on non-English accounts. See 6 RCNY § 2-193(c)(3).  The debt collector is required to keep this information because DCA will require it to file a report, annually, containing this information.  The form (which is not yet available) will be provided by DCA and made publicly available on its website.

While there are many unanswered questions regarding these Amendments, including whether the Amendments themselves were promulgated with the necessary levels of due process, debt collectors can begin to protect themselves by focusing on the low-hanging fruit:

□  Add the following statements to your initial validation notice:

□  “[A] statement informing the consumer of any language access services available, including whether the consumer may obtain from the debt collector a translation of any communication into a language other than English”;

□  “[A] statement that a translation and description of commonly-used debt collection terms is available in multiple languages” at www.nyc.gov/dca.

□  Update your collector scripts to include asking the consumer their preferred language prior to initiating any collection attempts.  Ideally such a question would be posed after validating the consumer’s identity, the call recording disclosure, and mini-Miranda warning.

□  Provide training to your collectors on the new script.

□  Update your company’s website to include the following statements, preferably on the front-page:

□   “[A] statement informing the consumer of any language access services available, including whether the consumer may obtain from the debt collector a translation of any communication into a language other than English”; and

□   “[A] statement that a translation and description of commonly-used debt collection terms is available in multiple langauges” at www.nyc.gov/dca.

The following Amendment requirements are items that may take longer to comply with, but a debt collector should begin investigating now:

□  Does the collection software allow for or can be altered to include a field that will mark both that the consumer is non-English proficient and what the consumer’s preferred language is?

□  How will your clients be supplying the debt collector with these language markers going forward?

□  Can your client receive the debt collector’s language markers?

□  An internal report by the debt collector to track both the number of accounts where the consumer was a non-English speaker and the number of employees who attempted to collect debts from non-English speakers.  (By creating and testing this type of report now, a debt collector will more easily be able to comply with DCA’s reporting requirement once it publishes the required form.)

The Amendments are likely subject to change as DCA has reportedly agreed to meet some industry members.  In the meantime, these Amendments remain on track for June 27, 2020, as an effective date for any debt collector collecting from consumers located within New York City.