Archives for July 2014

Washington Lawsuit Scrutinizes Use of Prosecutor’s Seal on Debt Collection Letters

July 25, 2014 By Leave a Comment

A federal class action lawsuit in Seattle alleges that a collection agency used the King County prosecutor’s seals on debt collection letters to consumers, while failing to disclose that the letter was from a collection agency and not a law enforcement office. The plaintiffs say they received seemingly official letters from Bounceback; the letters included threats of “criminal charges,” “criminal prosecution” and jail time if consumers didn’t pay the amount of the debt and more than $180 in fees.

It’s already clearly established under the Fair Debt Collection Practices Act that debt collectors can’t threaten consumers with fines, criminal prosecution or jail time if they don’t pay their debts. But in this specific case, Bounceback was able to use the county prosecutor’s seal on these collection letters because it participates in a “check enforcement program.” County prosecutors rented out the prosecutor’s seal and letterhead to Bounceback in exchange for a cut of the collection fees, the lawsuit alleges.

“Bounceback enters into contracts with prosecutors purportedly permitting it to operate in the prosecutor’s name, and it pays the prosecutor a fee for each successfully collected check,” the complaint states. “Prior to Bounceback initiating its collection activities, the local prosecutor neither conducts any investigation of a particular check writer, nor makes any individualized determination regarding either probable cause or the likelihood of prosecuting a check writer who does not pay the Bounceback fees and participate in the ‘Diversion Class.’”

This isn’t the first time Bounceback has been involved in a check enforcement program in the Pacific Northwest. The Missouri-based collection agency was being considered by the Multnomah County District Attorney’s Office in Oregon for its check enforcement program. But in June 2013, Oregon Governor John Kitzhabersigned into law SB 525, which ended the state’s check enforcement program, effective January 1, 2014.

Bounceback Inc., and its parent company Stone Fence Holdings, are not members of the collections industry trade group ACA International.

Privatized check enforcement programs were launched around the country in the late 1980s, but didn’t come to Washington until around 2000. Currently, approximately 300 prosecutors’ offices nationwide – nine of which are in Washington – take part in the program. In 2013, the Washington legislature tried to pass a bill prohibiting the practice in the state.

Washington Lawsuit Scrutinizes Use of Prosecutor’s Seal on Debt Collection Letters
http://www.insidearm.com/daily/washington-lawsuit-scrutinizes-use-of-prosecutors-seal-on-debt-collection-letters/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Louisiana Developing Office of Debt Recovery Through Private-Public Partnership

July 25, 2014 By Leave a Comment

Louisiana Secretary of Revenue Tim Barfield told the state Cash Management Review Board Thursday that the state’s new Office of Debt Recovery (ODR) is on schedule to be fully operational within three years. ODR will be an automated, centralized debt collection office that provides collection services for state agencies. It will include a suite of debt collection tools and will work with the Office of the Attorney General and outside collection agencies to perform collection services.

In order to prepare for ODR’s launch, the state is developing a request for proposals for an automated collections system. Deputy Secretary of Revenue Jarrod Coniglio said the RFP should be released by mid-August.

“Today, we’re working with manual processes,” Coniglio said. “The automated system will be fully scalable, and will allow ODR to increase its workload with a minimum of additional human resources.”

Collection tools already in use by ODR include the state tax refund offset from the Louisiana Department of Revenue and a federal vendor payment intercept program that allows ODR to collect final debt from payments owed to companies doing business with the federal government who have exhausted their due process. ODR will also use financial institution data match (FIDM) that allows it to identify and levy final debt payments from the bank accounts of debtors who have exhausted their due process. Already, 82 percent of financial institutions have signed up for participation in the FIDM program, which covers an estimated 90 percent of deposit accounts in the state.

“ODR has already implemented its electronic debt registry, significantly expanded use of an existing collection tool, implemented two new collection tools and has begun collecting debts,” Coniglio added.

The Louisiana Legislature created ODR to assist state agencies in collecting overdue debts determined to be “final debt,” after exhausting all other administrative and legal due processes. ODR will be part of the Louisiana Department of Revenue, and it will use new tools to identify and collect final debt payments on behalf of those agencies.

 

Louisiana Developing Office of Debt Recovery Through Private-Public Partnership
http://www.insidearm.com/daily/louisiana-developing-office-of-debt-recovery-through-private-public-partnership/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Executive Change: CFPB Enforcement Attorney Appointed Affirm Chief Compliance Officer

July 25, 2014 By Leave a Comment

Affirm today announced it has hired Consumer Financial Protection Bureau Enforcement Attorney Manuel (Manny) Alvarez as its first chief compliance officer and general counsel.

The appointment coincides with Affirm naming investment partners Keith Rabois, from Khosla Ventures, and Jeremy Liew, from Lightspeed Ventures, to the new financial services technology company’s board of directors.

Affirm was started in 2012 by Max Levchin, co-founder of the digital payments giant PayPal; Jeff Kaditz, formerly chief data officer of gaming company, ngmoco; and Nathan Gettings, co-founder of Palantir, the go-to company for mining massive data sets. They started Affirm on the belief that the current FICO-based credit rating system is not working for many consumers.

The announcements today come just weeks after Affirm launched its new Split Pay service that lets online merchants offer consumers simple installment payment alternatives at checkout. With Split Pay, online shoppers can spread a purchase across multiple months. Split Pay interest rates start as low as six percent, depending on a shopper’s payment history, the dollar amount being financed and the number of installments.

“Consumers often don’t understand the fees or interest they pay on a revolving account. That has to change,” said Alvarez. “Affirm’s commitment to delivering honest and transparent financial products totally aligns with my long-standing commitment to consumer protection.”

In his new role at Affirm, Alvarez will oversee and manage the company’s regulatory compliance program and related actives to prevent illegal, unfair or deceptive conduct. He will also take charge of liaising with regulators and Affirm’s service providers.

Alvarez was one of the earliest enforcement attorneys at the CFPB where he investigated and civilly prosecuted violations of federal consumer financial laws. He served as lead attorney in CFPB v. Castle & Cooke Mortgage LLC, et al., the first-ever enforcement action of the Mortgage Loan Originator Compensation Rule under Regulation Z. He also liaised with other federal and state regulators, trained housing advocates on the new mortgage servicing standards, and supported several bank examinations.

Before joining the CFPB Alvarez served as a Deputy Attorney General in the Consumer Law Section of the California Attorney General’s Office.

“Banks today are stuck in the 1950s in so many ways,” said Levchin. “Manny’s history of consumer advocacy and regulatory knowledge will be essential as Affirm reimagines financial services from credit cards to deposit banking.”

New Board Members A partner at Lightspeed Venture Partners since 2006, Liew’s current investments include Snapchat, Whisper, LivingSocial, Bonobos, Kixeye, PetFlow, Slice, The Honest Company and Zest Finance. He was also responsible for several successful Lightspeed investments including Playdom (acquired by Disney), Flixster (acquired by Warner Brothers), Kongregate (acquired by GameStop) and Serious Business (acquired by Zynga).

Rabois began his career in the technology industry as a senior executive at PayPal (acquired by eBay) and subsequently served in influential roles at LinkedIn and as chief operating officer of Square. As a board member, Rabois guided Yelp and Xoom from inception to successful initial public offerings. Simultaneously, he also invested in other like-minded entrepreneurs with early stakes in YouTube (acquired by Google), Yammer (acquired by Microsoft), Palantir, Lyft, AirBnB, Eventbrite and Quora.

“The industry knowledge, insights and business building knowhow that Keith and Jeremy bring to Affirm are truly priceless,” said Levchin. “Having them on our board only makes our vision for financial utilities loved by consumers all the more attainable.”

About Affirm Affirm is reimagining financial services — from credit cards to deposit banking. Starting with an amazingly simple, new way to get affordable financing at the online point of sale, Affirm lets shoppers pay for purchases across multiple months with transparent, fairly-priced fees built into every payment, and boosts conversion and basket size for eTailers at less than the cost of credit cards. Created in 2012 by PayPal Co-founder Max Levchin, Palantir Co-founder Nathan Gettings, and former Chief Data Officer of ngmoco, Jeff Kaditz, Affirm is based in San Francisco. To start working with Affirm go to affirm.com.

Executive Change: CFPB Enforcement Attorney Appointed Affirm Chief Compliance Officer
http://www.insidearm.com/daily/executive-change-cfpb-enforcement-attorney-appointed-affirm-chief-compliance-officer/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

ACA International Announces 2014-2015 Board of Directors and Officers

July 25, 2014 By Leave a Comment

ACA International elected its new 2014-2015 board of directors and officers at its 75th Anniversary Convention and Exposition in Chicago. Five board of director candidates were elected by the Council of Delegates, two of whom, Roger Weiss and Michael Frost, are new to the board. Once the new board was elected, the board of directors met to choose officers for the coming year.

Former President Tom Stockton and Lorraine Lyons also announced that they will be leaving the ACA International board of directors.

Officers for 2014-2015

  • Rick Doane, president
  • Jim Richards, president-elect
  • Keith Kettelkamp, treasurer

2014-2015 Board of Directors

  • Rick Doane – Farmingdale, N.Y.  (president)
  • Jim Richards – Duluth, Ga.  (president-elect)
  • Keith Kettelkamp – Princeton, N.J.  (treasurer)
  • Debra Ciskey – Bloomington, Ill.
  • Michael Frost – Cedar Rapids, Iowa
  • Michael Gardner, Sr. – Louisville, Ky.
  • Tom Gavinski – St. Paul, Minn.
  • William Hopkinson – Charlottesville, Va.
  • Nick Jarman – Lake St. Louis, Mo.
  • Matt Laws – Fort Morgan, Colo.
  • Tim Mabry – Hermiston, Ore.
  • Rick Perr – Philadelphia
  • Dan Russell – Rawlins, Wyo.
  • Mel Shaw – Los Angeles
  • Roger Weiss – St. Louis
  • Leslie Bender – Escondido, Calif. (ex-officio)
  • Pat Morris (CEO)

ACA International Announces 2014-2015 Board of Directors and Officers
http://www.insidearm.com/daily/aca-international-announces-2014-2015-board-of-directors-and-officers/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Debt Collectors Seemingly Split on the Question of Calling Cell Phones

July 25, 2014 By Leave a Comment

A consumer gives you a contact number that turns out to be his cell phone. What do you do?

In a poll-meets-pop-quiz of insideARM.com readers, 36.5 percent of participants said that when they get a contact number from a consumer that turns out to be a cell phone, they continue to call a consumer as they would on a landline. But coming in at a very close second, 33 percent of participants said that their next move would depend on whether or not they got the cell phone number specifically for the purposes of debt collection. Nine participants even wrote in to amend their answers, saying that it’s their collection agency’s practice to ask the consumer for permission to call their cell phone number for debt collection purposes.

According to the poll, 13 percent of participants scrub cell phone numbers from their lists altogether because “it’s not worth the regulatory headache.” Six percent of participants said they would ask the consumer for a home phone number, hopefully to avoid such regulatory headaches.

We reported that The Federal Communications Commission’s amicus brief filed in the case of Nigro v. Mercantile Adjustment Bureau sought to clarify what it means to get “prior express consent” from a consumer to call their cell phone number for the purposes of debt collection. According to the FCC, since Nigro did provide his cell number to the creditor, but not during the transaction that resulted in the debt owed, Mercantile violated the TCPA when it called Nigro’s cell number to collect the debt. But in another declaratory ruling earlier this year, the FCC said that “consent to be called at a number in conjunction with a transaction extends to a wide range of calls ‘regarding’ that transaction, even in at least some cases where the calls were made by a third party.”

The need for clarity about prior express consent is only going to grow, as TCPA lawsuits are poised to become the second most-litigated statute in debt collection after Fair Debt Collection Practices Act. Jack Gordon, founder of WebRecon, has tracked this trend on a monthly basis; he’ll share his expert knowledge on how collection agencies can use litigation and complaint data to be proactive in their compliance efforts at the webinar insideCompliance: Decoding Litigation Data in 2014, August 5 at 2 p.m. Eastern. Also, for the latest legal insight on the challenges of contacting consumers on their cell phones, check out To the Point: Collection Call Compliance, newly updated for 2014.

 

Debt Collectors Seemingly Split on the Question of Calling Cell Phones
http://www.insidearm.com/daily/debt-collectors-seemingly-split-on-the-question-of-calling-cell-phones/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Should the CFPB issue guidance about what it considers appropriate attorney oversight when filing debt collection lawsuits?

July 25, 2014 By Leave a Comment




Take Our Poll

On July 14, the Consumer Financial Protection Bureau filed a lawsuit against Frederick J. Hanna & Associates, a debt collection law firm that it redefined as a “lawsuit mill.” The CFPB alleges that the firm churned out hundreds of thousands of debt collection lawsuits with little or no oversight from attorneys, and violated the FDCPA in the process. In short: Lawyers aren’t happy. What kind of precedent do you think this sets?

Should the CFPB issue guidance about what it considers appropriate attorney oversight when filing debt collection lawsuits?
http://www.insidearm.com/poll/should-the-cfpb-issue-guidance-about-what-it-considers-appropriate-attorney-oversight-when-filing-debt-collection-lawsuits/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

UPDATE: NY Debt Collector’s Operations Shuttered After Joint FTC, NY AG Complaint

July 25, 2014 By Leave a Comment

The U.S. District Court for the Western District of New York issued a temporary restraining order and asset freeze against a Buffalo, NY-based debt collection operation Monday, at the request of the Federal Trade Commission and the New York Attorney General’s Office. In a joint complaint, the FTC and New York Attorney General charged three individuals – Joseph C. Bella, III, Diane Bella, Luis A. Shaw – and nine interrelated companies they control with using lies and threats against consumers in violation of federal and state laws. The court also appointed a temporary receiver to take over the defendants’ business pending trial.

The FTC alleges in the complaint that the defendants lied and told consumers that they had committed check fraud or other criminal acts; falsely threatened to arrest, imprison or sue consumers; falsely threatened to garnish consumers’ wages or put a lien on their property; failed to verify that consumers owed the debt; charged illegal fees; and revealed consumers’ debts to third parties. All of these practices are huge violations of Section 5(a) of the FTC Act and the Fair Debt Collection Practices Act on the national level, as well as New York Executive Law and New York General Business Law.

“These debt collectors continued to harass consumers and violate the law after the validity of the debt was called into question, and after the New York Attorney General’s office ordered them to stop,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “By working together with our state partners, we can leverage our resources to stop these illegal tactics.”

Joseph C. Bella, III did not respond to repeated requests for comment.

While the defendant listed on the TRO was National Check Registry, LLC, this group operated under a number of different aliases, including eCapital Services, LLC; Check Systems, LLC; Interchex Systems, LLC; Goldberg Maxwell, LLC; Morgan Jackson, LLC; Mullins & Kane, LLC; Buffalo Staffing, Inc.; and American Mutual Holdings, Inc. Upon closer examination of these organizations, there are some red flags.

For example, InterChecks Systems, LLC and Morgan Jackson LLC both have the exact same copy on their websites: “Focusing mainly on managing consumer debt, [Morgan Jackson/Interchecks] has an up and coming group of dedicated team players working together to make the entire collection process as seamless as possible and enjoyable for the consumer as well.  We understand the circumstances of debt and try to help get our clients back in good standing with their creditors.” The sites even have the same verbatim testimonials from “Aaron Smith” in Michigan and “Gladys Meecher” in Poughkeepsie, NY. Neither site makes any mention of being related to the other in any way.

Also, American Mutual Holdings, Inc. claims on its website that it is “a proud member of DBA International.” However, according to DBA International’s most recent member roster, that is not the case. DBA Executive Director Jan Stieger said American Mutual Holdings was a member of the organization until December 2013, and that DBA has requested that the company remove any language about DBA membership from its website.

ACA International reported that none of the companies listed in the complaint are ACA members.

UPDATE: The court-appointed receiver placed over Buffalo Staffing, one of the nine companies named in the original TRO, determined that the company“did not appear to be currently engaged in activities connected with the debt collection business.” As a result, the FTC, New York Attorney General and the defendants’ attorney agreed to a stipulated preliminary injunction for Buffalo Staffing only; it was later adopted by U.S. District Judge Richard J. Arcara.

“As a result of our agreement with the government, Buffalo Staffing was removed from the oversight of the receiver and is free to operate its business accordingly,” Dennis C. Vacco, an attorney representing the accused companies, said.

UPDATE: NY Debt Collector’s Operations Shuttered After Joint FTC, NY AG Complaint
http://www.insidearm.com/daily/new-york-court-halts-debt-collectors-operations-freezes-assets/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Convenience Fee Payment Processing is Now Available through Payment Savvy LLC

July 25, 2014 By Leave a Comment

Payment Savvy LLC, one of the top merchant account providers in the credit, collections, accounts receivable and medical billing industries, is proud to announce that they are now offering free payment processing. As Chad Deatherage, VP of Sales noted, the new and innovative convenience fee payment processing model is designed to avoid any legal issues within the accounts receivable and consumer finance industry.

As most business owners are well-aware, there has been a lot of recent media coverage regarding convenience fees, and if they might be against CFPB, FDCPA and state laws.

“It is very unfortunate that this is occurring and businesses are being sued due to the fees that are collected on the account receivables,” explained Deatherage, adding that this situation is what inspired Payment Savvy LLC to offer the new convenience fee program.

In addition to being an ideal option for every high risk merchant account, the new and helpful program will allow businesses to collect the full amount that is owed to them, without paying any merchant account fees.

“It will also help them avoid any attention from FDCPA, CFPB and the business owner’s state attorney general for adding additional fees,” Deatherage said, adding that the new program is an ideal way for companies to grow their revenue.

To help explain how a business can now take payments at no cost, Deatherage noted that when a consumer pays $100 to the business by either credit card or eCheck, the full $100 is collected by the company and deposited into its business account. A convenience fee is collected by Payment Savvy and the company pays absolutely nothing in processing fees. In addition to avoiding service fees, this new program gives businesses the chance to accept Visa, MasterCard, Discover, ACH and electronic checks, as well as take payments at all times by phone, online or even through text messages.

Anybody who would like to learn more about Payment Savvy LLC is welcome to visit their user-friendly website; there, they can read more about the company and its new and revolutionary free payment processing service.

About Payment Savvy LLC:

Payment Savvy LLC is the premiere merchant account provider within the credit, collections, medical billing and accounts receivable industries. They are now offering free payment processing, which allows their clients to accept payments via Debit/Credit Cards without paying any merchant fees. This new program will help their clients to increase their payments while increasing their revenue. For more information, please visit http://www.paymentsavvy.com/.

Convenience Fee Payment Processing is Now Available through Payment Savvy LLC
http://www.insidearm.com/daily/convenience-fee-payment-processing-is-now-available-through-payment-savvy-llc/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

NJ Court Holds No FDCPA Violation for Filing Suit on Time-Barred Debt

July 25, 2014 By Leave a Comment

Filing a lawsuit to collect a time-barred debt does not violate the Fair Debt Collection Practices Act according to a June 30 decision from a New Jersey state trial court.

The decision,Midland Funding v. Thiel, involved a collection action to recover the unpaid balance of a Home Depot credit card. The law firm representing the creditor filed suit under New Jersey’s six-year limitation period for contracts, which has been applied to countless credit card debts. The trial court dismissed the claim reasoning that this particular credit card could only be used to make purchases at Home Depot.

Four Year Limitations Period for “Store Branded” Credit Card Debt

A little over three months ago, this exact same issue was decided by the Appellate Division in an unpublished opinion in New Century Financial Services v. McNamara (you can read our analysis of that decision here). Although the trial court here did not rely on McNamara, it similarly reasoned that because the use of credit was limited to goods and services available only at Home Depot, the correct limitations period, according to the trial court, was New Jersey’s four-year limitations period for the sale of goods.

No FDCPA Violation

The filing of the lawsuit under the wrong statute of limitations is not the type of conduct the FDCPA prohibited, the court wrote. “While the process of debt collection may be an unhappy event for a Defendant, Plaintiff did not engage in oppressive conduct that would warrant a FDCPA violation or sanctions,” the court concluded.

The trial court departed from the reasoning of the New Jersey State Appellate Division in McNamara. There, the Appellate Division remanded the case to make findings on whether a time-barred lawsuit violates the FDCPA.

Unfortunately, the trial court’s decision has limited impact and other New Jersey state courts can choose not to follow it.

This post originally appeared on the Consumer Financial Services Blog, run by ARM defense firm Maurice & Needleman.

NJ Court Holds No FDCPA Violation for Filing Suit on Time-Barred Debt
http://www.insidearm.com/daily/nj-court-holds-no-fdcpa-violation-for-filing-suit-on-time-barred-debt/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News

Big Bank Regulators Propose New Supervision Model

July 18, 2014 By Leave a Comment

International banking regulators issued a new set of principles calling for a “college of supervisors” to oversee the global banking business, according to The New York Times’ Dealbook. The idea, explains University of Pennsylvania professor David Zaring, is to create a team of regulators for globally important banks that would share information fluidly enough to make the supervision of these institutions on a country-by-country basis manageable.

A “home” supervisor, or the supervisor in the country in which the bank is based, would lead the college, and would collaborate with those countries in which the bank has branches. In order to prevent a large-scale economic crisis similar to the one seen in 2008, the college would include a “crisis management group.”

However, Zaring points out that the idea of a college of supervisors for big banks is unlikely to “graduate” to fruition for a number of reasons. First, a college of supervisors is designed to be as ivory-tower in name as it is in practice; the main objective is communication, not taking action to fix a problem. Specifically, when it comes to financial crises, the college of supervisors is an untested and unproven solution to banking troubles. And stateside, big banks and creditors are already experiencing growing oversight from the Consumer Financial Protection Bureau, which was born largely out of big bank problems in the first place.

In the end, large banks and creditors in the U.S. are still going to look to the CFPB as its own “home” supervisor. This has created an especially important tie to the debt industry ever since the CFPB released its bulletin indicating that first party creditors will be held to the same compliance standards as collection agencies and “service providers,” particularly when it comes to Unfair Deceptive or Abusive Acts and Practices (UDAAP).

Could this kind of regulatory collaboration work in the debt collection sphere? What would it look like? Let us know what you think of the proposal in the comments.

Big Bank Regulators Propose New Supervision Model
http://www.insidearm.com/daily/big-bank-regulators-propose-new-supervision-model/
http://www.insidearm.com/feed
insideARM

Accounts Receivable Management

Filed Under: News
Next Page »