Archives for November 2017

This article was originally published last Friday November 24. It has since been updated as follows.

UPDATED Friday 11/24/17 5:00pm: Since this article was posted earlier on November 24, 2017, President Trump has named Mick Mulvaney, Director of the Office of Management and Budget, to lead the Bureau temporarily. The White House said in a statement, “The President looks forward to seeing Director Mulvaney take a common sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities.” It will be an interesting Monday morning at the CFPB, with two leaders potentially in charge.

UPDATED Sunday 11/26/17 9:25pm: CFPB Deputy Director Leandra English has filed suit against President Trump and OMB Director Mick Mulvaney in US District Court for control of the Bureau.

UPDATED Monday 11/27/17 10:15am: Trump’s Department of Justice opinion says he has authority to designate an acting director of the CFPB. Mary E. McLeod, General Counsel at the CFPB issued a memo to senior staff supporting this position, in opposition to her new boss (the one appointed by Richard Cordray).

Meanwhile, everyone showed up for work this morning. It looks like Mulvaney brought donuts.

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Today, on Friday of the Thanksgiving holiday weekend, the Consumer Financial Protection Bureau (CFPB) announced that Leandra English has been officially named deputy director of the agency. English, who had been most recently serving as the agency’s chief of staff, has previously held key leadership positions at the CFPB, the Office of Management and Budget, and the Office of Personnel Management. David Silberman, who had been serving as acting deputy director, will continue in his role as associate director of the Research, Markets, and Regulations division.

Before taking on the role of deputy director of the CFPB, Leandra English had been serving as the agency’s chief of staff.  Ms. English returned to the CFPB in January 2017 after serving as the principal deputy chief of staff at the Office of Personnel Management. She has previously served in number of senior leadership roles at the CFPB, including deputy chief operating officer, acting chief of staff, and deputy chief of staff. Previously, English served as chief of staff and senior advisor to the deputy director for management at the Office of Management and Budget, and as a member of the CFPB implementation team at the Department of the Treasury. Ms. English received her B.A. from New York University and her M.S. from the London School of Economics. 

In a statement, director Richard Cordray thanked David Silberman for serving in the role of acting deputy director in addition to his official role as associate director of Research, Markets, and Regulations. 

Cordray announced on November 15 that he would step down from his position at the Bureau by the end of the month. This ended months of speculation about whether he would or wouldn’t voluntarily leave – or be fired – before finishing his term, which ends in July 2018. Many expect that he will soon announce his candidacy for Governor of Ohio, his home state.

There has been a great deal of speculation about who would take on the interim director role after Cordray’s departure. Some interpret Dodd-Frank to say the deputy director would take over as acting director in the event of a departure. Since Cordray announced his resignation last week, it has been raised that David Silberman has never officially been given the deputy title, but has been serving as “acting” deputy, and that he is therefore not eligible to step into the role.  Many expected that Cordray would give the official title to Silberman before leaving, so today’s announcement is somewhat of a surprise.

Others, including Ballard Spahr’s Alan Kaplinsky, have interpreted that the Federal Vacancies Reform Act of 1998 gives Trump other options to appoint an acting director, including: (1) an officer in any agency who is occupying a position requiring Senate confirmation to perform the functions and duties of the office, or (2) any officer or employee of the subject agency who is occupying a position for which the rate of pay is equal to or greater than the minimum rate of pay at the GS-15 level and who has been with the agency for at least 90 of the preceding 365 days to perform the functions and duties of the office.

Within a day of Cordray’s November 15 announcement, it has been widely speculated that Trump would name Mick Mulvaney, Director of the Office of Management and Budget, to temporarily head the CFPB. Mulvaney has not been a fan of Cordray’s CFPB. One wonders whether Cordray felt that English would be more likely than Silberman to be left in place to lead the agency until a permanent director can be named.

As for a permanent replacement, which requires Senate confirmation, multiple names are still being circulated, including former Rep. Randy Neugebauer (R-Texas); House Financial Services Commitee Chairman Jeb Hensarling (R-Tex); Todd Zywicki, law professor at George Mason University; Mark Calabria, currently Mike Pence’s Chief Economist and former Director of Financial Regulation Studies at the Cato Institute; and former Fannie Mae counsel Brian Brooks.

insideARM Perspective 

This transition occurs literally in the midst of the expected release of a Notice of Proposed Debt Collection Rulemaking, a process which has been ongoing for four years. As today appears to be Cordray’s last day at the Bureau, we now know that the debt collection rule will not be dropped prior to his departure, which some had thought. 

Meanwhile, only last week the bureau published a notice in the Federal Register requesting comment on round 2 of its proposal to conduct a consumer survey about debt collection disclosures. Comments are due by December 14, 2017. This has led to speculation that perhaps the scope of the initial rulemaking would be limited — possibly even more so than was announced in June. At that time, Cordray outlined that of the three core areas to be addressed with rulemaking:

1. Collecting the right amount from the right consumer
2. Ensuring that consumers understand the collection process and their rights in that process
3. Ensuring that consumers are treated with dignity and respect within the debt collection process

The first would be separated out and addressed later, with #’s 2 and 3 being addressed first. But the proposed consumer study really seems to relate to #2. So, at this point, what rules will be proposed — and when — is truly anybody’s guess.

 

On Monday the Consumer Financial Protection Bureau (CFPB) took action against Xerox Business Services, LLC, now called Conduent Business Services, for software errors that led to incorrect consumer information about more than one million borrowers being sent to credit reporting agencies. The Bureau says that company also failed to notify all of its auto lender clients about known flaws in its software that led to the errors. The consent order requires Xerox to pay a $1.1 million civil penalty, explain its mistakes to its lender clients, and fix its faulty software.

According to the CFPB announcement,

Xerox Business Services, based in Dallas, Texas, operated and customized a third-party software application for five auto lenders. The software automatically generated and transmitted information about borrowers’ auto loans to consumer reporting agencies. Lenders use information furnished to the consumer reporting agencies when considering whether to issue a loan and on what terms, so it is essential the information is accurate. Mistakes on credit reports like those caused by Xerox can lead to consumers being denied credit, or not qualifying for lower interest rates or other favorable credit terms. Errors on credit reports can also impact a consumer’s ability to qualify for employment, insurance, and rental opportunities.

Widespread defects in the loan-servicing software that Xerox used led lenders to report inaccurate information about consumers’ performance on their loans. In 2016, its reports for more than one million of the auto lenders’ 6.4 million customer accounts had one or more errors. Xerox had acquired the rights to this software from its creator, an independent software developer. When lenders asked for certain features, Xerox would modify the software’s source code. Between 2004 and 2010, one modification was supposed to enable three of Xerox’s clients to provide consumer data in the Metro 2 Format. Metro 2 is the standard industry format used for furnishing this information in a uniform way to credit reporting agencies. However, Xerox’s modifications were based on a flawed, unreleased version of Metro 2 source code that led to the reporting of incorrect consumer information. This violated the Dodd-Frank Wall Street Reform and Consumer Protection Act.

According to the consent order, Xerox:

• Provided flawed software that led to incorrect information being sent to credit reporting companies: Xerox’s use of flawed, unreleased loan-servicing software resulted in the transmission of inaccurate and incomplete information to credit reporting agencies. Missing or incorrect information included the date of borrowers’ first delinquent payment; actual payment amounts; scheduled monthly payment amount; amount past due; amount charged to loss when a loan is charged-off; account status, and other payment and account information.
• Failed to inform lenders about defects in its software: Xerox did not notify all of its client lenders about the errors even after learning that the software it used resulted in the transmission of inaccurate information. Xerox’s clients told the company about faulty data being sent to credit reporting agencies, and ordered it to fix specific errors. But Xerox did not notify its other lender clients about the problems. Xerox also failed to pass along information it learned from the software’s developer about upgrades needed to prevent mistakes. As a result, for years Xerox’s clients persisted in transmitting inaccurate and incomplete information about borrowers and their accounts to the credit reporting agencies.

Enforcement action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws.

Under today’s consent order, Xerox must:

• Explain the errors to its clients, and act to prevent future mistakes: Xerox has to describe the errors caused by its flawed software to its client auto lenders, inform lenders of any future potential or actual errors within 30 days of its discovery, and explain the correct use of the software to its clients each time the coding is revised.
• Give the CFPB a compliance plan: Xerox must give the CFPB a plan showing that it will identify and fix all defects in its software, and ensure that the software will report accurate information to credit reporting agencies.
• Pay a $1.1 million penalty: Xerox must pay a penalty of $1.1 million to the CFPB Civil Penalty Fund.

You can read the full consent order here.

insideARM Perspective

Why is this relevant to the ARM industry? As in most markets, creditors and debt collectors – whose actions could pose risk to consumers if not executed correctly — depend heavily on vendor-provided/maintained software to run their business.

Everyone makes mistakes. We see these examples in the news every day. As in this Xerox case, it’s typically not the original mistake that causes the greatest consequences; it’s the delay in discovery of the problem, or the delay in reporting the problem, or confusion related to reacting to the problem.

Any service provider ought to consider reviewing two things:

• Their change management policy; a robust process should help to prevent a variety of mistakes in the first place.
• Their disaster recovery policy, which would dictate how a firm would deal with discovery of a software glitch, just as it contemplates how to manage a breach, or how to deal with a natural disaster.

This article previously appeared on the Ontario Systems blog and is republished here with permission.

The Scottsdale sun shined brightly on PowerUp 2017 last month. Specialty tracks, dynamic speakers and record setting attendance made our annual receivables education event one of the hottest conferences in the county. In addition to soaking up the sun, healthcare track attendees were keenly interested in absorbing every bit of information available about their market segment. This blog highlights some of the hottest topics.

Revenue Cycle Economics – A robust discussion of the market pressures impacting the revenue cycle kicked off a hard-hitting session on compliance.  Although the healthcare industry represents a $3 trillion segment of the U.S. economy, all is not bright for those who manage the revenue cycle. During the compliance hot topics session, attendees learned, according to a 2017 study of consumer trends by TransUnion Healthcare, the percentage of consumers not paying their total hospital bills will increase to 95 percent by 2020. To make matters worse, the percentage of patients who are even making partial payments toward their hospital bills is decreasing dramatically from 89-90 percent in 2015-2016 to 77 percent in 2016. If accurate, this scenario suggests bad debt will be on the rise.

Attendees agreed that higher deductibles, and an increasing number of patient self-pay accounts, are causing a decrease in patient payments available to cover funding for medically necessary services. In response, with millions of dollars in unpaid medical debt left uncollected, providers are beginning to implement new processes to prevent revenue leakage while also providing a better patient experience. For example, providers are employing new technology tools and hiring collection agency partners who specialize in healthcare collections to achieve higher liquidation rates and ensure a positive patient experience.

Compliance attendees also learned that with the rise in self-pay accounts comes a greater need to address patient payment preferences. TransUnion Healthcare reports analysis on payment patterns between 2014 and 2016, including:

• 63 percent of hospital bills were $500 or less; of those hospital bills, 68 percent were not paid in full in 2016.
• 14 percent of hospital bills were $3,000 or more; of those hospital bills, 99 percent were not paid in full in 2016.
• 10 percent of hospital bills were $500 to $1,000; of those bills, 85 percent were not paid in full in 2016.

These trends underscore the need for providers to not only understand patient payment preferences but to employ the technologies required to process a growing number of ways to move money via the IVR, website, the ACH network and mobile apps.

Revenue Cycle Compliance Hot Topics – Using the discussion about an unpredictable, evolving and  consumer-driven healthcare marketplace as a foundation, compliance hot topics took center stage. Compliance hot topics for healthcare providers included an update on Telephone Consumer Protection Act (TCPA) compliance developments; a primer on electronic consent requirements; a walkthrough of electronic payment processing requirements and breaking news about the first-party service provider relationships. Session highlights included:

TCPA – TCPA lawsuits against healthcare providers continue to rise. Apparent confusion over patient consent and revocation requirements plague providers and their receivables management partners. During the session, special emphasis was placed on a recent case which examined a new theory of contract law. In Reyes, Jr. v. Lincoln Automotive Financial Services, Case No. 15-0560, (Eastern District of New York, June 20, 2016) the second Circuit affirmed the lower court’s judgment in favor of the defendant and decided the TCPA does not permit a consumer to revoke its consent when that consent was part of a bargained‐for exchange. This case is on appeal and is one to watch.

This Court’s ruling creates a tremendous opportunity for healthcare providers and their first- and third-party collection agencies. If this decision is upheld, providers should be able to update their admission agreements with patients to include mutually bargained for consent and revocation requirements.

This session closed with six TCPA tips for healthcare providers:

• TCPA requirements apply to both autodialed calls to cells and prerecorded messages.
• Patient consent cannot be granted by friends, family, etc.
• Admission documents are powerful, valuable tools to gather consent.
• Cell numbers obtained through skip tracing can never be autodialed.
• Text messages are calls under the TCPA.
• Manual calls, as that term is technically defined, are always permitted [with or without consent].

Electronic Consent Requirements –  The Electronic Signatures in Global and National Commerce Act (E-Sign) has arguably created as much confusion about electronic documents and communication as it has provided clarity. The purpose of the act is twofold.

First, it clarifies digital documents and signatures, properly created, will substitute for paper and wet signatures. Not a difficult concept to explain or understand.

Second, the act seeks to protect the technology-challenged consumer. Specifically, E-Sign tells us when a rule, law or regulation requires one party, to send or provide another party with disclosures, documents or information, the sending party must obtain a unique type of consent from the receiving party before relying on E-Sign to legitimize the delivery of the disclosures, documents or information.  Session attendees were encouraged to study the requirements for E-Sign Consent if they are interested in using digital communication tools as a means to provide consumers with disclosures, documents or information such as validation notices, preauthorized or recurring electronic funds transfer payment arrangements, or postdated payment letters.

Electronic Payment Processing – Traditionally, healthcare organizations have been slow to adopt multichannel forms of payment. Even today, personal checks and credit card payments remain the top two forms of payment that healthcare providers require their patients to use. But patients are demanding change, and in turn expect their healthcare providers to embrace their payment preferences. Like any other patient or guarantor of a product or service, patients prefer electronic payments over any other form.

Electronic payments can be made in several ways: website, live operator, voice track recordings, interactive voice response (IVR), and smart phone app. Electronic payments can also come in various forms: single and recurring credit card payments, single and recurring ACH payments, single and recurring debit payments, and electronic checks, to name a few. Healthcare providers are well advised to consider:

• Patients and guarantors expect to make payments using a variety of options.
• A thorough understanding of the legal terminology associated with electronic payments is essential.
• Each type of electronic payment is associated with unique compliance requirements.
• The use of preset scripts can reduce regulatory risk.

First-Party Service Relationships – Revenue cycle professionals like the first-party model: It maximizes their control over the collection agency. Debt collectors like the first-party model: It insulates them from liability under the Fair Debt Collection Practices Act. Arguably, patients like the first-party model because they effectively communicate directly with the party to which they owe money. But recently the first-party business collections model has drawn the scrutiny of the consumer bar. Lawsuits against collection agencies and their outsourcing partners abound. This is largely due to a dearth of information about the attributes of the legal structure of a legitimate first-party outsourcing relationship. During this session, the attendees examined a series of cases to learn just how far one must go to establish its employees as the de facto or functional equivalents of the creditors’ employees.

Special Thanks to all of you who attended Power Up 2017 and participated in the healthcare track sessions. Mark your calendars for PowerUp 2018, October 15-17 in Indianapolis. In the meantime, please follow me on Twitter, and on LinkedIn for more information about these and other timely compliance topics.

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Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2017 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion. See the page here or find it in our main navigation bar from any page on insideARM under Compliance Resources.

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Click on the link in the chart for the complete text of the decision. Where insideARM has already published a story on the case, we provide a link to the story.

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Here are highlights of selected FDCPA Cases from September-October 2017:

Darian Derosa v. CAC Financial

The gist: Plaintiff claims a violation of FDCPA section 1692e occurred when a second collection letter from defendant showed “…only a single balance and does not break the amount down further into principal, interest, and or late fees.”  Further, plaintiff argued that the letter was deceptive as it “can be reasonably read to have two or more different meanings, one of which is inaccurate.” CAC responded that the original creditor does not seek interest nor fees from the the account holder. The Court found that collector is not under an affirmative duty to advise that a debt will not incur interest or fees, and that the least sophisticated consumer would not be confused by an “unadorned statement of the actual balance owed.”

Myron Hargreaves, Cortney Halvorsen, and Bonnie Freeman, Plaintiffs, v. Associated Credit Service, Inc., a Washington Corporation, and Paul J. Wasson and Monica Wasson, Individually and the Marital Community, Defendants

The gist: Plaintiff brought this FDCPA action against the debt collector as the result of a garnishment. State law requires the judgment creditor to affirm that the judgment remains unsatisfied, that the amount due is correct and that the creditor has “reason to believe that the garnishee is indebted to debtor in amounts that exceed the exemption limit set by federal and state law” or are otherwise exempt. The plaintiff alleged that monies garnished by debt collector were exempt. Court found that debt collector’s sworn affidavit was sufficient and a debt collector would have no way of knowing whether funds were subject to exemption.

John Dix, Plaintiff, v. National Credit Systems, Inc., Defendant

The gist: Debt collector sent plaintiff a collection letter identifying creditor as “Re: Metro on 19th/Chamberlin & Assoc/G171”. Creditor was Metro on 19th, the entity from which plaintiff had rented an apartment in the past. However, the creditor was only referenced in the letter’s subject line–a violation of 1692g(a)(2), which requires the name of the creditor to be conveyed effectively to the consumer. The Court found that debt collector did not sufficiently identify Metro on 19th as the current creditor.

Smith v. Cohn, Goldberg & Deutsch, LLC

The gist: In another case involving 1692g(b)(2), a letter to the plaintiff identified four separate entities and failed to identify the creditor to whom debt was owed. The Court agreed that the plaintiff established a claim under 1692g(a)(2) and defendant’s motion to dismiss was denied.

Fatema Islam, Individually and On Behalf Of A Class, Plaintiff, v. American Recovery Service Incorporated, Defendant

The gist: The Second Circuit’s decision in Avila v. Reixinger & Associates, 817 F.3d 72 (2d Cir. 2016) constrained this judge’s decision in yet another case about whether referencing an amount due “as of the the date of this letter” implies that post-default charges may be accruing. The Court found that a collection letter that stated balance “as of this date,” but also disclosed that no additional interest or fees were being charged, was ambiguous and thus false and deceptive.

Eric Delfonce, aka Elie Delfonce, Plaintiff-appellant, v. Eltman Law, P.C., Defendant-appellee

The gist: A law firm sent a letter regarding a prior judgment. It contained a disclaimer of attorney involvement and a statement that the letter should not be construed as a threat of suit. The letter also contained information about the date of the prior judgment. Plaintiff alleged that the mere use of the word ‘judgment’ was a threat of legal action, but the lower court disagreed. The circuit court affirmed the lower court’s decision and found that the letter was not in any way deceptive, refuting any claim that use of the word ‘judgment’ was a threat.

In the Department of Education (ED) case that becomes more bizarre by the week, Continental Service Group Inc. et al. v. The United States has been reassigned from Judge Susan G. Braden to Judge Thomas C. Wheeler.

The Transfer Order, filed yesterday and signed by Chief Judge Susan G. Braden, simply says,

For the efficient administration of justice, the Clerk of Court is directed to transfer the above-captioned cases to the Honorable Thomas C. Wheeler, pursuant to the Rule of the United States Court of Federal Claims 40.1(b). 

IT IS SO ORDERED.

insideARM Perspective

And so begins (maybe?) a new chapter in the ongoing case of the ED private debt collection contract. Judge Braden has appeared to struggle with this case from the beginning, at times issuing orders based on news reports, at times appearing defensive by ordering small details to be entered into the formal record, and at times appearing to engage in a battle of wits with the Department of Education. 

In a recent update on the case we said,

This is a little like seeing a junior high school argument play out in slow motion, in writing, with a lot left unsaid. ED concluded its update with this: “As stated in our August 4, 2017, August 24, 2017 and September 14, 2017 status reports, this corrective action is a top priority of Federal Student Aid, and ED is working diligently to complete the corrective action.”

The prior update included “Defendant respectfully requests that it be allowed to file a status report on…” This latest update includes no such respectful request.

One can only imagine Judge Braden’s response. Where to now? Will she set another new date? Order ED to show up in court and provide more specifics?

Well, now we know the response: Let’s see if someone else can sort it out. 

Meanwhile, because of Judge Braden’s May 31, 2017 injunction, accounts entering default continue to sit. Consumers are confused. Deadlines are being missed. Jobs are likely being lost.  Perhaps Judge Wheeler will be able to sort it out.

Editor’s Note: See here for a link to an insideARM page that provides a history of our ED-related articles. The page is automatically updated as new stories are written.

Last Thursday the Federal Communication Commission (FCC) approved new rules to assist in blocking unwanted and illegal robocalls.

As insideARM reported last week, Thursday’s Commission meeting included a review of the recommendations that had been submitted in September by the FCC’s Consumer Advisory Committee.

The new rules would allow voice service providers to block calls:

1. Purporting to be from a phone number placed on a “do not originate” list by the number’s subscriber
2. Purporting to be from invalid numbers, like those with area codes that don’t exist
3. From numbers that have not been assigned to a provider
4. From numbers allocated to a provider but not currently in use

To minimize blocking of lawful calls, the Report and Order encourages voice service providers that elect to block calls to establish a simple way to identify and fix blocking errors.  The rules also prohibit providers from blocking 911 emergency calls.

In a statement accompanying the release, FCC Chairman Ajit Pai said,

It is important to stress that today’s action is deregulatory in nature. We aren’t piling more rules upon industry. Instead, we’re providing relief from FCC rules that are having the perverse effect of facilitating unlawful and unwanted robocalls. I thank my colleagues for their thoughtful comments to this item and for joining me in this bipartisan endeavor. Make no mistake—this isn’t the end of our efforts. We’ll need to do more, and we will. But we’re building a strong foundation for fighting illegal robocalls, both by updating our rules and taking enforcement action.

Also accompanying the release was a statement by Commissioner Jessica Rosenworcel, who agreed in part and dissented in part, with the Order. Expressing her dissention, she said,

But let’s be honest: This is tepid stuff. We need to bring the heat. My blood boils when robocalls come in night after night after night and these strange voices and their scams hold up my line and invade my home. That’s why the FCC needs to do more—a lot more—than the small-bore stuff we do today. Moreover, I think even what we do here has a real flaw. While the agency offers carriers the ability to limit calls from what are likely to be fraudulent actors, it fails to prevent them from charging consumers for this service. So this is the kicker: the FCC takes action to ostensibly reduce robocalls but then makes sure you can pay for the privilege. If you ask me, that’s ridiculous. Come on. It’s an insult to consumers who are fed up with these nuisance calls. So on this aspect of today’s decision I choose to dissent.

You can download the FCC’s full Report and Order and Further Notice of Proposed Rulemaking here.

A comment period on this Report and Order ends January 23, 2018.

insideARM Perspective

Just as the industry applauds efforts of regulators to enforce the law and shut down crooks and scammers who pose as debt collectors, legitimate industry groups also applaud efforts to shut down these unwanted calls we all receive, such as those from “Rachel from Card Services.” After all, these incessant scam calls are what is really driving the problem. They have made us afraid to pick up the phone, and they have made it extremely difficult to know who we can trust.

The ARM industry continues to engage with carriers and application developers to jump onto this moving train, and address the nuances associated with blocking and/or labeling calls from debt collectors.

Last Friday the Innovation Council, a part of the Consumer Relations Consortium, held its final meeting of the year. In conjunction with the primary topic of ‘competing on data analytics,’ the group engaged in an in-depth discussion of the fast-moving robocall blocking and labeling activities. 

Rebekah Johnson, CEO of Gloria Mac, provided an in-depth overview of the state of the ongoing initiatives by regulators, carriers, application developers, and industry. Executives from First Orion (which owns the call blocking app PrivacyStar, and also provides call analytics for T-Mobile) and Hiya (which has its own app, and provides call analytics for AT&T and Samsung) then shared their firms’ labeling philosophies and answered a lengthy stream of questions. 

There is a willingness to work with legitimate businesses to ensure their calls are not inappropriately blocked or labeled. However it is also clear that 3rd party disclosure laws pose a real challenge to this new trend. When it comes to call labeling, all of the application developers I have heard from are passionate about and committed to the concept of accurate labeling and giving consumers as much information as possible about the source and purpose of a call.

Another challenge for the collection industry is that there are quite a few of these developers – some power the carriers’ solutions; many more create apps available for download by consumers in their relevant app store…most are largely focused on mobile calls because of the opportunity posed by screen size to provide rich information. As of yet, there is no common set of basic labels or definitions (i.e. what exactly constitutes “scam likely”), and as of yet, there is no central point for legitimate businesses to provide information about their phone numbers. Although there are telecom/application developer working groups beginning to engage on these issues.

Should the CFPB release a proposed debt collection rule, widely anticipated to include a cap on the number of contacts that can be attempted, the industry will need to adapt and find ways to make those fewer contacts more effective.

If this 3rd party disclosure challenge could be solved — not to mention a resolution to ACA International’s challenge to the FCC’s July 2015 Declaratory Ruling and Order regarding the definition of an autodialer — call labeling could actually be an interesting opportunity for collectors to encourage consumers to pick up the phone and resolve their accounts.

 

PITTSBURGH, Penn. – Thanksgiving offers us the opportunity to reflect on all the things for which we are grateful. It allows us to exercise our gratitude – to take the time to appreciate our loved ones, our communities, our workplaces, and to give careful thought to what matters most. In the spirit of Thanksgiving, Credit Management Company (CMC) volunteered their time to the Light of Life Rescue Mission on Friday, November 10^th 2017.

The executive and management team at CMC contributed as volunteers – participating in an on-site training which included an overview of all the areas that people are able serve. The CMC team was warmly welcomed by all staff members. Head cook, Kevin Hutchenson “Hutch” took the lead in teaching the CMC team their responsibilities and duties during the dinner shift at Light of Life.

“This truly was an eye-opening experience, said Mary Lou Muti, President of CMC. We really appreciate the opportunity to get involved and help our community, this was a great way for the CMC team to really put others first and with Thanksgiving right around the corner, the timing couldn’t have been better.

The Mission provides over 200,000 meals annually, including breakfast and dinner seven days a week. Staff cooks and volunteers work together to prepare and serve nutritious meals. Men, women and children from the community are welcome to receive these meals, in addition to the residents enrolled their programs.

About Credit Management Company                                                                     

Credit Management Company (CMC) is well known for delivering exceptional outcomes for healthcare clients. Our clients range in size and service offerings, but all experience the same exceptional results when partnering with us. We have been serving the healthcare market for over 50 years and healthcare clients make up 91% of our overall portfolio – healthcare knowledge in our call center is second to none. CMC also provides debt recovery and collections for the government, higher education, financial services and commercial sectors. 

Light of Life Rescue Mission

Since 1952, Light of Life has been a safe refuge for the homeless and hurting people in our community. Thanks to the prayers, compassion and generosity of our supporters; we are making a real difference for those who have been devastated by homelessness, addiction or abuse. Last year, over 190,000 meals were provided for those in need, 8,000 nights of shelter were provided for men who were homeless, and 476 Thanksgiving dinner baskets were provided to families in need on the North Side. To learn more about how you can help please visit us at www.lightoflife.org.

On August 11, 2017, a judge from the Central District of California dismissed a complaint for lack of subject-matter jurisdiction in a Federal Debt Collection Practices Act, 15 USC 1692 et seq. (FDCPA) case. Yes, it is from a few months back but any case that discusses dismissal of an FDCPA claim for lack of standing is worth highlighting. The case is Blue v. Diversified Adjustment Service (5:17-cv-366), U.S.D.C., Central District of California). 

You can find a copy of the order here. 

Background 

Defendant Diversified Adjustment Service (DAS) sent plaintiff Shon Blue a collection letter containing a number of payment options including via mail, online, phone or in-person. If deciding to pay online, the consumer needed to affirmatively opt-in, but DAS charged a convenience fee to process the payment. The plaintiff logged onto the online pay portal, but did not pay the debt or the convenience fee. Plaintiff then filed suit against DAS alleging that because DAS directed consumers to the website and then charged a convenience fee that was not part of the initial debt, it violated the FDCPA and Rosenthal Fair Debt Collection Practices Act (RFDCPA). 

Defendant moved 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 Court’s Decision 

The court ruled in favor of defendant and dismissed the action for lack of subject matter jurisdiction. 

The court relied heavily on Spokeo v. Robins, 136 S. Ct. 1540 (2016) in its decision, stating that per Spokeo, in order to have Article III standing, several criteria must be met, including that the plaintiff must have “suffered an injury-in-fact.” A mere procedural violation does not give the court adequate jurisdiction. The court determined that plaintiff did not suffer an actual injury as he did not pay the convenience fee or the debt, and his claims were “conjectural or hypothetical.” 

insideARM Perspective

The impact of the Spokeo decision on FDCPA actions has been, at best, mixed. This decision, however, offers a ray of sunshine. While this was not a letter case, the decision suggests that FDCPA actions based on an agency process, such as access to an online portal, may require a consumer to prove they were harmed by that process to allege an FDCPA violation.

According to Black Book’s 2017 Revenue Cycle Management survey, a staggering 82% of medical providers and 92% of hospitals plan to abandon ‘time-intensive, error-prone, manual efforts to back-end process and reconcile bills’ by Q4 2018.

This data point is among other eye-popping insights found in a compilation of two focused polls conducted among consumers and healthcare providers.

The results confirmed what many revenue cycle professionals have observed anecdotally: There is an acute need for more medical debt financing options, early-cycle patient engagement, analysis of consumers’ propensity to pay, and cost transparency. Black Book collected data between April 1 and September 30, 2017 from 2,698 healthcare providers, plus a focused group of 850 healthcare consumers insured under high deductible health plans (HDHPs).

The research study is designed to report trends in consumer satisfaction and patient experiences, outline payment challenges, and identify best corrective strategies for healthcare providers. The consumer portion of the survey aimed to determine how patient responsibility for medical costs, which shifted from employers to patients, is impacting uncollected provider revenue.

Among the survey’s other key findings:

• Tech on top. 83% of surveyed providers expect to answer increased consumerism with technology solutions to help patients anticipate, manage and track the costs of their health care.

• OOP costs skyrocketing. Since 2015, patients have experienced a 29.4% increase in both deductible and out-of-pocket maximum costs.

• Deductibles per surveyed consumers this year averaged $1820 and out-of-pocket costs rose to over $4400.

• Online pay is the way. Nearly 62% of medical bills are currently paid online and 95% of consumers polled would pay online if the provider’s website offered the option.

• 71% of surveyed patients reveal that mobile pay and billing alerts have improved their satisfaction with their healthcare provider.

• Info. and choices boost satisfaction. Online cost estimation, payment plan administration, and on-demand instructions support (top-ranked elements consumers say would boost their satisfaction) support increased cost transparency for consumers—and translate into faster posting and collection of payments.

• Get ready for mobile pay. 89% of financial administrators expect that healthcare payments will be chiefly made on phones and mobile devices by Q4 2018, yet only 20% are currently ready for electronic payments beyond checks, cash or credit/debit cards.

• Slow pay strangles physician practices. 83% of physician practices with fewer than 5 practitioners said the slow payment of high-deductible plan patients is their top collection challenge, followed by the difficulties practice staff have communicating patient payment accountability (81%)

• Inaccurate estimates getting worse. Despite efforts from health plans to provide current data back to providers on patient deductibles, 83% of ambulatory providers including surgical centers, diagnostic facilities and rehabilitation facilities indicated that estimates are wrong, and the problem is worsening: 78% of respondents reported this chronic problem last year.

• Focus on payment enhancements. Providers say these are the most urgent things they need to work on improving:

1. Managing consumer expectations through insurance eligibility verification prior to appointment (91%)
2. Cost transparency via out-of-pocket cost estimation (85%); and
3. Convenience enhancements for payment remittance (87%)

Survey methodology, auditing, resources, comprehensive research and ranking data can be found at http://www.blackbookmarketresearch.com.

Consumer Financial Protection Bureau Director Richard Cordray announced his intention to step down from the CFPB. Director Cordray made his announcement to CFPB staff via email earlier today. The controversial regulator did not give his agency much notice. According to his email, he plans to leave the agency in just a few weeks.

“I wanted to share with each of you directly what I have told the senior leadership in the past few days, which is that I expect to step down from my position here before the end of the month,” wrote Cordray, in an email quoted in multiple sources.  “As I have said many times, but feel just as much today as I ever have, it has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here.”

Cordray did not announce any future plans, but, according to several sources, Cordray may be planning to run for governor in Ohio, where he previously served as State Attorney General.

The vacancy frees President Donald Trump to name and install his own choice to lead the regulatory agency. insideARM will continue to monitor this story as new details emerge.