A recent opinion issued by the Tenth Circuit serves as further confirmation that plaintiffs bringing Fair Debt Collection Practices Act (FDCPA) claims in federal court must allege sufficient concrete injury — tangible or intangible — to confer Article III standing. The holding also underscores that FDCPA claims predicated on disclosure of debtor information to third parties must be public. A debt collector’s limited, private disclosure to its mailing vendor does not suffice.

The plaintiff’s allegations in Shields v. Professional Bureau of Collections of Maryland, Inc., focused on three letters she received from the defendant in July and August 2019 seeking payment on her outstanding student loan debt. Each letter contained the balance at the time the debt was assigned to the defendant as well as the balance owed as of the date of the mailing, the latter being substantially higher. According to the plaintiff, each of the letters failed to explain the differing amounts and failed to inform her that her debt could potentially increase due to fees, interest, and other charges. In addition to the allegedly misleading substance, the plaintiff claimed that the defendant’s disclosure of her debt to its mailing vendor violated FDCPA provisions prohibiting public disclosure of debtor information.

Based on these allegations, the plaintiff filed suit in the U.S. District Court for the District of Kansas in April 2020. The defendant moved to dismiss on the grounds that the complaint failed to allege concrete injury sufficient to confer Article III standing. In response, the plaintiff submitted a declaration attempting to bolster her allegations of harm and a proposed amended complaint alleging the same.

Treating the defendant’s motion as a facial challenge to subject matter jurisdiction, the district court refused to consider the supplemental declaration and dismissed the case without prejudice for lack of subject matter jurisdiction. The plaintiff moved for reconsideration and to reopen the case based on the allegations in her proposed amended complaint, which the district court denied. On appeal, the plaintiff argued that the defendant harmed her in two distinct ways sufficient to confer Article III standing: (1) by wrongfully disclosing her debt to its mailing vendor, and (2) by including misleading and/or confusing information as to the amount of debt owed. The Tenth Circuit rejected both arguments.

As to the plaintiff’s alleged “disclosure injury,” the Tenth Circuit, citing to Hunstein III discussed here, held that the limited disclosure of the plaintiff’s debt to a mailing vendor did not implicate the kind of intangible harm redressable at common law. While a debt collector’s “use of billboards to publicly shame a private citizen into paying his debt” would qualify as actionable public disclosure under the FDCPA, the plaintiff’s “alleged harm was that one private entity (and, presumably, some of its employees) knew of the debt.” The latter is “not the same kind of harm as public disclosure of private facts, which is concerned with highly offensive information being widely known.”

The plaintiff’s other claimed injury — her purported confusion as to the amount of debt owed — met a similar fate. First, because the defendant’s motion was construed as a facial challenge to subject matter jurisdiction — one based solely on the allegations in the pleadings — the appellate court held that the district court did not err in refusing to consider the plaintiff’s declaration in opposition. Confined to the allegations in the complaint, the Tenth Circuit determined that the plaintiff failed to allege that the letters “caused her to do anything.” Absent allegations of reliance, the appellate court held the plaintiff’s “confusion and misunderstanding . . . insufficient to confer standing” under the standard set by the Supreme Court in Transunion LLC v. Ramirez.

Troutman Pepper’s Take:

The Tenth Circuit’s opinion in Shields is one more nail in the coffin of mailer-vendor FDCPA claims, and further reinforces that aggrieved plaintiffs bringing suit in federal court under the FDCPA must allege concrete injury to meet Article III standing requirements.

LENEXA, Kan. — One True Holding Company d/b/a/ TrueML, a financial technology software company developing machine learning-driven products that enable intelligent, digital communication in the financial services space, today announced that Thomas Overton will join as Chief Technology Officer.

TrueML develops software using patented machine learning technology to create a digital-first process that aligns with consumer communication preferences. As a mission-driven company, TrueML aims to bring solutions to the marketplace that redefine how creditors and consumers engage in debt collection. 

TrueML’s mission is supported by data scientists, financial services industry experts and customer experience enthusiasts collectively building technology to serve people in a digital-first way by recognizing their unique needs and preferences as human beings and endeavoring toward ensuring nobody gets locked out of the financial system. 

“I am excited to join an organization driven to change the way an ages-old industry functions through digital innovation,” said Overton. “Technology is at the heart of TrueML and machine learning is a key aspect of the company’s overall growth strategy. The data scientists and engineers are incredibly talented and take the opportunity to produce a meaningful impact on the customer experience very seriously. I look forward to working with and empowering this team to deliver a world-class technology platform that gives consumers agency over their financial health.”

With 25 years of experience in the technology space and a background as a full stack engineer and architect, Overton brings a broad range of skills from leadership, operational excellence, and scalable architecture to data governance and regulatory compliance. Overton most recently served as CTO and acting CISO at Crunchyroll as part of Sony where he directed technology strategy, guided architectural design, and ensured secure and compliant operations for the company’s portfolio of cloud-hosted OTT, E-commerce, and game services. In 2018, he facilitated the acquisition of Crunchyroll by WarnerMedia, and in 2021 operated in a leading role to successfully complete Sony’s acquisition of Crunchyroll for ~$1.2 billion. Previously, Overton’s unique media and tech background led his path through systems engineering, data center build outs, color science, software development for B2B and B2C products, running an R&D division, and eventually leading product and engineering teams.

“At TrueML, we are building digital solutions to real problems, and the pace of innovation is high. We expect significant continued growth in 2023, and having experienced leadership for this focus area is critical to ensure that what we’re building is not only effective and sustainable, but also compliant and scalable,” said Steve Carlson, President of TrueML. “I’m confident that Thomas’ leadership and technical expertise will support our business goals and, as a result, our mission to deliver industry-leading software that will transform the experiences of millions more financially distressed consumers in the coming years.”

To learn more about TrueML, its subsidiaries and their products, visit www.TrueML.co, and follow on social media @TrueMLco.

About TrueML

TrueML is a software company developing machine learning-driven products that prioritize customer experience and revolutionize the experience of consumers seeking financial health. The mission-driven team of data scientists, financial services industry experts and customer experience fanatics are building technology to serve people in a way that recognizes their unique needs and preferences as human beings and endeavoring toward ensuring nobody gets locked out of the financial system. 

The CFPB has published its Fall 2022 rulemaking agenda as part of the Fall 2022 Unified Agenda of Federal Regulatory and Deregulatory Actions.  The agenda’s preamble indicates that “[t]he Bureau reasonably anticipates having the regulatory matters identified [in the agenda] under consideration during the period from December 1, 2022 to November 30, 2023.”

The new agenda includes 6 new active rulemakings that did not appear on the Spring 2022 agenda.  Perhaps some possible “good news” here is that Director Chopra is listening to calls for him to use notice-and-comment rulemaking (including revisions to Official Staff Commentaries) to further his priorities instead of relying primarily on supervision and enforcement as well as a potpourri of other methods that lack the transparency and predictability of rulemaking.  While the agenda does not include any “larger participant” rulemaking, the CFPB is currently considering petitions urging it to engage in rulemaking to define larger participants in the market for personal loans and in the market for data aggregation services.  Other potential areas of rulemaking not included in the agenda are buy-now-later, earned wage access, and liability for peer-to-peer payment fraud.

The six new agenda items are:

• Registration of nonbanks subject to certain enforcement orders.  In December 2022, the CFPB issued a notice of proposed rulemaking (NPRM) released a proposed rule that would require certain “covered nonbanks” to register with and submit information to the CFPB when they become subject to certain orders from local, state, or federal agencies and courts involving violations of certain consumer protection laws.  The Bureau provides no estimated dates for further action on the NPRM.

• Registration of nonbanks regarding standard form contract terms and conditions.  The agenda item indicates that the CFPB is developing a proposed rule that would require supervised nonbanks to register with the Bureau and provide information about their use of certain terms and conditions in standard-form contracts.  The proposed rule would be focused on collecting information on non-negotiable standard terms or terms that are not prominently advertised in marketing.  Based on media reports about remarks given by Director Chopra at a September 2022 event, it appears that “forced” arbitration provisions are among the types of non-negotiated consumer contract terms that the CFPB has in mind.  With the Bureau designating the rulemaking to be in the “proposed rule stage” and giving a December 2022 estimate for issuance of a NPRM, it would appear that issuance of a NPRM is imminent. 

• Overdraft fees.  The agenda item indicates that the CFPB is considering whether to propose amendments to the Regulation Z overdraft rules.  Although the CFPB has continued to make overdrafts a supervisory focus under Director Chopra and he has warned that overdraft practices can result in UDAAP violations, the CFPB has previously been silent on whether it planned to engage in rulemaking on overdrafts.  The Bureau designates the rulemaking to be in the “prerule stage” and estimates pre-rule activity in November 2023.  (In the preamble, the CFPB indicates that it uses the November 2023 date for further activity on prerule stage items as a placeholder.)

• Fees for insufficient funds.  The agenda item indicates that the Bureau is considering new rules regarding NSF fees (but notes that lately some financial institutions have stopped charging NSF fees.)  Like overdraft fees, the CFPB has continued to make NSF fees a focus under Director Chopra but has not previously indicated that it planned to engage in rulemaking on NSF fees.  The Bureau designates the rulemaking to be in the “prerule stage” and estimates pre-rule activity in November 2023. 

• Credit card penalty fees.  The agenda item indicates that the CFPB is considering whether to propose amendments to the Regulation Z rules on credit card penalty fees that implement the CARD Act, including the penalty fees safe harbors.  In June 2022, the CFPB issued an ANPR regarding credit card late fees.  As the CFPB gives a January 2023 estimate for issuance of an NPRM, it would appear that issuance of a proposed rule on credit card penalty fees is also imminent.  An annual inflation adjustment for 2023 to the Regulation Z credit card safe harbor amounts was conspicuously missing from the other annual TILA adjustments announced by the CFPB in late December (which, in our view, represented an inexcusable delay).  Because no adjustments for 2023 were announced, the 2022 safe harbor amounts remain in effect.  The CFPB’s addition of rulemaking on credit card penalty fees to the new agenda supports our suspicion that the CFPB’s delay in announcing the 2023 adjustments was tied to the ANPR.

• Fair Credit Reporting Act rulemaking.  The agenda item indicates only that the Bureau is considering whether to amend Regulation V (which implements portions of the FCRA).  The Bureau designates the rulemaking to be in the “prerule stage” and provides no estimated dates for further rulemaking action.  The CFPB’s press release earlier this week about its annual report on consumer complaints submitted to the CFPB regarding Equifax, Experian, and TransUnion includes a statement from Director Chopra indicating that the CFPB “will be exploring new rules to ensure that the [three companies] are following the law, rather than cutting corners to fuel their profit model.”  We are not aware of any other statements from Director Chopra that shed light on the nature of the new rules he has in mind.  The Bureau designates the FCRA rulemaking to be in the “prerule stage” and estimates pre-rule activity in November 2023. 

As the agenda correctly indicates, this is the first time that the two nonbank registration rulemakings and the credit card penalty fees rulemaking have been included in the CFPB’s rulemaking agenda (which means although now designated as “proposed rule stage” items, the two nonbank registration rulemakings were never included in prior agendas as a “prerule stage” item or a long-term action).  The agenda incorrectly indicates that this is the first time that an overdrafts rulemaking has been included in the CFPB’s rulemaking agenda.  An overdraft fees rulemaking was previously designated as a “prerule stage” item in the CFPB’s rulemaking agendas under former Director Cordray.  In the CFPB’s Spring 2018 rulemaking agenda issued under former Acting Director Mulvaney, it was designated as an “inactive” item.” 

The four agenda items that previously appeared on the Spring 2022 agenda are:

• Small Business Lending Data.  Section 1071 of Dodd-Frank amended the ECOA, subject to rules to be adopted by the Bureau, to require financial institutions to collect and report certain data in connection with credit applications made by small businesses, including women- or minority-owned small businesses.  The Bureau issued a NPRM in August 2021 and the comment period ended on January 6, 2022.  The Bureau estimates issuance of a final rule in January 2023 (which would be in advance of the court-ordered March 31, 2023 deadline for issuing a final rule). 

• Personal Financial Data Rights (previously titled “Consumer Access to Financial Information”).  Section 1033 of Dodd-Frank addresses consumers’ rights to access information about their own financial accounts, and permits the CFPB to prescribe rules concerning how a provider of consumer financial products or services must make a consumer’s account information available to him or her, “including information related to any transaction, or series of transactions, to the account including costs, charges, and usage data.”  In November 2016, the Bureau issued a request for information  about market practices related to consumer access to financial information and, after holding a symposium in February 2020, the Bureau issued an ANPR in connection with its Section 1033 rulemaking in November 2020 and issued a SBREFA outline in October 2022.  The CFPB estimates that it will issue a SBREFA report in February 2023.

• Amendments to FIRREA Concerning Automated Valuation Models.  The Bureau is participating in interagency rulemaking with the Federal Reserve, OCC, FDIC, NCUA and FHFA to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) concerning appraisals.  The FIRREA amendments require implementing regulations for quality control standards for automated valuation models.  The Bureau released a SBREFA outline in February 2022 and a SBREFA report in May 2022.  It estimates that the agencies will issue a NPRM in March 2023.

• Property Assessed Clean Energy Financing.  In March 2019, the CFPB issued an ANPR to extend TILA ability-to-repay requirements to Property Assessed Clean Energy transactions.  The Bureau gives an April 2023 estimate for issuance of a NPRM.

So you might recall a few months ago there was a new bill introduced to expand the TCPA’s ATDS definition. My sources told me it was going nowhere. I told you it was going nowhere. And it went nowhere.

Well now, FCC Chairwoman Jessica Rosenworcel just leaned in and requested a pack of Senators to look into doing precisely what the new bill would have accomplished–expanding the ATDS definition anew:

Fix the definition of autodialer: Because robotexts are neither prerecorded nor artificial voice calls, the Telephone Consumer Protection Act (TCPA) only provides consumers protection from robotexts if they are sent from autodialers. Last year’s Supreme Court decision, Facebook v. Duguid, narrowed the definition of autodialer under the TCPA, resulting in the law only covering equipment that generates numbers randomly and sequentially. Consequently, equipment that simply uses lists to generate robotexts means that fewer robotexts may be subject to TCPA protections, and as a result, this decision may be responsible for the rise in robotexts over the past year.

Hmmm…

The letter also brags about the FCC’s efforts to combat robocalls. You can read it here: FCC Letter

Obviously expanding the TCPA’s autodialer definiton is the wrong fix here. The TCPA is simply not an effective tool to combat robocalls–never was, never will be.  While R.E.A.C.H. promise to do what the TCPA cannot–stop up to a billion unwanted calls a month!–the unconstitutional TCPA should be put out to pasture completely.

And I already gave Congress the alternative the nation needs (in this post). Will anyone listen?

ROCKVILLE, Md. — The Consumer Relations Consortium (CRC) is pleased to announce its Legal Advisory Board (LAB) members for 2023. The LAB is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB is limited to ten law firms and is comprised of fourteen total attorneys. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.

Meet the 2023 LAB Members:

John Bedard – Bedard Law Group 

John is an AV-rated attorney and nationally recognized authority on the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. He serves as counsel to several professional trade associations, including the Georgia Collectors Association. John’s practice involves the defense of FDCPA claims, compliance audits, and creating solutions for ARM industry participants such as BLG 360, BLG Insight, and his newest offering, BLG Call Count. As a member of the 2022 LAB,  John co-authored comments to the Federal Trade Commission regarding its proposed rule to crack down on commercial surveillance.

Jedd Bellman – Buckley

Jedd assists banks, mortgage companies, auto lenders, debt collectors, money services businesses, and fintechs on a variety of licensing, regulatory, and enforcement matters, bringing a wealth of consumer financial services experience gleaned from more than a decade in government service. Prior to joining Buckley, Jedd was the Assistant Commissioner for Non-Depository Supervision in the Office of the Maryland Commissioner of Financial Regulation, where he coordinated the licensing and supervision of approximately 23,000 individuals and business entities, covering the mortgage, student loan, consumer finance, sales finance, debt services, credit reporting, and money services industries. He also managed the office’s regulatory investigations and enforcement actions, including playing a leadership role in every significant multistate enforcement matter handled by state regulators during his tenure. 

Jonathan P. Floyd – Troutman Pepper

Jonathan’s practice includes counseling to help businesses navigate and litigate the myriad consumer and financial services laws, with a particular emphasis on federal consumer protection statutes, such as the Fair Debt Collection Practices Act (FDCPA), Telephone Consumer Protection Act (TCPA), and Fair Credit Reporting Act (FCRA). He provides ongoing analysis and commentary on developments in the consumer financial services industry, with a focus on credit card lenders, through the Consumer Financial Services Law Monitor blog.

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Stefanie Jackman– Troutman Pepper

Helping her clients navigate trying and complex issues, Stefanie Jackman is a zealous and untiring advocate. Stefanie brings her experience and knowledge to bear when assisting clients with compliance counseling and assessments relating to consumer products and services, guiding them through state and federal government inquiries and investigations, and defending them in individual and class action lawsuits. Her clients are represented in almost all sectors of the financial services industry, including banks and nonbank lenders and servicers, student loans, debt collectors and buyers, third-party service providers, healthcare and medical revenue cycle service providers, credit and prepaid card companies, direct and indirect auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws (UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA). As a member of the 2022 LAB, Stefanie co-authored comments to the California Department of Financial Institution’s proposed data retention regulations.  Much or her thought leadership and analysis of relevant legal issues can be found on her Firm’s practice blog, the Consumer Financial Services Law Monitor.

Aylix Jensen –Moss & Barnett

Aylix practices in the areas of compliance and litigation relating to the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), and additional federal and state laws and regulations. She provides insight and analysis regarding current legal issues on her blog, The Safe Harbor. 

Jessica Klander – Bassford Remele

Jessica defends businesses and professionals against liability and malpractice claims in the consumer law defense, professional liability, and general liability arenas. Also experienced in complex litigation, employment law, non-compete disputes, and class action lawsuits, she regularly represents clients in both state and federal courts across the United States. She defends creditors and credit professionals against federal consumer statute and liability claims, performs compliance audits and trainings, and consults with creditors and credit professionals on commonsense compliance with the FDCPA, FCRA, TCPA, TILA, and applicable state laws. As a member of the LAB, Jessica co-authored the CRC’s Amicus Brief in the Hunstein matter in 2021. 

Joann Needleman – Clark Hill

Joann leads the firm’s financial services regulatory and compliance practice and advises banks, financial institutions, and financial services entities on regulatory compliance matters. She prepares and represents these same financial institutions during state and federal supervisory examinations and regulatory investigations before agencies such as the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and the Office of the Comptroller of Currency (OCC) as well as state financial services regulators and attorneys general. A former member of the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board, Joann provides her clients with useful strategies and common-sense solutions in order to prepare for areas of regulatory scrutiny. Joann is the host of the podcast “Credit Ecosystem to Go: Curbside Thought Leadership for Financial Services.” Listen to recent episodes here. As a member of the 2022 LAB, Joann co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules, the California Department of Financial Protection and Innovation  (DFPI) regarding its proposed consumer complaint and inquiry regulations, and the DFPI’s proposed data retention regulations 

Justin Penn – Hinshaw & Culbertson

Justin defends the interests of companies and individuals in the financial services industry in jurisdictions across the country. Justin is the co-chair of the firm’s Consumer Financial Services Practice Group. His extensive experience includes handling state and federal consumer statute litigation, including claims involving the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act (FACTA), False Claims Act (FCA), Telephone Consumer Protection Act (TCPA); and the Truth in Lending Act (TILA). He also advises corporations and professionals in professional liability and employment-related litigation.

Abigail Pressler – Ballard Spahr

Abigail focuses her practice on consumer finance law and regulatory compliance. She has extensive experience assisting clients with federal and state regulatory investigations and enforcement actions, as well as auditing and advising domestic and international clients on regulatory compliance, policies and procedures, and multi-jurisdiction litigation strategies. Abigail also works with clients prior to regulator examinations by drafting responses to regulators’ requests and preparing executives to testify. She provides timely analysis and insight in the Ballard Spahr Consumer Finance Monitor. As a member of the 2022 LAB, Abigail co-authored comments to the Federal Communication Commission regarding its proposed rule targeting unlawful text messages, comments to the New York City Department of Consumer and Worker Protection regarding a proposal to require direct consent for text messages, and comments to the Federal Trade Commission regarding its proposed rule to crack down on commercial surveillance.

John Rossman – Moss and Barnett, P.A.

In his national practice dedicated to the financial services industry, John has shaped the law in numerous landmark cases that preserved and expanded the rights of financial services companies, including national banks, automobile lenders, fintech companies, collection agencies, debt buyers, mortgage lenders, creditors, and fellow lawyers. He advises and counsels financial services industry clients on regulatory compliance, defends them in claims and litigation, and advises them on best practices to prevent legal action. John also helps creditors navigate the Bankruptcy Code and courts and represents them to secure payments and collateral, make determinations for future services, and minimize preference liability. He provides timely insight analysis through the  Debt Collection Drill series on YouTube. As a member of the 2022 LAB, John co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules, and comments to the Federal Trade Commission regarding its proposed rule to crack down on commercial surveillance.

David Schultz – Hinshaw and Culbertson

David defends Fortune 500 companies, debt buyers, debt collection agencies, lawyers, lending institutions, and others in consumer litigation, and counsels organizations throughout the consumer financial services industry on risk management. He has been lead counsel in more than 250 class-action lawsuits involving claims brought under various state and federal consumer laws, including the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Telephone Consumer Protection Act (TCPA), the Illinois Biometric Information Privacy Act (BIPA), and the Chicago Residential Landlord and Tenant Ordinance (CRLTO).  He also represents individuals and businesses in dozens of regulatory matters, including before the CFPB, FTC, Illinois Department of Financial and Professional Regulation (IDFPR), Illinois Attorney General, as well as other state and city regulators and Attorneys General.

Jim Schultz –  Sessions, Israel & Shartle

Jim’s primary role is to co-manage the firm’s consumer defense practice group, defending creditors, debt buyers and debt collectors in cases brought under various federal and state consumer protection laws, such as the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act. As part of the firm’s national reach, Jim is admitted to state and federal courts across the country, working to create consistent and uniform application of the ever-evolving consumer protection statutes so that his clients know the rules. Jim also works with these clients to stay current on regulatory and litigation trends to stay on the leading edge of compliance. As a member of the 2022 LAB, Jim co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules. 

Libby Shaffer – Dinsmore & Shohl

Known for her responsiveness to clients and her ability to resolve cases early with her writing skills, Libby focuses her practice on defending clients against allegations relating to the Fair Debt Collection Practices Act, Fair Credit Reporting Act, the Electronic Fund Transfer Act, Regulation E, and related state consumer protection laws. She works with some of the nation’s largest debt buyers, debt collectors, and collection counsel throughout the country, defending and resolving class actions in federal and state consumer protection matters. She represents several of the country’s largest prepaid debit card issuers and program managers and served as national coordinating counsel for one of the nation’s largest debt buyers, working with the general counsel to develop and implement the defense of cases throughout the country.  Libby has successfully resolved and prevailed in hundreds of arbitrations alleging violations of the Electronic Fund Transfer Act and Regulation E pertaining to alleged unauthorized transactions, improper holds, system outages, and delays in the posting of ACH transactions to prepaid debit cards.  Libby also routinely represents clients in mass volume arbitrations filed with the American Arbitration Association.

Bryan C. Shartle –  Sessions, Israel & Shartle

Bryan is one of the two managing partners of Sessions, Israel, & Shartle and assists in the management of the firm’s 10 offices. He specializes in representing collection agencies, debt buyers, student loan servicers, banks, credit issuers, financial institutions, and telemarketers. He assists clients with compliance, regulatory, bankruptcy, and licensing issues, has represented clients in CFPB readiness assessments and enforcement actions, and is familiar with many of the employment issues affecting the collection industry. Bryan has extensive experience in consumer litigation, including claims under the FDCPA, the TCPA, the FCRA, and the myriad of state consumer laws. He has been the lead attorney in several landmark decisions involving the collection industry and has special expertise in complex litigation and consumer class actions.

————

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

Learn more at www.crconsortium.org.

Just a few years ago, the annual review would primarily encompass federal activity. But a shift began in 2018, and by the close of 2022, it’s clear there is far more state activity impacting consumer debt collection.

The CFPB has reverted to its old form of issuing circulars and reports and engaging in regulation by enforcement. But it didn’t move the ball nearly at all compared to what was done at the state level.

And so here we will look at one federal regulation (which is not “new” but was still impactful) and 21 state and local laws and regulations that are game changers.

Federal Activity

Regulation of the Year – Safeguards Rule Amendments

Last year I pegged the Federal Trade Commission’s amendments to the Safeguards Rule as the “dark horse” to watch in 2022. By July, it was apparent that the Dec. 9 compliance date was going to be difficult for many, and the FTC ultimately extended the compliance date to June 9, 2023. As various trade groups pushed for a delay, the Consumer Financial Protection Bureau issued a circular reminding covered entities that regardless of the Safeguards Rule, it has its own expectations for consumer data protection. Those expectations remain very fluid.

Case Law of the Year – Bibbs v. Trans Union LLC (3rd Cir. Aug. 8, 2022)

When originating creditors sell charged-off accounts, it is not uncommon to furnish information to a credit reporting agency noting that the account had a delinquent “pay status,” was closed, transferred to another entity, and has a $0 balance.

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The practice has faced several challenges under the Fair Credit Reporting Act, usually on the claim that the consumer could not have a delinquent account if there is no present relationship with the creditor who furnished the information. Continuing to report a delinquent pay status allegedly misleads persons who review the consumer’s credit report. The argument focuses solely on the “pay status” and ignores notations that the account was sold or transferred to another entity.

The Bibbs decision applied a “reasonable reader standard reading the report in its entirety.” Using this standard, the court wrote, revealed multiple indicia that the account’s pay status was historical and did not reflect its present status. The court noted multiple conspicuous statements reflecting that the accounts were closed and the appellants had no financial obligations. These statements do not conflict with the “pay status” notations, the court concluded, because a reasonable interpretation of the reports, when read in their entirety, is that the pay status of a closed account is historical information.

Courts outside the Third Circuit rely on Bibbs to dismiss similar claims, including a federal court in the Eastern District of Texas (Palomo v. Trans Union, LLC). Bibbs has also impacted similar lawsuits brought against furnishers, leading to dismissals in federal courts of the Northern District of Illinois (Frazier v. Dovenmuehle Mortg., Inc.) and Arizona (Sanchez v. JPMorgan Chase Bank, NA).

Going Out With a Whimper – Hunstein v. Preferred Collection and Management Services, Inc. (11th Cir., Sep. 8, 2022)

Hunstein, last year’s disrupter, ended with a whimper on Sept. 8 when the U.S. Court of Appeals for the Eleventh Circuit, sitting en banc, found that a consumer did not identify a concrete harm sufficient to allow him to bring a federal complaint alleging a violation of the federal Fair Debt Collection Practices Act.

The complaint alleged that when a debt collector supplied its letter vendor with consumer information needed to print and send a dunning letter, it violated the FDCPA’s prohibition against third-party disclosure.

While the decision put a significant damper on several similar lawsuits pending in both federal and state courts, the ultimate question of whether a debt collector violates 15 U.S.C. 1692c(b) when using a third party to print and send its dunning letters was never decided.

State Activity

State and local governments continued to regulate debt collection activity, but this year, a new twist was a successful ballot measure curtailing debt collection activity. As has been the case over the past two years, these measures focus primarily on judgment executions, reductions in limitation periods, and regulation of medical and student loan debt collection. Much of this compilation comes from my work for the Receivables Management Association International. I thank its Executive Director, Jan Stieger, and General Counsel, David Reid, for allowing me to share it with you.

Arizona

Proposition 209 – Effective: Dec. 5, 2022 – A first of its kind, 72% of Arizona voters approved this ballot measure on Nov. 5. Advertised as offering medical debt relief and counter “predatory debt collection,” most of the measure dealt with exemptions applicable to all judgments, and substantially increased those exemptions. To be clear, it is not just judgments arising from a debt that get these protections, judgments arising from damages because of fraud, personal injury, or wrongful death also receive the same protections against garnishments and executions. Aside from that, it reduced judgment interest on medical debt from 10% to 3%.

California

AB 2424 [Chapter 965] Effective: Jan. 1, 2023 – This law regulates the activities of credit services organizations. It requires CSOs to provide customers with a monthly statement detailing the services performed and making available copies of written communications sent on a customer’s behalf. It prohibits CSOs from assisting a consumer in making a statement to a creditor or credit reporting agency that is known or should be known to be untrue or misleading. It requires CSOs, when making their first written communication to a credit reporting agency or data furnisher, to provide “sufficient information to investigate a dispute of an account.”

SB 975 [Chapter 989] Effective: July 1, 2023 – Creditors and debt collectors must cease collection activities upon receipt of documentation or a sworn written certification of a coerced debt until a review is performed. It allows a consumer a private right of action to establish that a particular debt is coerced and obtain injunctive relief prohibiting collection.

SB 1099 [Chapter 716] Effective: Jan. 1, 2023 – Under the Bankruptcy Code, a chapter 7 debtor has three options when addressing a motor vehicle loan: reaffirm the vehicle loan, redeem (pay the loan off), or surrender the vehicle. Some say there is a fourth option – just continue to pay the loan and keep the vehicle, but not all courts agree. This law seeks to allow Californians to take advantage of the “fourth option” by providing that filing a bankruptcy petition does not constitute a default of the motor vehicle loan and cannot serve as a basis for accelerating the maturity of any part or all of the amount due under the contract or for repossessing the motor vehicle.

SB 1200 [Chapter 883] Effective: Jan. 1, 2023 – The time that a debtor may move to vacate or modify a renewal of judgment is increased to 60 days after service of the notice renewal. The law also limits the renewal of certain judgments. A judgment creditor, having a money judgment of under $200,000 that remains unsatisfied relating to medical expenses or for personal debt under $50,000, is limited to one renewal of judgment for five years from the date the renewal application is filed. The interest rate for money judgments less than $200,000 relating to medical expenses and personal debt under $50,000 is reduced from 10% to 5%.

SB 1477 [Chapter 849] Effective: Sept. 1, 2023 – Increases exemptions on wages subject to execution.

Colorado

HB 1049 [Chapter 118] Effective: April 21, 2022 – Prohibits “postsecondary institutions” from withholding a student’s transcript or diploma for failure to pay any debt if it is required for a job application; to transfer to another postsecondary institution; to apply for “state, federal, or institutional financial aid . . .  pursuit of opportunities in the military or national guard. . . or pursuit of other postsecondary opportunities.”

HB 1137 [Chapter 367] Effective:  Aug. 9, 2022 – Imposes requirements upon “unit owners associations” when collecting “assessments, fines, or fees.”

HB 1285 [Chapter 447] Effective: Feb. 15, 2023 – Prohibits a hospital that was not in “material compliance” with federal hospital price transparency laws “on the date that items or services are purchased from or provided to a patient by the hospital” from pursuing or initiating a collection action against the patient or patient guarantor for a debt owed for the items or services.”

SB 86 [Chapter 74] Effective: April 7, 2022 – Increases homestead exemptions from $75,000 to $250,000 and for the elderly and disabled from $105,000 to $350,000. Increases by two-fold exemptions for household goods and other exemptions and makes wholly exempt any “economic impact payment,” which is defined as “a payment from a federal, state, or local government to a debtor or to a debtor’s dependents to assist in managing the economic consequences of a national or statewide emergency or disaster.”

District of Columbia

Section 28-3814 – Effective Jan. 1, 2023 – DC undertook a significant rewrite of its debt collection law. Where the law previously was limited to well-defined entities, it is now expanded to encompass pretty much anyone seeking payment from individuals in the nation’s capital. Financial institutions are not the only businesses that should be concerned – any entity requesting payment for goods or services is now a covered entity. Aside from regulating all communications (regardless of whether made by mail, electronic or in-person), it creates requirements that are confusing and conflicting. It also amounts to a boon for plaintiffs’ attorneys with uncapped class action statutory damages of up to $4,000 per violation for each class member, plus attorney’s fees. Expect to see the class actions filed later in 2023 after utilities, cable providers, and other businesses have emailed or texted hundreds of thousands of past dues notices to DC consumers.

Illinois

HB 4243 [Public Act No. 102-0727] Effective: May 6, 2022 – Prohibits a school district from withholding a student’s grades, transcripts, or diploma because of an unpaid balance on the student’s school account.

Louisiana

HB 610 [Chapter 710] Effective: Aug. 1, 2022 – Regulates “student loan servicers” by prohibiting certain activities and requiring acknowledgment within 10 days of receipt of “written” inquiries or complaints from borrowers or their representatives and a response by the services within 30 days.

Maine

SB 656 (LD 1838) [Public Law No. 538] Effective: Aug. 8, 2022 – Not a year passes without some consumer credit law coming from Maine. This law prohibits a two-year or four-year postsecondary educational institution from proving a transcript or diploma unless the student owes a debt of $500 or more at a two-year or $2,500 or more at a four-year postsecondary educational institution. The law also imposes requirements relating to payment plans. One such prohibition is that payment on such a plan cannot be a condition for releasing a transcript or diploma.

Minnesota

SB 2922 [Chapter 70] Effective: Sept. 1, 2023 –The law requires the Department of Commerce to develop a consumer notice in English, Spanish, Somali, Hmong, Vietnamese, and Chinese, which collection agencies must provide in their initial written communications with consumers. The notice reads: “There are resources available to help manage your debt. The following Minnesota organizations offer debt and credit counseling services. The Department of Commerce does not control or guarantee any of the services provided by these organizations. The provision of this list is not a referral to, or endorsement or recommendation of, any organization or the organization’s services.”

New York

AB 6938 [Chapter 180] Effective: June 3, 2022 – Prohibits a  “degree-granting institution or licensed private career school” from withholding “a transcript because a student owes a debt” or conditioning the transcript upon the payment of the debt or charging “a higher fee or provid[ing] less favorable treatment of a transcript request because a student owes a debt” to the school.

AB 7363 [Chapter 648] Effective: Nov. 23, 2022 – Amends CPLR section 5201 to provide that no money judgment may be “entered or enforced against a debtor’s primary residence in an action arising from a medical debt and brought by a hospital licensed . . . or a health care professional authorized under” New York law.

AB 7487 [Chapter 238] Effective: Dec. 27, 2022 – New York amended its law concerning collection on accounts subject to a claim of identity theft by adding to the enumerated documents a consumer can provide to trigger the protections of the law. Now a completed and signed FTC identity theft victim’s report as well as “an express statement that the debtor was coerced to authorize the use of the debtor’s name or personal information for incurring the debt” or “criminal or family court documents that support the statement of identity theft” will serve as a basis for identity theft.

North Carolina

SB 496 [Session Law Number 2022-46] Effective: July 7, 2022 – Debt collection agencies must cease collecting debt against consumers who reside within an area where a major disaster has been declared when the consumer notifies the collection agency that they are experiencing significant financial hardship related to the public health emergency or stay at home order. It remains in effect for the length of the “deferral period” which is “the time period covered by the proclamation or declaration or the time period prior to the expiration of the Commissioner’s order declaring this section effective for the specific disaster. This deferral period shall be 30 days from the last day the premium or debt payment may be made under the terms of the policy or contract.”

Rhode Island

HB 7781 [Public Law No. 2022-338] Effective: June 29, 2022 – Requires licensed debt collectors to file a bond of $50,000 that “shall run to the state for the use of the state and of any person who may have [a] cause of action against the obligor of the bond under the provisions of this title.”

Virginia

HB 1071 [Chapter 678] Effective: July 1, 2022 – Prohibits hospitals from undertaking “extraordinary collection actions” as defined by § 501(r)(6) of the Internal Revenue Code (such as garnishing wages, placing liens on a primary residence, adverse credit reporting, filing of a lawsuit, or any similar action) if they have not made reasonable efforts to determine whether the debtor qualifies for medical assistance.

Predictions

Last year’s prediction was “[m]ore states will focus on medical and student loan debt. You can add condominium and homeowners’ association debt to that mix.” The same holds true for 2023. My bet is that Massachusetts will finally pass legislation in this area after many failed attempts over the past decade

Repeating what was predicted in 2021, state and local governments will continue “to roll back the new FDCPA rules. Because the FDCPA will give way to more restrictive state regulation, you should see several states introduce legislation designed to limit electronic communications and the frequency of telephone communications.” DC did just that this year. Both the New York Department of Financial Services and the New York City Department of Consumer and Worker Protection have proposed “anti-Reg. F” provisions that are likely to be effective in 2023. Other states that might do so are Colorado, Maine, Oregon and Washington.

Finally, there will be more data security litigation. Although Hunstein is often viewed as a “third-party disclosure” claim in the debt collection space, it has the same basic principles as a data security claim – non-public personal information was alleged to be in the hands of an unauthorized party. The QR code cases from years past (like Styer and DiNaples) fall into this category. Indeed, standing will remain an issue if these are claims brought in federal court, but that will not be an impediment in certain state courts. And, as the CFPB’s recent data security circular explained, a case can be made that failed data security is also an unfair or deceptive act or practice.

AURORA, Colo. — Wakefield & Associates, one of the largest healthcare revenue cycle solutions companies in the nation, announced today that industry veteran Mark Schanck has joined the organization as its Chief Revenue Officer to provide executive leadership and oversight of the company’s business development efforts.

“As one of the leading revenue cycle solutions companies in the nation, Wakefield & Associates makes vital contributions to the financial health of medical providers,” said Matt Laws, CEO of Wakefield. “Mark adds close to 25 years of revenue cycle business development and executive leadership to Wakefield’s array of service lines. Mark is known in the industry as a highly respected leader who brings an authentic approach to both customers and employees, with a long history of success for the organizations and market segments he has served.”

Prior to joining Wakefield & Associates, Schanck served in various consultative and executive leadership roles. Schanck has provided executive leadership for a number of healthcare organizations, including his role as President and CEO of Convergent Healthcare, President of Medi-Centrix and more recently fulfilling the role as Chief Strategy Officer for Physicians Practice Enhancement, Inc. and ProCred, LLC located in Red Bank, NJ.

“I’m absolutely thrilled to join Wakefield & Associates,” Schanck said. “I count myself fortunate to be part of an executive management team that is so closely tuned into the markets they serve. I’m particularly excited to join an organization where my background and skillset align with the business development opportunities identified at Wakefield which in turn will allow me continued personal and professional development.”

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About Wakefield & Associates

Established in 1933, Wakefield & Associates specializes in Revenue Cycle Management Solutions, which includes System Conversions, Call Center Partnerships, Insurance Billing, Process & System Workflow Design, Eligibility Assistance Programs, Out-of-Network Claims resolution, Primary & Secondary Bad Debt Collections, Legal Solutions for over 5,000 medical clients nation-wide. Wakefield & Associates has and continues to make significant investments in people, processes, and technologies that allow us to develop and implement quality solutions that accelerate cash flow and A/R liquidation. Wakefield & Associates has developed effective recovery techniques and partnership collaborations that result in a positive patient experience.

MIAMI, Fla. — The law firm of Pollack & Rosen, P.A., is proud to announce that Autumn V. Bloom has joined the firm as Sr. Vice President of Acquisitions and Strategic Partnerships. Her valuable expertise and leadership will serve to further expand the firm’s growing portfolio of regional and national clients. 

Autumn spent the past 24 years with a major debt purchaser and master servicer where she most recently served as their Vice President of Operations. In this capacity, Autumn developed and led its attorney and collection agency network, consumer call center, internal litigation operation, media operations, and client services departments. 

Autumn is a widely respected authority in the field of receivables management. Her deep expertise in the areas of inventory management, performance, compliance, process improvement, project management, and team building, combined with her keen ability to effectively lead, direct and mobilize employees and service providers, has garnered her a reputation of trust and a profound level of respect from her peers. 

Autumn is an RMAi Certified Receivables Compliance Professional and an active member of the RMAi community, having recently completed her second term as Chairperson for the Public Relations & Marketing Committee and member of RMAi’s Certification Council. 

Autumn earned a Master of Science in Executive Leadership and Organizational Change from Northern Kentucky University and a Bachelor of Science in Education, concentration in Mathematics and Language Arts, from the University of Cincinnati. She also holds a certificate in Project Management and earned a Six Sigma Black Belt through Xavier University’s Leadership Center.

President Joseph Rosen said, “we are excited that Autumn has joined the firm. I am confident that she will bring a wealth of experience and industry knowledge to the table, which will benefit the firm and the clients we serve.”

Autumn will play a key role in the organization by providing insight into identifying and structuring potential acquisitions and building a comprehensive litigation network, which will bring about competitive and profitable solutions for clients across the credit spectrum.

About Pollack & Rosen, P.A.

Headquartered in Miami since 1995, the firm is well positioned as an experienced and compliant partner dedicated to providing credit originators across the financial industry with exceptional Receivables Management expertise, along with superior litigation strategies for its clients.

Autumn can be reached directly at (513) 258-9799 or via email at autumnb@pollackrosen.com.

On December 7, the Consumer Financial Protection Bureau (CFPB) released a report entitled Protecting Those Who Protect Us. The report sought to quantify, for the first time, the use of the Servicemembers Civil Relief Act (SCRA) interest rate reduction benefit. According to the CFPB’s research, between 2007 and 2018, fewer than 10% of eligible auto loans and 6% of personal loans received a reduced interest rate. Additionally, members of the reserve component also infrequently benefit from interest rate reductions for credit cards and mortgage loans. The report identified several strategies (previously “codified” via consent orders) to increase servicemember access to SCRA protections, including automatically applying interest rate reductions and applying reductions for all accounts held at an institution if a servicemember invokes protections for a single account.

The SCRA applies to active-duty members of the Army, Marine Corps, Navy, Air Force, Space Force, and Coast Guard as well as reservists or members of the National Guard serving for more than 30 consecutive days for the purpose of responding to a national emergency. The law also applies to active duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration. The SCRA provides multiple legal and financial protections to active duty servicemembers, including: (1) the ability to reduce the interest rate on any pre-service obligations or liabilities to a maximum of 6 percent; (2) protections against repossession of certain property, including motor vehicles, without a court order; (3) protections against default judgments in civil cases; (4) protections against certain home foreclosures without a court order; and (5) the ability to terminate certain residential housing and automobile leases early without penalty.

The CFPB’s report focused only on the interest rate reduction benefit and protection against repossession. To receive the interest rate reduction, a servicemember must notify their lender in writing with a copy of their orders to active-duty service or any other appropriate indicator of military service. Creditors may also proactively grant the interest rate reduction by retrieving information from the Defense Manpower Data Center SCRA website to determine active-duty status in lieu of written notification.

The report used data from the CFPB’s Consumer Credit Panel from 2007 to 2018 matched to activation data from the Department of Defense. Key findings from the report include:

• Fewer than one in ten members of the reserve component with eligible auto loans, and only 6% of those with eligible personal loans, received an interest rate reduction from 2007 to 2018. These missed interest rate reduction opportunities represent about $100 million in foregone savings.

• Members of the reserve component also infrequently benefit from the rate reduction benefit for credit cards and mortgage loans. Although the CFPB could not apply the same method to credit cards (in part because they are open-end credit) and home mortgages (in part because their payments often include taxes and insurance), it estimated the foregone savings of these rate reduction opportunities could amount to between $1,890 and $5,670 per activation, which is much larger than the savings for auto and personal loans.

• Reserve component servicemembers are more likely to obtain a reduced interest rate during longer periods of activation. Even among the longest periods of activation (about a year or more), however, the likelihood of an interest rate reduction remains under 16% for auto and personal loans.

• Reserve component servicemembers are less likely to experience reported repossessions during an activation. During activated periods, auto loans are two-thirds less likely to be reported in repossession, compared to non-activated periods.

In conclusion, the CFPB recommended that creditors take the following steps, consistent with practices that have been required as a practical matter by consent orders resolving SCRA violations, to increase utilization of the SCRA rate reduction:

• Apply SCRA interest rate reductions enterprise-wide if a servicemember invokes protections for a single account. If widely adopted, this measure will increase interest rate reduction utilization, reduce the duplication necessary to invoke the SCRA interest rate reduction for multiple accounts, and address complexity that may be hindering utilization.

• Explore ways to automatically apply the SCRA interest rate reduction. When the SCRA interest rate reduction benefit is automatically applied, as has been done for many student loans, eligible servicemembers are substantially more likely to benefit than if they are required to submit proper written notification.

• Develop comprehensive and periodic indicators of SCRA benefit utilization. A comprehensive and periodic review of SCRA rate reduction utilization would provide beneficial information to evaluate future efforts to expand servicemembers’ financial protections.