Archives for March 2019

Washington is gearing up to be the next state to implement a privacy law, following California’s Consumer Privacy Act. In Washington, Senate Bill 5376 — formally titled as “an act relating to the management and oversight of personal data,” or the “Washington Privacy Act” for short — passed in the Washington State Senate and has been sent to the state’s House of Representatives for consideration.

The bill was introduced in the state Senate on January 18, 2019. It was referred to the Committee on Environment, Energy & Technology, where it passed on February 14. After making its way through the Ways and Means committee, the bill was ultimately passed in the senate on March 6, 2019. It was sent to the House of Representatives on March 8 and referred to the Committee on Innovation, Technology & Economic Development.

The first scheduled public hearing in the House of Representatives is set for March 22 at 10am Pacific. If the bill passes in the House, it would become effective in December 2020.

The text of the bill before the House of Representatives can be found here. The bill contains hints of both Europe’s General Data Protection Regulation and California’s Consumer Privacy Act. It allows consumers to be informed about what personal data is collected and whether that information is sold. It also allows consumers to request correction of inaccurate data and deletion of their personal data. Consumers can also object to the use of their data in direct marketing.

The Washington State Legislature website offers the ability to comment on the bill.

insideARM Perspective

While Europe started the wave of broad privacy protection, it seems the west coast is leading the pack in the United States. Companies are eagerly keeping their eyes on California’s privacy law, which has undergone a round of public forums and a Senate Judicial Committee hearing over the past couple of months, in order to get more information on how to implement and comply with the new requirements. The Washington bill discussed above has seen quick movement through its state senate, where it was passed a little over two months after introduction. If that trend continues in Washington’s House of Representatives, we could see the next state privacy law passed by summer.

Well that was scary.

One would think that using an outbound manual call process that included physical desk phones and that required agents to enter all 10 digits of a phone number on a keypad in order to launch a call would be TCPA-proof. Think again.

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As one defendant just found out, using a software-enabled workflow tool that also has dialing capabilities as part of a manual process can lead to dire TCPA consequences. This is true even where agents are ultimately putting fingers to keys to launch calls. Luckily, however, the defendant in Folkerts v Seterus, Inc., Case No. 17 c 4171, 2019 U.S. Dist. Lexis 42347 (N.D. Ill. Mar. 15, 2019) avoided liability when the court went on to determine that a dialing system must utilize random or sequential number generation to qualify as an ATDS under the TCPA.

There is lots to unpackage here, so let’s dive in.

Like many companies, the Folkerts defendant used several software systems in the course of its outbound calling efforts. For predictive mode calls, the defendant used a common predictive dialer platform – a product the court repeatedly characterized as an ATDS for some reason. For manual calls, however, the defendant used manual desktop phones, made by the same company that supplied the predictive dialer– Czar says that’s a no-no folks – and the evidence was clear that it was these desk phones that were used to call plaintiffs. The manual phones did not store any lists of phone numbers and cannot generate random or sequential numbers. Instead, to make a call using a manual phone, a representative picks up the phone and manually dials each digit of the phone number. So far, so manual.

But then things get integrated. The manual phones and the predictive dialer system of the same brand were both linked to SynTelate, “a software program on each representative’s computer through which a representative can log into their manual phone.” Uh oh.

Still, SynTelate does not seem to be a dialer – rather it is a workflow tool allowing “agents to access customer information, the loan databases and the telephone system” to “manage the note taking process.” As used by the defendant, SynTelate showed an agent on the computer screen the number that defendant wanted an agent to dial – the agent must then dial all 10 digits. But defendant’s policy and procedure manual (mistakenly?) described SynTelate as “a predictive dialer system. which interfaces with our servicing system.” *Face palm* (When asked about this discrepancy, the manager of defendant’s Contact Strategy Department, explained: “I would say that is an error. I do not know why they say that….”) And plaintiff’s expert opined that the company that made the workflow software also makes predictive dialers: “[t]he material published by Seterus and the manufacture[r] clearly show that it is a predictive dialer.” Oh, bother.

At summary judgment, plaintiff’s entire case rested on asking the court to find that the SynTelate workflow tool was an ATDS “used” to “make” the manual calls. In addressing the core issue of ATDS usage, the court first rejected the defendant’s argument that no reasonable jury could find that SynTelate was used to call plaintiffs’ phones. In the court’s view, testimony that SynTelate “make[s] the queueing happen for manual outbound calls” and that representatives “log into their manual phones through SynTelate” was sufficient to treat SynTelate as the system used to make the calls at issue.

Let that sink in, friends. The TCPA governs calls “made” using an ATDS. The equipment used to make the calls here seem to be desk phones – not the workflow tool, which did not dial plaintiffs’ numbers. Yet the court is focused on how the numbers were presented to the agents to begin with. Perhaps the critical testimony related to “logging in” to the manual phones through the software – that is a little weird – but what a leap the court takes in suggesting that software that merely presents phone numbers was “used” to make calls. Unnerving to say the least.

The scary analysis is not done yet, though. Next, the court concludes that the workflow tool has the “capacity to dial numbers,” even if that capacity was not used with respect to the plaintiffs. Here, the court would not allow the defendant to escape the contents of its errant policies and procedures. Although the statements in the manuals are not binding on the defendant, they are evidence to be weighed against the testimony of the defendant’s witness. The court finds that the jury could disregard the 30(b)(6) witnesses’ testimony in favor of the manuals if they so decided. Eesh.

But, just when things are at their darkest, a little St. Patrick’s day luck finds the defendant. The court reads the TCPA as requiring random or sequential number generation – a pretty reasonable interpretation, since that is what the statute actually says – and finds there is no evidence that SynTelate can “presently” generate numbers in that fashion. And just like that, Folkerts is a great case for defendants.

In addressing the issue of ATDS functionality, the court concludes that: (1) to be an ATDS, the equipment at issue must have the present, as opposed to merely the potential, capacity to function as an ATDS; and (2) equipment that merely has the ability to dial numbers from a stored list, as opposed to producing numbers using a random or sequential number generator, does not qualify as an ATDS. Folkert at *18. Wonderful! Thus, as Folkertsexplains, a “predictive dialer” no longer automatically qualifies as an ATDS and “the ‘potential capacity’ of defendant’s systems is irrelevant; in other words, using a system that could function as an autodialer only if some other software was added to it does not constitute use of an ATDS.” Well, pop the champagne and cue the kazoos!

After teeing up the legal issues thusly, it was a short road to concluding judgment was proper for the defendant. Plaintiff had no evidence that either SynTelate or the manual phone had the present capacity to randomly or sequentially dial numbers. And plaintiff cannot prevail on a TCPA claim by demonstrating merely that defendant owns an ATDS – it must prove usage of the ATDS. Plaintiff did not. So, Defendant wins.

Folkerts will be widely heralded as a big win for TCPA defendants – and it is – but there is also a dark side to the decision that shows why TCPA compliance officers and call center operators must remain ever vigilant.

A few nuanced takeaways here. Although the court found that random and sequential number generation is required to qualify as an ATDS it also, somehow, found that Defendant’s predictive dialer is an ATDS, which is weird because: (1) that issue was not before the court; and (2) the dialer (which I am not allowed to name in  this piece– hate that) is one I am well aware of and it does not randomly or sequentially generate numbers. Nonetheless the court treated the system as if it were certainly an ATDS. See Folkerts at *18-19 (“Certainly, once the [predictive dialer] is employed, defendant is able to make autodialed calls…”) Weird and weird. The court also finds that errant descriptions of ATDS capabilities within a defendant’s manuals can be used as evidence of a system’s capacity; even if the 30(b)(6) testimony is contrary.

But most importantly – Folkerts is a first of its kind decision that holds, rather directly, that if a workflow tool has the capacity to operate as an ATDS a defendant can be held liable for “using” an ATDS even with a manual process that utilizes fingers on keys and physical desk phones to launch calls. While that worked out ok for defendant in Folkerts – the court rejected Marks and followed the Pinkus line of reasoning requiring random and sequential number generation – another court following Folkerts’ reasoning on workflow software might yet reach a different conclusion on ATDS functionality – and that could have far-reaching and devastating consequences for a defendant. (Any of you with call centers still using a dialer program as your workflow tool in your manual process may want to give me a call right about now.)

Stay safe out there TCPAworld.

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP — and all insideARM articles – are protected by copyright. All rights are reserved.  

BUFFALO, N.Y. — ABC-Amega, a global commercial receivables management firm headquartered in Buffalo, NY, is pleased to announce that CEO, David Herer, has been reappointed to the U.S. Department of Commerce Trade Finance Advisory Council (TFAC). 

The TFAC was established in 2016 by the International Trade Administration (ITA) and re-chartered in August 2018. The TFAC serves as the principal advisory board to the Secretary of Commerce on matters relating to access to trade finance for U.S. exporters. Herer is one of twenty members who will continue to serve on this board.  In his role, David provides counsel on issues and concerns that affect trade finance in the United States. 

“The work of the Trade Finance Advisory Council is important to U.S competitiveness, and trade policy is a vital concern of our clients,” said Herer. “I am thrilled to be part of this board for another term and continue this important work.” he added.

About ITA

The International Trade Administration (ITA) is the premier resource for American companies competing in the global marketplace. ITA has 2,100 employees assisting U.S. exporters in more than 100 U.S. cities and 72 countries worldwide. For more information on ITA visit www.trade.gov. For information on the ITA’s Strategic Partnership Program, please visit: http://export.gov/CSPartners.

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About ABC-Amega

Founded in 1929 as The American Bureau of Collections, ABC-Amega is an award-winning commercial collections agency specializing in global debt collection and accounts receivable management solutions.

ABC-Amega partners with clients to improve and manage credit, cash flow and customer retention with services in third-party commercial debt collection, first-party accounts receivable outsourcing, industry credit group management, and credit and A/R management training and education. The firm is also a certified member of the CCA of A, dual-certified by the CLLA/IACC and is a platinum partner of the Credit Research Foundation (CRF).

For additional information, please contact info@abc-amega.com or visit www.abc-amega.com.

This Amendment of Solicitation, dated March 6, 2019, makes a number of updates to the Department of Education’s (ED or FSA) Enhanced Servicing Solution RFP, including setting a March 27th deadline to sumbit bids. The previous deadline was “TBD.” insideARM described FSA’s three new NextGen solicitations (R0005, R0007 and R0008) here on January 16, 2019. This Amendment concerns R0005.

The revised Solicitation refines the requirements for post default collection activities, including the addition of references to skip tracing. Under the heading “Digital engagement layer,” the following was added: “Solution shall provide Skip Tracing tools to identify updated contact information for bad postal mail and bad phone numbers until another solution is capable of such needs.”

Under the heading “Business process operations,” the sentence “This is an optional task” has been added, along with other changes (noted in bold):

Business process operations: This is an optional task. Solution may serve as the sole business process operations (both contact center support and back-office processing) provider for all customer accounts as they are migrated onto the new servicing platform until the multiple vendors to be awarded under the separate Business Process Operations solicitation are fully operational. Once the Business Process Operations vendors are fully operational, no less than 80% of customer accounts will be re-assigned to the separate Business Process Operations vendors. The percentage allocated to this Solution may increase, at the discretion of ED, in the public’s interest. The solution will cease providing Business Process Operations no more than 12 months after the separate Business Process Operations vendors are fully operational. 

TransitionalServicing-related contact center support: Solution shall be equipped to provide world-class customer experience in responding and resolving servicing-related inbound customer inquiries across multiple channels (e.g., phone, email, chat, social media, SMS/text, fax) across the entire financing lifecycle, and executing outbound outreach as directed. This includes servicing-related support currently provided by multiple current FSA call centers, including but not limited to, FSA Information Center (FSAIC), Default Resolution Group, Borrower Defense Customer Support, servicers, and private collection agencies (PCAs). Refer to Attachment “13 – Existing FSA Contact Centers (Not Exhaustive)” and https://studentaid.ed.gov/sa/contact for a broader list of current contact centers.

There are numerous references to “servicing related” that have been changed to “transitional.” This means the bidder chosen for the Enhanced Servicing Solution will provide BPO services while FSA issues an RFP and hires multiple BPO vendors which may take up to twelve months to four years because the term of this “transitional” contract is two base years plus an additional two option years.

Under the Milestones section the Amendment clarifies,

“Solution shall begin migrating all existing customer accounts, except for DMCS and Perkins, to the Enhanced Processing Solution no later than six months after award”…and “shall complete migration of all existing customer accounts, except for DMCS and Perkins, by no later than ten (10) months after the start of the migration.” (The migration timing for DMCS and Perkins was updated to be completed no later than 16 months after award.)

The Amendment also clarifies,

“If optional task is exercised, establish transitional business process operations no later than six (6) months after award.”

Under the Expected Volumes section:

Customer outreach and communications – inclusive, though not comprehensive, of servicer, private collection agencies, and most other FSA contact center (e.g., FSAIC, Ombudsman, DRG, Student Loan Support) volumes:

Inbound debt collection communications

• 3148 million inbound calls received annually, with an average handle time of 7 minutes

Outbound communications

• 309 million outbound calls initiated annually, 282 million are collections-related

On Page 65 the Amendment adds the requirement of a Staffing Plan:

Offeror shall submit a Staffing Plan that explains their execution strategy and details their support for the EPS system and any transitional tasks, including:

• Personnel hiring, management, and retention plan, and
• Employee training and coaching approach.

There is an un-mentioned hurdle to accomplishing the staffing plan; security clearance. It’s unclear how any servicer will be capable of meeting the staffing requirements in the timeframe expected.

insideARM Perspective

According to my math, the call volumes contemplated in this RFP require approximately 12,000 FTEs for debt collection alone. (Note: While the RFP estimates 48 million inbound calls to average 7 minutes, no estimated call time is provided for outbound. I used 3 minutes. Also, I’ve added 25% to the required FTEs in order to account for management and supervision.)

Here’s the thing. All contractor staff, in order to work on the federal student loan contracts, require security clearance. Sources tell me that this clearance goes through the Office of Personnel Management (OPM), that there is currently a backlog of over 600,000 applications, and it currently takes, on average, 4 – 6 weeks to receive a security clearance for one collector. (Note: While the RFP does not breakout the number of inbound debt collection calls vs. servicing calls, as it does for outbound, I’ve kept the full amount for this calculation because all employees require security clearance.)

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Also, the rule used to be that an employee could work while waiting for the clearance to process. This rule was updated in July 2018, so that the work-while-waiting ability has been eliminated. While one can imagine the rationale for this change, one could also conclude that meeting the needs of this contract in the timeframe required will be virtually impossible.

Across all PCAs there had previously been a total of approximately 18,000 FTEs. Sources estimate the number is now closer to 3,000 because of the loss of contracts and work delays while this matter has spent several years in litigation). Security clearance was an issue as collectors needed to be replaced, but an entire workforce of clearances was not required at once, as will will be the case to stand up this new contract.

In order to estimate how many months (years?) it might realistically take to process all of the required clearances, I reached out to OPM to ask:

a) Can you confirm this backlog number?

b) Can you estimate how long you expect it will take to clear the backlog — or do you expect this to be a perpetual queue? 

c) Can you estimate the number of hours required to complete one clearance for a debt collector? 

As of the time of publication, OPM has not responded.

UPDATE: Friday March 15 at 3:30pm. Per an OPM spokesperson, “The backlog you refer to, as of Monday (3/11), was 542,000 and dropping. The goal of ‘Steady State’ we are trying to reach is between 220,000 and 250,000, and at the rate we are going we project to be at ‘Steady State’ in June of 2020. As far as the number of hours required to complete one clearance for a debt collector, we do not have that data because every case is unique.”

Meanwhile, on a related note: As ordered last week by Judge Thomas Wheeler at the Court of Federal Claims, on Wednesday the Department of Education submitted the Administrative Record (AR) related to the cancellation of Solicitation No. ED-FSA-16-R-0009. That AR, however, has been sealed at ED’s request. ED was also supposed to submit the AR regarding its Next Generation Solicitation on Wednesday but requested an extension to yesterday. That request was granted. I suspect that too will be sealed. So we won’t know for some time the details behind ED’s justification for 1) cancelling the procurement it was prohibited from canceling and 2) bundling debt collection servicing with other student loan servicing activities in NextGen. I wonder why it’s such a secret.

UPDATE: Monday March 18 at 8:30am.

On Friday afternoon March 15th FSA published the following update regarding NextGen Solicitation R0007, dubbed the ‘Optimal Processing Solution’: “The March 25, 2019 due date for proposals has been postponed and will be changed to a future date, to be determined via a forth coming solicitation amendment.” 

On Saturday March 16th the plaintiffs filed a motion to postpone the March 18, 2019 status conference “until later in the week after [ED] has decided which portions of the record do not merit protection and filing under seal, which will enable protesters’ clients to see the unprotected version of the record, evaluate ED’s representations and share their views with their counsel… At present time, undersigned is optimistic that the Government will file public versions of the administrative record on Monday and, if that occurs, a continuance until Wednesday afternoon would be welcome. If the Government is unable to file the public version of the record until Tuesday, we would request until Thursday afternoon for the hearing.” 

A new quarterly report to Congress on the Internal Revenue Service’s (IRS) Private Debt Collection (PDC) Program shows continued success. Since the third iteration of the PDC Program was implemented, it brought in total revenue of over $130.6 million. Less the overall costs of the program, which were $77.6 million, the program’s latest net balance is $52.9 million. The report focuses on Fiscal Year 2019, which begins on October 1 for the federal government, through December 13, 2018.

The IRS has contracts with four collection agencies for this program: CBE, ConServe, Performant, and Pioneer. The number and balance amount of receivables placed among the four agencies seems to be a roughly even spread.

CBE takes the crown for most dollars collected with a whopping $11.59 million in total payments. This is $1.3 million more than the amounts collected by Pioneer, who came in second with $10.26 million. Performant collected $10 million and ConServe collected $9.9 million.

CBE also entered into the highest amount of installment agreements at 9,736. ConServe, which trailed on the amounts collected category, had the second highest amount of installment agreements at 7,390.

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insideARM Perspective

Third time’s the charm for the PDC Program. Prior to the current program, the IRS attempted to implement PDC programs on two other occasions. Both times, the programs resulted in a financial net loss to the government according to the report. The 1996 pilot program resulted in a $17 million net loss and was cancelled after 12 months. The 2006 initiative resulted in a $20.9 million net loss.

The last quarterly report of this program showed a positive net balance, and it seems that trend continues. This is despite the IRS’s management of the program, which is less than stellar according to the Treasury Inspector General for Tax Administration report issued about a month prior to the last quarterly report.

Just when you think that you’ve seen the last of the interest disclosure issue out of New York, it rears its ugly head again. Luckily, the Second Circuit has yet again stood by the collection letter sent by the agency, finding no Fair Debt Collection Practices Act (FDCPA) violation despite the plaintiffs’ many attempts to twist and turn the interest disclosure argument. The decision is Kolbasyuk v. Capital Management Services, LP, No. 18-1260 (2d Cir. 2019).

Capital Management Services, LP (CMS) sent a collection letter that stated:

As of the date of this letter, you owe $5918.69. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For more information, write the undersigned or call 1‐877‐335‐6949. 

Plaintiff filed an FDCPA suit alleging that the letter didn’t adequately state the amount of the debt, break down what part of the balance is the principal, nor provide the interest rate or calculations about how to determine the balance at a future date. The Second Circuit noted that plaintiff’s arguments seemed to mirror its decision in Carlin v. Davidson Fink, LLP.

[article_ad] Why is this a problem? The Second Circuit found that CMS’s letter is different from the letter in Carlin, making the old case inapplicable to this instance. In Carlin, the Second Circuit took issue with an estimated payoff amount for a future date when a breakdown of the calculation was not provided. The CMS letter avoids this issue altogether since it explicitly states the amount owed as of the date of the letter rather than a future estimated amount.

Another claim made by the plaintiff was that the letter somehow misleads the consumer to believe that he could pay amount listed as due on a date later than the letter and still satisfy the debt. The court noticed the obvious — the exact opposite is true. The letter clearly states that the balance on the letter is “as of the date of the letter” and that the balance may be greater in the future.

The court also noted that the letter used by CMS “identically tracks” the safe harbor language the Second Circuit adopted for accounts where the balance is subject to change.

Finally, the court found that there is no requirement to provide a precise breakdown of the debt or inform the consumer of the precise interest that might occur going forward. (Which should hopefully be the final nail in the coffin for the Balke issue in case any are still out there.)

insideARM Perspective

Did we just do a time warp back to 2016/2017? Despite the Second Circuit already ruling extensively on the interest disclosure issues (in Avila, Taylor, and DeRosa), it seems prior decisions have not deterred the filing of these claims. At insideARM, we’d talked extensively about the litigation dilemma and how the current structure of the FDCPA makes debt collectors easy targets to line pockets with settlements. When will enough be enough? How many times does the Second Circuit have to put forward similar rulings with almost identical reasonings on these issues? Do these repeated hyper-technical actions really protect consumers from unscrupulous debt collectors, as is the mission of the FDCPA, or are they just clogging up court dockets and wasting everyone’s resources?

Over the weekend John Oliver took on the robocall epidemic in this country with a fantastic–but potentially highly misleading– piece of advocacy on his HBO Show Last Week Tonight.

The bit was hilarious–although the language was certainly blush-inducing for those of us that don’t frequently watch late night television– and Oliver is obviously immensely talented. The bit ended with a giant foam finger pushing a giant red button to launch robocalls at the FCC encouraging it to keep Wheeler-era TCPA regulations in place. It was comedy gold and actually quite a convincing piece of advocacy. But were his various statements regarding robocalls and the federal regulations governing automated calls accurate?  We here at TCPAworld.com decided to dive into the record and find out.

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As you’ll see below, we’re pretty critical of a number of assertions made in the bit. We don’t mean to suggest that Oliver was intentionally misleading people–his objective is to entertain after all– but given how serious the issue of TCPA reform is, reigning in potential misinformation–no matter how benign– is pretty important stuff.  So–ready to dive in? Here we go.

Assertion 1: Robocalls are Infuriating

TCPAworld.com Accuracy Score: Dead on accurate– sort of.

No one cares for true robocalls. Random-fired spam calls are the bane of our telecommunications existence, rendering our phones close to obsolete at this point. And this is not a new problem. When the Telephone Consumer Protection Act (“TCPA”) was passed way back in 1991 Congress recognized that computerized telemarketing messages were the “scourge of modern civilization.”

The first part of the bit focuses on “true” robocalls– IRS scam calls and pre-recorded messages pitching cruises or solar panels at random. Without question those robocalls must be stopped and Congress and the FCC must act to protect our phones.

But the bit quickly shifts away from true robocalls in a most unhelpful way and begins treating legitimate calls made by legitimate American businesses as if they were the same as random-fired spam or scam messages. As we shall see, however, this sort of sleight of hands only works to the advantage of spammers and makes an ultimate solution to the robocall epidemic more difficult to come by.

Assertion 2: Robocalls are the number one complaint to the FCC

TCPAworld. com Accuracy Score: True, but only as far as it goes.

It shouldn’t be forgotten that the FCC is not a general consumer protection organization. Its job is to facilitate interstate communications in the country. And how do we communicate interstate? Our cell phones. And what annoys us most about our cell phones? Right. Spam calls.  So unsurprisingly consumers are complaining most about spam calls to the FCC– what other forms of interstate communication are they using these days? Ham radio interference? The tinny sound of telegraph bursts?

But the point isn’t that consumers complain about “robocalls” more than other kinds of telecommunication disruption– the point is the focus should be on what sort of robocalls are they complaining about. But again, watch for the bait and switch. People call the FCC complaining about scam/spam calls–true robocalls.  But some people–mostly consumer lawyers–want to misapply the TCPA to legitimate businesses making calls on a volume basis (usually because they want to collect the millions in attorneys’ fees available in these lawsuits.) So they point to consumer “robocall” complaints to the FCC to support their lawsuits–even though those complaints are about spam calls and not legitimate calls made using modern dialers.

Again, the problem is definitional. “Robocall” complaints are generally focused on random-fired scam calls. Legitimate businesses do not make those calls.  But consumer lawyers want to sue legitimate businesses (they have real green money in real bank accounts–unlike off-shore scammers). So they label all calls made using automated dialers “robocalls” and act as if consumers are complaining to the FCC in legion about calls from legitimate business. Tricky tricky.

Luckily, a reputable comedian like John Oliver will see right through that bunk right?

Assertion 3: Robocalls are any call using a pre-recorded or artificial voice or any call where a machine automatically dialed your number

TCPAworld. com Accuracy Score: Dangerously inaccurate

Nooooooo! John, what are you doing man? You’re playing right into the ruse.

The bit starts with a discussion of scam robocalls, talks about all the complaints about scam robocalls to the FCC, but then offers a definition of “robocall” that includes legitimate phone calls made by legitimate businesses using efficient dialing technology. But that definition lumps in every fraud alert, account balance reminder, bill pay sms notification, stock price update, informational servicing call and pharmacy pick up text as equivalent to IRS and foreign-language scammers. It treats informational calls to consumers who may be facing foreclosure of their residence or repossession of their vehicles as equivalent with a random-fired message pitching solar panels. Bad bad bad terrible. How can we possibly get to the root of the scam call problem with definitions that label legitimate businesses with the same terrible “robocall” mantle that we affix to vile ne’er-do-wells that pepper us with Chinese-language scam calls?

There’s even more here to unpackage. The “robocall” definition Oliver offers is actually a crib of the expanded definition of automated telephone dialing system (“ATDS”)–a highly technical legal phrase embedded within the TCPA– that was recently handed down by the Ninth Circuit Court of Appeal in Marks v. Crunch. But the Marks ATDS definition is hardly the law of the land–indeed many courts have refused to follow it because it overly expands the definition of ATDS contained within the TCPA in a way that Congress did not intend. So by borrowing the Marks definition, Oliver has chosen only the broadest–and most misleading–potential definition of ATDS.

But way way more importantly–ATDS calls are not robocalls. The two concepts are absolutely not co-extensive, which is an absolutely critical point that Oliver’s bit misses entirely. Robocalls are bad scam calls. ATDS calls can sometimes be completely legitimate. So imagining a Venn diagram some ATDS calls are also robocalls–but not all calls using dialer technology are going to be the sort that lead to consumer complaints or irritation.

By conflating these terms Oliver inadvertently makes TCPA reform–a much needed policy shift that the FCC was poised to implement– more difficult. That means more frivolous lawsuits against legitimate businesses and less focus on the true scammers out there.

Assertion 4: Legitimate American Businesses are the Top Robocallers in the Nation

TCPAworld. com Accuracy Score: Cheater cheater pumpkin eater.

This assertion is totally inaccurate and based upon inaccurate–or at least inaccurately applied–data.

Oliver’s list of top robocallers is compiled from the same list submitted by the NCLC to the FCC last year which, in turn, was compiled from the robocall index compiled by a company called YouMail.

I wondered who YouMail was and who died and made it king of defining robocalls. So I invited YouMail’s CEO Alex Quilici onto my podcast at my former firm last year to discuss. In the podcast –which can be found here— Quilici confirms that he does not actually know how calls are being placed by the companies listed by NCLC–meaning the list just contains numbers making lots of calls, not robocalls– and cannot even confirm that the calls were actually coming from those companies. He also could not confirm whether the calls were wanted or unwanted. For those reasons he lists only phone numbers on the robocall index and does not name the callers.

But special interest groups–like the NCLC–unmask the numbers and lob them at the FCC and Congress as if they were accurate. And because YouMail labels its list the “robocall index”–even though it would more accurately be called the “top makers of legitimate phone calls list”–these special interest groups label legitimate companies as the “top robocallers” in the nation. But its just not true, as I’ve explained over and over again on my old website. (I still wonder how YouMail can get away with calling its index the “robocall index” to begin with. To a hammer everything looks like a nail and to a robocall-blocking app manufacturer everything looks like a robocall. So trusting YouMail to accurately count robocalls is like trusting a mattress salesman to estimate the number of Americans with preventable back problems.)

We later spoke with the CEO of a rival call blocking app who explained why focusing on “unwanted” robocalls is a far more accurate measure. When you look at his data, however, only 2% of true “robocalls” are made by the legitimate businesses that top YouMail’s list.

Translation: the data Oliver relied on in labeling legitimate American businesses as the top robocallers in the country was inaccurately applied. Had he done his homework–as we did– he would have discovered that only a tiny sliver of unwanted robocalls come from those companies.

Assertion 5: Robocall Volume Exploded After A Court Decision Overturned the FCC’s Rules Expanding the TCPA

TCPAworld. com Accuracy Score: Liar liar pants on fire.

This was the worst part of the bit.

Oliver states that robocalls exploded after ACA Int’l set aside the FCC’s expansion of the TCPA last year. He even throws up a blurry little graph to prove it. (Check it out at the 12:05 mark.)

But wait a second. Take a close look at that graph.

What you’ll see is that robocalls actually exploded AFTER the 2015 Omnibus Ruling expanding the TCPA and BEFORE the court set aside those rulings. Here’s a more accurate graph:

See– robocalls went up after July 10, 2015–when the Omnibus was decided–and peaked right when ACA Int’l was decided in March, 2018.

So whereas Oliver states that we had a “solution” to the robocall problem and then the courts ruined it he is just flat wrong. The FCC’s massive expansion of the TCPA did absolutely nothing to stop robocalls.  The number of “robocalls” literally quadrupled following the FCC ruling that Oliver touts as a solution. 

The reason is simple–the TCPA does not prevent robocalls. You can expand the statute all you want and the bad guys will keep on coming. That’s because the TCPA is only–or mostly–enforced against legitimate businesses, who are not causing the problem.

And that leads us to our last point.

Assertion 6: If the FCC Limits the ATDS Definition under the TCPA Robocalls Will Increase

TCPAworld. com Accuracy Score: Specious reasoning and misleading.

As just shown, when the FCC expanded the ATDS definition robocalls went up. There is no reason to assume, therefore, that narrowing that same definition will have any impact on robocalls. Robocalls are going up either way.

Instead the solution to the robocall problem is recognizing that the TCPA is not–and never was–the solution to the robocall problem. By highlighting the TCPA and acting as if it is a legitimate fix to the problem Oliver is actually making it more difficult for the FCC to focus on real solutions– like carrier requirements– by forcing it to fight political battles and waste resources over an ATDS definition that does nothing but foment frivolous litigation and does not actually stop robocalls. And that doesn’t help anyone but the consumer lawyers who rake in millions in fees under the TCPA every year.

Gross.

So TCPAworld.com’s overall take: Hilarious stuff. But not particularly accurate and perhaps even counter-productive to finding a real solution to the robocall problem.

But that giant finger pushing that giant red button was cool though.

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP — and all insideARM articles – are protected by copyright. All rights are reserved.  

Last week, the Federal Trade Commission (FTC) announced that it is seeking comments on proposed amendments to rules dealing with privacy and security of consumer information held by financial institutions. The two rules in question are the Safeguards Rule, which relates to information security programs, and the Privacy Rule, which relates to how the information is used.

Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, states:

We are proposing to amend our data security rules for financial institutions to better protect consumers and provide more certainty for business. While our original groundbreaking Safeguards Rule from 2003 has served consumers well, the proposed changes are informed by the FTC’s almost 20 years of enforcement experience. It also shows that, where we have rulemaking authority, we will exercise it as necessary to keep up with marketplace trends and respond to technological developments.

The proposed changes to the Safeguards Rule would “require financial institutions to encrypt all customer data, to implement access controls to prevent unauthorized users from accessing customer information, and to use multifactor authentication to access customer data.”

The proposed changes to the Privacy Rule would bring it in line to give examples of only the entities that the FTC has rulemaking authority over. Specifically addressed here are motor vehicle dealers.

The comments will be due within 60 days of publication of the proposed changes in the Federal Register, which has yet to occur.

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insideARM Perspective

Data security and privacy are important issues in 2019. The 2017 Equifax security breach caused a lot of concern regarding data security, specifically in the financial sector. On the privacy front, all eyes are on California as its implementation of the new Consumer Privacy Act continues to unfold. It is speculated that consumer privacy issues will spread throughout the country. Some states, including New York, Utah, Washington, and North Dakota, have already begun exploring their own privacy laws. Sounds like this is just the tip of the iceberg, folks.

Back in December, insideARM hosted its inaugural Women in Consumer Finance Conference (WiCF). It left a lasting mark on all of us who were present. In this video, you’ll hear the powerful words of attendees describing the impact this event had on them. I hope all women in the industry — regardless of position, experience level, or type of organization — answer the call and join us in December for our second annual WiCF, in Scottsdale, Arizona. Find more information here.  Early bird rates are now in effect. Don’t miss out.

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Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) announced the release of its latest edition of Supervisory Highlights (which, according to the CFPB’s website, was published on February 28, 2019). The Highlights cover the Bureau’s activities between June and November 2018. While this Highlights edition contains no specific reference to debt collection agencies or law firms, there are several nuggets of information that present three lessons for debt collectors.

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Lesson 1: Ensure Amounts in Collection Letters are Accurate

The Highlights discuss two separate issues where the Bureau observed incorrect calculations of the amount owed by the consumer.

The first occurred in relation to ancillary products in auto loan servicing. If consumers finance a vehicle through the auto manufacturer, they often have the ability to purchase ancillary products through the same loan, such as extended warranties. In the event of total loss or repossession of the vehicle, the servicer has the option to cancel ancillary products and obtain a pro-rated rebate for the unused portions. This rebate is first applied to the servicer for the deficiency, then the remainder goes to the borrower. Frequently, these rebates depend on the mileage of the vehicle. The CFPB observed instances where:

• The servicer either didn’t apply for the rebate at all, yet reflected in the deficiency letter to the consumer that the amount listed took into account rebates and credits to the account, and
• In the case of a used vehicle, servicers used the total mileage of the vehicle (rather than the mileage accumulated since the borrower purchased the vehicle) to apply for the rebate.

The CFPB found that borrowers in both situations were misled about the amounts that they owed on the deficiency.

The second observation related to unauthorized charges by mortgage servicers. Specifically, the CFPB observed that certain servicers charged late fees greater than those permitted by the mortgage notes. This was caused, according to the Highlights, by “programming errors” and “lapses in oversight.”

The Takeaway: These two observations show the importance of diligence and compliance oversight when it comes to calculating or determining the amount that a consumer owes. This is especially important where a debt collector is collecting on a balance that is subject to change due to interest, fees, or charges. Whether it be ensuring that whatever benefits the consumer may be eligible for are correctly applied to the account or ensuring that the debt collector’s systems are correctly calculating amounts owed and are regularly monitored by compliance teams, the onus is on financial institutions to get this right.

Lesson 2: Do Your Due Diligence with Disclosures

In another mortgage servicing observation, the Bureau focused on incomplete information being provided to consumers. In this specific example, the Bureau notes that mortgage servicers failed to tell the consumers the full story of why their requests to cancel private mortgage insurance (PMI) were denied. PMI can be cancelled upon the consumer’s request (1) if the principal balance of the mortgage reaches 80% of the original value based on extra payments the consumers made on principal, or (2) after the date the amortization schedule reaches the 80% value marker.

The CFPB observed a service mortgager who denied consumers’ requests to cancel PMI stating that balance has not reached the 80% value marker. In these instances, the amortization schedule didn’t reach the 80% mark, but the consumer’s extra principal payments satisfied the first option listed above. Even though the consumers had not met other criteria for cancellation of PMI, the misrepresentation of conditions for removal of PMI would affect the borrower’s choice to re-request the cancellation.

The Takeaway: There is a lot of pressure from both regulators and the courts for debt collectors to adequately inform consumers about their rights. As we have seen through myriad court decisions, ensuring that disclosures made to consumers are accurate is paramount (even when courts don’t agree on what the correct disclosures are). While we may not have all of the answers on what disclosures to use yet (maybe we will in the forthcoming CFPB debt collection rules), it is important to be diligent about the information that debt collectors provide to consumers. For example, responses to requests for validation of debt or credit reporting disputes should accurately disclose the full picture to consumers.

Lesson 3: Pay Attention to Payment Debit Dates

The Bureau observed issues with bill pay debit dates that occurred earlier than the consumer was led to believe, causing overdraft fees. This occurred where an online bill pay portal disclosed that the payment would be debited on or a few days after the selected date, leading the consumer to believe that the payment would not be debited earlier than this date. However, payees who accept only a paper check failed to disclose that the check could be debited on an earlier date.

The Takeaway: There are many different forms of payment available and it is important to ensure the proper disclosures are provided for each so that consumers can plan for when the money will be taken out of their accounts.