Archives for January 2018

EDWARDSVILLE, Ill. – KirkpatrickPrice announced today that National Loan Exchange (“NLEX”), a leading loan sales advisory firm, has received their SOC 2 Type I compliance report. The completion of this engagement provides evidence that National Loan Exchange has a strong commitment to deliver high quality services to its clients by demonstrating they have the necessary internal controls and processes in place. 

SOC 2 engagements are based on the AICPA’s Trust Services Principles. SOC 2 service auditor reports focus on a Service Organization’s non-financial reporting controls as they relate to security, availability, processing integrity, confidentiality, and privacy of a system. KirkpatrickPrice’s service auditor report verifies the suitability of the design and operating effectiveness of National Loan Exchange’s controls to meet the criteria for these principles.

“NLEX is committed to bringing our clients best-in-class services and information security,” said Tom Ludwig, General Counsel and Executive Vice President of NLEX. “Large-scale institutions reentering the debt sales market, as well as all debt sellers in this environment, should ensure their service providers provide high data protection standards, and the SOC 2 attestation demonstrates NLEX commitment to meet those needs.” 

“The SOC 2 audit is based on the Trust Services Principles and Criteria. NLEX has selected the security and confidentiality principles for the basis of their audit,” said Joseph Kirkpatrick, Managing Partner with KirkpatrickPrice. “NLEX delivers trust based services to their clients, and by communicating the results of this audit, their clients can be assured of their reliance on NLEX’s controls.”

About National Loan Exchange, Inc.

National Loan Exchange, Inc. (“NLEX”) has completed over 5,000 sale transactions across numerous asset classes with a total face value in excess of $150 billion, including $2.7 billion in 2017 alone. Along with best in class sale advisory services, NLEX provides reliable market evaluations and recovery strategy analysis, using its experience from consecutive monthly sales for over 20 years.  More information available at www.nlex.com 

About KirkpatrickPrice, LLC

KirkpatrickPrice is a licensed CPA firm, PCI QSA, and a HITRUST CSF Assessor, registered with the PCAOB, providing assurance services to over 600 clients in more than 48 states, Canada, Asia, and Europe. The firm has over 11 years of experience in information security and compliance assurance by performing assessments, audits, and tests that strengthen information security and internal controls. KirkpatrickPrice most commonly provides advice on SOC 1, SOC 2, HIPAA, HITRUST CSF, PCI DSS, ISO 27001, FISMA, and CFPB frameworks. For more information, visit www.kirkpatrickprice.com, follow KirkpatrickPrice on Twitter (@KPAudit), or connect with KirkpatrickPrice on LinkedIn.

Last Thursday the Consumer Financial Protection Bureau (CFPB) dismissed the case it had filed in April 2017 against four payday lenders. No reason was given. The case is CFPB v. Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc. and Majestic Lake Financial, Inc. (Civil Case No. 2:17-cv-02521-JAR-JPO)

The original complaint was filed April 27, 2017. You can download a copy here.

The case was dismissed without prejudice. You can download the dismissal notice here.

Editor’s note: Dismissal without prejudice means that the plaintiff is free to re-file a case against the defendant based on the same claim.

The CFPB announced at the time they filed the case that it was taking action against the group of lenders “for deceiving consumers by collecting debt they were not legally owed. The Bureau alleged,

“[t]he four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB seeks to stop the unlawful practices, recoup relief for harmed consumers, and impose a penalty.”

Two days prior to this dismissal, the CFPB announced it would be re-considering the Payday, Vehicle Title, and Certain High-Cost Installment Loans (“Payday Rule“), published in the Federal Register on November 17, 2017, scheduled to take effect January 16, 2018.

This is the latest action in a series that appears intent on undoing the work of former CFPB Director Richard Cordray. Other significant actions by Acting Director Mick Mulvaney include:

• Announced new staff additions — several on loan from Mulvaney’s other place of work, the Office of Management and Budget.
• Abandoned the planned consumer debt collection disclosure survey.
• Announced that the Bureau does not intend to assess penalties for errors in data collected in 2018, and plans to reconsider aspects of the Mortgage Data Rule.
• Hired new Chief of Staff, the former Staff Director of the House Financial Services Committee under Rep. Jeb Hensarling (R-TX). Hensarling famously opposes the concept of the CFPB.
• Updated the stated mission of the Bureau.
• Announced “call for evidence” to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers.
• Requested $0 from the Fed to fund the Bureau for Q2 2018.

Almost two years after the 1099C disclosure issue hit the industry, the Eastern District of New York finally finds that a disclosure stating a “settlement may have tax consequences” does not violate the FDCPA. Ceban v. Capital Management Services, L.P., 2018 WL 451637 (Jan. 17, 2018 E.D.N.Y.).

You can read the full decision here.

Factual Background

Julian Ceban, the plaintiff in this matter, received a settlement offer letter from Capital Management Services, L.P.  The letter contained what is known as the 1099C disclosure; specifically, “[t]his settlement may have tax consequences. If you are uncertain of the tax consequences, consult a tax advisor.”  The letter, however, did not have a settlement dollar amount listed. 

Ceban, represented by RC Law Group PLLC, filed a complaint against Capital Management Services on August 2, 2017, alleging that this disclosure violates the FDCPA. Specifically, the complaint alleges that this disclosure violates: section 1692(d) because it is intended to harass, oppress, or abuse the consumer; section 1692(e) because it is false, deceptive, or misleading; and section 1692(f) alleging Capital Management Services used unfair and unconscionable means to collect the debt. 

Capital Management Services filed a motion to dismiss this claim last November. On January 17, 2018, Judge Allyne Ross granted the motion to dismiss. 

The Decision 

Even though the decision found that Ceban had standing to bring the suit under Spokeo, the court dismissed all of the FDCPA claims related to the 1099C disclosure.

Judge Ross dismissed the 1692(d) claim without much analysis, plainly stating that “sending one allegedly misleading notice indicating that a settlement of plaintiff’s debt could have tax consequences” is not comparable to the non-exhaustive list of harassing, oppressive and abusive conduct prohibited by this section of the FDCPA.

As for 1692(e), the decision dismisses this claim, stating that the 1099C disclosure is not false, deceptive, or misleading. The court gave no credence to plaintiff’s argument that not including a settlement amount prevents him from determining whether 1099C reporting would be required. The court stated that the $600 threshold triggers the creditor’s—not the debtor’s—reporting requirement, noting that the debtor’s requirement of reporting debt may be triggered regardless of the amount forgiven.

Additionally, the court dismissed the argument that plaintiff may fall under the many exceptions of 1099C reporting.  Since the statement was conditional (“may”), the court found that “even if plaintiff did not have to report his forgiven debt because an exception applied, the statement… would not be false.”

All in all, the court found that the plaintiff’s interpretation of the disclosure is “bizarre or idiosyncratic” and, citing another case, stated that plaintiff “has unreasonably found meaning in the language that is plainly absent.”

Finally, the court dismissed the 1692(f) claim, stating that the allegations in the complaint were a mere recitation of the 1692(e) violations with the word “misleading” replaced with “unfair and unconscionable.” 

Perspective

It is comforting to see the trend of well-reasoned and favorable decisions out of the Eastern District of New York, arguably one of the most contentious federal courts for the industry. These good decisions only come about when the industry decides to defend off-the-wall claims brought by plaintiffs’ counsel. 

What is promising is the speed at which the court reached this decision; about five months after the case was filed in August 2017. While five months may seem like a long time to lay persons, it is a relatively quick turn-around time in the world of litigation. While not applicable for every claim, this case serves as an example of how quickly the tides can turn if weak and meritless claims are vigorously defended from the get-go.

PITTSBURGH, Pa. — Credit Management Company is proud to announce the promotion of Joel McKiernan to Executive Vice President of Sales. Joel is responsible for sales team leadership, growing revenue, and contributing to our marketing and business strategy.

Joel McKiernan began his career at CMC in 2013 and brought with him over 22 years of experience in the healthcare revenue cycle industry. He has played a critical role in managing and directing our sales force and new market and product development.

Joel has thrived as VP of Sales and has maintained a good rapport with clients over the past 4.5 years. He also added several large clients to our client base. Joel’s ability to maintain and nurture current client relationships while fostering and cultivating new ones has helped earn Joel the new title, Executive Vice President of Sales. 

About Credit Management Company

Credit Management Company, headquartered in Pittsburgh, PA, has been providing full service accounts receivable and collection management programs across several industry segments since 1966. Our clients reside in the healthcare, government, education, and consumer industry sectors. All have benefited from either our standard or customized outsourcing programs to improve their bottom line.

Working with some of the most influential players in the industry, we are proud of the partnerships we have cultivated over the years. Each business relationship is approached in a collaborative style, always listening and responding to our clients’ needs and working together to find the best solutions possible. More at www.creditmanagementcompany.com.

This morning CFPB Acting Director Mick Mulvaney submitted what is a routine quarterly budget request to the Chair of the Board of Governors of the Federal Reserve. The amount of the request, however, was not routine. He requested $0.

You can read the letter here in its entirety.

Mulvaney says the reason for the (lack of) request is because he is told projected expenses for the upcoming quarter are $145 million, and that the Bureau currently has $177.1 million in the bank. He proceeds to note, 

“My understanding is that previous Bureau leadership opted to maintain a ‘reserve fund’ to address possible financial contingencies, although I know of no specific statutory authority requiring the establishment or maintenance of such a reserve. 

…Finally, as net earnings of the Federal Reserve System are periodically remitted to the Treasury, this request – or lack thereof – will serve to reduce the federal deficit by the amount that the Bureau might have requested under different leadership. While this approximately $145 million may not make much of a dent in the deficit, the men and women at the Bureau are proud to do their part to be responsible stewards of taxpayer dollars.”

Former CFPB Director Richard Cordray made the following recent requests for funding:

• October 12, 2017: $217,100,000
• July 31, 2017: $84,600,000
• April 17, 2017: $125,600,000
• January 17, 2017: $145,700,000
• October 14, 2016: $246,100,000

The new CFPB management has been busy. Yesterday they announced a “call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers.” This will entail a comprehensive review of all CFPB departments, with a request for feedback from the public on their effectiveness.

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

A recent CDC publication states 39% of Americans between the ages of 18-64 in 2016 were enrolled in High Deductible Health Plans (HDHP), up from 26% in 2011. This 13% increase means a larger percentage of a provider’s patient accounts now require them to collect the deductible and/or co-insurance amount from the patient. That has been a significant increase to handle in a short five-year timeframe, and when combined with reimbursement reductions, the two have put providers in a position where adding headcount to handle the volumes is not an option.

As a result, managing self-pay has become an even more important task, one in which providers traditionally have not had much focus on over the past 10 years. Applying traditional insurance follow-up methodologies, like working larger accounts first, is inaccurate and can be counterproductive. A solid segmentation strategy, on the other hand, can fill in gaps using key scrub processes supported with quality reporting.  Below are three key disciplines you can review to help improve your self-pay management process, improving patient collections:

1. Develop a solid segmentation strategy: With a sizable increase in self-pay accounts to collect, combined with lower reimbursements, margins are too thin for staff to work every account. A segmentation strategy that identifies who can pay and who should be reviewed for financial assistance is key.  By using outside key data elements, you can ensure accounts are segmented into the right tiers for follow-up. Based on this tiering, a custom contact strategy should be deployed to help patients deal with their self-pay balances. This enables you to focus your limited resources on the most effective accounts and drive others through your financial assistance process.

2. Identify missing insurance: Registration processes are not perfect. Important information can be missed, and sometimes patients omit valid information. Use outside data services to scrub accounts and identify missing insurance information. This can impact 1-3% of your self-pay accounts – A valuable reduction in bad debt expense. Use this process at several points in your revenue cycle to ensure you catch these accounts as soon as possible. By focusing on this discipline, you can file missing insurance faster, and reduce both days in AR and the number of accounts written off to bad debt.

3. Detailed self-pay reporting: It is critical to have reporting in place that reviews your tiers’ performance along with other KPIs so you can update your strategy accordingly. Accurate knowledge of demographic changes and the ability to trend this data while comparing performance week over week, month over month, and year over year is key.  Make these reports actionable to monitor your self-pay process and adapt to changes quickly.

Self-pay management is an important part of the revenue cycle, but to many providers it is a relatively new process they have tackled. Developing a segmentation strategy, identifying missing insurance, and reviewing actionable detailed reporting are the key disciplines you need to improve your self-pay management process. By performing these functions, you will improve cash recoveries and days in AR.

This statement was released yesterday afternoon by the Consumer Financial Protection Bureau (CFPB),

The Consumer Financial Protection Bureau today announced that it is issuing a call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers. In coming weeks, the Bureau will be publishing in the Federal Register a series of Requests for Information (RFIs) seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities. These RFIs will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.

“In this New Year, and under new leadership, it is natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau’s statutory mandate. Moving forward, the Bureau will consistently seek out constructive feedback and welcome ideas for improvement,” said Bureau Acting Director Mick Mulvaney. “Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process. I look forward to receiving public comments in response to this call for evidence and encourage all interested parties to participate.” 

The first RFI issued by the Bureau will seek public comment on Civil Investigative Demands (CIDs), which are issued during an enforcement investigation. Comments received in response to this RFI will help the Bureau evaluate existing CID processes and procedures, and to determine whether any changes are warranted.

Interestingly, the announcement is titled, “Acting Director Mulvaney Announces Call for Evidence Regarding Consumer Financial Protection Bureau Functions.” (emphasis added)

This comes on the heels of yesterday’s statement by the Bureau that it intends to reconsider the rule entitled, “Payday, Vehicle Title, and Certain High-Cost Installment Loans,” which was scheduled to take effect (at least in part) yesterday. 

After less than 8 weeks in office, Acting Director Mulvaney has already picked up the pace of rollbacks and changes to CFPB policy. Other examples include:

• Announced new staff additions — several of them on loan from Mulvaney’s other place of work, the Office of Management and Budget.
• Abandoned the planned consumer debt collection disclosure survey.
• Announced that the Bureau does not intend to assess penalties for errors in data collected in 2018, and plans to reconsider aspects of the Mortgage Data Rule.
• Hired new Chief of Staff, the former Staff Director of the House Financial Services Committee under Rep. Jeb Hensarling (R-TX). Hensarling famously opposes the concept of the CFPB.
• Updated the stated mission of the Bureau.

insideARM Perspective

Following years of feeling that consumer advocates had the primary ear of the CFPB, industry appears to have an opportunity to be heard in the coming months. Larger debt collectors will no doubt have input as it relates to the CID process, identified as the first topic on the list.

If I could make a suggestion to Acting Director Mulvaney and his staff… I suspect that if you asked your Ombudsman, Wendy Kamenshine, she could tell you a lot about what a variety of stakeholders have to say. The Office has held several Forums, including at least two I can recall for industry representatives. A great deal of detailed, candid feedback was shared at those in-person events by a wide variety of organizations. The notes ought to be very insightful.

Today the Practice of Law Technical Clarification Act of 2017, along with a list of other proposed legislation, will be considered by the Committee on Financial Services. 

The law is proposed as an amendment to the Fair Debt Collection Practices Act (FDCPA) to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of a debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes. 

On December 14, 2017 insideARM published an article on this topic by Thomas B. Pahl (Acting Director of the Bureau of Consumer Protection at the Federal Trade Commission) and Mathew J. Wilshire (a Senior Attorney in the Division of Financial Practices at the FTC), supporting the concept in the proposed legislations. Note: the views represented were their own and not necessarily the position of the FTC. 

Originally proposed as H.R. 1849 by Rep. Dave Trott (R-MI) on April 20, 2017, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled “Legislative Proposals for a More Efficient Federal Financial Regulatory Regime,” in part to consider this bill. Vicente Gonzalez (D-TX) and Rep. Alexander Mooney (R-WVa) have subsequently signed on as co-sponsors. The bill is now known as H.R. 4550; the name has not changed from the original.

Testimony at that hearing included remarks by Anne P. Fortney, partner emerita with the law firm of Hudson Cook, LLP. In addition to her former practice as partner with Hudson Cook, Fortney served as Associate Director for Credit Practices at the Federal Trade Commission, as in-house counsel at a retail creditor, and as a practitioner counseling clients on compliance with consumer protection laws. insideARM summarized her relevant testimony to H.R. 1849 here.

NARCA, the National Creditors Bar Association, has published a release in support of the bill (see it here), as has the American Bar Association (see it here).

Yesterday, three law professors co-authored an editorial published in a Texas newspaper opposing the bill, saying it is likely to lead to: 

• More lawsuits as attorneys rush to litigation to immunize their conduct in an already overburdened court-system.
• Less informal resolution of consumer debt as lawsuits become preferred method of collection.
• More use of unfair litigation tactics, all now covered by the FDCPA, including:
• Lawsuits against consumers in distant courts.
• Lawsuits to collect zombie debt.
• Lawsuits to collect amounts not owed.
• More judgments obtained through unfair means with long-lasting and devastating consequences to consumers.

insideARM Perspective

The insideARM Perspective on the September 2017 hearing noted that the CFPB has been especially aggressive in taking action against collection law firms. This began in 2014 with their investigation of Frederick J. Hanna & Associates P.C. That ended after 18 months with a consent order against the firm. insideARM wrote extensively about this case. You can read the final chapter here, including comments from the Hanna firm and also NARCA, the National Creditors Bar Association.

On April 26, 2016 the CFPB announced the filing of a consent order with the New Jersey debt collection law firm, Pressler & Pressler LLP. You can read the insideARM coverage of that story here. On April 17, 2017 the CFPB filed suit against the law firm of Weltman, Weinberg & Reis Co, L.P.A. (WWR). Read our story here. Both Pressler & Pressler and WWR argued that they did not violate any federal or state laws, and suggested that the CFPB is making rules through enforcement activity. 

In 2015 insideARM published an extensive discussion by attorney Don Maurice of the Heintz v. Jenkins Supreme Court decision, which is about this same topic.

Now that there is new leadership at the CFPB it will be interesting to see whether this focus on debt collection law firms recedes. As for Congress, that’s another matter. The bill (now H.R. 4550) is in the very early stages; there is a long way to go.

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Correction note: An earlier version of this story listed Mike Bishop (R-MI) as the author of H.R. 1849. insideARM regrets the error.

The Consumer Financial Protection Bureau (CFPB) made the following announcement yesterday regarding its Payday Rule:

“January 16, 2018 is the effective date of the Bureau of Consumer Financial Protection’s final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (“Payday Rule”).  The Bureau intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.  

Although most provisions of the Payday Rule do not require compliance until August 19, 2019, the effective date marks codification of the Payday Rule in the Code of Federal Regulations.  Today’s effective date also establishes April 16, 2018, as the deadline to submit an application for preliminary approval to become a registered information system (“RIS”) under the Payday Rule. However, the Bureau may waive this deadline pursuant to 12 C.F.R. 1041.11(c)(3)(iii). Recognizing that this preliminary application deadline might cause some entities to engage in work in preparing an application to become a RIS, the Bureau will entertain waiver requests from any potential applicant.”

This is the latest example of the deregulatory direction being taken by Acting Director Mulvaney, who was appointed by President Trump last November. Other examples include:

• Announced new staff additions — several of them on loan from Mulvaney’s other place of work, the Office of Management and Budget.
• Abandoned the planned consumer debt collection disclosure survey.
• Announced that the Bureau does not intend to assess penalties for errors in data collected in 2018, and plans to reconsider aspects of the Mortgage Data Rule.
• Hired new Chief of Staff, the former Staff Director of the House Financial Services Committee under Rep. Jeb Hensarling (R-TX). Hensarling famously opposes the concept of the CFPB.
• Updated the stated mission of the Bureau.

At the other end of Pennsylvania Avenue, late last year a group of House Members initiated legislation that would use the Congressional Review Act to kill the Payday rule.

The Competitive Enterprise Institute, a conservative think tank, issued this statement in support of that legislation:

“Millions of Americans will have few other options to cover urgent expenses like rent, a car payment, or a medical emergency if regulators succeed in shutting off access to small dollar loans,” said Daniel Press, CEI policy analyst and author of the report, How the Consumer Financial Protection Bureau’s Payday Loan Rule Hurts the Working Poor. “Congress has an opportunity now to help consumers by stopping the pay day loan rule from going into effect.”

Consumer advocates are furious that Congress and the CFPB might be able to undo their years of work to create the Payday Rule. In an editorial published by The Herald Sun (North Carolina), Jennifer Copeland, executive director of the N.C. Council of Churches and Larry Hall, secretary of the N.C. Department of Military and Veterans Affairs, explain their support for the rule:

“The (Payday) rule was finalized only after a coalition of over 750 civil rights, consumer, labor, faith, veterans, seniors and community organizations from all 50 states energized a years-long effort to push the Consumer Bureau for these protections from predatory payday and car title lending. The North Carolina Coalition for Responsible Lending was active in that fight, supporting a strong rule from the Consumer Bureau that would not undermine strong state consumer protections, like North Carolina’s 30 percent interest rate cap for consumer loans.

…This legislation, introduced by Rep. Dennis Ross (R-Fla.) and co-sponsored by Rep. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn.), would kill the first ever national payday rule that requires payday and car-title lenders to make a loan only after they have determined that the borrower can afford to pay it back. It is a commonsense measure designed to protect people from being trapped for months and sometimes years in triple-digit payday and car title loans. Congress should leave it alone.”

 

 

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. 

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. Where insideARM has published a story on the case, a link is provided.

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Here’s a rundown of just a few of the FDCPA cases in the spotlight as 2017 wound to a close.

Ronald Chenault v. Credit Corp Solutions, Inc.

The gist: In the state-level court case that preceded this one, the debt collector lost for failure to produce sufficient documentary evidence to show that consumer owed the debt in question. FDCPA action followed, but the court found that the filing of a lawsuit absent the means to prove the debt was valid is neither harassing nor deceptive.

Barbara Winslow, on behalf of herself and all others similarly situated, v. Forster & Garbus, LLP, Ronald Forster, Esq. And Mark Garbus, Esq.

The gist: Law firm filed suit pursuant to a student loan account and identified a securitized trust as the original creditor rather than Bank of America, the lender. The court found the statement as to the trust’s “original creditor” status violated the FDCPA.

Elizabeth K. Atwood, aka Elizabeth King v. Cohen & Slamowitz LLP, Mitchell Selip, Mitchell G. Slamowitz, David A. Cohen

The gist: Law firm brought suit against the consumer, but never took judgment. The case was assigned to a second law firm for post-judgment execution proceedings. The second law firm was not aware that no judgment had been entered, and nonetheless garnished a bank account. Order to show cause (OTSC) was served on the first law firm, which responded and appeared in court. The consumer alleged that the first law firm’s response and appearance was a violation under the FDCPA. The court disagreed, and opined that a response to an OTSC is not debt collection activity.

Kraus v. Professional Bureau of Collections of Maryland

The gist: Court found that debt collection activity met safe harbor provisions set forth in Avila, even though dunning letter did not clarify whether or not interest was still accruing. This opinion is important because the court took great exception to the Avila decision and abuse by the plaintiffs’ bar. See insideARM articles on this case here and here.

Watson v. ARC Management Group, LLC

The gist: Collection agency was not licensed under state law when it reported a debt to a credit bureau. However, it subsequently obtained the necessary license and the court found that because the agency had cured its default, there was no FDCPA violation.

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Anne Humphreys v. Budget Rent-A-Car System Inc. & Viking Collection Service

The gist: Court found that communications regarding damages to a vehicle sent to a consumer’s attorney did not qualify as debt collection activity, and thus did not violate the FDCPA.

Saroza v. Lyons, Doughty & Veldhuis, P.C.

The gist: Plaintiff alleged that a letter in question unlawfully increased the balance due, since costs had yet to be awarded by the state court. The court found that the consumer’s contract with the creditor required the consumer to pay all of the creditor’s court costs. In granting the law firm’s Motion for Summary Judgment, the Court concluded that the letter was not “false” because it accurately included the amount of court filing fees and service fees that had been paid to the Clerk. The Court further observed that the consumer was on notice that he would be responsible for these costs, as a state court lawsuit that was served on the consumer included a request for the amount of the debt, plus court costs.

Christina Altieri, on behalf of herself and all others similarly situated v. Overton, Russell, Doerr, and Donovan, LLP

The gist: This is yet another “reverse Avila” claim ripping up the New York district courts. Judge McAvoy of the Northern District of New York dismissed a reverse Avila claim which alleged that the Avila disclosure was required on a letter due to pre-judgment interest that may accrue on the account as prescribed N.Y. C.P.L.R. § 5001. Read the insideARM article on the case here.

Kyle Spuhler and Nichole Spuhler, on behalf of themselves and all others similarly situated, v. State Collection Services, Inc.

The gist: Collection letter failed to disclose that interest was accruing. Following Avila and Miller in the 7th Cir., the court found that letter failed to contain Safe Harbor language, thus the FDCPA claim was a triable issue of fact.

Deborah Covarrubias v. Zee Law Group et al.

The gist: Law firm recorded a judgment lien on property of debtor’s parents. Property had an open line of credit, so when the bank learned of lien, it froze the line of credit. After a bench trial, the court found that law firm’s actions constituted a threat to sell plaintiff’s home and its actions were liable under the FDCPA. The appeals court confirmed. The facts of this case are unclear and not well stated in this (unpublished) opinion. See an article about this case here.

Paul Laak v. Quick Collect, Inc. and Jesse Conway

The gist: A collection agency had been attempting to collect a debt from a consumer since 2001. At that time, its communications complied with the rules for 1692g notices. Years later, the same collection agency sent the account to an attorney who started garnishment proceedings. The attorney did not include the 1692g disclosure with garnishment. Court held that the debt collection process began with the agency and did not commence anew with the attorney. A second validation notice accompanying the garnishment papers in 2016 would not have served the purposes §1692g(a).

Anastasia Belichenko v. Gem Recovery Systems

The gist: Although the debt collector in this case failed to respond, the court declined to issue a default judgment. The court found that statements, “we will use any collection activity necessary to collect this debt due to our client” and “our policy is to report delinquent account information to TransUnion and Experian Credit Bureaus which may impair your credit rating and your ability to obtain credit in the future” used in the letter in question did not otherwise overshadow the validation notice.

Beverly Heffington v. Gordon, Aylworth And Tami, P.C.

The gist: The consumer filed a claim that a letter (not a first communication) received from a law firm did not indicate interest was accruing. To complicate matters, the law firm that sent the initial letter changed its name. Despite the consumer’s allegations, the court found that the law firm did not obscure its name change to be deceptive, that it clearly communicated its name change, and that its letter referenced the same debt as an earlier-sent letter under the firm’s old name. Court found that §1692g(a) of the FDCPA does not apply to the letter in question, because it was not an initial communication, and that “even if it did apply, the language of the 2016 Letter comports with the statute’s notice requirements.” The consumer failed to show a genuine issue as to any material fact, so law firm was awarded summary judgment as a matter of law on the §1692g claim.