Archives for December 2018

As expected we saw some big robocall news out of D.C. yesterday. The FCC has made two rulings today that will impact American cell phones users in a big way.

First, the FCC confirmed that text messages remain “information services” and not “telecommunications services.” Had the FCC shifted the classification of text messages it would have meant wireless providers would be required to connect text messages without regard to content–just like it they must do (mostly) with telephone calls. By keeping text messages defined as “information services” the carriers can continue culling out spam messages and refusing to deliver messages that don’t meet certain requirements.  A press release on text messages remaining information services is available here. 

Next, the FCC adopted its proposed recycled number database. Notably Commissioner O’Reilly seemed to believe that the database would not be necessary if the TCPA were properly read to allow calls with the consent of the “intended recipient” of the calls. But the Commission as a whole looked at larger concerns regarding preventing calls to wrong numbers. As I reported yesterday, the Report and Order will require callers to pay for the database on a pay-per-view basis. 

A press release on the recycled number database can be found here. 

We’ll provide an update when the actual draft items are released.

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

The District of Columbia City Council will vote on December 18, 2018, on a bill that out limit wage garnishments. The bill is B22-0572, also known as the Wage Garnishment Fairness Amendment Act of 2017. 

According to the bill’s legislative summary, it would “establish limits on the amount that can be garnished from an individual’s wages by factoring in gross wages and disposable wages. It prevents wage garnishment from individuals making less than a living wage and requires notice to be provided to those whose wages will be garnished.”

The bill was originally introduced on November 7, 2018 and was immediately referred to the Committee on Judiciary and Public Safety. A public hearing on the bill was held in June of this year where witnesses from both sides of the aisle — consumers, consumer advocates, and industry members — spoke or provided written statements. A committee report filed in November mentioned that the debt most likely to result in garnishment is credit card debt.

According to the Fiscal Impact Statement, the bill “will reduce District revenues by $140,000 in fiscal year 2019 and $560,000 over the four-year financial plan.”

SAN FRANCISCO, Calif. — LiveVox Inc., a leading provider of cloud contact center solutions, announced that it will host a webinar alongside leading BPO, Performant Financial Corporation, to discuss how access to customer data will be the new competitive advantage in 2019.

Contact centers have to be faster and more flexible than ever before. This is especially true for contact centers operating in competitive and heavily regulated industries.  Being able to quickly implement highly customized engagement strategies can make or break a business opportunity. 

Yet, speed-to-market has long been handicapped by multi-step, multi-week, multi-integration, implementation times – averaging weeks to even months. 

At the heart of the delay is access to data. In fact, in an era of Big Data, access to data has become more, not less complex. But recent innovation is changing that. 

Cloud is helping simplify access to data and empowering contact centers, like Performant Financial Corporation, to shrink their speed-to-market by +60%. In addition, this new approach to leveraging customer data is providing businesses a practical path to evolving from primarily voice strategies to ROI-driven digital engagement.

Hear from Performant Financials’ business analyst, Edward Abreu, as he joins contact center solutions expert Boris Grinshpun, as they discuss how cloud is changing the way contact centers remain nimble and competitive in today’s ever-changing market.

About the event:

• EVENT: How a BPO Contact Center Became +60% Faster at Launching New Business Lines
• DATE: Thursday, December 13^th at 10am PT/ 1pm ET
• REGISTER HERE
• SPEAKERS: 
  • Boris Grinshpun, Director of Digital Solutions, LiveVox
  • Edward Abreu, Business Analyst, Performant Financial Corporation

TORONTO, Ontario — With more than 20 years of experience in the collection industry, Mr. Callender will be responsible for all national collections operations activity, including operational strategy and program management to ensure the highest level of consistent results delivery.

Mohsen Monavari, President and CEO, said, “We are delighted to welcome Dave to the DCA team and look forward to his leadership in revenue operations.” Overseeing multiple programs spanning first-party, outsourced services, including care and retention programs to third-party collections, Dave has managed key portfolios with all of the major banks and telcos in Canada.

Monavari added, “Dave’s leaderships skills and problem solving honed over several senior and executive management positions over the years singularly qualify him to lead our operations team in this highly competitive industry.”

About DCA

Debt Control Agency (DCA) is a leading national provider of collections and receivables management services.  With contact centres in Ontario and Quebec, DCA is headquartered in Toronto. We are nationally licensed and provide consumer and commercial debt recovery services to our clients in various industries. 

DCA is results driven and focused on servicing our clients with the highest collection recovery rate while maintaining the best standards of customer responsiveness in the industry. Keeping this in mind, we continually invest in the company and our greatest asset, our people. DCA staff is thoroughly trained during on-boarding as well as continuously subjected to standardized testing and monitoring. Our senior management team has held key positions within the collections industry and have over 100 years combined experienced. 

For more information about DCA visit: www.debtcontrolagency.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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Maloney et al. v. Alliance Collection Agencies, Inc., No. 17-CV-1610 (E.D. Wis. Nov. 6, 2018)

Issue: Does sending a second validation letter within the 30-day validation period of the first validation letter confuses the consumer as to their 1692g rights?

Conclusion: Yes

Defendant collection agency sent a letter, including a notice of the recipient’s 1692g validation rights, to plaintiff. Within the 30 day validation window, defendant sent a second letter to the consumer listing the same debts as the first letter as well as additional debts. The second letter also containing the notice of 1692g validation rights. Court denied defendant’s motion to dismiss, finding that it is reasonable that the least sophisticated consumer could be confused by the second letter, specifically about whether the validation rights in the second letter apply only to the new debts listed or also to the debts listed in the first letter.

Post v. Hodges Law Office, PLLC, No. 3:18-cv-358 (E.D. Va. Nov. 9, 2018)

Issue: Does a consumer’s request for debt validation impose a duty on a debt collection law firm to dismiss a collections suit against the consumer?

Conclusion: No

Plaintiff  sent a validation request to defendant, a debt collection law firm, after the firm filed a collection suit was filed against plaintiff. Plaintiff then filed a debt collection suit against defendant for not dismissing lawsuit after receiving the debt validation request. The court granted defendant’s motion to dismiss. In its decision, the court noted that while a debt collector cannot file a collection suit in response to a consumer’s validation request, the request does not impose a requirement for the debt collector to dismiss an already-filed lawsuit.

Brown v. Alltran Financial, LP, No. 18-cv-409 (E.D.N.Y. Nov. 14, 2018)

Issue: Is a debt collection letter false if the amount saved by the consumer per a settlement option is off my $0.01?

Conclusion: No.

Defendant collection agency sent a letter to the consumer listing three different settlement options, with each option providing the dollar amount the consumer would save. Plaintiff sued collection agency alleging that the savings amount was false because it was off by one penny. The court granted defendant’s motion to dismiss the case, finding that plaintiff’s interpretation was bizarre and idiosyncratic. According to the court, “no reasonable trier of fact could find that a single cent would be material in making a decision to repay or not repay a debt within six months.”

Today, the FCC is set to meet and, presumably, to approve a Second Report and Order creating a database of re-assigned numbers. The report and order is available here. 

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The database is being created to help callers avoid calling wrong numbers. When a phone number is reassigned currently there is no way for a caller to know that–unless the consumer informs the caller their phone number has changed hands, which they rarely do. So there have been a bunch of unwanted “robocalls” sent to the new owner of someone else’s phone number lately. (You may have noticed.)

While some might say that getting a few stray calls for a former subscriber is just the cost of getting a new phone these days, the FCC disagrees and plans to issue regulations mandating carriers supply phone numbers and dates of “permanent disconnection” to a third-party administrator who will make this information available to callers on a pay-per-view basis.

Why would callers pay to prevent wrong number phone calls? Because they’re good people, of course.

Just kidding.

The database will help callers avoid liability under the Telephone Consumer Protection Act (“TCPA”) that, as currently interpreted, makes callers (sort of) strictly liable for calls made to a number that has recycled without their knowledge. (I say sort of because callers can rely on a former subscriber’s consent for a ‘reasonable” period of time, but no one really knows how long that is just yet.)

So here’s a high-level review of the Report and Order cribbed from the FCC’s fact sheet:

• It will establish a single, comprehensive reassigned numbers database that will enable callers to verify whether a telephone number has been permanently disconnected, and is therefore eligible for reassignment, before calling that number;
• It will require a minimum aging period of 45 days before permanently disconnected telephone numbers can be reassigned;
• It will require voice providers that receive North American Numbering Plan numbers and the Toll Free Numbering Administrator to report on a monthly basis information regarding permanently disconnected numbers to the database.
• An independent third-party administrator will be selected, using a competitive bidding process, to manage the reassigned numbers database.
• The Administrator will establish the database by collecting start-up costs from providers using the same type of mechanism as other numbering administration costs.
• The Administrator will take steps to ensure that the data contained in the database are used appropriately and accessible to the widest possible array of users.

Here’s the key stuff from the order itself:

• “Specifically, we require providers to report the last date of permanent disconnection associated with their allocated and ported-in numbers to a reassigned numbers database administrator. A caller can then, if it chooses, use the database to determine whether a telephone number has been permanently disconnected after a date certain and therefore is no longer assigned to the party the caller wants to reach.
• We find that the database needs only the date of the most recent permanent disconnection of a particular number in order to enable a caller to determine whether that number has been permanently disconnected since a date provided by the caller.
• We establish a minimum aging period of 45 days…

So a caller using the database will only know whether or not a number has been disconnected since consent was supplied–meaning you better track dates you obtain consent folks. Additionally, note that numbers cannot be reassigned for at least 45 days now. That should build in some time for callers to use the database without calling anyone who has been assigned a new number. (Although one wonders who will be liable if a number is reassigned prematurely.)

Here’s the bad stuff for callers to keep in mind:

• We decline to defer consideration of the database until after we address issues raised in ACA International; nor do we address in this Report and Order how a caller’s use of this database would impact its potential liability under the TCPA for calls to reassigned numbers.
• Database Operation Costs. We believe that, over the long term, callers should pay for the database. Thus, the Administrator’s costs to operate the database following its establishment will be recovered through usage charges that the Administrator will collect from callers that choose to use the database

So the caller is going to have to pay to play here–each time they want to check a number they will be assessed a fee established by the administrator. Hmmm.

Oh, here’s a picture of how it will work:

Notice that the FCC specifically and expressly refuses to opine how the use of the database might cut down on TCPA liability. It could have, for instance, created a safeharbor. But it didn’t. Moreover, the Commission specifically determined to move ahead with the recycled number database before a ruling on the current TCPA Public Notice. 

So that brings us to the intriguing stuff:

• We anticipate that use of the database will be a consideration when we address the reassigned numbers issues raised in that decision [the Public Notice]

Wow. Let that sink in.

The FCC is telegraphing that whatever it does with recycled numbers in the Public Notice, use of the recycled number database will play a role. Does that mean that the FCC intends to maintain the rule that a caller can rely on the consent of a former subscriber for a “reasonable time” and that the use of the database might inform what a reasonable timeframe means?

Most of us in TCPAland had hoped and expected the FCC to adopt the “expected recipient” definition of “called party.” But that definition would not incentivize use of the recycled number database because the consent needed by the caller would be the consent of the person it was trying to reach– database or no database. So one possible reading of the FCC’s Report and Order is that it plans to reject the expected recipient approach after all. Uh oh.

Then again the FCC has been famously unpredictable in recent years, careening from one order to the next. This isn’t the MCU folks. We’ve seen the Commission lean one way in one order and then swivel completely the other direction in the next creating continuity errors left and right–remember Broadnet?

In any event, the roll out of the recycled number database will be interesting to watch and we’ll keep you posted on developments as the develop.

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

PHOENIX, Ariz. — Empereon-Constar recently held their annual employee holiday food drive. A joint effort between Empereon-Constar’s three Phoenix locations, this annual event supports St. Mary’s Food Bank Alliance and helps feed local families in need.

Empereon-Constar employees collected a total of 4,054 pounds of food, which will allow St. Mary’s Food Bank to provide 3,378 meals to those in need in our community. This year’s donations exceeded expectations and surpassed last year’s donations by 686 pounds.

“I am excited by the outcome of this year’s food drive; to exceed our goal is a great accomplishment,” said Martha Hewitt, Vice President, Client Services, Empereon-Constar. “I am proud and amazed by our employees’ generosity and giving. Knowing their contribution will help feed 3,378 meals to our neighbors in need is an extremely rewarding achievement.”

Food insecurity affects almost 1 in 5 Arizonans. In Maricopa County, over 585,000 people are food insecure and struggle to find enough food to eat (Feeding America, Map the Meal Gap). In response to this need, St. Mary’s helps feed hungry families throughout Phoenix and 13 Arizona counties.

“We are deeply grateful to our employees,” said Travis Bowley, CEO, Empereon-Constar. “Thanks to their commitment, many people in need this holiday season will be helped.”

About Empereon-Constar

Empereon-Constar is a leading business process outsourcing company providing end-to-end customer engagement and customer management solutions for New Sales Account Generation, Customer Care, Risk and Fraud Operations, Collections Operations, QA Agent Call Monitoring, Back Office Administration Support, and Tech Support across the entire customer account lifecycle. Our customized solutions, real-time analytics, and global footprint help our clients achieve their business goals.

Empereon-Constar’s full range of consumer and commercial services includes: lead generation, inbound / outbound sales, account origination, customer care, customer service, technical support, first party collections, recovery collections, credit bureau dispute management, fraud risk management, anti-money laundering, loan servicing and loan processing. Our world-class services and unique global strategy allow us to meet the needs of our client partners across multichannel (email, chat, phone) communication platforms, provide exceptional customer experiences, and consistently deliver world-class performance results, while maintaining the highest level of data security and compliance. For more information, please visit us online at www.empereon-constar.com or www.linkedin.com/company/22345663.

Empereon-Constar portfolio of companies: Empereon Marketing, LLC, Constar Financial Services, LLC, Empereon International, Constar International, and HQC International.

In October 2017, the Federal Trade Commission (FTC) and several states launched Operation Game of Loans to help fight deceptive student loan debt relief scams. Stemming from this program, the FTC settled with Student Debt Doctor (SDD) and American Student Loan Consolidators (ASLC), two Florida-based student loan debt relief companies, over collecting illegal upfront fees and falsely promising to help consumers enroll in government programs to reduce or forgive their student loan debt.

SDD entered into a stipulated judgment with the FTC on November 30, 2018. The stipulated judgment bans SDD from offering debt relief products, prohibits SDD from making misrepresentations related to financial products and services, and prohibits SDD from engaging in unlawful telemarketing practices. SDD must also pay $2.2 million as part of a partially suspended $13 million judgment.

ASLC was charged with misrepresenting that it is affiliated with the Department of Education and its servicers , “trick[ing] consumers into believing that illegal upfront fees of up to $899 were being used to pay off their student loans.” This misrepresentation led to ASLC collecting “$23 million from student loan borrowers by falsely promising loan forgiveness, lowered monthly payments, and reduced interest rates.” ASLC also entered into a stipulated judgment on November 30, containing many of the same prohibitions as the SDD stipulated judgment. ASLC is required to pay $1.3 million as part of a partially suspended $23 million judgment.

insideARM Perspective

These two settlements were entered into right around the time the Secretary of Education Betsy DeVos gave a candid speech addressing the student loan crisis. In this speech, DeVos discussed how over the past ten years, the student loan debt balance has grown exponentially, which is primarily due to an increase in borrower debt load. With student loan debt balances growing rapidly and starting salaries failing to keep up, many borrowers are left an intimidating amount of debt and looking for a way to bear the burden. The FTC’s Operation Game of Loans looks to stop bad actors who attempt to prey on consumers looking for relief.

Today, the Senate voted on and confirmed Kathy Kraninger as the next Director of the Bureau of Consumer Financial Protection (BCFP or Bureau). The vote was split 50-49.

President Donald Trump’s nomination of Kraninger for the top role at the Bureau was first announced back in June of this year. In July, Kraninger underwent a Senate confirmation hearing where she didn’t reveal much. Kraninger’s nomination was approved by the Senate Banking, Housing, and Urban Affairs Committee in August, sending the nomination to the full Senate for a vote. Earlier this month, Senate Majority Leader Mitch McConnell (R-KY) filed cloture for the vote on Kraninger to occur after Thanksgiving break and yesterday we found out that the vote would occur today.

Kraninger’s nomination faced criticism, particularly from Sen. Elizabeth Warren (D-MA) since it was first announced. Back in July, Sen. Warren released a reported entitled Record of Failure; Kathy Kraninger’s Disastrous Tenure at the Office of Management and Budget. Following Kraninger’s confirmation hearing, Sen. Warren submitted ten pages worth of questions for the record to Kraninger. On November 27, 2018, Sen. Warren submitted a letter to her fellow senators strongly urging them to vote against Kraninger’s nomination, in essence stating that Kraninger would continue the work of Acting Director Mick Mulvaney, which Sen. Warren strongly opposes.

During today’s Senate floor proceeding, Sen. Warren reiterated her concerns from the November 27 letter stating that “American families deserve a fighter” at the head of the Bureau, and that Kraninger “is not that person.”

Despite the pushback, the Senate confirmed Kraninger.

Lisa Donner of the Americans for Financial Reform stated,

“The Senate majority has endorsed a CFPB nominee indistinguishable from Mick Mulvaney, who has done his level best to dismantle from within an agency that once won real results for American families hurt by Wall Street and predatory lenders. Kraninger has no track record at all of consumer protection, or of standing up for vulnerable people. To the contrary, at OMB she has played a hidden role in the appalling and immoral family separation policy. Senators who voted for Kraninger have voted to expose American families to greater financial insecurity and abuse at the hands of Wall Street.”

Competitive Enterprise Institute Senior Fellow John Berlau provided this statement,

“The Competitive Enterprise Institute congratulates Kathleen Kraninger on her confirmation as new director of the Bureau of Consumer Financial Protection and commends Mick Mulvaney’s service as Acting Director of the BCFP, formerly known as the CFPB.

In the year that Mulvaney headed the BCFP, he made it responsive to consumers rather than to the bureaucrats and busybodies who thought they knew best and wanted to dictate consumers’ financial choices. Under his tenure, the BCFP both punished wrongdoers and ensured there was due process for regulated companies. This was in sharp contrast to Mulvaney’s predecessor, Richard Cordray, under whose tenure the bureau arbitrarily and retroactively applied regulatory punishments against certain financial firms without due process.

We believe Kraninger will continue the Bureau’s new direction of being tough but fair and promoting consumer choice. Her statements during the confirmation hearing indicated she values a thorough and fact-driven rulemaking process and wants to help bring down the cost of consumer credit by expanding choice and competition.

We also hope Congress will take Kraninger up on her offer to make the BCFP more accountable by making its budget subject to congressional appropriations and its director subject to presidential removal. Government entities must be answerable to the American people, no matter what political party controls the executive and legislative branches of government.”

During the vote, Acting Director Mick Mulvaney stated during a Consumer Advisory Board conference call, “This may be the last thing I do [as Acting Director], as the Senate is voting on Kathy Kraninger literally as we are on this call… I was not involved in the decision to pick her for the role, though many think I was. However they could not have picked a better person. [I would expect] the transition to be as seamless as a transition can be.”

insideARM Perspective

More than a year after former Director Richard Cordray stepped down, we have a new Bureau Director. We now wait to see what Director Kraninger will do. Most notably for the ARM industry, all eyes are on whether or not the third party debt collection rules, first announced back in 2013 and most recently set to be released in March 2019 after many delays, will continue on track, be delayed, or be scrapped altogether. Stay tuned, folks.

In a November 21, 2018 decision, the District Court for the District of Columbia found that the District of Columbia’s (DC) licensing requirements are preempted by federal law for two types of federal student loans, but not for a third. The case at issue is Student Loan Servicing Alliance v. District of Columbia, No. 18-cv-640 (D. D.C. Nov. 21, 2018). The plaintiff (SLSA) is a national membership organization of student loan servicers.

The decision is 70 pages long and goes into detail as to the analysis of applicable constitutional law, including all arguments that the court dispensed with. This article will discuss only the provisions the court found persuasive.

Brief Background

The federal government initially created two types of federal student loan programs: the Federal Direct Loan Program (FDLP) and the Federal Family Education Loan Program (FFELP). The federal government acts as the lender for FDLP, and thus owed these loans. FFELP loans, on the other hand, are issued by private lenders and the federal government acted as a reinsurer.

In 2008, Congress passed the Ensuring Continuing Access to Student Loan Act, which allowed the U.S. Department of Education (ED) to purchase FFELP loans for a limited time. ED purchased 3.91 million loans worth $94 million. The government now acts as the lender/owner of those loans. This split the two federal student loans into three: FDLP loans, ED-owned FFELP loans, and privately owned FFELP loans.

In 2010, Congress discontinued the FFELP program through the Health Care and Education Reconciliation Act. Currently, over 90% of new student loans are made through FDLP.

Congress granted regulatory authority for federal student loans to ED and specifically granted authority to the Secretary of Education to evaluate, contract with, and regulate its third party servicers.

The District of Columbia enacted the Student Loan Ombudsman Establishment and Servicing Regulation Amendment Act (DC Law) in 2016 “in response to increasing evidence of misconduct of student loan servicers.” This resulted in DC creating a licensing requirement for student loan servicers.

SLSA filed this lawsuit challenging the constitutionality of the DC Law, specifically the licensing requirement for student loan servicers, arguing that such a requirement is preempted by federal law.

The Court’s Decision

Preemption can be found under multiple different tests and standards, many of which the court raised and dismissed in its decision. However, the court agreed with SLSA in one of the arguments, and thus found that DC’s licensing requirement is unconstitutional for FDLP and government-owned FFELP loans, but not for privately-owned FFELP loans.

SLSA persuaded the court that conflict preemption exists in this case. Conflict preemption nullifies a state law when, among other things, a conflict exists between the state law in question and some Congressional purpose or goal.

The court found that the DC licensing requirement “impermissibly second-guesses” the federal government’s authority to select its third party servicers. Congress’s intent was to allow the Secretary of Education exclusive authority to determine the qualifications of and contract with its third party servicers. The DC licensing requirement creates its own set of requirements. If a servicer does not meet these requirements, it will not be granted a license in DC. According to the court, this creates a “second check” and adds additional requirements for third party servicers selected by the Secretary of Education, thus conflicting with the Secretary’s exclusive authority. Due to this, the court found that conflict preemption exists between the DC Law for the two types of government owned loans: FDLP loans and government-owned FFELP loans.

However, the court refused to extend the finding of conflict preemption to privately-owned FFELP loans. The Secretary of Education does not choose third party servicers for privately-owned FFELP loans; the private lender does. While the court agrees with SLSA that Congress had the intent to provide uniformity in the servicing and administration of FFELP loans, the court found that the DC licensing requirement supplements the baseline qualification requirements for third party servicers — but does not obstruct or impede the Congressional purpose.

insideARM Perspective

This decision may have a big impact on student loan servicing. While the decision analyzed only the DC licensing requirement, the court noted in its opening paragraph that this decision can be inferred to other states as well. In other words, if the Secretary of Education has the exclusive authority to vet and select third party servicers for FDLP and government-owned FFELP loans, then any state’s licensing requirements second guess and impede that authority.

The ARM industry is subject to many federal and state laws and regulations. This decision prompts an interesting question: could any of the myriad state requirements for debt collectors be preempted in a similar way?