Archives for April 2017

Yesterday, Judge Susan G. Braden, Chief Judge of the U.S. Court of Federal Claims, issued an order putting a 30-day halt to all proceedings in four separate but related lawsuits involving bid protests in the Department of Education (ED) RFP for Private Collection Agency services on government-guaranteed student loans. The judge issued the order to “maintain the status quo while the parties attempt to reach a global solution.” 

insideARM has written extensively about the RFP process, the protests and the GAO decision regarding the protests. See the March 29, 2017 article here and our April 10, 2017 article here for a summary of prior activity regarding the protests and the GAO findings. For a thorough review of the RFP process see our December 14, 2015 article.

Background  

On March 27, 2017, the Government Accountability Office (“GAO”) partially sustained several protests over a multiple-award $2.8 billion student-loan collection contract, awarded under Solicitation No. ED-FSA-16-R-0009, because ED failed to properly evaluate certain bids. 

Between March 28 and April 12, Continental Services Group, Inc. (ConServe), AccountControl Technology, Inc. (ACT), Pioneer Credit Recovery, Inc. (Pioneer), and Alltran Education, Inc. (Alltran)  (collectively “the Protestors”) filed related Bid Protests in the U.S. Court of Federal Claims, challenging ED’s decision not to award the Protestors contracts for student-debt collection services, under Solicitation No. ED-FSA-16-R-0009. Continental Services v. United States, No. 17-449; Account Control Technology v. United States, No. 17-493; Pioneer Credit Recovery v. United States, No. 17-499; Alltran Education v. United States, No. 17-517.

On March 29, 2017 the court issued a Memorandum Opinion and Temporary Restraining Order (“TRO”), to prohibit, pursuant to Rule of the U.S. Court of Federal Claims (“RCFC”) 65(d), the ED from:

1. authorizing the purported awardees to perform on the contract award under Solicitation No. ED-FSA-16-R-0009 for a period of fourteen days, i.e. until April 12; and
2. transferring work to be performed under the contract at issue in this case to other contracting vehicles to circumvent or moot this bid protest for a period of fourteen days, i.e. until April 12. Continental Services, No. 17-449. 

On April 10, the court extended the March 29 TRO until April 24. Continental Services, No. 17-449. 

On April 13, the court convened a Status Conference in Alltran, No. 17-517, during which the Government proposed a thirty-day stay of proceedings in four Bid Protests related to Solicitation No. ED-FSA-16-R-0009. The Government advised the court that the proposed stay would maintain the status quo while ED explored a global solution. On the same day, the court informed all of the parties in Continental Services, No. 17-449, Account Control Technology, No.17-493, Pioneer Credit Recovery, No. 17-499, and Alltran Education, No. 17-517 of the proposed stay. 

On April 17, the Government advised the court by email that all of the parties in Continental Services, No. 17-449, Account Control Technology, No. 17-493, Pioneer Credit, No.17-499, and Alltran, No. 17-517 agreed to the proposed stay, except intervenor-defendants Windham Professionals, Inc. (“Windham”) and Premiere Credit of North America, LLC (“Premiere”). 

Windham and Premiere argued that the court should not enjoin the ED from authorizing the awardees, under Solicitation No. ED-FSA-16-R-0009, to perform on contracts that were properly awarded. Windham and Premiere also argue that the Protestors do not have standing to seek injunctive relief, because Solicitation No. ED-FSA-16-R-0009 was an indefinite quantity procurement and the Protestors therefore were not prejudiced by the ED’s decision to award contracts to other bidders. But, Judge Braden determined: 

“The objections raised by Windham and Premiere, however, do not address the need for a stay. Instead, they attempt to re-litigate the merits of the March 29, 2017 TRO and April 10, 2017 TRO Extension.” 

Judge Braden then discussed her decision to stay the proceedings for 30 days:

“The court has determined that the proposed stay properly would maintain the status quo while the parties attempt to reach a global solution. Accordingly, the stay will preserve judicial resources without prejudicing the interest of any of the parties. For this reason, all proceedings in Continental Services, No. 17-449, Account Control Technology, No. 17-493, Pioneer Credit, No. 17-499, and Alltran, No. 17-517 are stayed for thirty days, i.e. until Friday, May 19, 2017. See Cherokee Nation of Oklahoma v. United States, 124 F.3d 1413, 1416 (Fed. Cir. 1997) (“The power of a federal trial court to stay its proceedings . . . is beyond question. This power springs from the inherent authority of every court to control the disposition of its cases. When and how to stay proceedings is within the sound discretion of the trial court.” (internal citations omitted)). On May 19, 2017, the parties will file a Joint Status Report and the court will convene a Status Conference thereafter at the earliest date convenient to all the parties. 

Under the Rules of the United States Court of Federal Claims, a TRO “expires at the time after entry—not to exceed 14 days—that the court sets, unless before that time the court, for good cause, extends it for a like period or the adverse party consents to a longer extension.” RCFC 65(b)(2). For this reason, on April 24, 2017, the court will extend the April 10, 2017 TRO until May 8, 2017. On May 8, 2017, the court will extend the TRO until May 22, 2017.

IT IS SO ORDERED.” 

insideARM Perspective 

So, the ED RFP remains a riddle.  In this matter, it is hard to separate fact from fiction. There are rumors swirling every day among the companies that would like to have the ED contract. What could possibly be a “global solution” with so many competing interests? 

Why would a “global solution” be difficult?  It is also hard to tell the “players” without a scorecard. In an effort to allow our readers to better understand who everyone is and where everyone stands, follow this below: 

Seven Companies received the ED contract award on December 9, 2016

1. Financial Management Systems Investment Corp
2. GC Services Limited Partnership
3. Premiere Credit of North America, LLC
4. The CBE Group, Inc.
5. Transworld Systems Inc.
6. Value Recovery Holding, LLC
7. Windham Professionals, Inc.

GAO Decision on Protests on March 27, 2017 

12 companies had their protests sustained:

1. Allied Interstate, Inc. (Iqor)
2. Automated Collection Services, Inc.
3. Collection Technology, Inc.
4. Collecto, Inc., dba EOS CCA
5. Delta Management Associates, Inc.
6. Gatestone & Co. International, Inc.
7. General Revenue Corporation
8. Performant Recovery, Inc.
9. Progressive Financial Services, Inc.
10. Texas Guaranteed Student Loan Corp
11. Van Ru Credit Corporation
12. Williams & Fudge, Inc. 

4 companies had protests denied:

1. Account Control Technology (2 of 3 protests denied, 1 not decided)
2. Alltran Education Inc. (formerly ERS) – 3 protests denied
3. Global Receivables Solutions, Inc. – 2 protests denied
4. Sutherland Global Services – 3 protests denied 

Two companies had no decision from GAO on their protest:

1. Continental Service Group, Inc. (ConServe)
2. Pioneer Credit Recovery 

4 companies filed lawsuits with the Court of Federal Claims 

1. Continental Service Group, Inc. (ConServe)
2. Alltran Education Inc. (formerly ERS)
3. Account Control Technology
4. Pioneer Credit Recovery 

Two companies had previously won an appeal of a denied protest over their contracts not being extended by ED in 2015.  But, no decision has been rendered in a request by ED to dismiss the lawsuit as moot because they have agreed to take “corrective” or “remedial action” with regard to the earlier decision not to issue contract extensions to the plaintiffs. 

1. Alltran Education Inc. (formerly ERS)
2. Pioneer Credit Recovery 

Oh, and let’s not forget the 11 small business that were selected by ED in October of 2014 under the small business set-aside on its Default Collection Services contract and private collection agency (PCA) program. These companies had been receiving placements from ED until the aforementioned TRO was issued.

The small business collectors are:

1. Action Financial Services
2. Bass & Associates
3. Central Research
4. Coast Professional
5. Credit Adjustments
6. FH Cann & Associates
7. Immediate Credit Recovery
8. National Credit Services, Inc.
9. National Recoveries
10. Professional Bureau of Collections of Maryland
11. Reliant Capital Solutions

On March 23, a federal judge in Illinois granted a debt collector’s motion for summary judgment when the court determined that the debt collector had established all three elements of the bona fide error defense under § 1692k(c) of the Fair Debt Collection Practices Act (FDCPA).

Editor’s Note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. Summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The case is Washington v. Convergent Outsourcing, Inc., (Case No. 15-c-7043, U.S. District Court, ND. IL, Eastern Division). A copy of the court’s Memorandum Opinion and Order can be found here. 

Background 

Sometime during or before 2013, Washington opened a consumer account with Comcast. On December 5, 2013, Comcast referred an unpaid bill of $1,001 associated with Washington’s account to Convergent Outsourcing, Inc. (Convergent) for collection. In October 2014, Convergent reported an unpaid balance of $1,001 on Washington’s account to various credit reporting bureaus, including Experian, Equifax, and TransUnion. 

Around the same time, Washington met with legal aid attorneys to address potential concerns that she had with her credit report. Upon reviewing her credit report, Washington told her attorneys that she did not believe the debt Convergent had reported was accurate, because she did not recall owing any balance on her Comcast account. Accordingly, on October 17, 2014, Washington’s attorneys sent Convergent a letter stating that the amount reported on the debt was not accurate. 

After Convergent received this letter, one of its employees updated Washington’s account to reflect the letter’s contents per company policy. However, while updating the account, Convergent’s employee made an error: the employee updated Washington’s account by marking it with the code “3ACA” instead of “3DSP.”  “3ACA” denotes that a consumer is represented by an attorney, whereas “3DSP” denotes that a consumer is represented by an attorney and disputes the debt in her account. Convergent acknowledges that Washington disputed her debt and that her account should therefore have been marked with the code “3DSP.” 

On March 30, 2015, Comcast informed Convergent that Comcast would no longer be including “equipment charges” in account balances placed with Convergent for collection. Comcast also informed Convergent that all such charges would be removed from existing accounts no later than April 30, 2015. Accordingly, on April 19, 2015, Comcast removed a $680 equipment charge from Washington’s account, leaving a balance of about $321.

Later that month, Convergent communicated the updated balance amount of $321 to Experian, Equifax, and TransUnion. However, it did not, at that time, also communicate to the bureaus that the account was disputed. 

If Convergent’s employee had properly coded Washington’s account with “3DSP” rather than “3ACA,” then the information communicated to Experian, Equifax, and TransUnion in April 2015 would have reflected that Washington disputed the debt.

The Court’s Decision

The motion was heard by the Honorable Judge John Z. Lee.  Lee authored the Opinion.

Failure to Communicate Disputed Status of a Debt

Washington claims that Convergent violated 15 U.S.C. § 1692e(8) of the FDCPA by failing to inform Experian, Equifax, and TransUnion that Washington disputed her debt when Convergent reported the debt in April 2015. That section prohibits debt collectors from “[c]ommunicating . . . to any person information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”

Judge Lee wrote:

“Under § 1692k(c) of the FDCPA, a debt collector is not liable for a violation of the FDCPA where the violation (1) was not intentional, (2) resulted from a bona fide error, and (3) occurred notwithstanding the maintenance of procedures reasonably adapted to avoid such a violation. In an FDCPA case, a debt collector is entitled to summary judgment in its favor when the undisputed evidence satisfies all three elements of the bona fide error defense. 

In this case, the undisputed evidence shows that Convergent has established the bona fide error defense.

First, Convergent asserts that its failure to report Plaintiff’s account as disputed was not intentional. It supports this assertion with a sworn declaration from its Executive Vice President of Operations, as well as with ample circumstantial evidence. 

For example, Convergent has set up an internal coding system to ensure that disputes are reflected in consumers’ accounts. Under this system, once an account is marked as disputed, all information reported to credit reporting bureaus is automatically updated to reflect the dispute. In addition, Convergent trains its employees regarding the policies governing its coding system, and it regularly performs compliance audits and tests employees on their understanding of these policies. Employees who deviate from Convergent’s policies are subject to discipline, up to and including termination. Taken together, this evidence is sufficient to establish that Convergent had no intention of violating the FDCPA by failing to report Washington’s debt as disputed.

Second, Convergent’s alleged FDCPA violation resulted from a bona fide error. An error is considered bona fide if it is a genuine mistake made in good faith, rather than a contrived mistake. Mere clerical mistakes qualify as bona fide errors. Here, Convergent’s failure to communicate the disputed status of Washington’s debt resulted from a textbook example of a clerical mistake: the Convergent employee who processed the letter from Washington’s attorneys manually updated Washington’s account with the incorrect code—“3ACA,” rather than “3DSP.” If the employee had not made this mistake, then the debt in Washington’s account would have been marked as disputed when Convergent subsequently reported it to Experian, Equifax, and TransUnion in April 2015. 

Third, Convergent has established that it maintained policies and procedures reasonably adapted to avoid the FDCPA violation at issue. As described above, Convergent developed procedures under which its employees systematically marked accounts as disputed whenever consumers raised disputes. Convergent’s employees were trained and tested on these procedures, and Convergent performed regular audits to ensure adherence to the procedures. As far as the evidence shows, these procedures were reasonably and proportionally tailored to ensure that Convergent communicated the disputed status of any disputed debts that it reported to third parties. And there is no indication that clerical mistakes like the one made in this case are a systematic problem that undermines the effectiveness of Convergent’s procedures. 

For all the foregoing reasons, the undisputed evidence shows that Convergent has established all three elements of the bona fide error defense under § 1692k(c). Convergent is thus entitled to summary judgment in its favor.” 

insideARM Perspective 

This is a case that all ARM companies should study. Policies and procedures matter. Documentation of policies and procedures matters.  Training matters.  Convergent did an excellent job of presenting to Judge Lee that it had met all 3 elements of the Bona Fide Error defense. 

insideARM contacted Convergent for a comment on the case.  Tim Collins, Convergent General Counsel, responded: 

“I have never been a fan of the bona fide error defense mainly because of the costs involved and the low probability of success. Our outside counsel, Charity Olson, from Charity A. Olson, PC, convinced me to give it a try in this case because of the strength of the facts. This was clearly a case of human error and the reason for the Bona Fide Error defense. Interestingly, the work that we have done in response to the creation of the CFPB helped us win this case. This included all the policy and procedure writing and reviews along with the training of our employees. Without these efforts, we may have seen a different outcome.  This win also wouldn’t have happened if it weren’t for the partnership we have with Charity and her willingness to honestly tell us how it is. My hope is this case helps others in deciding when to use the bona fide error defense and in winning the good fight.”

COSTA MESA, Calif. ― Getting debt collection right is about more than money. It’s about knowing the difference between a customer who has simply forgotten to make a payment or someone dealing with a financial hardship. Knowing the difference is important so lenders can provide the individualized customer experience consumers expect when they pay bills, secure a new loan online or deal with collections. 

Debt collections processes have remained static over the years. The industry-standard has been to follow the risk relying on standalone solutions that weren’t able to manage the entire life cycle. As the lending landscape has evolved, with many new and existing choices to access credit, complexity and costs have evolved as well. Collections costs have grown significantly. According to Federal Reserve, consumers accounted for $29.3 billion in charged-off credit card debt in 2016, a 15 percent increase over 2015. Lenders are trying to adapt to these market changes while managing against potential increases in delinquencies.

Experian^® has launched two solutions, eResolve™, and PowerCurve^®Collections, to give consumers an easier way to resolve their debt and to streamline the management process for businesses. eResolve is the first self-service platform to help consumers negotiate and resolve past due obligations while PowerCurve Collections brings together data, decisions, and the collections workflow in a single, unified system. 

“We have to move debt collections into the modern age,” said Craig Boundy, chief executive officer, Experian North America. “Using our data and analytics, lenders can uncover the best way to personalize the collections process to improve the customer experience and simplify debt management. The advanced, data-driven decisioning we offer can prepare lenders against rising delinquencies, while increasing the long-term value of their customers.” 

Helping consumers ease the debt process

eResolve is the first self-service platform that acts as a virtual negotiator for consumers to resolve their debt obligations. Through digital mediums, lenders can offer consumers options for payments, payment dates and the ability to negotiate terms without interacting with a collector. This tailored approach helps eliminate aggressive collections tactics so lenders can build trust through convenience. It also reduces lender costs, increases returns and improves the overall consumer experience while elevating the collections process into the modern age. 

Making the process of debt collection easier for businesses

PowerCurve Collections gives lenders an end-to-end debt management process with insights to inform their actions. Every contact with a customer is an opportunity to strengthen the relationship, and PowerCurve Collections can drive decisions like how often to contact customers and the most effective way – and times – to reach them. The best action could be a high-touch outreach or an automated effort that connects customers to a virtual platform to negotiate their debt. Sometimes doing nothing is the right approach, and understanding which customers are most likely to pay on their own is critical to that decision. PowerCurve Collections can handle these actions easily using a cost-effective collections process that focuses on customer satisfaction. 

“Banks are faced with managing multiple collections systems … and want to consolidate these systems into one integrated system. The cost to service a delinquent loan was eight times the cost of servicing a performing loan,” said Craig Focardi, principal executive advisor at CEB, now part of Gartner. “Client interaction is expected to increase across collections, loss mitigation, and foreclosure processes which leads to more costly interactions. Failure to provide better service may result in a loss of customer lifetime value. When successful, loan collections helps retain customers to extend the customer lifecycle and cross-sell additional products.” 

These new solutions complement the existing suite of Experian’s origination and customer management solutions that refine debt management and improve collections performance.

About Experian

Experian^® is the world’s leading global information services company. During life’s big moments — from buying a home or a car to sending a child to college, to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime. 

We have 17,000 people operating across 37 countries and every day we’re investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index. Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the company.  

Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.

CHICAGO, Ill. — Commercial Collection Agencies of America recently released its  year-end report and analysis of delinquent account placement with its agency membership. Annette M. Waggoner, Executive Director reports the number of commercial (business to business) accounts placed with agency members rose by 10.82% in 2016 when compared to 2015.

The dollar amount of accounts placed increased by 10.58%. Ms. Waggoner noted that the second  quarter of 2016 registered the largest dollar amount of placements in the eight quarter history  studied while the fourth quarter registered the second largest dollar amount of placements.

The association also studied the average-sized account placed with agency members, which ranged  from just above $2,400 to slightly above $3,100 in both 2015 and 2016. The average-sized account in the fourth quarter of 2016 was 16.64% higher than in the fourth quarter of 2015.

An expanded study also provided an analysis for the pre-recession period through current day. Regarding the number of accounts placed, at the outset of the recessionary period, 2007-2009, agencies reported an increase, followed by a sharp decline from 2010-2013. In 2014 and 2015, there were numerous fluctuations between quarters, while a steady increase was exhibited in 2016.

The same study examined the dollar amount of increases. Between 2007 and 2009, there was a consistent increase in the dollar amount of commercial accounts placed with third party agencies. Between 2010 and 2013, there was a consistent decline. As seen in the number of accounts placed, the index fluctuated between quarters in 2014. In 2015 and 2016, the highest levels in the dollar amount of accounts placed were reported.

The increases in number of accounts placed and dollar amount of accounts placed are encouraging to the seasoned professionals, which make up the membership. While manufacturing output is increasing and according to the economists, industrial sector output growth has been improving over the past months, members note that significant gains in their clients’ sales will have to occur before a notable uptick in account placement will be realized.

About Commercial Collection Agencies of America

Commercial Collection Agencies of America is the premier association for commercial collection agencies, elevating the standards of the collection industry by providing the superior certification program in the industry. The association requires adherence to a strict code of ethics in addition to fulfillment of continuing education of its members. The rigorous certification requirements, set by an Independent Standards Board, ensure that member agencies
provide the highest level of professional service while they collect billions of dollars on behalf
of creditors worldwide.

A list of certified agencies and affiliate members can be found at: www.commercialcollectionagenciesofamerica.com.

To contact the Commercial Collection Agencies of America, email Executive Director, Annette M.
Waggoner at awaggoner@commercialcollectionagenciesofamerica.com.

Yesterday the Federal Communications Commission (FCC) released a public notice soliciting comment on a petition by All About the Message, LLC (AATM) for declaratory ruling under the Telephone Consumer Protection Act (TCPA).

The petition requests that the FCC “declare that the delivery of a voice message directly to a voicemail box does not constitute a call that is subject to the prohibitions on the use of an automatic telephone dialing system (‘ATDS’) or an artificial prerecorded voice under the TCPA.” Alternatively, AATM requests a retroactive waiver for AATM and its customers “pursuant to 47 CFR § 1.3, with respect to any voicemail message delivered by AATM or on behalf of an AATM customer to any recipient” by direct-to-voicemail insertion technology.

The public notice includes instructions. The deadline to file comments is May 18, 2017.

On April 12, a federal judge in Illinois ruled that prior express consent in a credit card agreement defeated a Telephone Consumer Protection Act (TCPA) claim, but there was a genuine issue of fact for a jury to decide whether 87 calls to a consumer over a period of 19 days was a Fair Debt Collection Practices Act (FDCPA) violation.  The case is Losch v. Advanced Call Center Technologies, LLC. (Case No. 15-C-6644, U.S. District Court, ND of IL, Eastern Division.) 

The case came before the Honorable Judge Gary Feinerman on defendant’s motion for summary judgment.

Editor’s Note:  A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

A copy of Judge Feinerman’s Memorandum Opinion and Order can be found here. 

Background 

Plaintiff, Jenna Losch, brought a lawsuit against defendant, Advanced Call Center Technologies, LLC (ACCT) alleging that ACCT violated the TCPA, 47 U.S.C. § 227 et seq., and the FDCPA, 15 U.S.C. § 1692 et seq., Doc. 1, by calling her cell phone on numerous occasions over a two-week period.

The court determined the following facts as undisputed:

• Losch visited a Banana Republic store in Chicago on May 4, 2014.
• Losch decided to obtain a Banana Republic credit card after a sales associate explained that it would entitle her to a discount for her purchases that day.
• The sales associate briefly reviewed the terms of the credit card agreement with Losch, and she then signed the agreement and provided her cell phone number.
• Losch was generally familiar with how the credit card worked, and she knew that she would be bound by the terms of the credit card agreement even if she did not read them.
• Among those terms were the following:

This Agreement. This is an Agreement between you and Synchrony Bank, 170 Election Road, Suite 125, Draper, UT 84020, for your credit card account shown above. By opening or using your account, you agree to the terms of the entire Agreement. The entire Agreement includes the four sections of this document and the application you submitted to us in connection with the account. These documents replace any other agreement relating to your account that you or we made earlier or at the same time.

Consent To Communications. You consent to us contacting you using all channels of communication and for all purposes. We will use the contact information you provide to us. You also consent to us and any other owner or servicer of your account contacting you using any communication channel. This may include text messages, automatic telephone dialing systems, and/or an artificial or prerecorded voice. This consent applies even if you are charged for the call under your phone plan. You are responsible for any charges that may be billed to you by your communications carriers when we contact you. 

• Losch charged the purchases she made at Banana Republic that day to the Banana Republic card, and she later used the card to pay for other purchases.
• In the late summer or early fall of 2014, Losch began experiencing financial hardship and stopped making payments on the card.
• ACCT makes outbound debt collection calls on behalf of Synchrony Bank, the bank that issued Losch’s card.
• ACCT was assigned to make collection calls to Losch, and it used an automatic dialer system to call the cell phone number that Losch provided on her credit card application.
• ACCT called Losch 87 times between December 5 and December 23, 2014.
• Three to five calls were placed each day, and no two calls were made less than about two hours apart.
• Losch did not pick up any of the calls until December 23. On that occasion, she told the ACCT representative that she was unable to pay the debt and asked that ACCT halt the calls.
• ACCT did not call her again. 

The Court’s Decision – The TCPA Claim 

Judge Feinerman quickly decided the TCPA issue. He wrote: 

“ACCT is correct that Losch consented to be called. To obtain her credit card, Losch signed a contract that, as noted above, contained this language: 

Consent To Communications. You consent to us contacting you using all channels of communication and for all purposes. We will use the contact information you provide to us. You also consent to us and any other owner or servicer of your account contacting you using any communication channel. This may include text messages, automatic telephone dialing systems, and/or an artificial or prerecorded voice. The contact information Losch provided was her cell phone number, and that is the number that ACCT called. 

That ACCT rather than Synchrony Bank made the calls is of no legal consequence. The credit card agreement expressly contemplated the possibility that a “servicer” would contact Losch, and the TCPA treats consent given to a creditor as if it were given to a third-party debt collector acting on the creditor’s behalf.

Accordingly, Losch provided her prior express consent to receiving debt collection calls from ACCT when she obtained her Banana Republic card. That consent necessarily defeats her TCPA claim.” 

The Court’s Decision – The FDCPA Claim 

On the FDCPA claim Judge Feinerman wrote:

“The FDCPA provides in relevant part:

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

… (5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. 

Whether repeated phone calls were made with intent to annoy, abuse, or harass depends on the volume and pattern of calls. Generally, there are two types of evidence presented to show an intent to harass under § 1692d(5). First, where a plaintiff has shown that he asked the collection agency to stop calling … and the collection agency nevertheless continued to call the plaintiff … . Second, the volume and pattern of calls may themselves evidence an intent to harass. 

Because ACCT did not continue to call Losch after she asked it to stop, Losch opposes summary judgment based on the volume and pattern of ACCT’s calls. 

As a general rule, whether the volume and pattern of a debt collector’s calls violates the FDCPA is a jury question.

ACCT called Losch’s cell phone 87 times over a period of nineteen days, with three to five (but usually five) calls each day. True, ACCT did not call Losch early in the morning or late at night, or make one call immediately after another. Those facts certainly could lead a reasonable jury to find in ACCT’s favor, but not necessarily so.

ACCT continued to call Losch day after day, at various times of day, on weekends and weekdays for over two weeks, any belief that Losch was not answering the calls because she missed them inadvertently or that she would have wanted to be called at a different time became less and less reasonable—or so a reasonable jury could find. A jury thus could conclude that, at some point during those nineteen days, ACCT’s intent in continuing to call crossed the line from “a legitimate persistent effort to reach the plaintiff.

Losch’s FDCPA claim therefore survives summary judgment.”

insideARM Perspective 

This case provides a positive result for the ARM industry on the TCPA claim and the issue of prior express consent. However, the case proceeds on the FDCPA claim. The court ruled that whether 87 calls in 19 days shows intent to annoy, abuse, or harass is a question of fact for the jury to decide. The judge denied the motion for summary judgment on the FDCPA claim. 

The real FDCPA question for the ARM industry is this: What is the dialer penetration rate that should be used to avoid potential liability for “annoying or harassing?” Years ago, a 5-times per day dialer penetration rate was commonplace. However, most ARM companies have backed off that type of call frequency.  The CFPB has clearly indicated in their Outline of Proposed Rules that they believe that type of call frequency is too high.  

What is the magic number?

The industry awaits final CFPB rules.

New enterprise wide brand identity supports the company’s exponential growth and long-term business strategy

PHOENIX, Ariz. — Empereon-Constar, a leading provider of end-to-end customer engagement and customer management solutions, today introduced the new trademarked enterprise brand, unveiling an updated logo and launching a redesigned website as part of the comprehensive rebranding strategy.

“Empereon-Constar’s rebranding evolved as a result of our diversified expansion and rapid growth,” stated Travis Bowley, Chief Executive Officer. “Although we remain two distinct, but affiliated and privately held entities, our more comprehensive brand identity as Empereon-Constar supports our enterprise wide efforts and long-term business strategy as we move forward in the global marketplace.”

Over the last three years, Empereon-Constar has experienced significant growth contributing to an average 24% annual growth year over year. Empereon-Constar’s partnership seamlessly provides our clients’ with leading business process outsourcing, end-to-end customer engagement and customer management solutions.

While the brand, logo, and website have changed, the company’s core mission remains the same – to “provide end to end customer interaction solutions” across the whole spectrum of consumer service and accounts receivable management for varied and multiple industries always delivering quality service to Empereon-Constar’s client partners.

“The redesigned logo and website showcase our innovative, industry-leading customer account services,” said Yvonne Torrijos, Chief Marketing Officer. She added, “Our rebranding provides a fresh look for the company that resonates with our employees and emphasizes our value driven approach to becoming a trusted partner of our clients.”

Visit our website www.empereon-constar.com for more information.

About Empereon-Constar

Empereon-Constar is a leading business process outsourcing company providing end-to-end customer engagement and customer management solutions for New Sales Account Generation, Risk and Fraud Operations, Collections Operations and Tech Support across the entire customer account lifecycle.

Empereon-Constar’s full range of consumer and commercial services includes: lead generation, inbound / outbound sales, account origination, customer care, customer service, technical support, first party collections, recovery collections, credit bureau dispute management, fraud risk management, anti-money laundering, loan servicing and loan processing. Our world-class services and unique global strategy allows us to meet the needs of our client partners across multichannel (email, chat, phone) communication platforms, provide exceptional customer experiences, and consistently deliver world-class performance results, while maintaining the highest level of data security and compliance.

Editor’s Note:

First party collection activity is becoming a larger segment of ARM industry business every year. Virtually every type of business does some amount of first party collections, whether handled internally or outsourced.  This is the second of two excellent articles featured this week at insideARM about first party collections written by Linda Straub Jones from Lexis Nexis Risk Solutions.

Reminder: The insideARM 3^rd Annual First Party Summit is being held June 5-7 in Frisco, TX. This is the ARM industry’s only conference dedicated to first party activity – from customer care, customer service, to collections. If you want to learn more on this topic register here now.

I frequently speak with the collection departments of many banks and credit unions.  Since my job revolves around compliance, that’s where the conversation generally leads to – compliance within the credit and collections industry.  One surprising trend in these conversations is the number of first party collections personnel who say they aren’t concerned about the CFPB’s upcoming collections rulemaking, or the FDCPA.  While most collection departments in banks and credit unions do follow many aspects of the FDCPA, especially those relating to fairness when dealing with consumers, they also state that since the FDCPA doesn’t apply to creditors collecting their own debt, they don’t necessarily have to follow those rules. 

While all of this is true, one thing that many people forget is that the FDCPA and the CFPB’s upcoming collections rules aren’t the only regulations that first party’s need to be aware of when doing collections – let’s not forget about UDAAP!  Under the Dodd-Frank Act, all covered persons or service providers are legally required to refrain from committing Unfair Deceptive Abusive Acts and Practices (UDAAPs).   In fact, CFPB Bulletin 2013-07 revolves around UDAAP in the collection of consumer debts.  If you haven’t read this recently, I’d suggest a quick review of this bulletin.

The CFPB is actively pursuing first parties for UDAAPs related to their collection activities.  Additionally, the CFPB can determine exactly what it considers a UDAAP – while there are general guidelines as to what a UDAAP is in the Bulletin, the CFPB leaves much of the interpretation to its own discretion. 

But first, let’s review what UDAAP means:

UNFAIRNESS: An act or practice is unfair when:

1. it causes or is likely to cause substantial injury to consumers; 
2. the injury is not reasonably avoidable by consumers; and 
3. the injury is not outweighed by countervailing benefits to consumers or to competition. (A “substantial injury” typically takes the form of monetary harm)

DECEPTIVE ACTS OR PRACTICES:  An act or practice is deceptive when:

1. it misleads or is likely to mislead the consumer;
2. the consumer’s interpretation of the behavior reasonable; and
3. behavior is material (the misleading representation, omission, act, or practice etc. ) (Representation, omission, implication etc.  May disclose to avoid deception.) 

ABUSIVE ACTS OR PRACTICES: An act or practice is abusive when:

1. it materially interferes with the ability of a consumer to understand a term or condition product or service; or 
2. takes unreasonable advantage of – a lack of understanding about the cost, risks, or conditions of the product or service; the inability of the consumer to protect themselves when selecting or using a consumer financial product or service; or takes advantage of consumer’s trust that entity is acting in their best interest. 

In order to understand better what the CFPB considers a UDAAP in first party collections, look no further than two suits that took place in 2016.

• August 2016: Wells Fargo. Student Loan servicing practices. $410K in relief and $3.6 M in civil money penalty. The Bureau identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information.
• September 2016: Navy Federal Credit Union. $23 M in redress and $5.5 M civil money penalty for threatening to file suit, garnish wages, contact commanding officers, and change the credit scores of members who fell behind on payments.  The CFPB further found that in most cases Navy Federal did not intend to act on any of its threats to its members.

It’s important to note that even if you are a smaller bank or credit union, this doesn’t exclude you from the CFPB’s supervision.  The CFPB has said time and time again that it looks to its consumer complaint portal for leads as to which companies are being unfair, deceptive or abusive to consumers.  No matter your size, if you are participating in UDAAP’s against consumers, the CFPB will pay attention to you!

All information provided in this article is general in nature and is provided for educational purposes only.  It should not be construed as legal advice.  For legal advice applicable to the facts of your particular situation, you should obtain the services of a qualified attorney licensed to practice in your state.

There is another new consumer payment option available – Amazon Cash. The execution appears incredibly simple. Here’s how it works, from Amazon’s site:

Get a barcode via text message or print-at-home. Bring this barcode into any participating store and show it to the cashier to add cash to your Amazon Balance.

Then there is a big yellow button, “Get your barcode.” That’s it.

Currently participating retailers are: CVS, Speedway, Kum & Go, D&W Fresh Market, Sheetz, Family Fare Supermarkets, and VG’s Grocery.

At this time, the funds are available for use only to make purchases on Amazon.com. But I suspect this is a precursor to an Amazon payment product – like PayPal or Venmo – for payments to other merchants or individuals.

There is no doubt that consumers will eventually start to ask (if they haven’t already) whether they can make payments on their debts with one or more of these new forms of payment. Technology providers, creditors, collectors, and regulators would do well to work through the hurdles to making these options available.

This article originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

Since the birth of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) well over 150 Consent Orders have been entered against every sector of the financial services industry. Many of these Consent Orders came with a great deal of fanfare with exuberant press releases and exorbitant penalties. But what happens when all monies owing to affected consumers are paid and a surplus of funds remains? Under the Miscellaneous Receipts Act the money is to go to the U.S. Treasury. However, a recent federal court decision uncovered an attempt by three State Attorneys General to divert the money elsewhere, apparently possibly with the CFPB’s blessing. 

In 2014, the CFPB brought an action against Sprint in the United States District Court for the Southern District of New York for improper and unauthorized charges to its customers’ wireless telephone bills. In 2015, the parties settled the case and the CFPB sought judicial approval of the settlement, which initially was rejected by the Court because the CFPB failed to appropriately explain why the settlement was fair, reasonable and consistent with the public interest. After amending its application, the Court approved the settlement for $50 million, which would pay the claims of affected consumers. Consistent with the terms of prior CFPB Consent Orders, if any balance remained after the payment of all claims, the money would be returned to the CFPB to determine other equitable relief that reasonably would be related to the allegations against Sprint. To the extent any remaining funds existed thereafter, the monies were to go to the U.S. Treasury.

Sprint also settled with the Federal Communications Commission (“FCC”) for similar allegations as well as entered into agreements with all 50 state Attorneys General and the Attorney General for the District of Columbia.

Complete redress was made to Sprint customers sometime in 2016; however a balance of $15.14 million remained. After consultation with the FCC and the Attorneys General, the CFPB could not identify any equitable relief to which the remaining settlement funds could be applied. Rather than comply with the terms of the Consent Order and return the balance to the U.S. Treasury, the CFPB held onto the money. Shortly thereafter, three Attorneys General from Vermont, Kansas and Indiana petitioned the District Court to intervene and modify the Consent Order to redirect the undistributed settlement monies to develop a research and training institution for consumer protection, in affiliation with the National Association of Attorneys General (“NAAG”). Sprint filed an opposition to that motion but ultimately consented to the Attorneys General request. In their joint submission to the court, Sprint and the Attorneys General reported that the CFPB took no position on the matter.

The District Court rejected the petition and the joint submission for three reasons: (1) the proposal would fundamentally alter the Consent Order and redirect funds earmarked for the U.S. Treasury, possibly violating the Miscellaneous Receipts Act; (2) the modification of the Consent Order was not reasonably related to the allegations set forth in the complaint against Sprint, and the NAAG project would not provide any assistance to consumers affected by Sprint’s billing practices; and (3) both the CFPB and Sprint “unmistakably knew” by the plain terms of the Consent Order that undistributed settlement funds were to go to the U.S. Treasury. The Court ordered the CFPB and the Department of Justice to respond separately to the intervention motion. Specifically, the Court ordered the CFPB to advise where the unexpended funds have been deposited during the pendency of the motion to intervene. 

Providing monetary and equitable relief to consumers is an important role of the Bureau, however it has taken it on the chin lately with the Administration and Republicans building a “for cause” case to remove Director Cordray. This matter only adds potential traction to the claims that the CFPB is a “rogue agency.” The worst thing the CFPB can do is attempt to ignore statutory requirements in crafting enforcement actions.  By doing so, the Bureau loses credibility, potential respectability and risks additional adverse findings by the courts. Ignoring the law as well as its own settlement agreement in the name of consumer protection simply cannot be reconciled. Now more than ever the CFPB should work to strengthen its reputation and ability to continue its mission in a well-measured and reasonable way.