The pressure is off for collectors of debts owed by New Yorkers for now, under a New York City regulation that has been years in the making, and which has already seen its effective date postponed twice before. The New York City Department of Consumer and Worker Protection (DCWP) has announced that the effective date of its expansive new regulations—which were finally set to take effect October 1—have been postponed indefinitely.

The Final Rules

As Mayer Brown reported in December, the DCWP adopted a multitude of new practice requirements for debt collectors in 2024 (the “Final Rules”). Importantly, the adopted rules also included a definition of “debt collector” that appeared to reach first-party debt collectors—i.e., persons collecting their own debts on their own behalf. The Final Rules were originally set to take effect December 1, 2024, but were repeatedly postponed before taking effect. Most recently, the rules were set to take effect October 1, 2025, but the DCWP postponed them again over the summer—this time indefinitely. According to current public guidance, the DCWP “has not yet determined the new effective date of this rule.” The agency advised that it will provide a minimum of three months before these rules take effect.

The Proposed Rules

In the midst of all this, and as a response to it, the DCWP proposed additional amendments to clarify the definition of a debt collector in November 2024, and then revised them in March 2025 (“the Proposed Rules”). The comment period for the Proposed Rules closed June 10. While the Final Rules remain in limbo, the future of the Proposed Rules is unclear.

The Proposed Rules would amend substantive debt collection practice requirements in New York City relating to recordkeeping, unconscionable and deceptive trade practices, restrictions on time and frequency of communications with consumers, consumer consent to receive electronic communications, disclosures, time-barred debts, and other topics. The Proposed Rules also address the topic that has prompted the most consternation from the financial services industry: the definition of a “debt collector.” This definition had been amended previously under the Final Rules.

In response to stakeholders’ objections to the breadth of the “debt collector” definition adopted within the Final Rules, the Proposed Rules would narrow the definition somewhat to include only those persons engaged in certain acts “after the initiation of debt collection procedures.” Even when narrowed in this manner, the Proposed Rules would still define a debt collector to include first-party debt collectors in some circumstances. Specifically, the Proposed Rules would define a debt collector to mean:

Any person, including any natural person or organization, including a debt collection agency, who: (A) is engaged in any business the principal purpose of which is the collection of any debts, or (B) after the initiation of debt collection procedures, regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another person, or debts owed or due or asserted to be owed or due to the person collecting or attempting to collect the debts. (emphasis added)

A “debt collector” also includes debt buyers and creditors collecting their own debts while using fictitious names. “Debt collection procedures” are defined to mean any attempt to collect a debt after one of several indicia of delinquency or default has occurred. The Proposed Rules would also insert the “after the initiation of debt collection procedures” qualifier into several substantive practice provisions in the rules—e.g., relating to prohibitions on unconscionable and deceptive trade practices—so as to limit their applicability to activities conducted after the initiation of debt collection procedures, potentially providing a helpful exception for servicers of performing accounts and certain creditors.

Industry Response

Behind these delays is an ongoing fight between the financial services industry and the DCWP over the scope and substance of the rules. The DCWP stated publicly that it “has always intended that its rules apply to collectors collecting on their own debts,” a claim that some in the industry have taken issue with. Stakeholders, including financial services providers and industry groups, submitted comments to the DCWP objecting to both the postponed Final Rule and the pending Proposed Rule—particularly, the broad definitions of a debt collector in each—on a number of law- and policy-related bases.

Commenters argued that the DCWP’s decision to include first-party collectors in the new rules was unexpected and inconsistent with prior messaging, and that the rulemaking process is being conducted hastily without adequate time for public input. They claim that the short notice period provided by the DCWP—and the DCWP’s purported failure to consider conflicting laws and compliance costs for the Proposed Rules—violate NYC’s Administrative Procedure Act. Others commented that restrictions on call times and frequency in the new rules were unconstitutionally content-based, and that the rules are preempted by the federal Fair Debt Collection Practices Act (FDCPA), the National Bank Act, and New York state law. A trade group brought suit against New York City in response to the Final Rules, arguing they violated their members’ constitutional free speech and due process rights, but voluntarily dismissed the suit when the revised March 2025 Proposed Rules were published.

Some stakeholders argued that the DCWP’s concerns about abusive debt collection practices were largely inapplicable to creditors, or first-party collectors, who are already disincentivized from engaging in harassing communications with borrowers who are their current clients and may apply for additional credit in the future. They claim that the Proposed Rules would cause consumer confusion and illogical regulation by shoehorning a first-party debt collector definition into a regulatory regime originally intended to apply only to third-party collectors. Still others commented that the rules’ restrictions on electronic communications would be overly cumbersome and harmful to consumers, who largely prefer electronic communications over snail mail. Commenters also objected to the absence of an exemption for banks.

Takeaways

The DCWP’s indefinite delay of the implementation of the amended New York City debt collection rules could foreshadow additional revisions to the adopted Final Rules and the pending Proposed Rules to address industry concerns and clarify scope. Alternatively, the DCWP may be holding the Final Rules in abeyance until it can adopt a version of the Proposed Rules, with all amendments taking effect at once. Regardless, companies engaged in debt collection activities with New York City consumers should expect future developments that may affect their compliance burden in the jurisdiction.