Archives for June 2017

Yesterday the Second Circuit Court of Appeals issued a groundbreaking opinion in a Telephone Consumer Protection Act (TCPA) case regarding revocation of consent. The case is Reyes, Jr. v. Lincoln Automotive Financial Services, (Case No 16-2104, Second Circuit Court of Appeals).

A copy of the court’s opinion can be found here. 

insideARM originally wrote about this case on July 5, 2016. In that article, we commented that that the issue of “revocation of consent” was going to be a major battleground in TCPA cases. This decision from the Second Circuit is going to be a boost to defense of TCPA cases going forward.

Background 

On June 29, 2012, Plaintiff, Alberto Reyes, Jr. (Reyes), leased a new 2012 Lincoln MKZ luxury sedan from a Ford Dealership, through Defendant Ford Motor Credit Company LLC (Ford Credit) Note: Lincoln Automotive Financial Services” is a registered trade name of Ford Motor Credit Company LLC, and not an independent company. Ford Credit was named in the complaint as Lincoln Automotive Financial Services (Lincoln). In connection with this transaction, Plaintiff executed a written New York Lease Contract dated June 29, 2012.

As part of the Lease Contract, Plaintiff expressly consented to receive telephone calls from Ford Credit, “including but not limited to, contact by manual calling methods, prerecorded or artificial voice messages, text messages, emails, and/or automatic telephone dialing systems.”  Plaintiff further consented to Ford Credit using “any telephone number” provided by Plaintiff in order to contact him, “including a number for a cellular phone or other wireless device, regardless of whether [Plaintiff] incurs charges as a result.”

Plaintiff failed to make several payments under the Lease Contract when due, thereby defaulting on his obligation. Ford Credit then began telephoning Plaintiff at the phone number provided by Plaintiff in the Lease Contract. Plaintiff failed to cure his default and Ford Credit repossessed the vehicle.

Reyes claimed that on June 14, 2013, he mailed a letter to Lincoln in which he wrote: “I would also like to request in writing that no telephone contact be made by your office to my cell phone.” Lincoln contends that it never received Reyes’s letter, or any other request to cease its calls. At his deposition, Reyes testified to mailing the letter to the P.O. box listed on Lincoln’s invoices and produced a copy of the letter that did not bear an address or postmark and referenced an incorrect account number. 

Despite his alleged revocation of consent, Lincoln continued to call Reyes. Following the close of discovery, Lincoln’s attorney confirmed that Lincoln had called him 141 times with a customer representative on the line, and had called him with prerecorded messages an additional 389 times.

Plaintiff filed this lawsuit on February 6, 2015, alleging violations of both the TCPA and the Fair Debt Collection Practices Act (FDCPA). Plaintiff requested damages in the amount of $720,000. After Discovery, Ford Credit filed a 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.]

The district court granted the defendant’s motion for summary judgment on the basis that (1) the evidence of consent revocation was insufficient, and (2) in any event the TCPA does not permit revocation when consent is provided as consideration in a binding contract. 

The plaintiff appealed that order. Two issues were raised by Reyes in the appeal: 

1. That he introduced sufficient evidence to create a triable issue of fact as to whether he placed Lincoln on notice of his revocation of consent; and 
2. That the TCPA, construed in light of its broad remedial purpose to protect consumers from unwanted phone calls, does permit a party to revoke consent to be called, even if that consent was given as part of a contractual agreement.

This opinion is the result of that appeal. 

The Appellate Court Decision 

The Second Circuit affirmed the district court judgment in favor of the defendant. The court held that (1) Reyes did introduce sufficient evidence from which a jury could conclude that he revoked his consent, but that (2) the TCPA does not permit a consumer to revoke its consent to be called when that consent forms part of a bargained‐for exchange. (Emphasis added by insideARM) 

The court began its analysis with a review of the documentation: 

“In his lease application, Reyes provided several personal details, including his cellular phone number. The lease itself contained a number of provisions to which Reyes assented when finalizing the agreement. One provision permitted Lincoln to contact Reyes, and read as follows: 

You [Reyes] also expressly consent and agree to Lessor [Ford], Finance Company, Holder and their affiliates, agents and service providers may use written, electronic or verbal means to contact you. This consent includes, but is not limited to, contact by manual calling methods, prerecorded or artificial voice messages, text messages, emails and/or automatic telephone dialing systems. You agree that Lessor, Finance Company, Holder and their affiliates, agents and service providers may use any email address or any telephone number you provide, now or in the 1 future, including a number for a cellular phone or other wireless device, regardless of whether you incur charges as a result. 

As noted above, the court agreed with Reyes on the first issue. The court found that he did introduce sufficient evidence to create a triable issue of fact as to whether he had placed Lincoln on notice that he had revoked his consent. The court wrote: 

“We agree with Reyes that the district court’s finding that he did not revoke his consent to be contacted by telephone was improper on summary judgment. This material issue of fact was in dispute and raised a jury question. The district court’s conclusion that Reyes did not revoke his consent rested on an impermissible assessment by the court of Reyes’s credibility. The district judge erred in concluding 1 that no reasonable jury could find that Reyes revoked his consent, when Reyes introduced sworn testimony to the contrary. Whether that testimony was reliable was a question of fact for the jury.” 

The court then turned to the issue of whether Reyes was able to revoke his consent under the facts presented. The court noted that “two of our sister circuit courts have ruled that a party can revoke prior consent under the terms of the act.” (Citing cases from the Third and Eleventh Circuits.)  The court also noted that the Federal Communications Commission (FCC), in their 2015 Rulemaking, had relied on those two cases to rule that that “prior express consent” is revocable under the TCPA. 

However, the court distinguished those cases and the 2015 FCC Rule from this case. The court wrote: 

“Reyes’s appeal presents a different question, which has not been addressed by the FCC or, to our knowledge, by any federal circuit court of appeal: whether the TCPA also permits a consumer to unilaterally revoke his or her consent to be contacted by telephone when that consent is given, not gratuitously, but as bargained‐for consideration in a bilateral contract. 

Reyes contends that the same principles that the FCC and the Third and Eleventh Circuits relied on in their previous rulings apply to this situation as well. He argues that (1) under the common law definition of the term, which Congress is presumed to have adopted when it drafted the TCPA, any form of “consent” (whether contractual or not) is revocable by the consenting party at any time; and (2) permitting parties to revoke their consent to be called is consistent with the remedial purpose of the TCPA, which was designed by Congress to afford consumers broad protection from harassing phone calls. 

We agree with the district court that the TCPA does not permit a party who agrees to be contacted as part of a bargained‐for exchange to unilaterally revoke that consent, and we decline to read such a provision into the act.

 (Emphasis added by insideARM) 

Reyes also argues that his consent to be contacted is revocable because that consent was not an “essential term” of his lease agreement with Lincoln. This argument is meritless. In contract law “essential terms” are those terms that are necessary in order to lend an agreement sufficient detail to be enforceable by a court. Brookhaven Hous. Coal. v. Solomon, 583 F.2d 584, 593 (2d Cir. 1978) (“If essential terms of an agreement are omitted or are phrased in too indefinite a manner, no legally enforceable contract will result.”). For example, a contract for the sale of goods must contain terms such as the quantity of goods to be sold and the price at which they will be purchased. But a contractual term does not need to be “essential” in order to be enforced as part of a binding agreement. It is a fundamental rule of contracts that parties may bind themselves to any terms, so long as the basic conditions of contract formation (e.g., consideration and mutual assent) are met.” 

insideARM Perspective

This case is a very big “win” for defense of TCPA claims where consent has been provided in a contract.  The court’s labeling the Reyes argument on whether the consent was an “essential term” to the agreement will be referenced over and over in the coming weeks and months.  

However, before everyone gets too excited about this, note the very clear language in the lease agreement. Not every consumer contract is written in this manner. The consent terms are clearly part of the lease agreement. Would the result have been the same if this were a credit card account and these terms were sent out later as part of an update to an account terms and conditions?

insideARM contacted frequent contributor, attorney John Rossman from the Minneapolis law firm of Moss & Barnett, for his thoughts on this decision. Rossman commented:

“The decision in Reyes is a game-changer for companies defending against the seemingly endless onslaught of “no actual damages” TCPA cases.  Further, this case is yet another recent example of a Court injecting a much-needed common sense element into the assessment of the often ethereal claims asserted under consumer protection laws.  The Court recognized that it makes no sense to allow a consumer, after receiving the benefit of a contract, to pick and choose contractual elements that he or she later decides are unfavorable.  Our office intends to cite this case in motions to dismiss both under the TCPA and under certain State protection laws in a number of cases pending across the country.” 

Another frequent insideARM contributor, Rozanne Andersen, Vice President and Chief Compliance Officer at Ontario Systems, also commented:

 “This Court’s ruling creates a tremendous opportunity for creditors and their first and third party collection agencies. By updating their contracts with consumers to include mutually bargained for consent, calls placed to consumer’s cells using an ATDS or a prerecorded message will be subject to legally binding contract provisions – to wit the consumer cannot back out of without penalty. To date our industry has waffled between the need to include TCPA style written consent in the underlying creditor contract and relying on the FCC’s ruling that so long as the consumer voluntarily provides their cell number to the creditor consent is obtained. The latter is not protected by contract while the former will at least give the creditor and its first and third party debt collector their day in court.”

 

Today in New York City a team of researchers is meeting to finalize plans for studying the economic impact of medical debt forgiveness. The Mini-Summit is being hosted by RIP Medical Debt, a not-for-profit charity that buys portfolios of medical debt and then forgives the debt.

Coming together today will be researchers from the economics departments at UCLA, the University of Chicago, Massachussetts Institute of Technology, and University of California at Berkeley. Also taking part are RIP Medical Debt, TransUnion, 1/0, and other philantropists and interested parties.

The group says that about 64 million Americans struggle with unpaid and unpayable medical debt annually, even with health insurance. About 15 million annually become insolvent because of medical debt, and about 1 million go bankrupt. So they are looking to quantify the impact of medical debt forgiveness.

The bulk of the agenda will include “Shirtsleeves work by the University team and others, including breakout sessions for special interest groups in the banking, collections, insurance, philanthropic, medical and tech industries.”

The University Team includes:

• Wes Yin, PhD, Associate Professor of Public Policy, UCLA
• Neale Mahoney, Assistant Professor of Economics, University of Chicago
• Francis Wong, PhD Candidate, Department of Economics, UC/Berkeley
• Ray Kluender, PhD Candidate, Department of Economics, MIT

Neal Mahoney of the University of Chicago said of the initiative:

“We are interested in whether medical debt relief can start a virtuous cycle: raising credit scores, lowering interest rates on non-medical debt, and thereby allowing households to more generally get their financial lives in order. And we’re hoping to identify which types of household benefit the most from medical debt relief, so that we can target medical debt forgiveness to get the highest bang-for-the-buck.”

insideARM Perspective

If this sounds familiar, you may recall a story from last summer, when Last Week Tonight with John Oliver skewered the debt-buying industry, and then dramatically closed the segment by “giving away” $15 million in medical debt. He forgave the debt by buying a portfolio of approximately 90,000 out-of-stat accounts, and giving it to RIP Medical Debt. RIP is a non-profit company established by two former collection industry executives with the mission of forgiving medical debt, with no tax consequences for the consumer.

Meanwhile, you may have noticed a recent story in the news, where the Minnesota Nurses Association has worked to help approximately 1,800 patients by buying and forgivinig their medical debt.

An admirable initiative, this organization seems to have established some legs… and has recruited some very well-respected names in the process. We will keep watching.

PHOENIX, Ariz. — BillingTree®, the leading payment technology and merchant services provider, today announced the appointment of Bryan Schreiber as Chief Financial Officer. Schreiber will oversee the company’s expansion plans to spearhead growth and drive revenue in new and existing focus markets, including ARM, Healthcare, Financial Services, Property Management and more.

Prior to joining BillingTree, Schreiber held financial leadership positions at FinTech providers including FundTech and BankServ and was most recently head of Finance, US Payments, Treasury & Enterprise Solutions at D+H. Schreiber has worked in the finance and accounting industry for more than 25 years and is a Certified Public Accountant (CPA) in the state of Arizona.

Schreiber’s appointment comes during a period of major expansion for BillingTree which has grown its headcount by 30% since its recapitalization by private equity firm Parthenon during Q4 2016. The company continues with plans to increase its workforce to support its rapid growth and has also announced two new senior appointments to its leadership team:

• Kathy Baker joins BillingTree as Director of Risk and Underwriting and brings over 20 years of experience in the merchant acquiring industry. Baker was the former Director of Enterprise Business Compliance at TSYS Acquiring Solutions, where she was responsible for developing the company’s Risk and Security strategy and will now lead the risk management and underwriting teams at BillingTree.
• Steve Recchia joins as Director of Sales and leads the BillingTree Sales and Account Management Team in alignment with the company’s business development strategy. Recchia is tasked to help accelerate growth in key markets including accounts receivable management, financial services, healthcare, property management, and student loan industries.

“The newest members to the BillingTree team reflect both the success the company is experiencing and our commitment to supporting the ongoing needs of our current and future customers” said Edgars Sturans, CEO and President at BillingTree. “Bryan, Kathy and Steve bring an invaluable set of skills to the team and will help broaden and strengthen our position as the leading payment technology provider in the markets we serve. It is an exciting time to be part of BillingTree and all three will help continue the success we’ve had in the fast-changing payments industry.”

About BillingTree

BillingTree® is the leading provider of integrated payments solutions to the healthcare, ARM and financial services industry verticals. Through its technology-enabled suite of products and services, BillingTree enables organizations to increase efficiency and decrease the costs of payment processing while adhering to compliance regulations. Leveraging more than a decade of market experience, BillingTree is dedicated to growing payments with technology through an integrated omni-channel offering, suite of proprietary products and value-added services, and a Company-wide focus on delivering extraordinary customer service.

On Monday the Minnesota Court of Appeals reversed a lower court decision granting summary judgment in favor of a debt collector attorney on whether the Fair Debt Collection Practices Act (FDCPA) applied to an attorney who, in the course of complying with the Minnesota Mechanic’s Lien statute, served two mechanic’s lien statements on a consumer and his spouse. The case is Randall v. Pall, (Case No. A16-1745, MN Court of Appeals).

A copy of the court’s opinion can be found here. 

Background

Bruce and Kathy Randall hired Northstar Design and Build, Inc. (Northstar) to complete a home improvement project during the summer of 2014. On September 26, 2014, respondent William Paul, counsel for Northstar, served the Randalls via certified mail with a copy of a mechanic’s lien statement and a letter, which said, “please find [enclosed] a copy of the Mechanic’s Lien Statement which is going to be recorded in the immediate future.” Among other things, the lien statement provided that Northstar intended “to claim and hold a lien upon” the Randalls’ land for the home improvement work in the amount of $9,901.75, which was “due and owing.” On October 2, 2014, Paul recorded the lien statement.

On October 6, 2014, Paul served the Randalls via certified mail with a second copy of the mechanic’s lien statement. For purposes of summary judgment, the parties appear to agree that the second copy of the lien statement was the same as the first copy, except it included an attachment providing a legal description of the Randalls’ property. Paul explained in an accompanying letter to the Randalls that he realized after serving the first copy that he had failed to include the attachment, he was serving “a conformed copy” of the lien statement, and he had recorded the lien statement. 

Over one year later, on October 15, 2015, the Randalls sued Paul for damages under the FDCPA, claiming that Paul failed to provide what the parties call a “mini-Miranda” warning advising them that he was a debt collector and that anything they said could be used in a debt collection action. The complaint also alleged that Paul failed to send the Randalls a validation notice verifying the amount owed and providing the procedures they could follow if they disputed the debt.

Paul moved for summary judgment, arguing that the letters and service of the mechanic’s lien statements were not subject to the FDCPA because they were not “communications” regarding a debt collection action, and he was complying with the requirements under Minn. Stat. § 514.08 to perfect the lien.

The district court granted Paul’s summary judgment motion and dismissed the complaint, concluding that the Randalls were not entitled to relief as a matter of law because Paul’s communications with them did “not trigger the protections afforded by the FDCPA.” 

The Randalls appealed the district court decision. 

Issue Presented 

The appellate court determined that the case presented the following issue:  Did the district court err in granting Paul summary judgment based on its determination that Paul’s service of two mechanic’s lien statements was not, as a matter of law, a “communication” under the FDCPA? 

The Court’s Opinion 

For purposes of the summary judgment motion, it was undisputed that the mechanic’s lien involved a disputed debt between the Randalls and Northstar, and Paul did not include mini-Miranda warnings in the service letters or lien statements or send the Randalls a validation notice. 

Also, Paul did not contest that, when he served the mechanic’s lien statements, he was acting as a “debt collector,” as that term is defined under the FDCPA.

Thus, the sole issue on appeal was whether there are genuine issues of material fact that Paul’s service of two mechanic’s lien statements in September and October 2014 were “communications” “made in connection with the collection” of a debt under the FDCPA.

The court wrote: 

“The Randalls contend that Paul’s two communications triggered FDCPA protections because they were “associated with the collection of a debt,” and fact questions exist that preclude summary judgment. Paul responds that his service of the lien statements was not an attempt to collect the debt, but rather was a necessary step under Minnesota law to perfect the lien. 

In granting Paul’s summary judgment motion, the district court determined that Paul’s communications with the Randalls were not subject to the FDCPA as a matter of law because Paul merely notified the Randalls “of the legal status of the case,” the service letters “included no demand for payment or a threat if payment was not received, and were not an attempt to get immediate payment,” and Paul was “not actively seeking to collect a debt on behalf of his client.” 

All that is required to trigger FDCPA initial notice requirements is a debt collector’s oral or written communication with a debtor made in connection with a debt collection. 15 U.S.C. §§ 1692e(11), 1692g(a). The fact that such a communication is also mandated by state law does not affect the FDCPA’s applicability. In other words, the FDCPA and the Minnesota mechanic’s lien statute are not mutually exclusive, and a debt collector may be required to comply with both laws. 

Keeping in mind the FDCPA’s broad remedial purpose, we conclude that a debt collector is not immune from FDCPA liability by virtue of complying with a state statute. Therefore, Paul was not immune from the FDCPA solely by reason of complying with Minn. Stat. § 514.08.” 

Once the court found that the FDCPA did apply to the defendant, the court moved to a discussion of whether a genuine issue of material fact exists regarding whether Paul’s service of the mechanic’s lien statements was a communication made in connection with a debt collection. 

The opinion states:

“We begin our analysis with the FDCPA’s definition of a “communication,” “the conveying of information regarding a debt directly or indirectly to any person through any medium,” and conclude that Paul’s service of the mechanic’s lien statements meets this “broad” definition because the lien statements and accompanying service letters conveyed information “regarding” the debt that the Randalls allegedly owed Northstar. 

But a debt collector’s communication to a debtor triggers FDCPA initial notice requirements only if it is made “in connection with the collection” of a debt. 

Whether a communication has the requisite connection with a debt collection activity is an objective, “commonsense inquiry” and is generally a fact question reserved for a fact finder. 

In granting Paul’s summary judgment motion, the district court noted that Paul did not explicitly demand payment or threaten consequences for non-payment in either his service letters or the mechanic’s lien statements. We also note that Paul did not provide a deadline for payment in his communications. But the district court erred by failing to view the evidence in the light most favorable to the Randalls. 

For instance, a reasonable fact-finder could conclude that Paul’s animating purpose in sending the lien statements was to induce payment because the statements expressly provided that “[t]he amount for the lien claimed is $9,901.75, and is due and owing to the lien claimant for labor performed and material furnished to the land.” (Emphasis added.) The statements also identified Northstar as the lienholder and provided Northstar’s mailing address. 

Viewing the evidence in the light most favorable to the Randalls, we conclude that there is a genuine issue of material fact on whether the “animating purpose” of Paul’s communications was to induce payment. Accordingly, the district court erred in granting summary judgment to Paul.” 

insideARM Perspective 

This case highlights the argument for attorneys to consider the absolute most conservative position in regard to FDCPA applicability in any instance.  The lesson: When in doubt, the FDCPA applies. 

However, one wonders if the result in this case would have been different if the attorney had argued that he was not a “debt collector” as that term is defined under the FDCPA.  Under the FDCPA , the term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another (emphasis added by insideARM). If the attorney does not “regularly collect” or his “principal practice” is not “the collection of debts” would the same result have occurred?

 

Yesterday afternoon the Department of Education (ED) issued a press release that has garnered little national attention, yet may be very significant for the ARM industry. 

Per the press release: 

“Today, U.S. Secretary of Education Betsy DeVos announced her intent to appoint Dr. A. Wayne Johnson as Chief Operating Officer of Federal Student Aid (FSA). Dr. Johnson is a highly regarded leader with more than 30 years of experience in the financial services industry and holds a Ph.D. in higher education leadership. 

“Wayne is the right person to modernize FSA for the 21st Century,” said Secretary DeVos. “He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers.” 

The term for this position is five years. It was left vacant when Mr. James Runcie, the former chief operating officer of the Education Department’s Office of Federal Student Aid, resigned in May. 

A May 24, 2017 article in BuzzFeed News noted: 

“I cannot in good conscience continue to be accountable as Chief Operating Officer given the risk associated with the current environment at the [Education] Department,” the chief operating officer of federal student aid, James Runcie, wrote in his resignation memo, which was obtained by BuzzFeed News.” 

Dr. Johnson is uniquely qualified for this position. Johnson has previously held executive positions at VISA USA, Providian Financial, and First Data Corporation. Most recently, Johnson was also Founder, Chairman, and former CEO at First Performance Corporation and CEO of Reunion Financial Services Corporation / Reunion Student Loan Finance Corporation. In those prior positions Johnson has been involved in high volume, large scale operations that required a focus on technology, compliance, and customer service. 

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FSA needs expertise in all of those areas. The portfolio is huge. The federal student loan portfolio now approaches $1.4 trillion. Technology issues are rampant. Student borrowers constantly complain about fragmented information and multiple servicers of different loans for the same consumer that do not communicate. Customer service for these students needs to be improved – and improved dramatically. Compliance with regulations governing the industry should be a core part of the DNA of FSA.

However, Johnson brings additional skills and knowledge to the table. As noted in an article published yesterday in the Wall Street Journal:

“Dr. Johnson, who went back to earn his Ph.D. in educational leadership in his 60s, appears to have done his homework for the job. He wrote his dissertation on the weaknesses of the decision-making process students go through before they borrow tens of thousands of dollars to pay for college.

“There is more federal protection in place when you buy a car than there is when you sign up to take on student debt. It comes down to basic consumer protection.”

insideARM Perspective 

Dr. Johnson will be stepping into a position with significant challenges. FSA is under fire from multiple fronts. Among the critical issues that Johnson will need to deal with in the coming months are:

• Allegations that FSA has been mismanaged in the past. See this May 25, NPR story.
• A prior ED proposal to move to a single source model for servicing the massive ED portfolio. See this May 22, 2017 insideARM article on the issue.
• The ED PCA RFP that has been mired in protests and litigation. See here for a link to an insideARM.com page that provides a history of our ED RFP related articles. 

Hopefully, Johnson’s diverse business background and understanding of large scale operations, student loans and customer service will provide the expertise needed to resolve these and many more issues at FSA.

Last week the state of Maine adopted a new debt collection law, HP 836 (LD1199), titled “An Act To Promote Fiscal Responsibility in the Purchasing of Debt, which add new requirements for debt buyers. 

The full text of the bill is available here.

Maine defines a “debt buyer” as:

“A person that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether the person collects the debt or hires a 3rd party, which may include an attorney-at-law, in order to collect the debt. “Debt buyer” does not include a supervised financial organization as defined in Title 9-A, section 1-301, subsection 38-A or a person that acquires charged-off consumer debt incidental to the purchase of a portfolio predominantly consisting of consumer debt that has not been charged off. A debt buyer is considered a debt collector for all purposes under this chapter.”

Under the law, a debt buyer may not collect or attempt to collect a debt unless the debt buyer possesses the following:

1. The name of the owner of the debt;
2. The original creditor’s name at the time of the charge-off;
3. The original creditor’s account number used to identify the debt at the time of the charge-off, if the original creditor used an account number to identify the debt at the time of charge-off;
4. The principal amount due at charge-off;
5. An itemization of interest and fees, if any, incurred after charge-off claimed to be owed and whether those were imposed by the original creditor or any subsequent owners of the debt;
6. If the debt is not from a revolving credit account, the date that the debt was incurred or the date of the last charge billed to the consumer’s account for goods or services received. In the case of debt from a revolving credit account, the debt buyer must possess the date of the last extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money;
7. The date and amount of the last payment, if applicable;
8. The names of all persons or entities that owned the debt after the time of the charge-off, if applicable, and the date of each sale or transfer;
9. Documentation establishing that the debt buyer is the owner of the specific debt at issue. If the debt was assigned more than once, the debt buyer must possess each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer; and
10. A copy of the contract, application or other documents evidencing the consumer’s liability for the debt. If a signed writing evidencing the original debt does not exist, the debt buyer must possess a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money.

The law also states that a debt buyer may not sell or otherwise transfer ownership of a debt without the information and documentation listed above, and may not sell or transfer ownership of or information relating to a resolved debt.

In order to file a complaint against a consumer, a debt buyer must allege all of the following in their complaint: 

1. The information described above, including that the debt buyer possesses the documentation described above;
2. The basis for any interest and fees described above;
3. The basis for the request for attorney’s fees, if applicable;
4. That the debt buyer is the current owner of the debt; and
5. That the cause of action is filed within the applicable statute of limitations period.

And in a collection action initiated by a debt buyer, the debt buyer must attach all of the following to the complaint:

1. A copy of the contract, application or other document evidencing the consumer’s agreement to the debt. If a signed writing evidencing the original debt does not exist, the debt buyer shall attach a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money or the last payment or balance transfer; and
2. A copy of the bill of sale or other writing establishing that the debt buyer is the owner of the debt. If the debt was assigned more than once, the debt buyer shall attach each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer.

Finally, the law outlines penalties for non-compliance, and the fact that bona fide error is an acceptable defense, assuming the debt buyer can show a preponderance of evidence that the violation was not intentional, and occurred in spite of the maintenance of procedures reasonably adapted to avoid any such error.

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RMA International (formerly Debt Buyers Association) worked with the bill’s sponsor and issued this statement from Mark Naiman, RMA Board President: “RMA is pleased with the consumer protections adopted in Rep. Sanborn’s bill as they are highly consistent with the rigorous national-leading standards contained in RMA’s Certification Program. As a result, RMA does not expect this new law to result in any major compliance concerns for RMA certified companies but plans to monitor the implementation of the new requirements to identify any unintended consequences that might occur.”

 

BROOKFIELD, Wisc. — Surefire Data Solutions, LLC, located at 250 N Sunnyslope Rd Suite 220, Brookfield, WI 53005-4809, has become an affiliate member of ACA International, the Association of Credit and Collection Professionals. 

As an affiliate member, Surefire Data Solutions, LLC demonstrates its commitment to supplying quality goods and services to the credit and collection industry, as well as pledging to abide by the association’s code of conduct. 

About Surefire Data Solutions

Founded in 2010, Surefire Data Solutions is an innovative technology company that provides performance and compliance focused solutions that enable Accounts Receivable Management (ARM) Professionals to reduce the complexity, cost and risk associated with doing business.  Over the past 7 years, the Surefire team has developed applications for process improvement through automation, network management, compliance & tracking and data analysis. For more on Surefire Data Solutions, LLC, visit www.surefiredata.com. 

About ACA International

Founded in 1939, ACA brings together third-party collection agencies, law firms, asset buying companies, creditors, and vendor affiliate, representing more than 230,000 industry employees. ACA establishes ethical standard, produces a wide variety of products, services, and publications, and articulates the value of the credit and collection industry to businesses, policymakers, and consumers. For more information about ACA International, visit www.acainternational.org.

 

ST. GEORGE, Utah, — TCN, Inc., a leading provider of cloud-based call center technology for enterprises, contact centers, BPOs and collection agencies worldwide, announced today the unveiling of VocalDirect, a new direct-to-voicemail technology feature for its flagship cloud-based contact center platform, TCN Platform 3.0. TCN’s new streamlined ringless voicemail technology enables businesses and contact centers to instantly send a voicemail directly to the voicemail boxes of thousands of customers all at once. Fully integrated with TCN Platform 3.0’s business intelligence (BI) suite, VocalDirect helps businesses easily create effective omni-channel (inbound, outbound and SMS) communication campaigns.

According to the 2016 Global Mobile Consumer Survey by Deloitte, mobile phones have become an essential part of people’s lives. The report states that more than 40 percent of consumers check their phones within five minutes of waking up, and over 30 percent check their devices five minutes before going to sleep and half doing so in the middle of the night. All told, consumers look at their phones approximately 47 times a day. To better assimilate with the 24/7 “on-the-go” mentality, VocalDirect provides businesses and contact center professionals with the ability to connect and engage with consumers in a non-invasive manner, allowing them to listen, respond and save messages in their inboxes at their own convenience. 

“VocalDirect is a safe, reliable and effective feature that streamlines and enhances communication efforts in one direct and ringless approach,” said Terrel Bird, CEO and co-founder of TCN. “With the addition of VocalDirect, TCN further strengthens our commitment to providing first-rate cloud-based call center technology to businesses of any size at an affordable price.” 

With its pay-for-use pricing structure, TCN’s contact center technology platform is suitable and scalable for businesses of all sizes.                  

Key benefits of VocalDirect include:

• Usable On All Carrier Networks — Delivered seamlessly and successfully, straight from the source
• Business Intelligence (BI) — Offers unique insights and analytics with the ability to view and evaluate the impact and progress of a campaign
• Delivery Guaranteed — Required to pay only for the successfully connected and delivered voicemails
• Time-Efficient — Instantly send thousands of voicemail messages to customers around the globe at one time, with no send limits.
• Omni Channel — Integrated with call, text and email campaigns to offer a comprehensive approach to inbound and outbound communication efforts
• List Building — Scrub cell phone data to repurpose and build future campaign lists 

VocalDirect is built on top of TCN’s advanced cloud-based contact center suite, Platform 3.0, that eliminates the need for complicated hardware. The platform improves connectivity between agents and customers and increases efficiency without the need for additional staff. It provides industry-leading features such as predictive dialer, IVR, call recording and business intelligence. Its “always-on” cloud-based delivery model gives end-users the ability to quickly and easily scale and adjust to evolving business needs. 

To learn more about TCN’s VocalDirect, click here. 

About TCN

TCN is a leading provider of cloud-based call center technology for enterprises, contact centers, BPOs, and collection agencies worldwide. Founded in 1999, TCN combines a deep understanding of the needs of call center users with a highly affordable delivery model, ensuring immediate access to robust call center technology, such as predictive dialer, IVR, call recording, and business analytics required to optimize operations and adhere to TCPA regulations. Its “always-on” cloud-based delivery model provides customers with immediate access to the latest version of the TCN solution, as well as the ability to quickly and easily scale and adjust to evolving business needs. TCN serves various Fortune 500 companies and enterprises in multiple industries including newspaper, collection, education, healthcare, automotive, political, customer service, and marketing. For more information, visit http://www.tcnp3.com or follow on Twitter @tcn.

ROCHESTER, N.Y. – Employees of Continental Service Group, Inc., d/b/a ConServe, recently spent the day at the Nathaniel Rochester Community School #3, one of Rochester’s City Schools, presenting the concepts of financial literacy, entrepreneurialism and workforce readiness to students in grades one through six. Delivered through grade level-appropriate lesson plans created by Junior Achievement (JA), the ConServe team embraced the opportunity to educate our community’s youth with information that will empower them to succeed in the future.

“The ConServe team is committed every day to providing financial solutions and education to adults in need, and they truly understand the importance of fostering these same positive financial habits in youth” said Patricia Leva, President of Junior Achievement of Central Upstate New York. She continues “JA is proud to partner with ConServe employees to bring their expertise and inspiration to students in the Rochester City School District, helping break the cycle of poverty and improve the quality of lives.  We are equally delighted to be a recipient of the Jeans for Charity program which will allow JA to bring this message of hope and empowerment to even more students in our community! “     

 “ConServe endorses the concept of people taking control of their financial destiny – we believe in Fostering Financial Freedom®.  As our Jeans for Charity recipient for June, we are helping to instill these concepts and skills in the young adults of our communities while they are still in school.  In this way, we are investing in their future and providing them with the tools they will need to achieve their long-term goals” adds Mark Davitt, President of ConServe.

About ConServe

ConServe is a top-performing award-winning provider of accounts receivable management services specializing in customized recovery solutions for our Clients. Anchored with ethics and compliance, and steadfast in our pursuit of excellence, we are a consumer-centric organization that operates as an extension of our Client’s valued brand.  For over 30 years, we have partnered with our Clients to give them peace of mind while simultaneously helping them achieve their goals. Ethics. Technology. Performance. 

About ConServe’s Jeans For Charity program

ConServe’s Jeans For Charity initiative began in 2008 when the team’s employees had an idea to launch a program that would provide a way for the company’s mission of “improving the human condition” to coordinate with the organization’s commitment of giving back to their community.  ConServe employees are given the opportunity to participate in monthly charitable donations, benefitting a wide-range of recipients, in exchange for having the option of dressing down and wearing jeans to work for the entire month. The funds raised by the employees’ generosity are supplemented by the organization’s Matching Gift Program – symbolizing ConServe’s commitment to good corporate citizenship. This ongoing initiative, which has inspired countless replications throughout the region, is just one of the ways in which ConServe supports varied and diverse community agencies. To date the program has donated over $650 thousand to local community organizations.

Visit us at www.conserve-arm.com

About Junior Achievement of Central Upstate New York  (JA) 

Junior Achievement is a global non-profit organization that prepares and inspires students to succeed in a global economy by offering in-school and after-school programs in financial literacy, workforce readiness and entrepreneurship.

JA programs start in Kindergarten and are available for all grade levels through high school. Each lesson contains hands-on activities that align with New York State learning standards while encouraging innovation, creativity and critical thinking. JA programs are independently evaluated and are taught by a community volunteer who brings real life examples of success into the classroom and makes everyday lessons in math, social studies and English/language arts relevant to the real world.

The result is a unique learning opportunity for our kids and a future generation of engaged consumers, qualified employees and leaders who will drive the economic growth of our community. 

Visit them online www. rochesterny.ja.org

A $200 debt turned into a $500 jury verdict against a debt collector for violating the Fair Debt Collection Practices Act (FDCPA). Then that $500 jury verdict morphed into a request for over $73,000 in attorney’s fees for the prevailing party. Finally, that request translated into an award of $36,000. 

The case is Heling v. Creditors Collection Service Inc. (Case No. 5-CV-1274, U.S.D.C., Eastern District of Wisconsin). 

Background 

The plaintiff, Lori Heling, filed her complaint in this case on October 26, 2015. She alleged that the defendant, Creditors Collection Service Inc. (CREDITORS), violated the terms of the FDCPA, 15 U.S.C. § 1692, et seq.  

In her complaint Heling alleged that in April of 2015, CREDITORS sued her in Sheboygan County Circuit Court for an unpaid debt. Ms. Heling also alleged that she never received actual service of summons in that case, so CREDITORS served her by publication and, ultimately, the Circuit Court entered default judgment against her in the amount of $390.09, which included a $50.00 attorney fee, a $44.46 service fee, and a $94.50 filing fee. CREDITORS then attempted to collect on that judgment by garnishing Ms. Heling’s wages. 

At one point, CREDITORS sent a Garnishment Notice to Ms. Heling’s employers; that notice listed $396.14 as the outstanding judgment, $22.00 in post-judgment interest, and $122.50 as “[e]stimated costs of this earnings garnishment.” 

This notice prompted Ms. Heling to contact CREDITORS and its attorneys. During a phone call with CREDITORS, Ms. Heling was informed that she owed $538.94, which was allegedly more than she actually owed.  At that point, Ms. Heling informed CREDITORS that she was prepared to pay the judgment against her but would like to have the judgment against her vacated. CREDITORS informed Ms. Heling “that it could not have the judgment vacated.” Ms. Heling claims that, in taking these actions, CREDITORS violated the FDCPA by misrepresenting the amount, character, and status of the debt she owed and incorrectly stating that CREDITORS could not have the judgment vacated.

In December of 2015 CREDITORS filed a motion to dismiss the case. On February 2, 2016, the court denied that motion to dismiss. 

Several other motions were filed and orders entered in response thereto, including a motion for summary judgment that was denied by the court. The case proceeded to trial. 

In October 2016, after a two day trial, a jury awarded plaintiff $500 in damages. CREDITORS filed post-trial motions that were denied by the court. 

On February 6, 2017, the attorney for the plaintiff filed a Petition for Attorney’s Fees pursuant to the FDCPA’s fee-shifting provision.  

On June 12, 2017, the court filed an order awarding Attorney Fees. It is the details of the “ask” and the “award” that are interesting. 

The plaintiff’s motion for attorney’s fees 

Plaintiff’s attorney sought over $77,000 in attorney’s fees and costs for their work in this case. Defendant argued that she is entitled to no more than $1,500. 

Per the plaintiff’s motion:

“Plaintiff anticipates that Defendant will suggest that this was a simple FDCPA case that did not warrant the time and effort required to prosecute this matter to its ultimate conclusion. But the assertion that this was a simple FDCPA case is not a reasonable argument that can be posited given the considerable procedural history of this matter – a history driven almost exclusively by Defendant. 

In response to Plaintiff’s complaint, Defendant filed a motion to dismiss pursuant to Rule 12(b)(6), based on the Rooker-Feldman doctrine, and to dismiss pursuant to Rule 12(b)(6) for failure to state a claim. Defendant’s motion was denied in its entirety. Defendant subsequently filed its answer to Plaintiff’s complaint and asserted three (3) separate affirmative defenses, though it proceeded without pursuing any of the three (3) defenses at trial. 

In addition to the filing of its motion to dismiss, Defendant subsequently filed a motion for summary judgment, which resulted in the taking of four (4) depositions, three (3) witnesses for the Defendant and the deposition of the Plaintiff. Ultimately, Defendant’s motion for summary judgment was denied and this case proceeded to trial before a jury.  At the conclusion of the trial, the jury entered a verdict in favor of Plaintiff and against Defendant and awarded Plaintiff statutory damages. 

In response, Defendant once again persisted in its attempts to have the current matter decided in its favor with the filing of post-trial motions for judgment in its favor or for a new trial. As with its motions to dismiss and for summary judgment, Defendant’s post-trial motions were denied in their entirety and on January 23, 2017, this Court entered judgment in favor of Plaintiff.” 

In the motion, plaintiff’s attorneys also outlined numerous attempts to settle the case. But claimed that CREDITORS never responded to any settlement offers. 

The defendant’s argument against an award of attorney’s fees 

CREDITORS filed a Brief Opposing an award of Attorney’s Fees.  They objected to the plaintiff’s request for nearly $74,000 in fees upon the basis that plaintiff was not “successful” in this action, i.e. though she “prevailed” by obtaining a statutory damage award for one-half ($500) of the nominal award allowed under the “additional” or statutory damages provision of the FDCPA. They argued that plaintiff did not succeed in obtaining an award that justifies an award of attorney fees. Finally, they argued that any such award as that sought by the plaintiff is excessive, unreasonable and unfair. 

They also noted in their brief that plaintiff was seeking attorneys’ fees in the amount of $73,429.50 from an agency that had at the time of trial three employees, including its owner. 

The Court’s Decision  

The court disagreed with defendant’s policy arguments about whether the plaintiff was entitled to an award of attorney’s fee. The court held that plaintiff was entitled to an award of attorney’s fees. 

The court then conducted the actual fee analysis using the “lodestar method.” The “lodestar” analysis involves setting a reasonable hourly rate and the number of hours which should have reasonably been expended to litigate the claims at issue. Those figures are multiplied to achieve the lodestar, which may then be adjusted for various reasons. 

HourlyrRate 

The Court first determined that plaintiff carried the burden to show appropriate market rates for her counsel’s time, and awarded her fees based on the hourly rates she proposed. 

Reasonableness of time spent 

The court then looked at the time spent on the case. The court wrote:

“Plaintiff’s initial demand is for $73,429.50 in fees for 203.8 hours of work.  The Court concludes that many of these hours were unreasonably expended in what can only be described as a mine-run FDCPA case. The complaint is a mere forty-five paragraphs.  Though a motion to dismiss was filed, the Rooker-Feldman issue it raised was not novel or particularly complex; the Court disposed of it in a ten-page order.

Given the limited claims that survived the motion, discovery was simple and short, with only a handful of depositions taken. Summary judgment was also relatively brief, and the Court addressed it in just seventeen pages. Trial itself took less than two full days, with five witnesses and less than thirty exhibits presented across barely six hours. 

The hours Plaintiff’s attorneys expended addressing each of these tasks were excessive. Plaintiff’s attorneys are experienced consumer rights litigators and are receiving an hourly rate commensurate with that experience. By the same token, they cannot charge their client, or Defendant by way of the instant motion, at the rate of a novice in addressing issues they have likely seen on numerous prior occasions. 

In the end, excessiveness pervades Plaintiff’s fee bill. The Court declines to waste its time by addressing this problem with respect to each individual line item of Plaintiff’s seventeen-page bill. Rather, in light of the nature and history of this case, and the experience of Plaintiff’s attorneys, the Court believes that no more than 120 hours could have been reasonably expended in litigating this matter.” 

Lodestar adjustment 

Finally, the court discussed a “lodestar” adjustment. The court made a further adjustment: 

“Overall, Plaintiff was partially successful in vindicating the claims and damages her lawsuit entailed. The Court concludes that an appropriate, across-the-board reduction for Plaintiff’s partial success is twenty percent, or $8,485.20.” 

The court closed the order with the following statement: 

“If a minor violation of the FDCPA necessitates discovery and a jury trial to resolve, it would offend Congress’ intent in passing the FDCPA to fail to reasonably compensate plaintiff’s counsel for the time and effort needed to obtain redress for the consumer. Plaintiff’s motion for attorney’s fees will be granted in the amount of $36,190.80.” 

insideARM Perspective 

This case defines the phrases “Monday Morning Quarterbacking,” and “Hindsight is 20/20.” An account with an initial balance of approximately $200 turns into litigation that lasts over 20 months! It is hard to not look back and suggest all parties would have been better off settling the case early. While plaintiff did receive an award of attorney’s fees, the final award was less than 50% of what was requested. Is there a “winner” in this case? 

This case is a warning to all ARM firms about the risks of trial and the FDCPA fee-shifting provisions. This result has to have a heavy impact on a 3-person company.