Archives for May 2014

FTC in $5.5 million Debt Collection Settlement with Auto Lender/ARM Firm

May 30, 2014 By Leave a Comment

The Federal Trade Commission Thursday announced a settlement with a national subprime auto lender and debt buyer/collector that will see the company pay $5.5 million in penalties, refunds, and account adjustments. The charges relate to the firm’s collection practices on its own accounts and loans it was servicing as a third party.

Consumer Portfolio Services, Inc. (CPS), headquartered in Irvine, Calif., agreed to refund or adjust 128,000 consumers’ accounts more than $3.5 million and forebear collections on an additional 35,000 accounts to settle charges the company violated the FTC Act. CPS will pay another $2 million in civil penalties to settle FTC charges that the company violated the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA)’s Furnisher Rule.

The FTC alleged that CPS’s collection violations included disclosing the existence of debts to third parties; calling consumers at work when not permitted or inconvenient; calling third parties repeatedly with intent to harass; making unauthorized debits from consumer bank accounts; falsely threatening car repossession; and deceptively manipulating Caller ID.

Because for many of its accounts CPS is a creditor, the complaint charges these practices violated Section 5 of the FTC Act. For those accounts where CPS is a debt collector, the complaint charges these practices violated the FDCPA.

In a statement provided to insideARM.com, CPS said that it cooperated with the investigation and is glad to put the issue to rest.

“We are pleased to have resolved the matter with the FTC,” said Charles E. Bradley, Jr., President and Chief Executive Officer.  “We cooperated fully with the FTC during their inquiry and made several system and procedural changes related to their comments. Furthermore, we are pleased that the final settlement is consistent with our expectations. Accordingly, the amounts we’ve agreed to pay for customer refunds and the civil penalty are covered entirely by the legal provision expenses we’ve previously recognized.”

CPS is publicly traded on the NASDAQ stock exchange under the ticker symbol CPSS. The company provides indirect automobile financing to consumers with poor credit and also purchases retail installment sales contracts primarily from franchised automobile dealerships.

In an unrelated move, the Consumer Financial Protection Bureau (CFPB) recently disclosed that it is pursuing rules for defining larger participants in the auto finance industry. Once that rule is in place, the CFPB will be able to regulate and supervise auto lenders in the same way as many other financial markets.

 

FTC in $5.5 million Debt Collection Settlement with Auto Lender/ARM Firm
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Accounts Receivable Management

Filed Under: News

POLL: How many consumer complaints from the CFPB has your company received this year?

May 30, 2014 By Leave a Comment




Take Our Poll

In April 2014, the Consumer Financial Protection Bureau received 3,582 consumer complaints about debt collection; that’s down one percent from March 2014, but this data doesn’t necessarily represent a turning tide in the collection industry. Signing up for the CFPB portal is the only way a collection agency can see and respond to the complaints filed against it. Once your company does that, you must make sure you’re appropriately responding to consumer complaints, while taking steps to reduce them. To the Point: CFPB Collection Complaints shows you the top four things your company can do right now to perfect its complaints management system.

POLL: How many consumer complaints from the CFPB has your company received this year?
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Accounts Receivable Management

Filed Under: News

FDCPA Lawsuits on Track for Third Straight Year of Declines

May 30, 2014 By Leave a Comment

Lawsuits against ARM companies filed by consumers under the Fair Debt Collection Practices Act (FDCPA) are on track to decline again in 2014. If the trend holds, it would be the third-straight year of declines in total FDCPA lawsuits after years of rapid growth.

In the first four months of 2014, there have been 3,294 FDCPA cases filed in federal courts across the U.S. That number is 18 percent below the total at the same time last year, according to data provided by WebRecon LLC.

In April 2014 alone, there were 947 FDCPA suits filed, down 17 percent from April 2013, but actually up eight percent from the previous month.

FDCPA lawsuits filed against ARM firms rose rapidly from 2005 to their peak of 12,330 in 2011. Ever since then, fewer cases claiming FDCPA violations have showed up in the court system. Industry watchers had expected the rate of decline to slow as the “market” for plaintiff cases corrected. But it actually appears that the decline is accelerating.

FDCPA-suits-April2014

While FDCPA suits decline, cases claiming violations of the Telephone Consumer Protection Act (TCPA) continued their explosive growth in 2013.

TCPA cases were up nearly 70 percent in 2013. Consumers filed nearly 1,900 suits seeking remedy under the statute intended for telemarketers. In April 2014, there were 235 such cases filed, up 47 percent from April 2013. For the year, total TCPA lawsuits are up 46 percent from the same point last year.

TCPA-suits-April2014The recent growth in TCPA lawsuits largely mirrors the increase in FDCPA suits seen in the middle and end periods last decade. In 2008, there were only 14 TCPA cases filed, followed by just 31 the following year. But beginning in 2010, consumers and their attorneys saw an opportunity and began focusing on TCPA cases. While the total number of cases is still dwarfed by FDCPA cases, the trend in filings has caused many ARM firms to shift legal resources.

FDCPA Lawsuits on Track for Third Straight Year of Declines
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Accounts Receivable Management

Filed Under: News

Healthcare Providers Can Improve ARM and Reduce Risk with a ‘Credit Card on File’ System

May 30, 2014 By Leave a Comment

High-performing physician practices empower their front end workers the resources, tools and training needed to make successful receivables happen. An important tool that physician practices can use to mitigate their risk of not getting paid on the back end is the Credit Card on File system.

What is ‘Credit Card on File’ System?

In a Credit/Debit Card on File (CCOF) system, every patient’s credit card information is stored in an off-site source. This enables physician practices to charge the credit card automatically for deductibles, co-insurance, co-pays, balances and non-covered services. Furthermore, CCOF system helps physician practices to set payment plans, so that patient payments can be automatically credited on a predetermined schedule mutually decided by the facility and patient. Credit/Debit Card on File systems shift patient’s back-end accounts receivable system to a front-end accounts receivable system.

For the rest of the blog entry, including three specific steps to implementing a CCOF system, check out the full post on the Array Services Group blog here.

Healthcare Providers Can Improve ARM and Reduce Risk with a ‘Credit Card on File’ System
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Accounts Receivable Management

Filed Under: News

Account Control Technology Donates $5,000 to Project Graduation – San Angelo

May 30, 2014 By Leave a Comment

Account Control Technology, Inc. (ACT), a national leader in delivering debt management and recovery solutions, is pleased to announce that employees of its San Angelo office recently delivered a donation of $5,000 in support of the community’s Project Graduation program, which provides an alcohol and drug-free celebration for high school seniors the night of graduation.

The money was raised in individual contributions by ACT’s San Angelo office employees as well as through a donation match by the Account Control Technology Foundation.

“The month of May is a dangerous time for teens as prom and graduation celebrations can lead to alcohol-related accidents,” said Brian Shively, Director of ACT’s San Angelo office. “ACT is happy to support Project Graduation which helps keep our community’s kids safe on what should be one of the happiest nights of their young lives.”

San Angelo’s Project Graduation 2014 event is for graduating seniors from all of San Angelo’s public and private high schools. It will be held the night of Saturday, May 31, beginning at 9 pm and ending at 4 am. This year’s event has a theme of “Ready for the World” and will feature food, casino games, a rock climbing wall, music, a hypnotist show, a mechanical bull and a large array of prizes.

Front Row: ACT San Angelo representatives Brenda Coats (far left) and Trudy Taylor (far right) present a check to Project Graduation representatives Sandy Sawyer and Joanne Bishop (middle). Back Row (L-R): ACT representatives Yvonne Rodriguez, Brian Shively (Director of Operations), Monica Parker, Rebecca Becknell and Stephanie Martinez.

Front Row: ACT San Angelo representatives Brenda Coats (far left) and Trudy Taylor (far right) present a check to Project Graduation representatives Sandy Sawyer and Joanne Bishop (middle). Back Row (L-R): ACT representatives Yvonne Rodriguez, Brian Shively (Director of Operations), Monica Parker, Rebecca Becknell and Stephanie Martinez.

Account Control Technology, Inc. is a leader in providing consultative debt management, collection, call center and business office solutions for education, government, commercial and consumer entities. Established in 1990, ACT has been recognized as an Inc. 5000 fastest-growing private company for the past seven years running. The company serves clients nationwide from five office locations: Bakersfield, California; Woodland Hills, California; Mason, Ohio; Dallas, Texas; and San Angelo, Texas. For more information, call 800-394-4228 or visit www.accountcontrol.com

The Account Control Technology Foundation is a charitable organization established by Dale and Debbie Van Dellen with a stated mission “to improve the future of students and the greater community by offering financial literacy and debt management education, mentorship and support to those in need.” Each year, the Foundation awards $50,000 in college scholarships in addition to supporting local and national charities. For more information, visit www.accountcontrolfoundation.org.

Account Control Technology Donates $5,000 to Project Graduation – San Angelo
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Accounts Receivable Management

Filed Under: News

ACA International Education Foundation’s Collectors Challenge Month a Success

May 30, 2014 By Leave a Comment

A month of workplace fun by 15 organizations in the consumer debt collection industry raised more than $24,000 in ACA International Education Foundation’s Collectors Challenge Month.

Proceeds from Collectors Challenge Month, which featured workplace-friendly fundraising activities such as casual days, company meals, snack breaks and games, will be used to enhance the Loomer-Mortenson Scholarship.

Each year, ACA International Education Foundation awards post-secondary scholarships totaling $10,000 to four individuals who work in or are affiliated with the collections industry (1st place = $5,000; 2nd place = $3,000; two 3rd place = $1,000 each). Scholarship applications are accepted through May 15 and the scholarship recipients are announced in July.

ACA International Education Foundation would like to thank the following 15 organizations for their exceptional fundraising efforts:

  • ConServe – Fairport, NY
  • ACA International – Minneapolis, MN
  • J. C. Christensen & Associates, Inc. – Sartell, MN
  • North American Credit Service – Chattanooga, TN
  • Pro Com Services of Illinois, Inc. – Springfield, IL
  • American Profit Recovery – Farmington Hills, MI
  • Sunrise Credit Service – Farmingdale, NY
  • Nationwide Credit Corporation – Alexandria, VA
  • Delta Outsource Group – O’Fallon, MO
  • Helvey & Associates – Warsaw, IN
  • Uptain Group – Knoxville, TN
  • Oliver Adjustment Company of Kenosha & Racine – Kenosha, WI
  • Credits, Inc. – Hermiston, OR
  • ProCollect Inc. – Dallas, TX
  • Wilber and Associates – Normal, IL

In addition, a drawing was held for the participating companies. The winners are:

  • North American Credit Service – ACA International 75th Annual Convention registration
  • Sunrise Credit Service – Complimentary Training Pass
  • Wilber and Associates – Complimentary registration to ACA International’s 2014 Fall Forum
  • Helvey & Associates – Airfare for one to the ACA International 75th Annual Convention

The ACA International Education Foundation is a 501 (c)(3) non-profit organization founded in 1996 that is committed to helping men and women in the consumer debt collection industry with their post-secondary education through the Loomer-Mortenson Scholarship. It is the philanthropic arm of ACA International, the trade association representing the third-party debt collection industry. For more information, visit www.acainternational.org/foundation.

ACA International Education Foundation’s Collectors Challenge Month a Success
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Accounts Receivable Management

Filed Under: News

We Asked, You Answered: Collectors are Watching the CFPB on Time-Barred Debt

May 30, 2014 By Leave a Comment

As the Consumer Financial Protection Bureau tries its hand at rulemaking and surveying in the debt collection industry, Ronald Canter – founder  of The Law Offices of Ronald S. Canter, LLC and panelist at ARM-U – wrote about five key court cases the industry should look towards as precedent for the Bureau’s proposed reforms. But at the end of the day, it seems as though one major case is getting on everyone else’s…well…case. According to a recent insideARM.com poll, nearly 50 percent of you said you thought time-barred debt would be the first thing the CFPB addresses as it attempts to overhaul the Fair Debt Collection Practices Act.

Coming in at a distant second, 24 percent of you said you thought the CFPB would first address debt verification as a potential FDCPA reform. Individually, insideARM.com readers said they were also concerned about how the CFPB will address “frequent calls to the wrong person,” “cell phones” and “including creditors as third-party debt collectors.” Debt verification and time-barred debt were two of the key issues covered in the CFPB’s 162-question Advance Notice of Proposed Rulemaking earlier this year.

VIEW RESULTS-What do you think will be the CFPB’s first move in overhauling FDCPA?

Experts predict that the CFPB will ultimately take the stance that debt collectors should make an affirmative disclosure to consumers when they are seeking to collect debts that cannot be judicially enforced, and that failure to do so may violate the FDCPA. But in an op-ed Tuesday, attorney Tomio Narita argued that “If the CFPB discourages delinquent consumers from paying debts they admittedly owe, this raises the cost of credit for all consumers, and it may eliminate the availability of credit to low and moderate income consumers who need it the most.”

At ARM-U (October 14-15, 2014 in Washington, DC), Canter will join Kim Phan of Ballard Spahr and Anita Tolani of Weinberg, Jacobs & Tolani for a panel discussion about what the regulatory future looks like for debt collectors – including the huge role the CFPB will play – and how agencies can prepare for the future right now. This exclusive event will bring together senior compliance and operations officers, collection attorneys and HR/training experts, and allow them to learn from each other, discuss pitfalls and identify areas of improvement.

 

We Asked, You Answered: Collectors are Watching the CFPB on Time-Barred Debt
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Accounts Receivable Management

Filed Under: News

Collector Wins Arbitration and Defeats FDCPA Class Claims

May 23, 2014 By Leave a Comment

Ronald Canter, lead counsel in this particular case, also contributed to this post.

John Bedard

John Bedard

On May 9, 2014, the United States District Court for the District of Maryland in the case of Grant-Fletcher v. Collecto, Inc., d/b/a/ EOS CCA (Case No. 13-1505) handed the collection industry a major victory by rejecting an FDCPA class action suit filed on behalf of consumers in nineteen (19) states.

Luciena Grant-Fletcher, a repeat FDCPA Plaintiff, sued a third party collection agency for allegedly attempting to collect amounts not permitted by her cell phone service agreement with AT&T Wireless.

After Ms. Grant-Fletcher failed to pay her phone charges, AT&T sold the account to a third party debt purchaser, which in turn referred the defaulted account to the defendant collection agency, Collecto. Shortly thereafter, Grant-Fletcher filed a lawsuit claiming violations of the FDCPA.

Collecto responded to the suit by filing a motion to compel arbitration, contending that the terms of the Plaintiff’s contract with AT&T contained an enforceable Arbitration Clause. The agency argued that the arbitration provision which included AT&T’s “agents” and “assigns” as parties subject to the arbitration provision required the Court to reject the class action suit in favor of the binding arbitration.

The Court agreed, and relying on Fourth Circuit authority, held that even though Collecto did not sign the original contract, the arbitration provision inured to its benefit because the Plaintiff relied on the AT&T contract in alleging that the agency added late fees and interest not permitted by the AT&T contract. The Court ruling also required that the arbitration proceed on an individual basis in light of the class action waiver clause contained in the AT&T agreement.

This decision emphasizes the need for all industry members facing  consumer protection claims to diligently scrutinize the contract documents creating the debt obligation and to consult with experienced defense counsel to determine if class action or individual consumer protection suits can be defeated on the basis of enforceable class action waivers and moved away from the Court system into the less expensive and time consuming arbitration process.

Untitled-3John Bedard (Bedard Law Group)is a 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 is a former member of the Board of Directors of ACA International and is recognized by Collection Advisor magazine as one of the nation’s top 50 most influential people in the collection industry. His firm recently announced an Of Counsel relationship with The Law Offices of Ronald S. Canter.

Collector Wins Arbitration and Defeats FDCPA Class Claims
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Accounts Receivable Management

Filed Under: News

CFPB Details Non-Bank Supervision Activities in New Report

May 23, 2014 By Leave a Comment

The Consumer Financial Protection Bureau (CFPB) Thursday released a report on its supervision activities in the non-bank markets it regulates, including debt collection. The report highlights illegal practices the Bureau says it uncovered in its supervision of the payday lending, debt collection, and consumer reporting markets.

“For the first time at the federal level, nonbank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers,” said CFPB Director Richard Cordray. “The CFPB’s oversight of banks and nonbanks alike is exposing risky practices and getting results for consumers.”

Those results for consumers are much more tangible than just simple research results. The report — “Supervisory Highlights – Spring 2014” — contains the first official accounting of the CFPB’s non-public supervisory activities that have resulted in remuneration.

The CFPB said that in “recent months,” its supervisory program has resulted in more than $70 million in remediation to some 775,000 consumers from banks and non-banks. That amount came from non-public supervisory actions resulting from examiner findings and self-reported violations during an exam.

Most of the report is dedicated to enumerating various issues CFPB examiners have uncovered in its supervision of certain markets.

The Bureau began conducting supervisory examinations of larger collection agencies in January 2013. The primary focus of the exams in the early stages appears to be on the compliance management systems of the debt collectors. But examiners also evaluate a company’s compliance with federal laws that apply to debt collection, like the FDPCA and FCRA.

The report notes several areas in which it found issues in the exams:

  • Failure of debt collectors (and others) who furnish information to CRAs to investigate disputes regarding that information;
  • Failure to obtain appropriate authorization prior to initiating a recurring electronic transfer of funds from a consumer’s account; and
  • Failure of debt collectors to comply with the Fair Debt Collection Practices Act’s limitations on the use of phone calls and its prohibition on false and misleading statements.

Debt collection also features prominently in the section dedicated to payday lending.

Examiners found issues with both lenders’ internal debt collection practices and at third party debt collection agencies that had been contracted to recover payday loan debt.

At several short-term, small-dollar lenders, CFPB examiners found inadequate compliance management systems for collection activity. Lenders did not adequately monitor collections calls, attempt to understand the root causes of complaints arising from collections practices, provide training for collectors, and properly oversee third-party service providers.

In several situations, examiners identified violations carried out by third-party debt collectors working for payday lenders.

The FDCPA prohibits debt collectors from using any false, deceptive, or misleading representation or means in connection with the collection of any debt, and the Dodd-Frank Act prohibition on UDAAPs also applies to certain activities uncovered, including:

  • Claiming the account would be reported to a credit bureau when there was no such reporting
  • Making false threats of litigation and referral for criminal prosecution
  • Misrepresenting identity as an impartial mediator or attorney
  • Failing to disclose the identity of the caller or the purpose of the communication
  • Threatening to add unauthorized fees
  • Making false claims that a borrower’s bank account would be closed

 

 Does your collection agency have questions about CFPB supervision and examinations? insideARM has a number of resources to help!

On Tuesday, June 3, we will be holding our second insideCompliance webinar on the topic: How to Survive a CFPB Audit – Debt Buyer Edition. Collection agencies can check out our audit compliance guide, drawn from a previous webinar on CFPB examinations – CFPB Examination Checklist: A Primer.

CFPB Details Non-Bank Supervision Activities in New Report
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Accounts Receivable Management

Filed Under: News

Conserve Recognized as Top Private Collection Agency on ED Unrestricted Contract

May 23, 2014 By Leave a Comment

Continental Service Group, Inc. d/b/a ConServe is proud to announce that they have once again been recognized as the number one Private Collection Agency on the U.S. Department of Education Unrestricted Contract for the Quarter ending in March 2014.

This honor was earned during the same quarter the U.S. Department of Education had documented that, as a group, Private Collection Agencies achieved record breaking recoveries.

“Our performance is a direct result of the combined efforts of our employees who work on our U.S. Department of Education contract,” said Brandon Booker, Director of Operations and interim Vice President of Operations at ConServe. “It is also reflective of the effectiveness of the initiatives deployed enterprise wide, that permeate our culture and are the reason so many of our Clients proudly claim ConServe as their top collection agency.”

ConServe has held contracts with the U.S. Department of Education since 2004.

Founded in 1985, Continental Service Group, Inc. (d/b/a: ConServe), has provided accounts receivable management services in the higher education, government and commercial markets. ConServe was ranked as the number one performing Small Business Collection Agency on the U.S. Department of Education’s Student Loan Collection Contract from 2004-2010. In 2009, ConServe was again awarded a long term contract by the Department of Education. ConServe was recognized as the number one Private Collection Agency on the U.S. Department of Education Unrestricted Contract for the first quarter in 2014.

ConServe has also achieved the ACA International Professional Practices Management System (PPMS) certification. Less than 1% of collection agencies nationwide offer the benefits of this certification to their Clients. This designation is the collection industry’s standard for quality management. ConServe was a recipient of the Rochester Business Ethics Award, listed on the Inc. Magazine’s 5000 fastest growing companies, named a Rochester Top 100 company 11 times in the last 12 years, named by insideARM.com as one of the Best Places to Work in Collections and earned the Greater Rochester Quality Control’s Customer Excellence Award.

Visit ConServe online at www.conserve-arm.com.

Conserve Recognized as Top Private Collection Agency on ED Unrestricted Contract
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Accounts Receivable Management

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