Archives for February 2018

On January 17, 2018 CFPB Acting Director Mick Mulvaney announced that he was issuing a “call for evidence” to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers. Yesterday they released the latest in a series of Requests for Information regarding its practices — this time regarding its Supervision program.

Here’s what they want to hear about:

1. The timing, frequency, and scope of supervisory exams. 
2. The timing, method or process used by the Bureau to collect information and documents from a supervised entity prior to the commencement of an examination. Typically, the Bureau sends an examination Information Request (IR) to a supervised entity prior to the commencement of an examination. An IR is a list of information and documents that the supervised entity is asked to provide to the Bureau for off-site review or to make available when examiners are onsite at the entity. An IR is typically sent to an entity at least 60 days prior to the onsite start of an examination.
3. The type and volume of information and documents requested in IRs.
4. The effectiveness and accessibility of the CFPB Supervision and Examination Manual (Exam Manual). The Exam Manual provides internal direction to supervisory staff, including summaries of statutes and regulations and specific examination procedures for use by examiners in conducting exams. It is published on the Bureau’s website to promote transparency and assist the public in understanding how the Bureau oversees supervised entities. 
5. The efficiency and effectiveness of onsite examination work. Typically, while onsite, examination teams may review documents and data, hold meetings with management, conduct interviews with staff, make observations, and conduct transaction testing.
6. The effectiveness of Supervision’s communications when potential violations are identified, including the usefulness and content of the potential action and request for response (PARR) letter. A PARR letter provides an entity with notice of preliminary findings of conduct that may violate Federal consumer financial laws and advises the entity that the Bureau is considering taking supervisory action or a public enforcement action based on the potential violations identified in the letter. Supervision invites the entity to respond to the PARR letter within 14 days and to set forth in the response any reasons of fact, law or policy why the Bureau should not take action against the entity. The Bureau often permits extensions of the response time when requested.
7. The clarity, organization, and quality of communications that report the results of supervisory activities, including oral communications from examiners and Supervisory Letters and Examination Reports.
8. The clarity of matters requiring attention (MRA) and the reasonability of timing requirements to satisfy MRAs. An MRA is used to address violation(s) of Federal consumer financial law or compliance management weaknesses. MRAs often require a written response to the Bureau and will include a due date for completion.
9. The process for appealing supervisory findings.
10. The use of third parties contracted by supervised entities to conduct assessments specified in MRAs, or to assess the sufficiency of completion of an MRA.
11. The usefulness of Supervisory Highlights to share findings and promote transparency. The Bureau periodically publishes Supervisory Highlights to apprise the public about its examination program, including the concerns that it finds during the course of its work.
12. The manner and extent to which the Bureau can and should coordinate its supervisory activity with Federal and state supervisory agencies, including through use of simultaneous exams, where feasible and consistent with statutory directives.

The RFI on supervision processes is available here.

The Bureau will begin accepting comments once the RFI is printed in the Federal Register, which is expected to occur on February 20. The RFI will be open for comment for 90 days.

In recent weeks the CFPB has published RFIs for Civil Investigative Demands (the comment period closes on March 27), Administrative Adjudication (the comment period closes on April 6) and Enforcement (the comment period closes on April 13). 

Yesterday’s announcement noted that the Bureau anticipates issuing RFIs on the following additional topics in the coming weeks:

• External Engagement
• Complaint Reporting
• Rulemaking Processes
• Bureau Rules Not Under §1022(d) Assessment
• Inherited Rules
• Guidance and Implementation Support
• Consumer Education
• Consumer Inquiries

The Northern District of Illinois struck down the idea that the safe harbor language provided in Miller v. McCalla somehow creates new disclosure requirements for debt collectors. In Jasmine Chatman v. Alltran Education, Inc., 2018 WL 741465 (N.D. Ill. Feb. 7, 2018), the court dismissed a claim arguing this notion. The court found that including a balance due at the time of the letter and a simple statement saying interest is accruing, directing the consumer to the original loan agreement for the accrual rate, is sufficient to put the consumer on notice of the amount owed. 

Read the decision here.

Factual & Procedural Background 

Alltran Education, Inc. (Alltran) sent a collection letter to plaintiff Jasmine Chatman containing a “Total Current Balance” of $3,051.55. The letter contained a disclosure stating: 

The total balance due reflected above is correct as of the date of this letter. Until paid in full, interest may continue to accrue on your account.  Please refer to the original loan documents for interest rate and accrual information. 

Plaintiff, represented by Celetha Chatman of Community Lawyers Group of Chicago, filed suit against Alltran claiming that this disclosure failed to state how to determine the balance of the debt, that an adjustment may be necessary after receipt of payment due to the accruing interest, and that Alltran will notify the plaintiff in writing before depositing the payment if such adjustment is necessary. In other words, plaintiff argued that Alltran’s disclosure failed to conform to Miller’s requirements. 

Alltran filed a motion to dismiss the matter, alleging that plaintiff failed to state a claim upon which relief can be granted. The court granted Alltran’s motion. 

The Decision 

Plaintiff’s primary argument is that the elements of the Miller safe harbor language were missing in Alltran’s letter, thus arguing the letter violated the FDCPA. The court disagreed, citing Miller itself, stating that the Miller safe harbor disclosure is not the sole sufficient disclosure to convey the intended message to the consumer. 

The court called out the fact that the Seventh Circuit “did not create additional disclosures beyond those required by the statute when it formulated the safe harbor language in Miller” and declined to read any such additional disclosure requirements into the statute. 

The decision also stated that “Chatman as the unsophisticated consumer is reasonably intelligent, and is capable of making basic logical deductions and inferences. She would understand that she should check her loan documents for more information, as directed.” (Internal citations omitted.) 

Ultimately, the court found that Alltran’s disclosure met the unsophisticated consumer standard to accurately notify the consumer of the amount of her debt and dismissed the lawsuit with leave to file an amended complaint. 

Analysis 

In a rare turn of events, the consumer-friendly jurisdiction of Northern District (N.D.) Illinois refuses to further complicate an issue, taking a more workable stance than Eastern District (E.D.) New York.  Here, N.D. Illinois acknowledges that some disclosure is required in a situation where interest is accruing. However, the court does not muddle things by requiring the disclosure to be inundated with detail when such detail is available in another document, specifically the agreement between the consumer and creditor. 

Current precedent in E.D. New York, unfortunately, takes a more complex stance. Per Avila v. Riexinger & Assoc., Inc., the Second Circuit, like the Seventh Circuit where N.D. Illinois is located, requires a disclosure if an account is currently accruing interest. In E.D. New York, according to the Balke decision, a simple reference is insufficient and instead the consumer must be overwhelmed with detail of what the exact interest rate is, how to calculate the balance, and so forth. 

Ultimately, a further complication of collection letters harms consumers. Collection letters are already long and filled with legally required language created by lawyers, judges, and regulators – who are highly sophisticated individuals. While each individual disclosure on its own may be understandable, a mass of disclosures on a single letter may confuse and frustrate the least sophisticated consumer — or even just a less-sophisticated consumer. Such a consumer who simply wants to resolve their account and move forward financially may be reluctant to do so if they are intimidated by the collection letter. 

The courts, if anything, should look for ways to simplify letters, not complicate them. The Northern District of Illinois succeeded in this task with the Chatman decision.

COLLINGSWOOD, N.J. — The Fed Cetera Network, a business development organization under 48 CFR 52.219-9, is pleased to make two announcements. First, small business members of the organization have now exceeded $100,000,000 in total billings as a result of their membership. The organization also announced that Federal contractor Dyck-O’Neal, a nationally-operating small business focused on distressed and under-managed real estate debt, is now a member of the Fed Cetera Network. Dyck-O’Neal has served government-sponsored enterprises (GSEs) and other government agencies that preserve and promote public confidence in the financial system for more than 25 years.

The Fed Cetera Network is a one-stop shop for Federal contractors, including United States Department of Education (ED) Private Collection Agency (PCA) contractors, to easily find pre-qualified potential subcontractors who have the wherewithal to implement Federal subcontracts successfully. The Fed Cetera Network has helped dozens of small businesses pursue and receive Federal subcontracts over the years.  Member companies pay nothing to join the network, but pay only a nominal fee if successfully placed as a subcontractor with a Federal contractor.

“We are thrilled our members have surpassed this milestone, and that Dyck-O’Neal has joined our ranks,” said Nick Bernardo of Fed Cetera. “Any company can set up a free profile on www.sam.gov, but a query on that website cannot tell a prime contractor who has the bandwidth and capital to get things done or which potential partners are really ready for this work.”

Dyck-O’Neal‘s business originated in mortgage insurance, banking, legal, and real estate. Founded in August 1988 to recover on mortgage deficiencies in Texas, the company expanded into additional states during the early 1990s following nationwide foreclosure trends and to meet the needs of its partners.

The company released this statement: “Dyck-O’Neal is very excited about this new opportunity to market to ED contractors the stellar performance and customer service we have provided the mortgage industry and how that relates to the student loan world.”

Fed Cetera is planning to hold an informational call for small businesses interested in learning about Federal subcontracting opportunities on Thursday, February 22, 2018, at 11:30AM EST. Interested parties should email nick@fedcetera.com for dial in details.

As reported on ED procurement documents posted on www.mygovwatch.com, the procurement for PCAs that resulted in awards to two firms in January, which are now in litigation, placed greater emphasis than ever before on the need for PCAs to subcontract accounts to small businesses. A set aside contract awarded to eleven small businesses in late September of 2014 requires, for the first time, even those small businesses to farm out some of the work to other small businesses.

About Fed Cetera

Fed Cetera is a “business development organization” under 48 CFR 52.219-9 that PCAs contact when subcontracting opportunities are available in order to be fully compliant with Federal regulations requiring outreach to various sources of potential subcontractors.  The company maintains a source list of qualified small collection firms, regularly markets to the PCA community, and provides advisory services around business development and compliance to firms operating in the federal market place. Click here to learn more.

CLEVELAND, Ohio — HS Financial Group is honored to now be certified through the National Veteran Business Development Council (NVBDC) and National Veteran-Owned Business Association (NaVOBA) as a Veteran-Owned Business. NVBDC utilizes the Department of Defense Requirements to certify an organization. Per NVBDC, veteran status generally means “having served in active military, naval or air service, and was discharged or released under conditions other than dishonorable.”

NaVOBA also utilizes a stringent certification process using U.S. Department of Veterans Affairs’ qualifications, site-visit, and detailed questioning to ensure the validity of an organization.  Both certifications represent diligent procedures to certify the ownership of an organization, as a veteran.  Both organizations have a mission to support Veteran-Owned businesses.

HS Financial Group, also certified as a Veteran-Owned Small Business, is proudly owned by Timothy M. Sullivan, whom served as an attorney in the U.S. Navy’s Judge Advocate General’s Corp.

“The military teaches discipline, structure, systems and leadership, all of which translated seamlessly into running our business. It also reinforced my intense work ethic, strong decision-making skills and dedication to always aim for exemplary performance.” — Timothy M. Sullivan, Esq.

Please join us in supporting Veteran-Owned businesses!

This is part three of a three-part series. Read part one here, and part two here. The articles first appeared on the Ontario Systems Blog and are republished here with permission.

Rarely does the Americans with Disabilities Act (ADA) present unique compliance issues for a web developer based on industry type. The visual and audio solutions most businesses and organizations must incorporate into their websites are one-time solutions that can be replicated over and over across all websites. While this is true for most, it is not true for third-party debt collection agencies, financial services organizations, companies that process electronic payments online, or healthcare providers. This is because these organizations must take into account the impact of the following laws and regulations when developing their ADA-compliant websites:

• Fair Debt Collection Practices Act (FDCPA);
• Electronic Funds Transfer Act (EFTA);
• Health Insurance Portability and Accountability Act (HIPAA);
• State licensing requirements;
• Gramm Leach Bliley Act; and/or
• Service Members Civil Relief Act

Here is a list of requirements many web developers and consumer portal engineers forget to address when building consumer-facing websites and portals for members of the collection, financial services and healthcare industries: 

• Authentication of the Consumer: Consumers who simply visit a consumer-facing website are window shoppers. But consumers who interact with a website to retrieve documents, make payments or learn more about their account or accounts are privacy risks who must be authenticated.Many companies ask consumers to establish an account with a user name and password before they may access personally-identifiable information (PII) or protected health information (PHI). Others provide the consumer, patient or guarantor with Personal Identification Numbers (PIN) they may use to access private, confidential information about their accounts.

• Federal and State Disclosures: The FDCPA and state debt collection laws require websites to include disclosures such as the Mini Miranda on consumer facing websites. Don’t forget to include these disclosure on each page of the web site. 

• Audio Warnings: Consumers who are sight-impaired need to be forewarned about the impact of interacting with your site using an audio enhancement. Audio announcements that include the name of the collection agency, financial institution or healthcare provider may potentially reveal personal, private, confidential information protected by HIPAA and the GLBA and inadvertently disclose the existence of a debt to a third party. Provide the consumer with ample warning of audio enhancements so they may move to a private location or control the volume.

• Contact Information: Nothing is more frustrating than visiting a website that requires a detective to figure out how to communicate with the organization by phone, U.S. mail or email. Hours of business, consumer help lines, complaint forums and phone numbers should be prominently displayed, updated and monitored. 

• Consumer Communication Preferences: In addition to making the site ADA compliant, remember to include a readily accessible page to collect the consumer’s communication preferences. Properly presented, websites serve as an excellent tool to obtain consent to call a cell, email, text, use a VoIP line, leave messages, identify best times to call, communicate with a spouse or communicate at special times of day. Don’t forget to include the required information about how the consumer may revoke consent for each of these communication preferences.

• Electronic Funds Transfer Act: Websites may be used to present consumers, patients and guarantors with payment options and tools. Once authenticated, use the website or payment portal to present the consumer with account and balance information, an itemization of interest, fees and charges, create the authorization for EFTA payments and credit card payments and obtain the consumer’s digital signature. Using a click agreement, you may obtain consent, authorization and signatures and present information about the process to stop payment or revoke the payment(s). Remember, Reg E requires any payee of a recurring, preauthorized, EFTA payment to send the consumer a copy of the “written authorization” “signed or similarly authenticated.” Use the website to confirm the consumer’s email or snail mail address. Do not assume your offer to allow the consumer to “print” the authorization is sufficient. Print does not equal send when it comes to consumer protection.

• Convenience Fees: Seek the advice of legal counsel before assessing a convenience fee. The FDCPA and the Consumer Financial Protection Bureau’s Guidance Bulletin of January 2017 establish whether, when and how a convenience fee may be assessed. Regardless of your interpretation of the law, in all cases provide the consumer with a free option to pay.

• Service Members Civil Relief Act: Make sure the consumers, patients and guarantors visiting your website are presented with an opportunity to claim protections under this Act, explain their active duty status, and learn more about their rights.

• License Number Disclosure: Many states and several cities require third-party debt collectors to prominently display their license number in all communications. This requirement extends to consumer facing websites. Healthcare providers should also review state requirements to determine if information about licensure or accreditation are required. 

For most readers, the information presented in this series is not a surprise. But it is often difficult to connect the dots between the various state and federal laws and regulations that protect consumers. For additional information about the ADA, please visit ADA.gov. For a review of your website’s compliance with requirements referred to in this article, please consult with independent legal counsel or reach out to Ontario Systems Compliance Consulting Service team. We are here to help.

The George Mason University Antonin Scalia Law School recently hosted a forum titled: Regulatory Reform, Transparency, and the American Economy. The event raised both liberal and conservative views on innovation, privacy, and personal responsibility.

The opening panel – Financial Innovation and Innovative Financial Regulators — included Todd Zywicki, a law professor at George Mason whose name has been raised as a possible replacement for CFPB Director Richard Cordray; Charles J. Cooper, a Partner at Cooper & Kirk, PLLC, and David C. Vladeck, a law professor at Georgetown University and formerly Director of the Bureau of Consumer Protection at the Federal Trade Commission.

Zywicki presented a summary of a recent paper he co-authored, titled Consumer Protection at the FTC and the CFPB; his remarks focused on the CFPB part. Zywicki’s stance as a libertarian is clear (he also authored the 2015 paper, The Consumer Financial Protection Bureau and the Return of Paternalistic Command-and-Control Regulation). He began by announcing that, under the former Director, the CFPB has been protecting consumers from themselves.

Zywicki offered a theory of two approaches to regulation: Market Reinforcing and Market Replacing.

A Market Reinforcing approach makes markets work better in their ability to match consumers with products. He said the original version of Truth in Lending supported this. A Market Replacing approach incorporates concepts such as usury ceilings and the CARD Act.

Zywicki said the CARD Act has prevented banks from being able to price risk efficiently, which has led to low income households having 11% fewer credit cards. He blamed the Durbin Amendment (which required the Federal Reserve to limit fees charged to retailers for debit card processing) for causing a doubling of bank fees and a drop in free checking accounts from 76% to 38% since it was enacted as part of Dodd-Frank in 2010. He argued that regulations like these have caused an increase in the unbanked population, and an increase in the need for short term lenders – in other words, he said, eliminating the supply of credit doesn’t eliminate the demand for credit.

He suggested that a new approach for the CFPB could include: innovation, inclusion, choice, competition and respect. Indeed, the stated vision in the 5-Year Strategic Plan released this week by Acting Director Mick Mulvaney resembles these principles:

Free, innovative, competitive, and transparent consumer finance markets where the rights of all parties are protected by the rule of law and where consumers are free to choose the products and services that best fit their individual needs.

Zywicki recommends the following:

1. Create a clear regulatory framework, including reducing rulemaking by enforcement
2. Pay attention to policies impacting low income consumers (such as the small dollar loan rule); treat them as consumers versus charity cases. Use incentives versus mandates.
3. Recognize the full ecosystem – for instance, payday vs. overdraft. Think about regulating parts of the ecosystem together versus separately.
4. Treat borrowers like adults; protect them from fraud and deception, but don’t ban products without putting something else in their place.

Charles Cooper spoke about the effect that Operation Chokepoint has had on banks and payday lenders (full disclosure – his firm represents a payday lender that has been harmed by the policy). He made the following claims:

• The chokepoint policy has pressured banks to terminate highly mutually beneficial, long term relationships across the U.S., en masse, without a business explanation, following no wrongdoing or change in procedures.
• Reputation risk has been redefined through informal guidance notices; Banks now need to protect the reputation of all of their customers, as well as their own.
• Banks have been pressured to end relationships with 40 types of industries with poor reputations, including many which are lawful and regulated (i.e. credit repair, firearms, coin dealers and payday lenders).
• Banks that cancelled relationships with his clients were candid verbally but guarded in writing about what caused them to end the business, but said that one letter mentioned the threat of regulatory action against banks who do business with payday lenders.

David Vladeck, who clearly enjoyed a relationship of respect with the other panelists (refreshing to see, even though they were clearly on opposite sides of the issue), suggested the reports are inflammatory and not accurate.

He said that operation chokepoint had focused on payment processors that supported scams – not disfavored industries – as measured by the signal of chargebacks. While Charles Cooper mentioned payday lenders as a heavily regulated group, Vladeck noted that this isn’t always the case because many are affiliated with Indian Tribes, who claim immunity from state and federal law. He also noted that if there were excesses [of chokepoint implementation] there ought to be consequences, but those excesses were not the intention of the initiative.

Vladeck said he agrees with some of Zywicki’s recommendations for a more effective CFPB, including:

• Innovation – we don’t have sensible alternatives to traditional debt traps
• Inclusion of the unbanked – we need to find finance institutions that want to service this population
• Choice

Finally, he highlighted the fact that one in seven Americans are victims of Fraud every year. Economic incentives lead to massive data breach because the cost of the penalty is often a pittance compared with the cost of fixing it.

insideARM Perspective

Discussions like these are extremely interesting in the context of a shifting regulatory leadership environment. As it relates to debt collection, I think one of Zywicki’s recommendations is especially salient; consider the whole ecosystem. In this case, that means creditors, collectors, and the technology that connects them to each other and to consumers.  

CFPB Acting Director Mick Mulvaney released 5-year strategic plan for the Bureau yesterday.  This plan is a revision (or major overhaul of) the plan issued by former Director Richard Cordray last fall, and opens with a message from the Acting Director stating,

“…it became clear to me that the Bureau needed a more coherent strategic direction. If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.”

Here is a link to the draft 35-page plan released by Cordray for public comment in October 2017.

Here is a link to the full 14-page plan released by Mulvaney (the plan notes that performance goals and measures would be moved to the Annual Performance Plan and Report, which explains why this plan is less than half the length of the former one).

Here is a link to the 2013-2017 40-page plan released by Cordray.

Both the Cordray draft plan and the Mulvaney plan begin with the same listing of the five areas of authority granted to the CFPB by Dodd-Frank:

1. Consumers are provided with timely and understandable information to make responsible decisions about financial transactions;
2. Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination;
3. Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens;
4. Federal consumer financial law is enforced consistently in order to promote fair competition; and
5. Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

The interpretations, however, diverge from there.

The Cordray mission: The CFPB helps consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.

The Mulvaney mission: To regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws and to educate and empower consumers to make better informed financial decisions.

The Cordray vision: If we achieve our mission, then we will have encouraged the development of a consumer finance marketplace:

• where consumers can see prices and risks up front and where they can easily make product comparisons;
• in which no one can build a business model around unfair, deceptive, or abusive practices;
• that works for American consumers, responsible providers, and the economy as a whole.

The Mulvaney vision: Free, innovative, competitive, and transparent consumer finance markets where the rights of all parties are protected by the rule of law and where consumers are free to choose the products and services that best fit their individual needs.

The Mulvaney goals:

1. Ensure that all consumers have access to markets for consumer financial products and services.
2. Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive.
3. Foster operational excellence through efficient and effective processes, governance, and security of resources and information.

The Cordray goals:

1. Prevent financial harm to consumers while promoting good practices that work for consumer, responsible providers, and the economy as a whole.
2. Empower consumers to make informed financial choices to reach their own life goals and enhance their own financial well-being.
3. Inform the public, policy makers, and the CFPB’s own policy-making with market intelligence and data-driven analysis of consumer financial markets and consumer behavior.
4. Advance the CFPB’s performance by maximizing resource productivity.

Both make reference to efficiency. However the new Acting Director places top priority on a free and competitive market, while the former Director focused first on identifying good and bad practices in order to prevent harm to consumers.

Meanwhile, President Trump released his own strategic plan this week, in the form of his 2019 budget proposal. According to The Washington Post, under the President’s plan, the CFPB would be funded through Congress rather than the Federal Reserve. The Post also notes that the Trump plan caps the CFPB’s 2019 budget at the 2015 level of $485 million, rather than the projected $630 million for 2018. Given that Mick Mulvaney is also the President’s Budget Director, it would appear that these strategic plans are working in sync. Over the last two months the Acting Director has cancelled enforcement efforts, opted out of funding, and other actions which would align with this budget reduction strategy.

Also swirling around this week is a rumor that President Trump wants to replace White House Chief of Staff John Kelly and is considering Mick Mulvaney for the job. This would be Mulvaney’s third job… unless he gives up the other two, which would once again send leadership of the CFPB into question. Trump has yet to pick a nominee for the permanent CFPB Director job, and former Director Cordray’s Chief of Staff, Leandra English, is still suing to serve in the Acting role.

On Face the Nation this past Sunday, Mick Mulvaney says nobody from the White House has discussed the Chief of Staff role with him, nor would he want it. You can listen here:

CINCINNATI, Ohio — The City of Cincinnati commenced the implementation process of their new Cloud Financial Ecosystem “CSS IMPACT! HD™ 2.0” earlier this month. CSS, Inc., the developer of “IMPACT! HD™ 2.0”, is the leading provider of Cloud Financial Ecosystem platforms for enterprises & government.

CSS’s financial cloud architecture removes the prohibitive costs of acquiring new technology and workforces to overcome fundamental day to day processes. Municipalities, like the City of San Francisco & Cincinnati, are leveraging intuitive agile new technology to engender turn-key automation with CSS’s Cloud Financial Ecosystem platform, enabling them to cost-effectively leverage cutting-edge financial Fintech technology with the added benefit of a streamlined workforce. This in turn enables veteran City operations staff to focus solely on revenue management and customer care.

The City of Cincinnati is quickly becoming one of the smartest and most innovative cities in the country by adopting leading cloud technology solutions that engender efficiency and automation.

“We are honored & privileged to have been recognized by the City of Cincinnati for our advanced Financial Ecosystem Technology and to have been awarded the City’s Legal & Tax Collections processing system project. We look forward to and are excited for a long and successful partnership with the City of Cincinnati,” said Carl A. Briganti, President of CSS, Inc.

To learn more about how municipalities are leveraging CSS’s Cloud Financial Ecosystem, please visit http://www.cssimpact.com/software/tax-information-platform-system or download our tax platform brochure at http://tax.cssimpact.com

About the City of Cincinnati

The City of Cincinnati government is dedicated to maintaining the highest quality of life for the people of Cincinnati. The City is focused on economic development to create jobs, committed to innovation and efficiency through technology, seeks to be a leader in environmental sustainability, and pursues partnerships to help create opportunities that benefit the City’s diverse residents, businesses, and visitors.

About CSS, Inc.

CSS is a leading provider of end-to-end Cloud Financial Ecosystem platforms & Contact Center solutions for enterprises that generate & manage mass receivables, payments, recoveries & revenues. By delivering cognitive Cloud Financial Ecosystems technology, CSS helps municipalities and enterprises improve and automate all their daily financial activities, consumer engagement & business process.

For more information, download our brochure at http://brochure.cssimpact.com, visit us http://www.cssimpact.com or call 877.277.4621.

Three lawsuits were filed on February 9, 2018 in the case of the Department of Education (ED) Private Collection Agency (PCA) Unrestricted Contract Award. The latest chapter in the years-long battle over the award finally came to an end on January 11, 2018 when ED completed its corrective action. It seems a new chapter has begun this week.

Brief background

There were 17 collection agencies on the 2009 five-year unrestricted (large company) contract (there were 5 firms on the small business contract). In 2014, 11 firms won new small business contract awards. The unrestricted awards were delayed.

In February 2015, ED announced suddenly that it would “wind down” its relationship with five PCAs that were “providing inaccurate information to borrowers regarding rehabilitations.” The companies said they had no warning of this, and had received high performance marks until that time. Three large firms were suddenly terminated (two of them later won an appeal and received award term extensions in April 2017). Lawsuits were filed in March.

Also in February 2015, five firms received two-year ATOs; lawsuits were filed over these. 

In December 2016 – almost two years later – seven firms received new awards under the unrestricted contract. 22 firms protested those awards; four filed lawsuits.

In March of 2017 a TRO was issued which stopped implementation of the new awards. More lawsuits were filed. In May 2017 the court issued a preliminary injunction, stopping all placements to all firms (including the small companies) on the ED private collection contract.

Also in May 2017, ED says it will engage in a do-over of the unrestricted contract award, and invited all 47 firms who submitted offers to participate. The Department issued an initial schedule which said new awards would be made on August 25, 2017.

This infographic summarizes the activity through May 2017.

August 25th came and went. Lots of activity happened in court, but confusion and waiting continued. Finally, in November 2017, a new judge was assigned to the case. He held a hearing with all parties in December, and ordered ED to complete its corrective action within 30 days.

ED complied. On January 11, 2018 just two firms were awarded the unrestricted (large) contract: Windham Professionals, Inc. (which was one of the seven that originally won a contract in December 2016) and Performant Recovery, Inc. (which was not one of the seven that originally won a contract). The other six contracts were rescinded.

The new round of litigation

Here is what we know as of today:

Sources tell insideARM that ED has issued recall notices to the five ATO agencies, recalling 10% of the accounts per week for the next 10 weeks.

Three companies filed suits in the U.S. Court of Federal Claims on February 9, 2018: Account Control Technology, Inc. (ACT), Transworld Systems, Inc. (TSI), and GC Services Limited Partnership (GC). All complaints are currently sealed, so the details are not available for review.

ACT filed Motions for Temporary Restraining Order (TRO), for Preliminary Injunction, and for Protective Order.

TSI filed Motions for Protective Order and for Leave to File Under Seal.

GC filed Motions Protective Order and for Leave to File Under Seal, as well as Motions for TRO and for Preliminary Injunction.

The cases were assigned to Judge Thomas C. Wheeler – the same judge who took over the longstanding case last fall, and set the final deadline for ED to close its corrective action. On February 12 Judge Wheeler granted all three Motions to Seal and set a scheduling conference for today at 2pm.

insideARM Perspective

Sources tell insideARM that more lawsuits are expected in this case – perhaps as many as 8-10. Meanwhile, the two large firms that received awards last month are in the process of ramping up to to begin receiving accounts.

insideARM will continue to follow and report on this unfolding new chapter of the Department of Education PCA story.

For those interested in all of the twists and turns in this case, click here for all insideARM Department of Education coverage.

This article previously appeared on the Burr Foreman Consumer Finance Litigation blog and is re-published here with permission. Katherine West also contributed to this article.

In Ferrer v. Bayview Loan Servicing, LLC, No. 15-20877-Civ-Scola, 2018 WL 582584 (S.D. Fla. Jan. 26, 2018), the Southern District of Florida determined that a telephone dialing system that was incapable of predictively dialing, storing, or independently producing telephone numbers and could not place a call without human input was not an automatic telephone dialing system (“ATDS”) within the meaning of the Telephone Consumer Protection Act (“TCPA”).

Plaintiff Maria Ferrer (“Plaintiff”) filed suit against Bayview Loan Servicing, LLC and other defendants (“Bayview”) alleging, among other things, that Bayview violated the TCPA. The TCPA prohibits calls made “using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service . . . or any service for which the called party is charged for the call” unless the call is for emergency purposes or the called party has provided prior consent. 47 U.S.C. § 227(b)(1)(A)(iii). Thus a plaintiff asserting a claim under the TCPA must establish that the call(s) at issue were made to a cell phone number, the defendant made the call(s) using an ATDS or an artificial or prerecorded voice, and the call was made without the called party’s prior express consent. See Ferrer, 2018 WL 582584, at *6.

In Ferrer, Plaintiff claimed Bayview violated the TCPA by repeatedly calling her cell phone number. Bayview moved for summary judgment on Plaintiff’s TCPA claim in part on the grounds that Bayview did not use an ATDS for the calls it made to Plaintiff’s cell phone. The court agreed that Bayview did not use an ATDS to place calls to Plaintiff’s cell phone, and, therefore, granted Bayview’s motion for summary judgment.

Pursuant to the TCPA, an ATDS is “equipment which has the capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” 47 U.S.C. § 227(a)(1).  In Ferrer, the court relied on the declaration of a Bayview employee which explained that the system Bayview used to call Plaintiff’s cell phone number merely allowed “a user to dial phone calls using a computer keyboard and mouse, and . . . the calls must be manually dialed.” Ferrer, 2018 WL 582584, at *6. The declaration further explained that the system used could not make a call “without human input, and [could not] dial predictively, store, or produce telephone numbers independently.” Id. The court determined that such a system did not constitute an ATDS within the meaning of the TCPA.

Though Bayview admitted it used another system that was an ATDS to make calls to other numbers belonging to Plaintiff, the court held that the mere use of an ATDS to place some calls was not enough to establish TCPA liability. Instead, there must be evidence “the auto-dialer was used to contact [the plaintiff] on her cell phone in a manner prohibited by the TCPA.” Id. As discussed above, the Court found no evidence Bayview used an ATDS to call Plaintiff’s cell number in violation of the TCPA and granted Bayview’s motion for summary judgment.