When the CFPB introduced Reg F in late 2020, a lot of attention focused on the change in collector-debtor communication practices. A less discussed, but equally significant change is the increased oversight responsibilities creditors have when outsourcing collections. With the CFPB’s announcement about extending its supervisory authority to non-bank financial institutions, vendor management and auditing is increasingly becoming a priority for originators and lenders. As a result, for collection agencies, robust compliance management and reporting capabilities now represent a competitive advantage when marketing their services to creditors.  

For creditors and collectors alike,  Reg F oversight requirements create a new reality of shared compliance responsibility. In this post we discuss how servicers and creditors can better collaborate by using new tools that provide all parties with critical insights and generate the transparency and trust needed to succeed in a tightening regulatory climate. With the help of these tools, servicers can function as trusted compliance partners for creditors, instead of potential high-risk liabilities. They can also help growing ARM businesses minimize risk when contracting with 3rd parties.  

Easing the Oversight Burden

Reg F transforms the creditor-collection agency relationship equation by requiring close cooperation on compliance issues. But it also raises legitimate concerns about increased workload and financial burdens. For collections agencies, adding staff to extract data and compile reports might be near-impossible in times of declining ARM industry profits. Likewise, for creditors, the new oversight responsibilities also require increased documentation and audits that are resource-intensive.

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Advanced, AI-based compliance management platforms can ease the burden on all parties by automating many processes. In fact, they can transform the burden into benefit by providing insights and reports that are incisive and actionable as well as timely. They can help creditors and agencies develop more trusted relationships with their vendors, automate reporting, reduce risk and compliance management costs, and mitigate reputational and legal threats. 

The most valuable platforms cover the full operational spectrum, from monitoring, archiving and alerting through remediation, reporting and agent coaching. While many servicers have separate archiving, speech analytics, scoring or coaching systems in place, switching to an “all-in-one” solution can reduce risk of critical data being lost in transitions and eliminate manpower-intensive bridging of gaps between systems. They reduce the overhead involved in generating compliance health reports and provide 1st parties with the visibility they need into servicers’ operations and associated risks.  

What to look for in a compliance platform 

When selecting an end-to-end compliance management platform, make sure it comes with these 4 essential capabilities:

Comprehensive reports and audit trails 

New Reg F-mandated oversight responsibilities mean that vendor due diligence and regular audits will  be central elements of creditors’ compliance processes. In case of an external audit, seamless documentation of issue discovery, vendor communication, and remediation activity are a big plus. 

End-to-end compliance management platforms offer comprehensive activity documentation at a single access point. Servicers can easily provide creditors with the data they need, and enable them to track performance and improvements over time. Automated systems allow creditors and servicers alike to be audit-ready at all times, with violation and mitigation logs always current.

100% coverage

Traditional monitoring process sampling covers only a small percentage of interactions. Agencies and creditors may be unaware of misconduct that falls outside of the sample unless (or until) a complaint is filed or a regulator knocks on the door. 

Automated monitoring systems audit 100% of calls, providing a comprehensive picture of legal risks for collectors as well as for creditors. Multi-language capabilities represent an extra “bonus” since they can monitor and transcribe consumer interactions conducted in foreign languages such as Spanish or Chinese, and then automatically translate to English. 

Real-time risk monitoring

Traditional sampling and auditing methods not only fail to cover the entirety of consumer interactions, they also introduce substantial delays and gaps between the moment the violation has occurred and when it is detected and ultimately mitigated. Remediation is most effective when it’s provided immediately following the problematic event. If audit results are received only monthly – or even weekly – intensive monitoring and coaching will be likewise delayed, enabling poor practices to become further entrenched and exposing all parties to risk. By the time post-coaching performance is assessed, several weeks might have passed.

In contrast, AI-based, automated monitoring solutions flag violations as they occur, so that mitigation and agent coaching can be initiated immediately. With information regarding risks available as they emerge, stakeholders can act to protect themselves against costly litigation, potential fines and damage to their brands. Real-time monitoring and reporting can give creditors that “ear” to the ground that is usually not available when using 3rd party services.

Data privacy and security compliance 

Advanced platforms integrate data security and privacy guardrails to ensure full compliance with consumer data protection requirements. Features to look out for include automated PII redaction, out-of-the-box tools for data residency compliance, end-to-end encryption, SOC2, ISO 27001, and PCI compliance.

Looking ahead

Regulations and oversight responsibilities will continue to increase in the coming months and years. Investing in a plan and technology now, not later, will help your organization stay ahead of the curve. 

CINCINNATI, OH – Slovin & Associates, a Cincinnati-based law firm that provides clients with the personal, hands-on accessibility of a small law firm combined with the deep experience of industry veterans, is proud to support dozens of local artists through its new office. 

As Slovin began looking for ways to make its new office more engaging and inspiring, the team turned to local community artists to showcase their work. By displaying local artwork in the workplace, the team not only enhanced the office’s aesthetic appeal with interesting pieces that trigger conversations, inspiration, and positive community discussions but also supported those in the community working hard to make a living. 

“We didn’t want to go to TJ Maxx or Marshalls to buy corporate art to put in the office,” Slovin and Associates Partner Randy Slovin said during a Receivables Roundtable podcast with Receivables Info Founder Adam Parks. “We are going to work with emerging artists and display their work. We’ve acquired about a dozen pieces, and we want to have as many as 30 pieces of local art displayed in this office.” 

Supporting the Community

Slovin and Associates has long valued the impact its organization can make in the community. For decades, its founding partners have made donations to various charities, local hospitals, and other organizations looking to better the global community. Throughout the process of adding artwork to the office, Slovin has met with truly inspiring artists that will continue to make a difference both at the office and in the community. 

Slovin has commissioned additional artwork to fill the office and continues to support other local charities, including the New Life Furniture Bank, as they continue to look for ways to help wherever is needed. 

The New Life Furniture Bank

The New Life Furniture Bank partners with local social service agencies to provide full house furniture to families and individuals overcoming devastating circumstances, so they can start their new life with hope and dignity. At Slovin and Associates, the team realized the value of providing support to not only those afflicted by homelessness but also those who have found permanent housing and cannot afford to provide beds or supplies for their families. 

For Slovin’s 15th anniversary, the company participated in a program called Beds for Sleepy Heads to get kids off the floor and into a bed. Slovin helped purchase several truckloads of beds, nightstands, and lamps for children. The latest American Community Survey estimates that more than 89,000 kids in the Ohio, Indiana, and Kentucky areas are affected by child poverty, with many of them lacking a bed to sleep in. 

“Once they find housing, that’s not the end of it,” Slovin said. “We wanted to help them with something as simple as a bed.” 

Living With Change

Continuing with their support of at-risk children, Slovin and Associates supports their local Cincinnati Children’s Hospital whenever possible. Specifically, there is one program—Living With Change—that partner Randy Slovin holds close to his heart. The Living With Change center at the Cincinnati Children’s Hospital works to bring more resources, more professionals, and, ultimately, better outcomes for transgender youth and their families to the area. 

“That group of people are some of the most at-risk individuals in our society. We support that organization, and they do amazing work through the children’s hospital for education, psychiatrists, and helping the kids adjust at school,” Mr. Slovin said. 

Learn More Online

Slovin and Associates believes that supporting local communities is a vital part of its responsibility as a business. By investing in local charities, artists, and other community initiatives, the business helps to create a more vibrant and connected community. To learn more about what they do and how they help clients, consumers, and their community, visit their website at https://sclpa.com/. 

About Slovin & Associates, Co., LPA

Slovin & Associates, Co., LPAaims to achieve the highest rating for creditor’s rights law firms in Ohio, Kentucky, and Indiana by obtaining expeditious and cost-efficient results in a professional and low-maintenance environment for our clients in the fields of collections, commercial and consumer litigation, bankruptcy, leasing and landlord-tenant law, and Fair Debt consulting.

On May 8, the Maryland governor signed HB 686 to eliminate a requirement that collection agencies and certain non-depository financial institutions must maintain separate licenses for branch locations. The Act now allows such entities to conduct business at multiple licensed locations under a single license. 

The Act also amends and clarifies other provisions relating to application requirements, licensee information listed in the Nationwide Multi-State Licensing System and Registry, requirements when using trade names, examinations, Commissioner of Financial Regulation assessments, and surety bond requirements. The Act is effective July 1.

On May 4, the Colorado governor signed SB 23-093 to cap the interest rate on medical debt at three percent per year. The Act outlines numerous provisions, including that entities collecting on a medical debt must provide a consumer with a written copy of a payment plan within seven days for medical debt that is payable in four or more installments. 

The Act also outlines requirements for accelerating or declaring a payment plan longer operative, and lays out prohibited actions (such as collecting on a debt or reporting a debt to a consumer reporting agency within a certain timeframe) relating to medical debt that an entity knows, or reasonably should know, is under review or being appealed. An entity that files a legal action to collect a medical debt must provide to a consumer (upon written request) an itemized statement concerning the debt and must allow a consumer to dispute the debt’s validity after receiving the statement. 

Entities are prohibited from engaging in collection activities until the itemized statement is delivered. The Act outlines self-pay requirements and estimates, and further provides that it is a deceptive trade practice to violate outlined provisions relating to billing practices, surprise billing, and balance billing laws. The Act takes effect immediately and applies to contracts entered into after the effective date.

STERLING, Ill. — VeriFacts, a leading location and employment verification service provider, is proud to announce it is sponsoring the third annual Run for Brain Health on May 20. All proceeds from the run will be donated to the Sauk Valley Area National Alliance on Mental Illness (Nami), whose mission is dedicated to improving the quality of life for people with mental illness and their families through support, education, and advocacy. 

“This annual run was started by my best friend, Brenda,” VeriFacts’ Director of Business Development, Traci Oltmans, said. “Brenda works hard to bring awareness to mental health and end the stigma that follows. Countless others have joined in the cause. This third annual event is gearing up to be the biggest run yet. This event is near and dear to my heart, and I’m so happy the VeriFacts team is part of the event this year.” 

Run for Brain Health

For countless people suffering from anxiety, mental illness, and depression, running has become a stable form of focus and meditation. The annual Run for Brain Health event began as a way to focus both Brenda’s own anxiety and to fight for a good cause. Anyone is allowed to sign up for the event— running or walking the 5k race— and all proceeds from the event are dedicated to ending the stigma surrounding mental health.

To learn more about the race, or to donate toward this incredible cause, visit the Run for Brain Health webpage. 

Sauk Valley Area NAMI

The Sauk Valley Area NAMI is an organization that is dedicated to improving the quality of life for people with mental illness and their families. NAMI accomplishes this through education, support, and advocacy. With events held throughout the year and advocacy efforts in full force nationwide around the clock, NAMI works closely with families, consumers, professionals, veterans, students, and dozens of other affected individuals.

For those seeking help, NAMI even offers a helpline and referral service that can help those in desperate need of care. To reach the NAMI team, call (800) 950-NAMI. 

A Culture for Change

VeriFacts is a company firmly rooted within its community and takes great responsibility and commitment to giving back. VeriFacts is proud to have a team that works hard and also plays hard. Team members actively donate their time, energy, and financial resources to both local and national charitable organizations including the Salvation Army, Alzheimer’s Association, YMCA at Camp Benson, the YWCA in Sauk Valley, and countless other charitable organizations. 

About VeriFacts

VeriFacts, LLC is the top employment location and verification service for the receivables management industry. Having been in business for over 30 years, they are committed to offering guaranteed customer location and employment verification services to creditors across the nation. The VeriFacts brand has become synonymous with high-quality service and a positive customer experience. Over the years, their services have expanded into residential location information, data verification, and unique data aggregation. VeriFacts is proud to be a Certified Women-Owned Business by the WBENC.

In Casillas v. Thunderbird Collections Specialists Incorporated, et al., the plaintiff sustained a work-related injury requiring medical treatment for which a worker’s compensation claim was filed. Under state law, an injured worker who receives a workers’ compensation award is not legally responsible for medical bills covered by the award. Unaware of this law, a collection agency began efforts to recover the plaintiff’s unpaid medical bills, including engaging a law firm to file a collection suit.

After the collection suit was dismissed for lack of service, the plaintiff filed an action in Arizona federal court against the collection agency and its law firm for violations of the Fair Debt Collection Practices Act, 15 § USC 1692 et seq. (FDCPA), alleging that the defendants’ representations that the plaintiff was responsible for his medical bills, including the filing of the lawsuit, were false, deceptive, and misleading.

The collection agency made an offer of judgment, which the plaintiff accepted. The law firm then moved for summary judgment, but rather than disputing the violation, argued, in part, that the plaintiff was precluded from recovering against the law firm because the case arose out of a single FDCPA violation, for which the plaintiff had already received the $1,000 maximum statutory damages available from the collection agency.

The court disagreed, noting that while the defendants’ actions related to the same debt, the collection agency’s liability went beyond violations of the FDCPA and therefore its conduct was distinct from that of the law firm. Surveying decisions by other district courts on the issue, the court further concluded that, even assuming that the defendants’ actions were not independent of each other, § 1692k(a) “provides for statutory damages in the amount of $1,000 per defendant-debt collector.”

TAMPA, Fla. — OneTouch Direct, a global business process outsourcing company, has announced the appointment of Yvonne Torrijos as Chief Client Officer (CCO) of OTD Americas, its newest company subsidiary. Yvonne is a recognized industry leader with significant experience building long term client partnerships, developing innovative marketing and sales strategies, and driving strong revenue growth.

In the newly created Chief Client Officer role, Yvonne is responsible for global client management, ensuring clients a consistently exceptional experience integrated across the company. She will oversee all communications, marketing, and client business development for OTD Americas, with a focus on building long term client partnerships in new business verticals and services. 

“Yvonne’s strategic vision and extensive experience make her an excellent addition to OTD Americas’ leadership team,” said Chris Reed, OneTouch Direct’s Executive Vice President. “Her expertise cultivating high profile client relationships will be invaluable to OTD Americas’ growth and expansion.”      

With more than 30 years’ experience, Yvonne is known as the Client Champion, applying a cohesive approach across marketing, sales, client support, project launch and operations to deliver an integrated end-to-end customer experience across the organization and supporting the client goal for success. She will leverage her industry expertise to build long-term, strategic client partnerships, accelerating company growth and expansion.

“It is a privilege to take on this role at an exciting time in OTD Americas growth,” said Yvonne. “I joined OTD Americas because I could see the great potential in the Company to deliver true, sustaining value for our client partners and look forward to working with Toby and the senior management team to help lead the company to its next level of strategic growth.” 

To learn more about OTD Americas, you can reach Yvonne at yvonne.torrijos@otdamericas.com.

About OTD Americas

OTD Americas, the nearshore subsidiary arm for OneTouch Direct, provides full service contact solutions from state of the art centers in Colombia, Mexico, Asia, and Eastern Europe with the ability to build to suit upon client demand. As a contact center outsourcing company, OTD Americas offers integrated omni-channel customer engagement for customer service, collections, back office support, and custom technology solutions designed to drive exceptional customer interactions and enhance our clients’ brands. Partnering with leading global brands representing clients in Banking and Financial Services, Consumer Auto, FinTech, Healthcare, Insurance, Media, Retail and e-commerce, Technology, Telecom, and Utilities industries, OTD Americas is focused on facilitating our clients’ strategic growth with Class A workplace, leveraging exceptional employee attrition rates, and ensuring brand protection in a competitive unique cost benefit structure. Our global delivery model offers flexible onshore, nearshore, offshore, and WAHA service options spanning the US, Mexico, Colombia, Asia, and Eastern Europe. 

About OneTouch Direct

OneTouch Direct, parent company for OTD Americas, is a US based business process outsourcing company delivering best-in-class customer experiences (CX) for some of the world’s largest and most loved brands. Rooted in our passion and deep expertise, OneTouch Direct creates unified brand experiences that break the rules and foster meaningful relationships. For over 20 years, our people-centric, data driven outsourcing solutions have powered better revenues and profitability across the full customer life cycle. For more information visit https://www.onetouchdirect.com/.

WASHINGTON, DC — McGlinchey Stafford is pleased to announce that litigator Jonathan “Jon” Cornfield has joined McGlinchey as an associate in the firm’s Washington, D.C. office. Jon represents financial services institutions in litigation, commercial disputes, complex torts, and class actions at the state, federal, and appellate levels.

“I am pleased to welcome Jon to our D.C. office,” said Megan Ben’Ary, Managing Member of the firm’s Washington, D.C. office. “His strong background with all stages of litigation will enhance our robust financial services litigation team in D.C..” Jon is the second hire McGlinchey has made in D.C. in recent months. Member and veteran financial services compliance attorney Jim Milano joined the office in March.

Before joining McGlinchey, Jon represented a federal regulatory agency as outside counsel on claims involving broker-dealer and investment advisor requests for expungement of information from their registration records. 

“Jon’s commercial litigation and complex tort capabilities will be an asset to our team as we continue to provide clients nationwide with best-in-class financial services litigation services.” said Shaun RameyShaun Ramey co-chair of the firm’s Financial Services Litigation group.

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Jon received his J.D. with Honors from The George Washington University Law School in 2018. After graduation, Jon clerked for the Hon. William M. Jackson in the Superior Court of the District of Columbia, and previously interned with the U.S. Trade Representative’s Office of General Counsel, the U.S. Department of State’s American Foreign Service Association, and the U.S. Marshal Service’s Office of General Counsel. 

McGlinchey’s Financial Services Litigation group represents all manner of financial institutions including national and state-chartered banks, finance companies, mortgage lenders and servicers, credit card issuers, automobile lenders, student lenders, community banks, thrifts, credit unions, and insurance providers.  With over 65 attorneys licensed in 25 states and Washington D.C., Financial Services Litigation is the firm’s largest practice group. Since the beginning of 2022, the group has made 16 new attorney hires in 11 offices. 

About McGlinchey

McGlinchey Stafford is a premier midsized business law firm offering services in 30 practice areas through a highly integrated national platform. McGlinchey attorneys leverage bold innovation, diverse talent, and leading-edge technology across our powerful network to serve clients at the local, regional, and national level. With nearly 150 attorneys licensed in 32 states, McGlinchey operates from 17 offices nationwide. The firm currently has 18 attorneys and 12 practice areas recognized in Chambers U.S.A. 2022 and Chambers FinTech 2023, and 53 attorneys recognized by Best Lawyers, 40 attorneys recognized in various Super Lawyers rankings, 49 practice areas recognized by Best Law Firms, and was named a “Top Performer” by the Leadership Council for Legal Diversity (LCLD) since 2018. To learn more, visit www.mcglinchey.com.

Turning its sights to collections judgments, the Consumer Financial Protection Bureau (CFPB) recently published a blog post (Blog Post) to highlight its new Working Paper and report (Paper) analyzing collection judgments. The Paper addresses the racial distribution of collection judgments and the effect judgments have on consumers. Citing a suggestion by the National Consumer Law Center (NCLC), the Paper considers how increasing state and federal garnishment protections would affect consumers. It does not, however, discuss the impact a widespread change to garnishment exemptions would have on the overall financial ecosystem. 

The Blog Post

The April 26, 2023, Blog Post, drafted by CFPB economists, begins by including an anecdote about a consumer whose wages were garnished to satisfy a judgment.  While not including anything specific about this consumer’s case, the authors indicate that if the garnishment did not satisfy the judgment, the consumer might be garnished again.

The authors acknowledge there is limited data about civil judgments; however, they assert they have filled the data gap by studying credit bureau data and its relationship to wage garnishment laws. 

The Blog Post claims the Paper establishes the following new facts:  

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1. Civil Judgments are about twice as common as bankruptcies.
2. Civil Judgments are 20 times more common in some states than others. 
3. And Civil Judgments are more concentrated in areas with a higher percentage of Black Residents, even after adjusting for the rate of unpaid debts.

Though the Blog Post mentions, in passing, that there was a decline in suit rates in 2016 and that the 2020 pandemic caused a further decline, they use 2012 data to support the above findings. Referencing a chart that shows the 2012 judgment rate per 1000 people, the authors state they were surprised by the level of variance and opined, “[w]e find that states with more wage garnishment protections have fewer civil judgments. Further, we find that states with lower filing costs have far more civil judgments.”

Regarding racial distribution, citing the 2012 data, the authors indicate that “as an area’s share of Black residents increases, the incidence of civil judgments also goes up.” The authors claim their analysis and comparison of 90-day delinquency rates supports this finding. It does not appear the CFPB economists considered any other factors. 

The Blog Post concludes the way it started, referencing a single consumer’s experience with garnishment stating, “civil judgments can have a profound impact on people’s lives.”

The Paper

The 45-page paper, which serves as the basis for the Blog Post, includes the following notable statements, findings, and claims:

• Defendants in debt collection suits “frequently do not show up in court at all, possibly because they were never informed about the suit or thought it was a mistake” (Page 3)

• “Most people’s experience with the civil court system is courts enforcing a judgment against them, not helping them start anew” (Page 3)

• The “simple model of a profit maximizing creditor” shows why judgments are higher in some states than others (Page 4)

• “Around three-quarters of civil judgments were never ‘satisfied,’ suggesting that collection is a problem even with the force of the state.

• “Despite its importance as the primary legal recourse to collect consumer debts, relatively little is known about civil judgments. Yet judgments impose costs on defendants, courts, as well as employers and financial institutions who are ordered to help creditors garnish wages or seize assets.” (Page 7)

• References to suit filing rates are based on 2004 data that was analyzed in 2008. (Page 7)

• “Defendants rarely have representation and are often unaware of the civil litigation at all until their wages start being garnished.” (Page 7)

• An analysis of debt lawsuits in New York City Civil Court from 2006 – 2008 shows debt collection suits cluster in black neighborhoods. (Page 8)

• Based on a study with data gathered from 1994-2000, “greater wage garnishment is associated with a lower likelihood of credit card delinquency, but does not affect bankruptcy.” (Page 9)

• For its analysis, the authors pulled data from 2012, which contains archives for a sample of records going back to 2001. (Page 10)

• The NCLC’s Model Family Financial Protection Act proposes to quadruple current federal exemptions and is larger than any current state protections (except in states which do not allow garnishment). (Page 40)

• “Decreases in the amount garnishable also appear to decrease access to credit, suggesting an important public policy trade-off,” (Page 40)

The Paper does not address:

• Civil litigation and civil procedure outside of the collections context
• State laws, regulations, and procedure that impact collections
• The effect of the Fair Debt Collection Practices Act 
• Suit service rates

Finally, the list of resources included in the Paper includes several studies commissioned by consumer groups. No creditor, banking, credit bureau, debt buyer, or debt collection industry resources were cited. 

Questions submitted to the CFPB

On May 8, 2023 (6 days before publishing this article), I sent the CFPB a list of questions regarding the Paper and Blog Post, which included the following: 

• Who is the target audience for the working paper upon which the blog post is based? 

• Whether they consulted with debt collectors, creditors, or other accounts receivable management people or organizations for input, reports, studies, data, or sources? 

• Did the authors consider any factors which lead to lawsuits, such as why accounts are not settled somewhere between charge off and lawsuit?

• Regarding the age of the data: how are 2012 suit rates and 2017 credit reporting data relevant to 2023? What is the trajectory, and how do the authors know?

• Was there an attempt to obtain more recent data? 

• What is the factual basis for the sentences regarding consumers’ knowledge of the lawsuits against them and their experience with the civil court system?

• Were the effects of the 2020 pandemic studied, such as significant pauses to litigation? If so, why are these effects not mentioned in the report?

• How can the authors be sure their study is complete when a significant number of state courts are not online, and those that are online do not have a uniform reporting system?

• When discussing race, did the authors consider any other factors besides population? For example, litigation challenges like high court costs in certain jurisdictions?

• How does the NYC 2006-2008 study apply to the current trends? What was the racial makeup of NYC at that time? 

• Why does the statement which lists the adverse financial effects of garnishment omit the cost to the creditors?

• Did the authors consider that judgments are a basic part of legal civil procedure?

• What is the intended goal of publishing this Paper?

The CFPB did not provide a comment or response to these questions by the time this article was published. 

insideARM Perspective

Creditors and everyone in the ARM industry should be concerned by the Paper and Blog Post. Though the Paper’s goal was not explicitly stated, there is a clue. On Page 40, it references NCLC’s “Model Family Financial Protection Act” and points out that NCLC’s proposal more than quadruples current exemptions and is more than most states’ current garnishment protection. The authors explain the positive effect adopting this policy would have on consumers earning certain amounts. 

Though decreasing the stress on consumers is a worthy endeavor, the Paper and Blog Post are deeply flawed.

The collections world moves fast. The old (perhaps ancient?) data speaks for itself. The authors did not attempt to reconcile 2017, 2012, 2008, and in some cases 2003 data, to 2023. All of these dates precede Reg F and the pandemic which each had, and continue to have, a significant impact on the collection industry as a whole, including lawsuits and judgments. Though the authors did say in passing that their data set is limited, they did not discuss the effects of Reg F or the pandemic, or explain why either is irrelevant to their data and resulting conclusions.  

Further, several base facts concerning consumers and their involvement in legal proceedings are incorrect and cited in the Paper as “fact” without a data source. For example, the Paper states that consumers “frequently do not show up in court at all, possibly because they were never informed about the suit” and that  “Most people’s experience with the civil court system is courts enforcing a judgment against them.”

This simply isn’t true. This data is available and easily accessible with minimum effort.

To highlight the inaccuracy of these statements and the ease of gathering this information, I contacted a leading national process-serving company for some statistics about personal service (where a litigant is served directly with the lawsuit). Within two business days of my request, the process serving company confirmed that out of approximately half a million serves, 60% were personally served to the defendant (consumer).  The remainder were served via acceptable substitute service methods. 

Thus, contrary to the authors’ assertions, and without even delving into methods of substitute service, nearly two-thirds of consumers served with lawsuits filed against them are served by someone directly placing the lawsuit in their hands. In other words, consumers know about the lawsuits filed against them. What they choose to do with it after service is a different question. Had the CFPB chosen to connect with creditors and the debt collection industry before publishing the Paper, the authors could have verified their claims and removed these factually inaccurate statements.

Finally, although the authors considered access to credit, stating “decreases in the amount garnishable also appear to decrease access to credit, suggesting an important public policy trade-off,” (see page 40), they did not consider other unintended potential economic consequences that would result from a wide-spread change to garnishment laws. 

Collection agencies are a critical part of the financial ecosystem. They fill the gap between charge-offs and lawsuits. Though no one likes discussing past due debts, compliant collection agencies work with consumers to find ways to pay less than they owe, split their payments over time, or come up with other repayment options which original creditors don’t offer. 

If the CFPB is genuinely interested in stopping judgments, they should meet with creditors and the debt collection industry to learn why it’s so challenging to connect with consumers to discuss the resolution of their debt at the collection agency phase. They should look at the consequences and realities of collecting within the confines of a law as outdated as the FDCPA and the myriad other factors (like carriers blocking valid text messages) that are strangling lawful and compliant collection agencies and preventing them from resolving debt before lawsuits are filed. 

Everyone with a stake in the ARM industry should consider contacting their Federal Representatives (particularly if those congresspeople sit on the House Financial Services Committee) to express their concern with the CFPB’s deeply flawed “new” facts. Debt collection is an integral part of the financial ecosystem. Wide-spread changes based on incomplete and one-sided data will have dire unintended consequences. 

A Florida appellate court recently published a massively important opinion regarding text messages and standing.  

In Pet Supermarket v. Eldridge, No. 3D21-1174, (May 10. 2023), Florida’s Third District Court of Appeal confirmed that 

1. Florida state courts have the same Article III “concrete harm” limitations that federal courts have; 
   
2. Receipt of a text message in violation of a bare procedural right established by the TCPA does not create “concrete harm”; and 
3. Plaintiff failed to show any significant harm arose from receipt of a single text that it is “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency,” and therefore failed to show concrete harm from the text at issue.

You can read the ruling here: Eldridge

This is an incredibly important ruling on a couple of fronts.

First, and most basically, having a state appellate court confirm that concrete harm limits exists in state court is really important. Many states treat their courthouses as tribunals of “general” jurisdiction meaning they will hear any dispute regardless of whether any real harm resulted. Not in Florida. Only a violation of the law that has actually caused some meaningful harm is going to be heard–otherwise the case will be dismissed!

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Second, the finding that a violation of the TCPA does not trigger standing because the mere violation of a procedural protection cannot create “concrete harm” is a sneaky important ruling. I have said since the day after Spokeo was decided way back in 2016 that TCPA class actions were dead since a mere violation of the statute–without more–would never cause sufficient harm to afford standing. And while some unwanted texts might cause harm–such as where they cause someone to fall off a ladder– the regular old text message would not and certifying a class of ladder injuries would be impossible in these cases. Well the Edlridge court concurs–which is fabulous because so many district courts have gotten this issue deass wrong.

Third, the Eldridge court sets an incredibly high standard for substantive harm here. Nuisance or annoyance is not enough. Rather the Plaintiff needs to show some truly obnoxious conduct to have standing to sue. This last piece is a bit odd because standing is not the same as showing elements of a common law claim. So the idea that TCPA cases are not enforceable unless some common law claim could also be stated seems a bit… off. Still that appears to be the heart and soul of the Eldridge court’s holding:

We find that Eldridge’s receipt of one text message while at home, during the weekend, simply does not rise to the level of outrageousness required for an invasion of privacy, i.e., that it is “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency,” and therefore, Eldridge’s alleged statutory injury is not akin to Florida’s common law harm of intrusion upon seclusion.

Hmmm.

Again, not sure that’s the correct analysis– but it is super cool and very helpful for TCPA defendants in the state.

Bottom line: in Florida state court a mere violation of the TCPA is not enough to cause harm– and this may mean that the jurisdictional requirements in state court are actually now much HIGHER than in federal court. Wow!

The take away here is that good news just keeps pouring in for callers and texters in Florida. Not only has the FTSA been massively amended, the courthouse doors were just shut to most types of call and text cases. Remarkable change in just a few days!

We’ll keep an eye on all of this.