Archives for March 2015

CBE Companies’ Tom Penaluna Recognized for Community Leadership

March 28, 2015 By Leave a Comment

CBE Companies Chairman and Chief Executive Officer Tom Penaluna earned the Fulfilling the Vision of One award from the Greater Cedar Valley Alliance Thursday for his continued leadership in the Cedar Valley.

Penaluna committed to growing leaders

Penaluna has led CBE for 35 years, growing the company from 25 employees to more than 1,600 today. Along the way, Penaluna has been instrumental in growing leaders both inside CBE and in the greater community.

The Greater Cedar Valley Alliance award recognizes an “outstanding contribution by an individual in the private sector for leadership in creating and strengthening regional collaboration and cooperation for economic and community development.”

“Tom is one of those special people who doesn’t just want to give back to his community, he wants to do something significant enough to leave our people better off because of his efforts,” said Steve Dust, CEO of the Greater Cedar  Valley Alliance.

Penaluna’s influence runs deep in both the Waterloo/Cedar Falls area and Iowa as a whole. Penaluna served eight years on the Waterloo City Council, as well as on the Alliance and Chamber of Commerce Board since 2005. He is also a board member on the Iowa Partnership on Economic Progress. The Alliance noted, “Tom is a visionary who works tirelessly for the good of his company and the community.”

Of particular note, the Alliance cited his passion for bettering the community as he helped form Leader Valley. That program’s Leader in Me component brings the 7 Habits of Highly Effective People to students in Cedar Valley Schools.

Dust noted that Penaluna not only built a successful and growing company, but sought out an opportunity to make a powerful change in the community.

“Tom Penaluna is a business leader who is contributing to the success of every student in our schools – and the future of the Cedar Valley – through the Leader Valley initiative,” Dust said.

 

About CBE Companies

Founded in 1933, CBE Companies is a global provider of outsourced call center services. The company specializes in receivables management and customer care services. This narrow focus has enabled the company to be an expert in every aspect of the business. From a one-of-a-kind approach to onboarding to a proven ramp process, CBE’s focused expertise saves its partners money and enables them to focus on their core business.

CBE approaches every business relationship as a strategic partnership. The company shares in its partners’ successes and failures and strives to create more of the former and less of the latter. CBE firmly believes transparency and communication are the cornerstones in the foundation for success. The company’s approach to a strategic partnership begins with open communication; this assures CBE partners that the team handling their business is committed to delivering customer insights, ideas and new ways to accomplish goals.

With more than 1,500 people in seven locations globally, CBE Companies can deliver the right solution in the right location for your business. For more information about CBE Companies, please visit www.cbecompanies.com or call 319-833-1397.

CBE Companies’ Tom Penaluna Recognized for Community Leadership
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Accounts Receivable Management

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Greetings from the Self-Proclaimed “Dullest Person in the ARM Industry”

March 28, 2015 By Leave a Comment

Tim Bauer

Tim Bauer

Hello again.  Well, I have survived almost 3 months in my new role as President of insideARM.  I must say it is has been everything I thought and more. I joined a terrific group of talented people.

I had an interesting phone call this week from a long-time friend in the industry. It really validated my belief about the company.  We were talking about all of the current events/news in the industry.  He said: “I do two things EVERY DAY.  I read the Wall Street Journal and I read the daily insideARM newsletter.” It took a second for the power of that statement to register. But the more I thought about it, the more proud I became to be a part of the ARM industry’s leading source of news, information, education, and conferences.

Speaking of conferences….in the words of the late Joan Rivers: “Can we talk?” My hair is getting thinner and whiter by the minute.  I have been going to the various industry events for over 25 years. I used to get excited about going to conferences. I have a different perspective these days.

I am so “over” Las Vegas.  I am not a gambler.  Plus, since I have the well-earned title of being THE DULLEST PERSON IN THE ARM INDUSTRY, all of the glitter and glamour of Las Vegas is lost on me. Lastly, time away from home has become less attractive.  I like being at home. Shorter trips are better for me, and I hear the same from many of my colleagues.

insideARM has created a different conference model for our industry. The 3rd Annual Larger Market Participant Summit (April 23, 2015) is shaping up quite nicely. First of all.  This conference is designed entirely for the LMPs. It’s in Washington, D.C., not in Las Vegas.  The conference is not at a beautiful resort surrounded by a fabulous golf course. There are no distractions.  There is also no exhibit hall. Best of all, the event is not spread out over multiple days.  It is a single working day. For many people it can be a day trip to D.C.

I urge you to take a look at the Agenda. I think you will find it very compelling. You will not hear the same speakers and speeches you have heard at prior events. The program is designed to stimulate discussion and collaborative thinking.  There will only be a single general session panel (with a terrific group of experts on one of the hottest industry issues right now: Credit Bureau Reporting). The rest of the day is built around small group sessions discussing the most important issues affecting our industry.

YOU are an important part of the conference. We don’t just want people to attend the conference, we want people to participate in the conference. Your participation in discussions is what make the Summit important.

We have had a tremendous response to the event so far. If you are interested in participating I suggest you act quickly.  Our hotel room block expires on March 31st (that’s this coming Tuesday).  There are still some rooms available. There is another city-wide convention at the same time (neurology, in case you are interested).  We are being told that rooms will be scarce and pricey if you wait too long.

I look forward to seeing you in D.C.

Greetings from the Self-Proclaimed “Dullest Person in the ARM Industry”
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Accounts Receivable Management

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Obama, Republicans, in Legislative Tug-of-War Over Over CFPB Reform

March 28, 2015 By Leave a Comment

On this side, Republicans in Congress, with an eye on dismantling the Consumer Financial Protection Bureau.

On this side, President Barack Obama, who has stated that he will veto any bill “to unravel Wall Street reform.”

These comments happened Thursday, in Birmingham, Alabama, during a speech focused on the economy. Obama sees Republican pushes to dismantle the CFPB as an attack on working class families and tax payers. “The Republican budget would make it harder for the CFPB to do its job, and allow Wall Street to go back to the kind of recklessness that led to the crisis in the first place,” he said.

Republicans have always seen the CFPB as a challenge to the free market. In their economic view, banks should be free to decide to lend money to people based on credit instead of government mandates.

Collection agencies have seen the CFPB as an opaque Magic 8 Ball, with no clear direction or guidance for those working in the accounts receivable management space.

We can expect to hear more rhetoric from both sides in the ramp-up to the 2016 presidential elections. Democrats will want to focus the conversation on consumer protections — from reforms in debt collection to reforms in lending (specifically, yesterday’s story about payday lending). Republicans will focus largely on what they see as a regulatory body with no supervision, and will likely frame the conversation in terms of a need for smaller government. (Texas Representative Randy Neugebauer would accomplish this smaller government by replacing Richard Cordray with a five-person bipartisan committee.)

Republicans will also attempt to direct attention to those whom they feel need protection: “Main Street” financial institution. Using language usually reserved for liberal ecologists, House Financial Services Committee Chairman Jeb Hensarling said, “It is not an exaggeration to say that community banks and credit unions are withering on the vine. We are losing, on average, more than one a day and they are not perishing of natural causes. The sheer weight, volume, cost, complexity, and uncertainty of federal regulation is a burden that is killing them off. And as they die, unfortunately, so do the dreams of millions of our fellow citizens who rely upon these community financial institutions to achieve their American dream of financial independence.”

Neugebauer sees these financial reforms as a necessary corrective: Today, the Financial Services Committee has begun to move the pendulum closer to the direction of reasonable regulation by taking the first step to address much-needed regulatory relief for our Main Street financial institutions and the consumers they serve.”

The answer is no doubt somewhere in the middle. Good luck finding where that is.

Obama, Republicans, in Legislative Tug-of-War Over Over CFPB Reform
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Accounts Receivable Management

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Is This the Beginning of the End for Payday Loan Operations?

March 28, 2015 By Leave a Comment

The Consumer Financial Protection Bureau (CFPB) announced it is considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans. The proposals under consideration would also restrict lenders from attempting to collect payment from consumers’ bank accounts in ways that tend to rack up excessive fees. The strong consumer protections being considered would apply to payday loans, vehicle title loans, deposit advance products, and certain high-cost installment loans and open-end loans.

“Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” said CFPB Director Richard Cordray. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay. The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans. These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.”

Read NPR’s take on the issue: Payday Loans — And Endless Cycles Of Debt — Targeted By Federal Watchdog

Today, the Bureau is publishing an outline of the proposals under consideration in preparation for convening a Small Business Review Panel to gather feedback from small lenders, which is the next step in the rulemaking process. The proposals under consideration cover both short-term and longer-term credit products that are often marketed heavily to financially vulnerable consumers. The CFPB recognizes consumers’ need for affordable credit but is concerned that the practices often associated with these products – such as failure to underwrite for affordable payments, repeatedly rolling over or refinancing loans, holding a security interest in a vehicle as collateral, accessing the consumer’s account for repayment, and performing costly withdrawal attempts – can trap consumers in debt. These debt traps also can leave consumers vulnerable to deposit account fees and closures, vehicle repossession, and other financial difficulties.

Read a counter-proposal from AL.com: Payday loans: Don’t rush into regulations without research: guest opinion 

The proposals under consideration provide two different approaches to eliminating debt traps – prevention and protection. Under the prevention requirements, lenders would have to determine at the outset of each loan that the consumer is not taking on unaffordable debt. Under the protection requirements, lenders would have to comply with various restrictions designed to ensure that consumers can affordably repay their debt. Lenders could choose which set of requirements to follow.

Read the Huffington Post’s take: Consumer Financial Protection Bureau Proposes New Payday Lending Rules

Ending Debt Traps: Short-Term Loans
The proposals under consideration would cover short-term credit products that require consumers to pay back the loan in full within 45 days, such as payday loans, deposit advance products, certain open-end lines of credit, and some vehicle title loans. Vehicle title loans typically are expensive credit, backed by a security interest in a car. They may be short-term or longer-term and allow the lender to repossess the consumer’s vehicle if the consumer defaults.

For consumers living paycheck to paycheck, the short timeframe of these loans can make it difficult to accumulate the necessary funds to pay off the loan principal and fees before the due date. Borrowers who cannot repay are often encouraged to roll over the loan – pay more fees to delay the due date or take out a new loan to replace the old one. The Bureau’s research has found that four out of five payday loans are rolled over or renewed within two weeks. For many borrowers, what starts out as a short-term, emergency loan turns into an unaffordable, long-term debt trap. 

The proposals under consideration would include two ways that lenders could extend short-term loans without causing borrowers to become trapped in debt. Lenders could either prevent debt traps at the outset of each loan, or they could protect against debt traps throughout the lending process. Specifically, all lenders making covered short-term loans would have to adhere to one of the following sets of requirements:

  • Debt trap prevention requirements: This option would eliminate debt traps by requiring lenders to determine at the outset that the consumer can repay the loan when due – including interest, principal, and fees for add-on products – without defaulting or re-borrowing. For each loan, lenders would have to verify the consumer’s income, major financial obligations, and borrowing history to determine whether there is enough money left to repay the loan after covering other major financial obligations and living expenses. Lenders would generally have to adhere to a 60-day cooling off period between loans. To make a second or third loan within the two-month window, lenders would have to document that the borrower’s financial circumstances have improved enough to repay a new loan without re-borrowing. After three loans in a row, all lenders would be prohibited altogether from making a new short-term loan to the borrower for 60 days.
  • Debt trap protection requirements: These requirements would eliminate debt traps by requiring lenders to provide affordable repayment options and by limiting the number of loans a borrower could take out in a row and over the course of a year. Lenders could not keep consumers in debt on short-term loans for more than 90 days in a 12-month period. Rollovers would be capped at two – three loans total – followed by a mandatory 60-day cooling-off period. The second and third consecutive loans would be permitted only if the lender offers an affordable way out of debt. The Bureau is considering two options for this: either by requiring that the principal decrease with each loan, so that it is repaid after the third loan, or by requiring that the lender provide a no-cost “off-ramp” after the third loan, to allow the consumer to pay the loan off over time without further fees. For each loan under these requirements, the debt could not exceed $500, carry more than one finance charge, or require the consumer’s vehicle as collateral.

Ending Debt Traps: Longer-Term Loans
The proposals under consideration would also apply to high-cost, longer-term credit products of more than 45 days where the lender collects payments through access to the consumer’s deposit account or paycheck, or holds a security interest in the consumer’s vehicle, and the all-in (including add-on charges) annual percentage rate is more than 36 percent. This includes longer-term vehicle title loans and certain installment and open-end loans.

Installment loans typically stretch longer than a two-week or one-month payday loan,have loan amounts ranging from a hundred dollars to several thousand dollars, and may impose very high interest rates. The principal, interest, and other finance charges on these loans are typically repaid in installments. Some have balloon payments. The proposal would also apply to high-cost open-end lines of credit with account access or a security interest in a vehicle.

When lenders have the ability to access the consumer’s account or have a security interest in a vehicle, consumers may lose control over their financial choices and these longer-term loans can turn into debt traps. The CFPB’s proposals under consideration for longer-term loans would eliminate debt traps by requiring that lenders take steps to determine that borrowers can repay. Just as with short-term loans, lenders would have two alternative ways to extend credit and meet this requirement – prevent debt traps at the outset or protect against debt traps throughout the lending process. Specifically, lenders making covered longer-term loans would have to adhere to one of the following sets of requirements: 

  • Debt trap prevention requirements: Similar to short-term loans, this option would eliminate debt traps by requiring lenders to determine at the outset that the consumer can repay the loan when due – including interest, principal, and fees for add-on products – without defaulting or re-borrowing. For each loan, lenders would have to verify the consumer’s income, major financial obligations, and borrowing history to determine whether there is enough money left to repay the loan after covering other major financial obligations and living expenses. Lenders would be required to determine if a consumer can repay the loan each time the consumer seeks to refinance or re-borrow. If the borrower is having difficulty affording the current loan, the lender would be prohibited from refinancing into another loan with similar terms without documentation that the consumer’s financial circumstances have improved enough to be able to repay the loan.  
  • Debt trap protection requirements: The Bureau is considering two specific approaches to the debt trap protection requirements for longer-term products. Under either approach, loans would have a minimum duration of 45 days and a maximum duration of six months. With the first, the proposal being considered would require lenders to provide generally the same protections offered under the National Credit Union Administration program for “payday alternative loans.” These loans have a 28 percent interest rate cap and an application fee of no more than $20. With the second, the lender could make a longer-term loan provided the amount the consumer is required to repay each month is no more than 5 percent of the consumer’s gross monthly income; the lender couldn’t make more than two of these loans within a 12-month period. 

Restricting Harmful Payment Collection Practices
Lenders of both short-term and longer-term loans often obtain access to a consumer’s checking, savings, or prepaid account to collect payment through a variety of methods, including post-dated checks, debit authorizations, or remotely created checks. However, this can lead to unanticipated withdrawals or debits and transaction fees. When lenders attempt to get repayment through repeated, unsuccessful withdrawal attempts, consumers are charged insufficient funds fees by their depository institution and returned payment fees by the lender, and may even face account closure. These fees add to the spiraling costs of falling behind on these loan products and make it even harder for a consumer to climb out of debt. To mitigate these problems, the Bureau is considering proposals that would:

  • Require borrower notification before accessing deposit accounts: Under the proposals being considered, lenders would be required to provide consumers with three business days advance notice before submitting a transaction to the consumer’s bank, credit union, or prepaid account for payment. The notice would include key information about the forthcoming payment collection attempt. This requirement would apply to payment collection attempts through any method and would help consumers better manage their accounts and overall finances.
  • Limit unsuccessful withdrawal attempts that lead to excessive deposit account fees: Under the proposals being considered, if two consecutive attempts to collect money from the consumer’s account were unsuccessful, the lender would not be allowed to make any further attempts to collect from the account unless the consumer provided a new authorization. This would limit fees incurred by multiple transactions that exacerbate a consumer’s financial woes.

A factsheet summarizing the proposals under consideration is available at:http://files.consumerfinance.gov/f/201503_cfpb-proposal-under-consideration.pdf

A factsheet summarizing the Small Business Review Panel process is available at:http://files.consumerfinance.gov/f/201503_cfpb_factsheet-small-business-review-panel-process.pdf 

An outline of the proposals under consideration will be available on March 26 at:http://files.consumerfinance.gov/f/201503_cfpb_outline-of-the-proposals-from-small-business-review-panel.pdf

A list of questions on which the Bureau will seek input from the small business representatives providing feedback to the Small Business Review Panel is available at: http://files.consumerfinance.gov/f/201503_cfpb_list-of-questions-from-small-business-review-panel.pdf

This is the first public step in the CFPB’s efforts to reform the markets for these products. In addition to consulting with the Small Business Review Panel, the Bureau will continue to seek input from a wide range of stakeholders before continuing with the process of a rulemaking. Once the Bureau issues its proposed regulations, the public will be invited to submit written comments which will be carefully considered before final regulations are issued.

Is This the Beginning of the End for Payday Loan Operations?
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Change Reaction: Implementing Change Control Processes in Your Organization

March 28, 2015 By Leave a Comment

One of the offerings at The Compliance Professionals Forum – in fact, one of our key differentiators – is our monthly Compliance Peer Group conference calls. Groups of no more than 15 individuals spend an hour or more, once a month, diving into compliance questions, issues, challenges, and successes.

Terri Haley, our Director of Compliance, and I, moderate the calls, so we have a front-row seat, in a sense, at these working sessions. And I think it’s fair to say that, if we were asked to describe the tenor of these group, the description would be “overwhelmed.” On top of all internal policies and procedures compliance oversees, there is a veritable flood of changing laws and regulations to keep up with.

Luke Umstetter, general counsel for Resurgent Capital Services, recently published an article over on CPF titled “Change Reaction: Implementing Change Control Processes in Your Organization” (you’ll need to be a member of The Compliance Professionals Forum in order to read this, and other, full articles).

It has been said that change is the only real constant.  Nowhere is that more true than in the ARM industry nowadays.  The pace and degree of change on the legal and regulatory fronts in recent years has been staggering, and there is no sign of it slowing any time soon.  With the continuous barrage of new laws, regulations and other requirements, organizations that are not prepared to manage change will eventually be overwhelmed by it.  A change control process, or “CCP,” is the way in which an organization implements and manages sudden or ongoing change.  For ARM companies, the need for change can arise suddenly and aggressively at the regulatory or market levels.

Luke gets at that drinking-from-the-firehose sensation right there in the opening paragraph. He goes on to lay out three key things a compliance department should keep in mind when it starts to get serious about change control processes:

1)      Organizations must have a solid grasp on their compliance management system (CMS). In fact, that’s a regular feature of the monthly peer group conference calls: “Where are you in your process? Can you help me get there? And is there something I’m doing that you’re not that I can share, too?” Additionally, this year’s ARM-U (in the Dallas/Ft Worth area) is focusing a half-day specifically on compliance management systems: gap assessments, best practices, problem-solving.

2)      Make sure you’ve set up a system for documenting, logging, and tracking any issues that prompt a change in a policy or procedure. “Once determined, implementation should involve a task owner or team of subject matter experts that, depending on the scope and materiality of the change and reactions thereto should report progress on the matter to a committee or board.”

3)      You’ll want to make sure “all relevant organizational documentation should be updated contemporaneously to reflect the implementation of the change(s), and each discrete process affected should be similarly trained and updated consistent with the new process or adjustment.”

Since it’s clear that change is really the only dependable constant any ARM company can rely on, it makes sense to develop solid solutions to manage those changes. What, specifically, is your company doing to manage change, rather than being managed by change?

Change Reaction: Implementing Change Control Processes in Your Organization
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Collection Agencies Choose Sides in Busy Week for ED Contract Protest Case

March 21, 2015 By Leave a Comment

This week saw a flurry of activity in the Court of Federal Claims case against the Department of Education over its decision to end student loan debt collection contracts with five collection agencies. The end result is a consolidated case that pits four collection agencies — with two others supporting as amici — against the United States and five other collection agencies on the contract.

Going back a week, the Government Accountability Office (GAO) last Friday dismissed a formal protest from Pioneer Credit Recovery over ED’s decision. There were no details given for the dismissal, which occurred uncommonly quickly compared to the typical GAO protest timeline. The claim was most likely expedited so that Pioneer could join the consolidated Federal Claims lawsuit.

And so Pioneer did. The company filed a motion Monday that was consolidated into the existing case. That brings to four the number of collection agencies seeking relief from ED in the lawsuit. The fifth company impacted by ED’s decision, West Asset Management, filed a motion mid-week to be added as an amicus curiae in the case. WAM has a deadline of April 1 to file its amicus brief supporting the four other plaintiffs.

Another ED contractor, CBE Group, was also added to the case as amicus curiae for the plaintiffs. CBE was not one of the five contractors terminated by ED. CBE’s deadline for filing a brief is also April 1.

ED noted in an announcement of its decision that a review of all 22 of its private debt collection contractors had revealed “unacceptably high rates” of misinformation regarding rehabilitations among five collection vendors. One of the collection agencies protesting the action provided a statement this week to insideARM addressing those concerns.

“We look forward to a full, fair and open adjudication of our complaint, something we expect from an Administration committed to transparency,” said Brian Davis, CEO of Coast Professional, Inc. “Coast has been a top performing Private Collection Agency receiving the highest scores and has at all times complied with applicable law and regulation, including the FDCPA.  As evidence of our good work, we have never had any violations — major or minor — that would help us understand this latest action. Specifically in helping students rehabilitate their loans, Coast has followed the Education operations manual regarding offers to remove the delinquency of repayment from credit reports and the waiving of collection fees, both which are specifically allowed by the Department of Education.”

ED got some support this week on its side of the case, as five other collection agencies were named as Defendant-Intervenors.

In conjunction with ED’s notice that it would be ending contracts with some collectors, the agency also sent letters to five other contractors informing them that they would receive term extensions when the current contract ends. The extensions were made based on performance scoring criteria. But four of the five dismissed contractors noted that they also qualified for term extensions under the contract and that they would have received additional accounts if ED had not decided to end its relationship with them.

That is now the central focus of the protest case before the Court of Federal Claims. The four plaintiffs are seeking an injunction that would – while the protest is being adjudicated — prevent ED from forwarding the additional accounts to the other five collectors: Account Control Technology, Continental Service Group, Financial Management Systems, GC Services, and Windham Professionals.

Alternatively, the suit asks that the Court award the term extension, or bridge contract, to the four plaintiffs that qualified under the terms of the contract.

The five collection agencies that received term extensions have been added to the case as Defendant-Intervenors to support the defendant, the United States.

As of Friday, according to an order from the judge granting access to sealed filings to WAM and CBE as amici, the case is formally named Coast Professional, National Recoveries, Enterprise Recovery Systems, and Pioneer Credit Recovery (Plaintiffs) v. The United States (Defendant) and Account Control Technology, Continental Service Group, Financial Management Systems, GC Services, and Windham Professionals (Defendant-Intervenors). WAM and CBE are amici for the plaintiffs.

Collection Agencies Choose Sides in Busy Week for ED Contract Protest Case
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Collection Law Firm Uses Recent Ruling Against CFPB to Bolster FDCPA Enforcement Defense

March 21, 2015 By Leave a Comment

A federal judge in Indiana last week dismissed part of an enforcement action brought by the Consumer Financial Protection Bureau (CFPB) against a for-profit college under the Truth in Lending Act (TILA) because TILA actions are subject to a one-year statute of limitations. A collection law firm currently embroiled in a nasty legal fight with the CFPB jumped on the opportunity to note that the FDCPA carries similar restrictions.

Judge Sarah Evan Barker, in the Southern District of Indiana, denied in part and granted in part a motion to dismiss a case against ITT Educational Services, an operator of for-profit technical colleges. ITT was sued by the CFPB for allegations it misled students and steered them into high-cost, high-interest education loans, violations of the TILA and UDAAP provisions of the Consumer Financial Protection Act (CPFA).

ITT filed a motion to dismiss the case on several grounds, including the CFPB’s constitutionality and its lack of authority over college operators. Judge Barker rejected most of the arguments, leaving the lawsuit primarily intact.

But she did dismiss the CFPB’s claims under the TILA as time-barred, as the law carries a one-year statute of limitations. The CFPB argued that it was suing under a different section of the TILA, thus, its claim wasn’t governed by the SoL. And besides, the CFPB said, the SoL applies only to private actions. Judge Barker, however, noted that even the CFPB’s claim is governed by the one-year limit because it was a civil action, not an administrative action.

She dismissed the one count under the TILA, but denied ITT’s motion to dismiss three other counts under the CPFA.

On Wednesday, collection law firm Frederick J. Hanna & Associates filed a notice that it was using the ruling to support its own motion to dismiss a case brought by the CFPB. (Hanna’s notice also contains a full copy of the ITT ruling.)

Hanna and the CFPB have been locked in a nasty legal battle ever since the Bureau announced its lawsuit last summer. The CFPB alleges that the firm was a “lawsuit mill” that churned out debt collection actions and violated the FDCPA en masse.

The case has drawn heavy scrutiny from ARM legal experts who claim that the Bureau might be overstepping its authority in targeting a law firm. Hanna certainly agrees with that contention, engaging in a testy back-and-forth argument with the CFPB in court filings.

Like in the ITT action, the CFPB sued Hanna under the CPFA and a consumer statute, the FDCPA in this case. The notice from Hanna this week argues that the FDCPA carries a similar SoL as the TILA and the judge in the case needs to take that into consideration.

“[We] have argued the Bureau’s FDCPA claims are barred by the one-year statute of limitations in § 1692k, and the Bureau countered in the same manner it did in ITT by arguing § 1692k applies only to private actions,” the firm wrote in its notice. “The court’s reasoning in ITT therefore applies equally here.”

The focus on the FDCPA’s statute-of-limitations for bringing legal action is relevant because the CFPB has vigorously argued that it does not apply to government actions. It said in its initial response to Hanna’s motion to dismiss that the one-year limitation applies only to private actions brought by consumers and provided numerous examples in the legislative history of the FDCPA. But it took the argument even further.

The CFPB wrote that even if the specific text of the FDCPA was not clear, a long-running principle of statutory construction would allow it to take enforcement actions on acts older than a year: quod nullum tempus occurrit regi – “Time does not run against the King.” The CFPB wrote that “In the absence of a congressional enactment clearly imposing a limitations period, the United States, in its governmental capacity, is not subject to one.”

Hanna filed its motion to dismiss in September 2014, and the CFPB responded three weeks later, and Hanna responded shortly thereafter. The filing this week is the first substantive action on the case since then.

 

Collection Law Firm Uses Recent Ruling Against CFPB to Bolster FDCPA Enforcement Defense
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BillingTree Showcasing Reg E Compliance Service amongst Suite of Payment Offerings at ACA International Spring Forum in San Antonio March 25-27, 2015

March 21, 2015 By Leave a Comment

BillingTree®  is showcasing multiple payment services and solutions at the 2015 ACA International Spring Forum & Expo from March 25 – 27. The offerings featured include a new Regulation E (Reg E) and E-sign compliance service; Check 21 paper check conversion solution and the extremely popular Medical Savings Account acceptance service ‘Health PAS’.  Spring Forum attendees can learn how these offerings benefit Collection Agency bottom lines at BillingTree’s booth 10.

BillingTree is leveraging the Spring Forum to debut an innovative Reg E & E-Sign document management service. The new service allows companies to digitally present, process, and store documentation of recurring ACH payments and signatures in accordance with Reg E and the E-sign act rules.  This helps solve the challenge agencies face managing the documentation and paper trail required to extend consumers installment payment plans, and the required notifications, signature captures and document archiving and retrieval.

Also featured at Spring Forum is BillingTree’s solution enabling agencies to convert paper checks or tele-checks into electronic payments through the use of Check 21. The Check 21 solution creates and submits demand draft documents to the bank of deposit in an electronic form. By combining remotely created checks (RCC) and Check 21 X9.37 files, agencies benefit from direct merchant-to-bank relationships, lower NSFs, and have quicker access to funds from the Fed. The solution removes much of the cost and hassle associated with handling  tele-checks and paper checks (mailed to the agency for payments) while saving the time and expenses related to accepting  these deposits, including printing check images or taking them to a local banking branch.

The third showcased offering is BillingTree’s Health PAS (Payment Ambassador Service) – which allows flexibility for agencies taking payments on behalf of healthcare providers. Health PAS offers three unique ways to capture Medical Savings Account (HSA/FSA) payments: as an extension of the healthcare provider with a dedicated merchant account owned by the provider, a gateway only variation that points to an existing merchant account owned by a health care provider and a hybrid – where a merchant account is opened by the agency on behalf of the health provider – which requires a contingency agreement from an authorized health care provider.

“Collection Agencies continue to face greater regulatory scrutiny while also being pressed for more services and faster returns by their clients,” commented Chad Probst, BillingTree’s Vice President of Sales.  “The services and solutions we are highlighting at this year’s ACA Spring Forum meet the needs of our ARM clientele, enabling them to focus on their core business while more easily and compliantly capturing or converting payments for their customers.”

To learn more about these or any of BillingTree’s offerings, BillingTree staff will be exhibiting and answering questions at booth 10 during the main exhibition hall hours or request information online at http://info.mybillingtree.com/WebsiteForms_DemoRequest.html

BillingTree’s mission has centered around assisting companies with growing their business by delivering cost-effective, compliant payment solutions that increase and accelerate collections. Committed to and serving the accounts receivable industry for over a decade, BillingTree is the industry leader in the breadth of integrations with core collection platform systems and payment technologies, and in payment compliance. At BillingTree – Your Growth is Our Business. For more information, visit www.mybillingtree.com or call 877.4.BILLTREE.

BillingTree Showcasing Reg E Compliance Service amongst Suite of Payment Offerings at ACA International Spring Forum in San Antonio March 25-27, 2015
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Accounts Receivable Management

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On-Demand Webinar: Student Loan Data Security

March 21, 2015 By Leave a Comment

Data Security and compliance play significant roles in Student Loan Collections

2015-02-inin-webinar-collections-101-after-event

Your clients are expecting you to conduct various audits of your processes and procedures.

There’s overarching regulations like SSAE 16 and those from the CFPB. Add to those requirements from The Higher Education Act of 1964 and the Department of Education, and collecting on student loans becomes much more than elementary. Listen as our panel discusses what it takes to maneuver through this maze when collecting on Student Loan debt.

The Student Loan Landscape at a Glance

On-Demand Webinar: Student Loan Data Security
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Accounts Receivable Management

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CFPB Finalizes Policy on Consumer Complaint Narratives; Changes Company Response Process

March 21, 2015 By Leave a Comment

The Consumer Financial Protection Bureau (CFPB) announced today that it has finalized its publication rules for consumer narratives in complaints. The move will allow the CFPB to publish the language provided by consumers explaining why they are logging the complaint. The final policy includes a significant change to the way companies can respond to consumer narratives.

The CFPB is also publishing a Request for Information seeking public input on ways to highlight positive consumer experiences, such as by receiving consumer compliments about financial services businesses.

“Consumer narratives shed light on the full consumer perspective behind a complaint,” said CFPB Director Richard Cordray. “Narratives humanize the problems consumers face in the marketplace. Today’s policy will serve to empower consumers by helping them make informed decisions and helping track trends in the consumer financial market.”

When consumers submit a complaint to the CFPB, they fill in information such as who they are, who the complaint is against, when it occurred, and what issues were relevant based on a preset list of options. They are also given a text box to describe what happened and can attach documents to the complaint. When the Bureau forwards the complaint to the company, the narrative text and documents (if any) are provided.

But that narrative text does not currently appear in the CFPB’s public complaints database, nor is it published anywhere else. In July 2014, the CFPB proposed a policy that would allow consumers to publicly share their stories when they submit complaints to the Bureau.

There was strong opposition to the proposal in the banking and ARM industries. The American Bankers Association, ACA International, NARCA and many other groups filed comments on the proposal. The Financial Services Roundtable also launched a PR campaign against the proposal. But the plan will move forward, with some changes from the original proposal.

Starting today, when consumers submit a complaint to the CFPB, they will have the option to check a box and opt-in to sharing their narrative. In order for companies to learn about this new system, the Bureau will not publish any consented-to narrative for at least 90 days after the policy’s publication in the Federal Register, most likely Friday March 20. (Read the final statement submitted for publication)

In its announcement today, the CFPB noted that it is concerned with both consumer privacy and ensuring companies named in complaints have an opportunity to publicly respond. The CFPB said that the policy establishes a number of important safeguards for a clear, fair, and transparent process, including:

  • Consumers must opt-in to share their story
  • Personal information will be removed from narratives by CFPB staff – the CFPB will use a thorough process to ensure complaints are scrubbed of information such as names, telephone numbers, account numbers, Social Security numbers, and other direct identifiers.
  • Complaints must meet certain criteria to qualify for narrative publication – including that the complaint is submitted through the CFPB website, that the complaint is not a duplicate submission, and that the consumer has a confirmed relationship with the financial institution.
  • Companies can choose a response to publish – Companies will be given the option to select from a set list of structured response options as a public-facing response to address the consumer complaints. Companies will be under no obligation to offer a public response, and they have 180 days after the consumer complaint is routed to them to select the optional, public response. Companies will have the option to address all consumer complaints submitted, not just those where a consumer consented to publication.

The last bullet point represents a significant change from the original proposal.

The Bureau’s proposal has always allowed for a company response to consumer narratives. Originally, the CFPB thought that the company responses would be submitted in a manner similar to that of consumers: using a text box to write a response, given that consumer information was not included.

But the CFPB noted that it received many comments from trade groups and companies concerned that an unstructured open field might expose responding companies to liability under various laws, including Gramm-Leach-Bliley, the FCRA, and even the FDCPA. Commenters argued that, under the Bureau’s proposal to permit voluntary narrative company responses, they might not be able to provide any public-facing response at all due to legal, business, and reputational considerations, thus undercutting the CFPB’s desire to provide companies an opportunity to respond.

So the Bureau will provide companies with a finite list of optional structured responses from which company responders can choose. Within the secure web portal companies use to respond to complaints, the CFPB intends to add a set list of responses, giving companies the ability to recommend a public-facing response addressing the substance of the consumer’s complaint. Companies will be under no obligation to respond with their own narrative.

Also in a nod to comments received from the financial services industry, the CFPB today is issuing a Notice and Request for Information (RFI) seeking input from the public on the potential collection and sharing of information about consumers’ positive interactions with financial service providers.

Broadly speaking, the Bureau sees two options for sharing positive consumer feedback about companies. One option is to provide more information about a company’s complaint handling such as highlighting the quality of responses to consumers. The second option is to collect and provide consumer compliments – independent of the complaint process. Today’s RFI seeks input on these options and welcomes other ideas.

CFPB Finalizes Policy on Consumer Complaint Narratives; Changes Company Response Process
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