NYC Proposes Updated Debt Collection Penalty Schedule Ahead of Expanded Rules Taking Effect
The New York City Department of Consumer and Worker Protection (DCWP) has proposed amendments to the city’s debt collection penalty schedule to align enforcement penalties with the agency’s recently adopted debt collection rules that take effect Sept. 1, 2026.
The proposal would revise the penalty schedule applicable to debt collectors operating in New York City and establish updated penalties tied to a broad range of compliance obligations, including validation notices, time-barred debt disclosures, medical debt requirements, public website obligations, record retention, and communication practices.
The public hearing is scheduled for June 1 at 11 a.m., with written comments due the same day.
Proposal Tied to Broader Debt Collection Rule Changes
According to the DCWP’s statement of basis and purpose, the proposed amendments are intended to “amend and update the penalty schedule for debt collectors to incorporate recent changes to the debt collector rules,” which were published Feb. 26, 2026, and become effective Sept. 1.
The department stated that the previously adopted debt collection rules added new requirements and modified existing obligations for debt collectors, prompting the need to revise the city’s penalty framework “to ensure accuracy and so that all potential violations are captured and included with relevant penalty amounts.”
Under the proposal, most first-time violations would carry penalties of $525 per violation. Second violations would generally increase to $1,050, while subsequent violations could reach $3,500.
The updated schedule would apply to alleged violations involving:
- Acquisition of location information
- Communications in connection with debt collection
- Harassment or abuse
- False, deceptive, or misleading representations
- Unfair or unconscionable collection practices
- Validation notice and debt verification requirements
- Public website obligations
- Time-barred debt requirements
- Medical debt requirements
- Record retention obligations
Time-Barred Debt Provision Removed and Replaced
The proposal would also eliminate an older penalty category tied specifically to the failure to provide certain statute of limitations disclosures. The removed provision, formerly listed under 6 RCNY § 2-191, carried penalties ranging from $750 to $1,000.
In its place, the city is incorporating broader “requirements for time-barred debts” under the revised rule structure contained in 6 RCNY § 5-77(i).
The revised framework reflects DCWP’s broader overhaul of debt collection regulations finalized earlier this year, which expanded compliance expectations for debt collectors operating in the city.
The proposal also renames the existing “Debt Collection Agency Penalty Schedule” to the “Debt Collection Penalty Schedule,” reflecting updated terminology within the city’s rules.
Compliance Pressure Likely to Increase Before September Effective Date
The proposed amendments signal that New York City regulators are preparing for active enforcement of the revised debt collection framework once the Sept. 1 effective date arrives.
For collection agencies, creditors, debt buyers, collection law firms, and compliance departments, the proposal highlights the need to review operational procedures before the new rules become enforceable. Areas likely to draw heightened scrutiny include consumer communications, disclosures related to time-barred debt, website compliance, documentation practices, and handling of medical debt accounts.
The notice also states that the Mayor’s Office of Operations determined the proposal would not include a cure period because “a cure period is not practicable under the circumstances.”
DCWP cited Sections 1043 and 2203(f) of the New York City Charter, along with Sections 20-104(b), 20-493(a), and 20-702 of the New York City Administrative Code, as authority for the proposed amendments.
