Archives for April 2018

ROCKVILLE, Md. — At last week’s spring meeting of the Consumer Relations Consortium (CRC) and its Innovation Council, the group recognized three individuals and three firms with ‘Most Valuable Contribution’ awards for 2017. Winners were selected earlier this year by CRC members, based on the value of the contribution provided by executives from member technology firms.

Winners in the individual category included: 

• Boris Grinshpun – Director of Product, LiveVox
• Brian Robertson – CEO, VisiQuate (pictured at right with Stephanie Eidelman, CRC Executive Director)
• Peter Ghiselli – VP, US Emerging Markets, TransUnion

Winners in the company category included:

• Ontario Systems – Primary 2017 contributors included Dan Womack, Director of Product Engineering; Rozanne Andersen, VP & Chief Compliance Officer; and Amy Kennedy, Senior Director of Product Management. (Rozanne Andersen and Dan Womack pictured at right with Stephanie Eidelman)
• LiveVox (primary contributors included Luis Summe, CEO; Boris Grinshpun, Director of Product; and Erik Fowler, EVP Business Operations)
• Noble Systems (primary contributors included Karl Koster, VP Product Management; and Jason Ouimette, VP Product Management)

Dan Womack said, “The Innovation Council provides an environment and structure that fosters collaboration and innovation between large market participants, creditors, technology providers, and compliance experts. It has been wonderful to be able to regularly sit with representatives from each portion of our industry and not only discuss challenges we all face, but more importantly work together on solutions. We walk away from each interaction with tangible items to enlighten and impact our product roadmaps and technologies.”

Rozanne Andersen added, “The Innovation Council is what many consider to be the leading organization for creditors, larger market participants and their service providers. As members of the council, we are honored to have the opportunity to collaborate and support the advancement of the industry’s approach toward compliance, technology and business processes and are humbled that a group of our peers selected our company for this award.”

In 2017, its first year, the Innovation Council addressed three main categories: payments, omni-channel communications, and data analytics. In addition to discussing case studies and new developments, members engaged in structured small group-based discussion around best practices and future direction.

Brian Robertson commented, “The Innovation Council is a great opportunity to network and collaborate with industry peers on the important topics of compliance, consumer value, technology automation and big data analytics. It has been a joy and a pleasure to contribute and to get to know so many high caliber individuals on this great Council. I am honored and humbled to have received this award.”

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To start 2018, the Council conducted a series of in-depth interviews to identify priorities and opportunities for collaborative solutions. Some of the topics explored include substantiation, data standards, big data, and bridging the gap between creditors and collectors in order to help build consumer trust. 

Last week’s session also included an in-depth exploration of other important topics, including SHAKEN (a protocol in development for authenticating calls, in an effort to further highlight the difference between scammers and legal call originators) and practical blockchain applications. 

About CRC’s Innovation Council

The Innovation Council operates in conjunction with the Consumer Relations Consortium (CRC). Formed in 2013, the CRC is a membership group for forward-thinking creditors and larger ARM companies that engages proactively with consumer groups, regulators and other influential thought leaders. The goal is to develop relationships that lead to candid discussion of practical ways to address challenges facing all parties involved in the debt collection process.

Established in 2017, the Innovation Council is a platform for senior technology, strategy, operations, and compliance executives to shape understanding of the big technology issues certain to redefine the ARM industry, and to collaborate on innovative solutions.

The CRC and its Innovation Council are managed by The iA Institute, parent of insideARM.

SAN DIEGO, Calif. — Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today announced it will hold its sixth annual Global Volunteer Day on Saturday, April 28. Activities will take place in 16 locations around the world, including the company’s U.S., India, and Costa Rica locations and, for the first time, its wholly owned subsidiaries, Baycorp, Lucania Gestión and Grove. 

Nearly 500 Encore employees will give their Saturdays to spend a collective 2,500 hours in service to their communities. Most of the volunteers will build homes alongside Habitat for Humanity — an international non-profit that provides affordable housing to low-income families around the world. 

“Enabling people to live better lives through financial well-being is the cornerstone of our business, and we’re proud to carry out that mission alongside Habitat for Humanity,” said Sheryl Wright, Encore’s Senior Vice President of External Affairs. “Through our charitable giving and the incredible volunteerism of our employees, we are proud to support Habitat in providing affordable housing to people all over the world, which we know is a critical piece of economic empowerment.” 

With the inclusion of its wholly owned subsidiaries in Global Volunteer Day, Encore extends its efforts to 16 locations. In the U.S., sites include San Diego, California; Phoenix, Arizona; Troy, Michigan; St. Cloud, Minnesota; Tampa, Florida; Roanoke, Virginia; San Antonio and Houston, Texas; and Hato Rey, Puerto Rico. Global Volunteer Day activities will take place internationally in Madrid, Spain; Auckland, New Zealand; Perth and Parramatta, Australia; Manila, Philippines; Heredia, Costa Rica; and New Delhi, India.

“We’re excited to share this day with our Encore family around the world, and we are proud of their willingness to volunteer their time and talents,” said Wright. “This global effort is an extension of the work we do together every day and will help facilitate positive, long-term change in the communities where we live.” 

Encore held its first Global Volunteer Day in 2013 as part of its Corporate Social Responsibility (CSR) program, which underscores the company’s commitment to supporting its employees and communities through volunteerism, financial donations and strategic non-profit partnerships. To date, Encore has donated more than $1 million around the world to support organizations like Habitat for Humanity that offer a path to dignity and financial self-sufficiency through education, job skills training and affordable housing. To complement these efforts, Encore recently launched a financial literacy program for students, which has already impacted over 1,500 people in high school and community college. 

In addition to the work with Habitat for Humanity this Global Volunteer Day, employees at Encore’s international locations will support charitable organizations around the world that align with the company’s CSR commitments. Employees in New Delhi are providing volunteer hours and financial support for Literacy India and Rainbow Homes, and employees in Heredia, Costa Rica, are supporting Banco de Alimentos Costa Rica. Other volunteers will work with the Gawad Kalinga community in Manila, People Who Care in Perth, and Serve the City in Madrid. 

About Encore Capital Group, Inc.

Encore Capital Group is an international specialty finance company that provides debt recovery solutions for consumers across a broad range of assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions and utility providers. Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. 

Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. It has operations and investments in 16 countries, including its international subsidiaries Cabot Credit Management (Europe), Grove Capital Management (Europe), Lucania Gestión (Europe), Refinancia (Latin America) and Baycorp (Australasia). More information about the company can be found at http://www.encorecapital.com. Information found on the company’s or its subsidiaries’ websites are not incorporated by reference. 

Contact:
Christine Alhambra
Manager, Corporate Social Responsibility and Corporate Communications
Encore Capital Group, Inc.
(858) 380-0193
christine.alhambra@mcmcg.com

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 in March 2018.

Curt Majors v. Professional Credit Management, Inc.

The issue: Convenience fees

The gist: Curt Majors brought an FDCPA action against a debt collector, alleging that he did not consent to the assessment of credit card convenience fees by a third party processor, even though defendant’s letter had explained this before plaintiff used his credit card to make a payment on a debt. Plaintiff admitted that he was not confused by the letter, and that adequate disclosures had been made. Plaintiff moved to dismiss the complaint without prejudice during summary judgment phase, but the defendant opposed dismissal, seeking sanctions against the plaintiff for filing a frivolous suit. Judge granted the plaintiff’s motion for dismissal, showing yet again that the standard applied to the plaintiff’s bar is low, and possibly dropping.

Rodney Neeley v. Portfolio Recovery Associates, LLC

The issue: Statute of limitations language

The gist: A collection letter sent to plaintiff failed to notify him that any payment would reset the statute of limitations. Court found that failure to provide re-tolling language was both a violation of 1692e & 1692f. Significantly, many jurisdictions take the position that double recovery on the same conduct is not permitted, but this court found the opposite, ruling that the same conduct can lead to recovery on both statutes.

Rivera v. IC Systems, Inc.

The issue: Verbal dispute of debt validity

The gist: The consumer alleged that the debt collector violated 1692e(2)(A) by only providing an invoice to the debt as validation. Plaintiff disputed her debt, but only verbally, in a jurisdiction that requires written validity disputes. The court found that a debt collector can reasonably rely on the representations of their client to determine that a debt is valid. Although a debt collector must abide by fair collection practices, its contractual obligation is to the client, not the consumer. Absent a written notice of a consumer’s dispute per §1692g (b), the debt collector is not obligated to provide validation of the debt to the consumer, nor is it required to cease collection activity. Note that this holding would only apply in jurisdictions that require written disputes.

Mehdi Abdollahzadeh v. Mandarich Law Group, LLP

The issue: Statute of limitations (SOL) bona fide error

The gist: A law firm sent a collection letter to the plaintiff without advising the consumer that the statute of limitations on the debt had expired. The law firm asserted, and was able to demonstrate, a bona fide error defense. The firm stated it was not aware that consumer’s account was outside SOL when they mailed the letter, and that it has documented procedures in place to prevent the attempt to collect an out-of-statute debt, including: 1) a policy to cancel and return any account not in active litigation once its statute of limitations expired, 2) a policy to check dates on each account and review the certification of accurate account information from client before filing suit, and 3) reliance on the nightly scrubbing of accounts by the client’s software to identify out-of-statute debts. Court agreed and found the law firm’s procedures were reasonable.

Derosia v. Credit Corp Solutions, Inc.

The issue: False and misleading licensing statements

The gist: Agency sent a letter which stated it was licensed by the Wisconsin Department of Financial Institutions (DFI) as a sales finance company. Derosia, the plaintiff, alleged this was misleading because the defendant should have been licensed with the Department of Banking as a collection agency. Even if the consumer did an investigation and went to the DFI website, they would learn that the defendant was not licensed as a collection agency and upon learning that, a consumer would be more likely to assume the letter is a scam and ignore it. The court agreed that the statement in letter was false and misleading, and would be a material violation of the FDCPA.

Taylor v. Financial Recovery

The issue: Interest accrual disclosure

The gist: The plaintiff alleged that the collection agency failed to disclose that interest was accruing. The reason, as stated by the defendant, was that interest was no longer accruing. The court noted the Avila decision, which said a disclosure that paying a debt in full using an amount listed in a letter would be misleading only if the amount would not settle the debt due to accruing interest. In this case, the only harm suffered by plaintiff is that if they believed interest was accruing, they might pay the debt sooner rather than later. The court found that as long as the letter was accurate and no interest was being charged, then the letter is not misleading.

For additional insight on this case, see this insideARM article.

Oksana Timoshenko v. Mullooly, Jeffrey, Rooney & Flynn, LLP

The issue: Interest accrual disclosure

The gist: A law firm’s letter used safe harbor language as set forth in Avila to disclose the accrual of interest. Nonetheless, the consumer brought suit on the issue of interest accrual. The court found that the consumer stated no valid claim under the FDCPA and ordered a rule to show cause of why the plaintiff should not be sanctioned.

Konyo v. ARS National Services, Inc.

The issue: 1099C disclosure

The gist: Plaintiff Konyo received a collection letter with settlement options that included the following: “When your final payment is received, we will advise our client so that it may notify any credit reporting agencies to which it reports of the updated status of the account.” The court found this statement could mislead the ‘least sophisticated consumer’ into believing that updates to her credit report would only occur after the final payment on the debt was made. Letter also stated, “IRS requires certain amounts that are discharged as a result of the cancellation of debt to be reported on a Form 1099–C.” The consumer claimed the letter failed to explain the IRS exceptions to the discharge report requirement. The court agreed that the least sophisticated consumer could conclude that the collection agency would be required to report the cancellation of debt in all circumstances.

DULUTH, Ga. — Crown Asset Management, LLC a Georgia-based purchaser of distressed consumer accounts receivable is pleased to announce that Bob Deter is joining Crown Asset as Director of Business Development. Bob brings 30 years of Accounts Receivable Management experience, having served in senior management roles with a credit issuer, a debt purchaser, and a third-party collection firm. Bob’s experience incorporates 17 years with Discover Card, including his role in managing Discover’s former debt sales program. After leaving Discover, he served as an EVP of Acquisitions and Business Development in the debt purchasing sector and then as the VP of Compliance with a third-party collection agency. “I am very excited to get back into the debt purchasing arena. Brian Williams and the Crown Asset Management team have built a strong and well-respected company that is well positioned for continued strategic growth in a rapidly changing marketplace. I look forward to working with them to further build on their already solid foundation,” said Mr. Deter. 

Crown CEO Brian Williams said, “Bob is a respected and proven industry leader in the debt purchase and sales market, and we are excited that he is joining our team.”  Bob’s recent role as a VP of Compliance provides a unique understanding of the risk sellers must evaluate when selecting a debt purchasing partner. Bob knows how to balance compliance with asset sales and purchases and how to build mutually valuable relationships. 

About Crown Asset Management, LLC

Based in Duluth, Georgia, Crown is in its fifteenth year as a debt purchaser and master servicer in the Accounts Receivable Management Industry. Crown has purchased over 400 portfolios including credit card portfolios, automobile debt, consumer loans, judgements and specialty portfolios.

Contact:

Crown Asset Management, LLC 

Bob Deter, Director of Business Development

(614) 583-0979 or bdeter@crownasset.com

Crown Asset Management, LLC                                            

Brian Williams, CEO                                                  

(678) 205-0909 or bwilliams@crownasset.com

Very early in 2018, a New Jersey District Court judge granted defendants’ motion to dismiss claims against them in the case of Winters, et.al. v. Jones, et. al, (Case No 2:16-cv-09020, U.S. District Court, District of New Jersey. insideARM first wrote about it when the case, which dropped many a jaw in the ARM community, was originally filed in December of 2016.

Nutshell re-cap

In case you missed the gist of the case, plaintiff and collection agency owner Winters and his class action co-plaintiffs accused some New Jersey law firms of scheming to solicit clients in order to file bogus class-action lawsuits, with the aim of seeking fast settlements from defendants interested in avoiding the expense and hassle of trial. A copy of the original complaint can be found here.

Judge dismissed RICO case without hearing oral arguments

Fast-forward to January 2018, when insideARM reported in an update that New Jersey District Court Judge John Vazquez dismissed the complaint without oral arguments. Vazquez bluntly wrote that Winters’ First Amended Complaint (FAC) was “riddled with factually unsupported accusations and wholly conclusory language” and “suffers from defective legal theories, both substantively and as pled. Moreover, Plaintiff’s factual allegations are severely lacking in light of the federal pleading requirements.”  

He gave plaintiffs 30 days within which to file a second amended complaint (SAC), adding that “If Plaintiffs believe that Defendants are conducting some nefarious scheme, then Plaintiffs will have to conduct much more due diligence to plausibly plead their claims rather than relying on PACER print-outs, a legal seminar, and other anecdotal information — all of which is benign on the surface (if not common practice)…”

A copy of the judge’s Order can be found here.

A copy of the judge’s Opinion can be found here. The Opinion is not for publication. 

Editor’s Note:  An unpublished opinion is a decision of a court that is not available for future citation as precedent because the court deems the case to have insufficient precedential value. 

Defendants in the case had also requested that the court sanction Winters et. al. for filing suit with what they perceived were such flimsy claims. The judge declined to penalize plaintiffs under Rule 11, although in his Opinion on the matter, he did note that if plaintiffs decided to submit a Second Amended Complaint (SAC) and not prevail, nothing would prevent defendants from re-requesting that the court issue sanctions after a future decision and order.

Both sides appeal to the Third Circuit

As winter (the season) marched on, Winters (the plaintiff) filed an appeal to Vasquez’ decision to dismiss. A copy of Winters’ appeal can be accessed here.

Defendants are also appealing Vasquez’ decision to decline to issue Rule 11 sanctions.

The cross-motions for appeal were originally scheduled for conference in mid-April, but are now on for conference in early June, in the Third Circuit.  We’ll stay on top of the appeals as they unfold.

insideARM perspective

Winters and co-plaintiffs seem almost activist in their determination to keep fighting against perceived frivolous litigation. In part, that sense comes from the original allegations in this case, which were sensational to say the least: Defendants were accused of federal RICO violation, a federal RICO conspiracy, a New Jersey RICO violation, a New Jersey RICO conspiracy, fraud, negligence, legal malpractice, wire fraud, obstruction of justice, witness tampering, and extortion.

If this case does nothing else, it shines a light on a problem congesting the courts; professional plaintiffs with seemingly no injuries, who are betting that collection agencies will opt to offer a quick settlement at a lower cost than a drawn-out regulatory lawsuit–even if baseless.

On the issue of sanctions, it was interesting to see that, where collection agencies as defendants are are almost never granted motions for sanctions against plaintiffs, here the tables were turned, and again the plaintiff sidestepped a motion for sanctions. This is a case many will keep watching. Let’s see what shakes out of the Third Circuit Court of Appeals this summer.

Three dates in May are of interest to collection agencies, payday lenders and debt buyers: May 1, May 15, and May 30. If you’re doing business in these states, check out the calendars below:

Alabama

Arkansas

Florida

Georgia

Idaho

Illinois

Michigan

Nevada

New Mexico

North Dakota

Oklahoma

Texas

You can download PDFs of the calendar here:

May 1 (Alabama, Arkansas, Florida, Oklahoma, Texas)

May 15 (Michigan, New Mexico, North Dakota, Texas)

May 31 (Georgia, Idaho, Illinois)

Each PDF has clickable links, taking you to each state’s website with information about filing.

Last week a group of six U.S. Senators introduced the ROBOCOP Act, to require phone companies to offer their customers free robocall blocking technology. Several of the recommendations could use some fleshing out.

The six Democrats (Richard Blumenthal (D-CT), Edward J. Markey (D-MA), Ron Wyden (D-OR), Charles E. Schumer (D-NY), Tammy Baldwin (D-WI), and Jeff Merkley (D-OR)) named the bill ROBOCOP as a moniker for “Repeated Objectionable Bothering of Consumers on Phones).

The ROBOCOP Act:

• Directs the Federal Communications Commission (FCC) to require telecom companies to verify that caller ID is accurate.
• Provides an exception for consumers with legitimate need for altered caller ID, such as medical offices and domestic violence shelters.
• Directs the FCC to require telecom companies to offer consumers optional free robocall-blocking technology.
• The technology would not block public safety entities and calls that the consumer consents to receive (e.g., school closings).
• Authorizes the FCC to create a nationwide unblocking system that will ensure consumers are in control of the calls and text messages they receive.
• Gives consumers a private right of legal action against telecom companies that violate this statute.
• Requires the FCC, in consultation with the Federal Trade Commission (FTC), to make a public report on whether the new rules have reduced unwanted calls.

This is one of a range of efforts being pursued by Congress and regulators in response to the fact that the National Do Not Call Registry – initially effective – is no longer capable of protecting consumers from overseas scammers who do not hesitate to break the law.

On March 28 insideARM published a recap of a joint policy forum held by the FCC and FTC, titled “Fighting the Scourge of Illegal Robocalls.” The forum featured prepared remarks from leaders of both federal agencies with jurisdiction over robocalls, including newly installed FCC Chief of Consumer and Governmental Affairs Patrick Webre, FCC Chairman Ajit Pai, FTC Acting Chairman Maureen Ohlhausen, and several Commissioners from both agencies. All of them basically said the same thing: Illegal robocalls are awful, we get tons of complaints about them, and this issue is our top priority.

The substance of the Forum included a series of three panels including the regulators on the front lines of enforcement and rulemaking, representatives of the carrier industry and the calling industry, and consumer advocates.

One of the takeaways from that forum was that the FTC has learned that there are “kingpins” who seem to lord over the bulk of the schemes and those kingpins tend to be located in the United States. Denise Beamer, Senior Assistant Attorney General for the Florida Office of the Attorney General, said “[The kingpins] are known, they are sophisticated, and they are connectors…Going after them really is a deterrent.”

On the same day the ROBOCOP bill was introduced, an alleged ‘robocall’ mastermind appeared under subpoena before the Senate Commerce Committee. The Federal Communications Commission (FTC) has accused Adrian Abramovich of making 96 million robocalls during a three-month period in 2016 and has proposed a $120 million fine. He said to the committee, “I am not the kingpin of robocalling that is alleged.” Abramovich claimed his activities constitute legitimate telemarketing. The FCC claims his company appeared to offer deals from legitimate companies like TripAdvisor and Expedia, but then transfer calls to foreign call centers often pushing timeshares. In response to some questions, Abramovich invoked his Fifth Amendment right against self-incrimination.

insideARM Perspective

Something from the proposed ROBOCALL bill that immediately catches my eye is the requirement that the FCC require telecom companies to verify that caller ID is accurate. This is interesting. I am not an expert in this area, but I can say for sure that this is likely no easy task. I get calls all the time from legitimate known people/companies, yet their caller ID often makes no sense. When I ask, “did you know this is how you appear in caller ID?” people are generally surprised and have no idea how to address it. Interestingly, calls that I receive from staff at the Consumer Financial Protection Bureau (CFPB) – or should I now say, Bureau of Consumer Financial Protection – typically display as “Washington, D.C.”

I don’t know whether this has to do with errors in a central database, who purchases that data from the central database, how often the information is updated, settings on internal hardware or software, settings controlled by one or more carriers delivering the call, simple human error, or perhaps all of the above. As with many things in our complex interconnected world, ‘all of the above’ means that no one entity has control, and a solution requires motivation to cooperate.

Other aspects of the bill that I wonder about:

1) The technology would not block public safety entities and calls that the consumer consents to receive (e.g., school closings).

How would the technology know if I had consented to receive a communication? Would there be some kind of database of approved callers, like schools or local governments? What about other consented calls, like debt collection? Debt collection calls may not be ‘wanted’ or accepted in the same way we can all get behind school closings, but in a way, they are even more important, since there are any number of other ways to learn about school closings (website, local news station, etc.). A call from a debt collector may be the last stop before a lawsuit from a creditor, or a negative item on a credit report.

2) Authorizes the FCC to create a nationwide unblocking system that will ensure consumers are in control of the calls and text messages they receive.

Will this be a centralized nationwide system (like the caller ID information, or Do Not Call List)? Will we end up on the same situation we are in today? It will be interesting to see whether something like this could end up on a distributed blockchain.

3) Gives consumers a private right of legal action against telecom companies that violate this statute.

All I can say is, telecom companies – welcome to the world of debt collectors.

The following two pieces appeared in issues of Compliance Weekly, a newsletter focused on compliance and breaking down the complexities of some of the legal cases affecting the industry. Compliance Weekly is produced by The Compliance Professionals Forum. You can sign up for this free newsletter here. 

Credit Counselors Not Protected by FDCPA

Can a collection agency be sued for an FDCPA violation by talking to a credit counselor? No! (But keep reading, it’s not a definitive “no.”)

The deets

A consumer, working with a credit counselor, called a collection agency (I.C. Systems) to discuss the consumer’s credit report. There were items on there that the consumer felt should not be. So, after the plaintiff verified his information with the collector, and gave I.C. Systems permission to talk to his credit counselor, the counselor then asked, “Can the plaintiff dispute this account over the phone with you right now.”

THIS SOUNDS LIKE A TRAP!

I hear you — but it isn’t, at least in this case. I mean, consumers have been known to use credit reporting questions to trap newer collectors into UDAAP violations. In this case, the consumer’s account had already been recalled. I.C. Systems explained this, said that it couldn’t be disputed because it had been recalled, and said it would be removed from the plaintiff’s credit report within 30-60 days.

So, how did the suit come about?

The consumer tried to sue, basing it on “false, deceptive, or misleading representations” during the call.

What was false?

Great question. It has to do with the question about the dispute. The plaintiff really wanted to dispute the item on his credit report. The collection agency said, “You can’t, because first of all the account had already been recalled; and then, also, the account had a zero balance.”

But all this was said to the credit counselor on that call.

And that made a difference?

That made a difference. We can’t be 100% sure — and I am not an attorney — that if the consumer had had this conversation by himself with the collection agency, if the suit could have continued. It’s generally not a great practice for a collector to offer credit reporting advice of any kind, or to answer definitively any question about credit reporting.

It’s also likely, though not a given, that if the consumer and his credit counselor were on the phone together, but it was the consumer who asked those credit reporting questions, that that would have affected the outcome.

However, in this case, the consumer brought on a third party, his credit counselor, who asked the question about the credit reporting — and communications with a third party, especially in a call initiated by the consumer, are not covered by the FDCPA. So, no violation.

Katie Neill writes, “One thing many, if not all, of the alleged baiting calls have in common is that the calls are initiated by someone other than the debt collector. Many of these calls have the consumer on the line to authorize a third party representative to speak with the debt collector, and then the consumer goes silent while the conversation continues. Many of these calls include someone asking, on behalf of the consumer, whether the account can be disputed over the phone or if the dispute needs to be in writing. There is now a strongly worded defense against such tactics.”

You can read the full case here: Sandoval v. I.C. Systems, 17-CV-3755, 2018 WL 1582218 (E.D.N.Y. Mar. 29, 2018)

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New Forum Resource: Power of Attorney Rules by State Chart

A CPF member reached out with the following question:

I am looking for a resource on Power of Attorney. The credit repair companies send the POAs, but they are not notarized. Do you know if there is a resource of POAs and if they need to be notarized?

So, whether or not a Power of Attorney needs to be notarized depends on the state — so there’s no “one answer to rule them all” on this.

What there is, though, is a resource detailing requirements, state-by-state. It’s now available for all CPF members. Click here. (The chart, to be clear, is not legal advice and may not be used as legal advice. It’s just the hard work of my typing fingers and mouse-scrolling. Errors, corrections, etc.: send ’em my way.)

I was curious about the efficacy of collection agencies making it a practice to ask for all PoAs to be notarized in order to be accepted, and Editorial Review Board member (and my best friend, “Rozanne” category) Rozanne Andersen said, “Requiring notarization in documents not otherwise required to be notarized by law may be deemed overly burdensome or an unfair or deceptive practice. I wouldn’t recommend the practice for a third party debt collector in connection with the collection of consumer debt.” 

DEARBORN, Mich. — FocusOne, Inc. is pleased to announce Linda Woodward has recently joined the FocusOne executive management team as Vice President of Strategic Accounts. In this newly created role Linda will collaborate with our existing team in overseeing and enhancing all aspects of client experience, from sales and implementation of new clients to new product and service delivery, as well as ongoing long-term relationship partnering with existing clients. Linda brings with her a wealth of experience within the ARM industry, having spent the last 12 years with DANTOM/RevSpring where she was instrumental in the development and creation of implementation onboarding process, project management office, and business relationship management as well as sales and sales support of nationwide strategic accounts.

Linda joins FocusOne to continue our proven success in providing ARM communication services to various types of business within the ARM industry.  “I’m honored and proud to start a new future with FocusOne and look forward to working with the team to further develop their already extensive product and service suite, as well as the opportunity to provide the level of support and partnership our clients deserve that will foster success. Our clients’ success is our success! I’m fortunate to be joining a highly respected company and team that prides itself on quality service and products that meet their clients’ needs, and where building relationships matter.”  

CEO James Nesbitt said, “Linda’s experience and industry knowledge has already made her a key addition to the Hatteras/FocusOne corporate family. Her appointment is a sign of our commitment to being the leading company in our industry. Our new innovations and the increasing demand from our customers led us to look for an addition to our team who shares our philosophy of innovation and exceptional service, as well as our vision for future growth. There is no one else in the industry with the wide breadth of knowledge of project management, relationship management, and sales experience. She’s well known for the dedication to exceptional client experience and proven results that she now adds to our already proven executive management team. Linda will play key role in providing and implementing high quality solutions for our clients.” 

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About FocusOne, Inc.

FocusOne is a division of Hatteras, Inc., a WBENC certified woman-owned full service design, data, print, mail & electronic communication delivery company headquartered in Dearborn, MI and founded in 1977.  FocusOne has extensive understanding and experience in ARM-related communications and our client service is unparalleled in the industry. More information on FocusOne’s services, solutions, and key leadership can be found at www.focus1data.com.

Contact
FocusOne, Inc.
Linda Woodward, PMP
VP of Strategic Accounts
313-624-3360
lwoodward@focus1data.com
www.focus1data.com

Just about a year ago the Consumer Financial Protection Bureau (CFPB) filed suit against the law firm of Weltman, Weinberg & Reis Co, L.P.A. (WWR) alleging that the firm deceived consumers with misleading calls and letters. The fundamental issue is the fact that there is no formal definition of “meaningful review” of lawsuit documentation – 30 seconds? 5 minutes? 2 hours? This issue is now going to trial.

Background

The CFPB’s lawsuit accuses WWR of falsely representing in millions of collection letters sent to consumers that attorneys were involved in collecting the debt. The Bureau argues that a “letter sent on law firm letterhead, standing alone, represents a level of attorney involvement to the debtor receiving the letter” and that consumers receiving these collection letters “may reasonably believe that an attorney has reviewed his file and has determined that he is a candidate for legal action.”

The Bureau further argues that WWR attorneys do not 1) review account-level documents, 2) make any individual determination that the balance stated is due and owing, 3) form a professional judgment that a demand letter is appropriate for a particular account, or 4) decide to send a demand letter to individual consumers.

WWR asserts that its “lawyers are involved in and oversee every step of the collection process; communicate with their clients to gather information that the lawyers feel, in their professional judgment, is necessary to evaluate a portfolio of debt and verify the accuracy of representations that the client makes; develop a collections strategy, and oversee the use of technology to identify accounts that should be treated differently, thereby satisfying the meaningful involvement standard.”

insideARM reported on the lawsuit in April 2017, and noted that this was the third debt collection law firm targeted for enforcement by the Bureau.

In June of 2014 the CFPB filed suit against the Georgia law firm of Frederick J. Hanna & Associates. That case was ultimately settled with a consent order announced in December of 2015. insideARM subsequently published an article by Joann Needleman that discussed the significance of the Hanna order and predicted continued oversight by the CFPB over the practice of law in the collection arena.

On April 26, 2016 the CFPB announced it had filed a consent order with the New Jersey debt collection law firm, Pressler & Pressler LLP. Pressler & Pressler issued its own press release about the order.

Both Pressler & Pressler and WWR have insisted they have not violated any laws, and that they have been truthful with consumers. WWR issued this statement in 2017,  

“We fundamentally disagree with the CFPB’s allegations and believe that this lawsuit is the result of our firm’s refusal to be strong-armed into a Consent Order. We are a law firm that is legally allowed, under federal and state law, to provide collection and legal services. We are being truthful with consumers and factually accurate when we use our name and our company’s letterhead for proper debt collection activity. WWR has taken every reasonable step to ensure that it collects on consumer debts in compliance with those statutes and to ensure that every statement made to consumers is accurate and not misleading. I’d also like to emphasize that the CFPB’s two-and-a-half-year investigation into our firm did not uncover a single instance of consumer harm.

WWR cooperated fully with the CFPB since it initiated its Civil Investigative Demand (CID) in September 2014, producing hundreds of thousands of pages of documents and more than 1 million collection phone call recordings, and submitting to two investigational hearings. This was done at significant cost to WWR, but with the goal of proving to federal regulators that its attention to compliance and its by-the-book ethical practice of law is exemplary.

It is not unusual for any large entity in the financial services industry to receive a CID from the CFPB. WWR, which has 65 attorneys and more than 650 employees, represents many of the largest financial institutions in the U.S. in bankruptcy, consumer and commercial collections, litigation, and real estate default matters. WWR has not been the subject of any other formal government actions or disciplinary reviews.

The result of the CFPB’s investigation of our law firm is based on its interpretation of the law, and not on any actual violation of federal or state laws or regulations as they are written today. We will continue to vigorously defend WWR’s honest, ethical and compliant collection practices, and we look forward to our day in court.”

Moving forward

The day in court is finally coming for WWR. Earlier this month, Judge Donald C. Nugent in the U.S. District Court for the Northern District of Ohio denied a Motion for Summary Judgment by WWR and sent the case to trial.

The company had filed its Motion citing 1) statutes of limitation applicable to the claims, 2) its communications with consumers truthfully identified WWR as a law firm as required under the FDCPA and the Ohio Rules of Professional Conduct, and 3) that the Bureau is not entitled to restitution or disgorgement damages based on the deposition testimony of a witness who stated, “I have no idea if it is all ill gotten or partly ill gotten.”

Judge Nugent concluded that no claim in this action will be completely foreclosed on statute of limitations grounds, and whether the communications at issue are misleading is a question of fact that must be determined by a jury. You can read the judge’s order here. The trial is set for May 1, 2018.

Some drama

A court filing last week revealed some drama regarding potential testimony in this case. WWR has indicated it will call former CFPB Director Richard Cordray as a witness in the case because 1) he was the Attorney General of Ohio in 2009 and 2010 when that office retained the firm to collect debts owed to the State of Ohio, and 2) as CFPB Director, he later authorized the filing of the lawsuit against WWR.

The CFPB moved the Court for a pre-trial ruling to exclude Cordray, claiming that evidence he could offer from the 2009-2010 period is not part of the period in question (the lawsuit specifically references letters sent after July 21, 2011), and therefore will confuse the jury, unfairly prejudice the Bureau, and waste time.

The CFPB also argues, “…that the Ohio Attorney General never identified any concerns with WWR’s collection practices or demand letters in 2009 or 2010 when Mr. Weinberg was special counsel likewise should be excluded,” and that “Mr. Cordray’s testimony and other evidence responsive to these lines of questions are protected from disclosure by the attorney-client privilege, the deliberative process privilege, and the attorney work product doctrine.”

You can read the full Motion, including additional arguments by the parties, here.

insideARM Perspective

This case proceeds against the backdrop of the advancing Practice of Law Technical Clarification Act of 2018 (formerly of 2017). H.R. 5082 amends the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of debt collector. Last month the House Financial Services Committee completed markup of the bill and approved it to move on. insideARM wrote about this Act on March 19, 2018, just before it moved out of Committee.