Archives for June 2019

NORTH ANDOVER, Mass. — FH Cann & Associates a leader in the Accounts Receivable industry names Sara Tremaine as their Director of Client Services. Sara will oversee the administration and operational management of the client services department to ensure delivery on the company’s promise of respect, care and recovery.  Sara will advance the organizations commitment to excellence by supporting continuous quality improvement, provide strategic direction and enhance the customer experience.

“I am thrilled to join FH Cann’s tremendously talented team where I will focus on creating a meaningful and personalized customer service experience for all our partners.”

Sara joins FH Cann after a successful twenty-one-year career with Granite State Management & Resources where she ensured the operational success of corporate servicing initiatives and created an agile organizational structure that enabled movement of people and resources to meet the challenging needs of a growing organization.

“We are pleased to welcome Sara and with her diverse background and extensive experience she will be a tremendous asset to our management team by enhancing operational efficiencies across the organization said, Frank Cann-Executive Vice President and Chief Operating Officer.”

About F.H Cann

F.H. Cann & Associates (FHC) is an accounts receivable management company operating from its headquarters in the Greater Boston Area. Incorporated in 1999 and licensed in all 50 States and Territories, FHC specializes in education, government and banking/financial collections. On the government side, FHC works with departments at every level ranging from small municipalities to the Federal government.  On the banking/financial side, FHC serves multinational institutions and many other US national enterprises. More detail on www.FHCann.com.

The First Amendment has long held a special place in constitutional jurisprudence. Given its importance to a well-functioning government and public discourse, courts take special care to enforce its protections, even for unwanted speech or around the periphery of what could be considered a content-based restriction. And when a statute did discriminate on content, courts were careful to rule in a matter that did not restrict more speech than Congress intended.

Enter the TCPA.

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Compounding a dangerous precedent set by the Fourth Circuit, the Ninth Circuit recently severed the government-backed debt exemption to the TCPA after finding that it is an impermissible content-based restriction on speech. See Duguid v. Facebook, Inc., No. 17-15320, 2019 U.S. App. LEXIS 17675 (9th Cir. June 13, 2019).

The Ninth Circuit agreed with the Fourth that the government-backed debt exemption renders the TCPA a content-based restriction, subject to strict scrutiny. The Ninth Circuit also agreed that, under Reed v. Town of Gilbert, the exemption itself had to pass strict scrutiny, not the “TCPA writ large.” Finally, it held that the exemption is not narrowly tailored to the government’s purported privacy interest, and thus fails strict scrutiny. None of that is surprising. As we have mentioned multiple times, the TCPA is the broadest restriction on constitutionally protected speech in current American law.

So far, so good – the TCPA is unconstitutional. But what about the remedy? That’s where things began to go off the rails. Again.

The Ninth Circuit also followed the Fourth Circuit’s lead in severing the government-backed debt exemption instead of striking down the TCPA as a whole. That sets a very dangerous precedent, as two federal appellate courts have now restricted speech that Congress plainly intended to permit. And although both opinions interpreted the TCPA, nothing in either courts’ analysis necessarily restricts their reasoning to this one specific context. Both courts relied on congressional intent – a nebulous proposition to begin with – and the TCPA’s severability provision. But severability provisions are common, and every statute that prohibits speech will obviously have a congressional intent to prohibit speech. So it could prove difficult to cabin the severability holdings of both opinions to the government-backed debt exemption.

The end result is that litigants seeking to enforce prohibitions on speech now have two opinions at their disposal to sever content-based prohibitions while maintaining overly broad prohibitions on constitutionally protected speech.

Stay tuned, folks. We at TCPAWorld are actively monitoring all First Amendment challenges to the TCPA to, including any potential petitions for certiorari.

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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.  

While courts have found that sending a second validation letter within the 30-day validation window is problematic, sending a second letter outside of that 30-day window does not pose an issue, says the Northern District of Texas.

In Ortiz v. Enhanced Recovery Company, LLC, No. 3:18-cv-1347 (N.D. Tex. June 6, 2019), ERC sent a second validation letter to the consumer three months after sending the initial validation notice. The consumer filed a Fair Debt Collection Practices Act (FDCPA) lawsuit alleging that the letters contained conflicting information, specifically that the validation window in the first letter was “literally false” if the second letter also included the same thing.

The court granted ERC’s motion for summary judgment, finding that there was no problem with this situation. While sending a second letter within the 30-day validation window causes some concern that a consumer might be confused as to how much time remains to request verification, this issue is not present when the letters are sent three months apart like in the instant case.

The court found as follows:

ERC’s mailing of a second letter to Ortiz neither “vitiated the validity of the original notice” nor constituted conduct by a debt collector that could lead an unsophisticated consumer to act to her detriment… Indeed, if the second letter did re-start the period of time that the consumer had to request debt verification, then it only enlarged the consumer’s rights. And if the second letter did not re-start the period of time available to the consumer, then the consumer is in the same position she was before the second letter was sent—she could not feasibly take any action to her detriment in response to the second letter.

insideARM Perspective

This case provides some clarity for debt collectors on when it is okay to send a second validation letter. This is especially important for debt collectors who (1) hold on to accounts for a long time and might deem it prudent to send another validation letter if there has been a significant period of time between collection efforts or (2) work with creditors who might recall and later re-place accounts with the same debt collector.

insideARM reached out to and obtained this comment from Shelly Gensmer, ERC’s Vice President of Legal and Compliance:

ERC works diligently to do the right thing by consumers, including keeping them notified of their rights and treating them with respect. We believe this case helps illustrate that effort. Likewise, we dedicate our efforts and litigation strategies to best impact our industry as a whole. Knowing that many other agencies remind consumers of their rights in subsequent letters, this win means helping tip the scales in the right direction for our peers. 

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AUGUSTA, Ga. — Contract Callers, Inc. (CCI) is pleased to announce the addition of Brett Alspach as Chief Operations Officer Call Center Division. Brett brings an extensive background of delivering world-class operations management and will lead all aspects of the Call Center Division within CCI, including Operations, Client Services, IT, and Sales.

“CCI is thrilled to have such a proven leader on our team.  His ability to align and focus all functions to one standard of success will help CCI realize our full potential.  Brett’s positive attitude and unique approaches will undoubtedly improve the dynamics of operational execution and ensure optimal customer service to our valued clients.  We are fortunate and find it refreshing to have a professional of his caliber on board.“ said CCI’s President/CEO, Tim Wertz.

About Contract Callers Incorporated (CCI)

Established in 1926, Contract Callers, Inc. (CCI) is a unique business process outsourcing company, committed to the highest standards of quality, performance, customer service, and compliance. We are a privately held corporation that has displayed consistent, profitable growth leading to a solid financial foundation. We employ over 600 employees in offices located throughout the continental U.S. CCI provides valuable outsourcing services to a variety of industry verticals via our distinct operating divisions. For more information, visit www.contractcallers.com.

June 11 marked the first six months of Director Kathleen L. Kraninger leading the Consumer Financial Protection Bureau. 

“It is an honor and privilege to serve American consumers. As Director, my focus is to prevent harm to consumers by using all the tools Congress gave us, including education, regulation, supervision and enforcement. I look forward to building on the efforts and progress of these first six months,” said Director Kraninger. 

The press release publshed by the CFPB includes a dizzyingly long list of accomplishments. Some are substantial — “Received and handled 170,000 consumer complaints” — and then some are…look: the CFPB published a graphic novel/choose-your-own-adventure feature for servicewomen and men to manage money, which seems a little condescending and not actually helpful.

According to the Bureau, “Congress charged the Bureau with conducting financial education programs and ensuring consumers receive timely and understandable information to make responsible decisions about financial transactions.” Which might be why the Bureau listed its Start Small, Save Up initiative “to increase emergency savings among consumers.” Programs like this assume a level of financial health that may not necessarily be the norm for a lot of at-risk American consumers.

The Bureau also congratulated itself on modernizing, clarifying, and reducing the burden of rules. But, if you’re like anyone else in this industry, I don’t know if any of those words are the words you’d use to describe the recent NPRM.

We’ll check back in with Director Kraninger in December. Maybe there will be a coloring book about finances for college grads!

Can you do business with a company that has/is in the process of filing bankruptcy?

Businesses can file for Chapter 7, Chapter 11, or Chapter 13 bankruptcy, based upon the business’s debt levels and financial situations. We’ll look at the various types of business bankruptcies and if/how you can move forward with this customer in the future.  

The bankruptcy process starts with a petition filed by, or on behalf of, the business. Bankruptcy doesn’t mean they absolutely won’t survive; in fact, some businesses revitalize and save themselves by taking such action. Just ask General Motors, Marvel, Delta, and Starbucks. They all filed bankruptcy previously and are thriving in today’s economy! We recommend educating your management team on the risks vs rewards available in recouping financial losses from companies that have declared bankruptcy. Also, we suggest contacting your attorney to ensure all paperwork is filed on time for the debt owed to you.

Chapter 7: Liquidation Bankruptcy

Chapter 7 bankruptcy will typically end in a complete liquidation of the business and those monies disbursed to the secured creditors. This is the most common type of commercial bankruptcy filing for companies that don’t have any cash to keep their business afloat. Secured debt will always be paid back first, and unsecured priority debts next. In rare instances, the company may be allowed to temporarily remain in business.

Chapter 7 bankruptcy is a viable option for corporations, limited liability companies, and sole proprietorships. Sole proprietorships often file Chapter 7 because once the trustees receive their fee, they are no longer responsible for paying back the business debt, even if they’ve signed a personal guarantee. This isn’t the case for Corporations, LLCs, and partnerships, however. Those parties are still held liable and can actively be pursued for their signed personal guarantees. Otherwise, once the debts are discharged under Chapter 7, you can’t collect them in the future.

Recommendation:

1. If this is an existing customer you should suspend.  You will not be paid and they will dissolve quickly.
2. If this is a prospective customer, make determinations depending on the opportunity of revenue versus your organization’s current tolerance of risk.
3. Move forward with safety precautions like prepayment, COD (cash on delivery), or very tight automatic terms.
1. Let the customer know that this isn’t necessarily going to be in place forever, and you will do a credit review again in the future. I would recommend that credit reviews be done in accordance with your company’s credit policy.
4. Your organization has to determine: Is the risk worth the reward on this current or future opportunity.

Chapter 11: Reorganization Bankruptcy

Chapter 11 bankruptcy generally ends in a reorganization of the business, and the company successfully operating out of bankruptcy and into solvency. However, not always, and it’s not guaranteed. The company can and will remain operating during the bankruptcy, but that doesn’t mean the business is viable. The courts will require the business to eliminate debt, sell off non-performing assets, restructure long term debts, and look for new funding. Additionally, the creditors and the courts must approve the restructure proposal in this bankruptcy.

Recommendation

1. Immediately ask the prospective/existing customer if they excluded your company from the bankruptcy filing. Why? Because the business can petition the courts to exclude vendors from the bankruptcy.
2. If they tell you that you were excluded, ask for the court issued documentation that supports your exclusion. If they can’t provide this documentation, you weren’t excluded. If they tell you that they didn’t exclude you from the bankruptcy, this means you are at risk of payments being called back.
3. Contact an attorney to file the paperwork with the courts for the debt owed to you.
4. Be aware, the courts can request that payments made within the last 90 days of filing be returned to the debtor. Those assets would be used in the repayment and restructure of their debt. If you are an unsecured creditor, you most likely will get paid cents on the dollar.  
5. This business and debt (even secured) can come back as nonviable and move to a complete liquidation. The Blockbuster story is a great read to learn more.
6. Request prepayment, COD, personal guarantees, and tight payment terms if you decide to move forward.
7. Actively keep a watchful eye on the account and also stay up to date with the court on the bankruptcy. If they remain in bankruptcy, then they still are at risk of liquidation and closing the business.
8. Once the debts are discharged under a Chapter 11 bankruptcy, you can’t collect these debts ever in the future.

Chapter 13: Reorganization Bankruptcy (Sole Proprietors)

Chapter 13 bankruptcy can reorganize the debt and the company can continue operating. This business will also make every effort to come out as viable but can end in complete dissolve. This type of bankruptcy is meant for small businesses with minimal creditors. The business can’t have more than $419,275 of unsecured loans or $1,257,850 of secured loans to qualify. Those are the numbers as of April 1, 2019, but these numbers are fluid to allow for inflation and cost-of-living adjustments. These sole proprietors have to petition the courts for bankruptcy under his/her name but also under the business’s name as well in this option. The trustee here is responsible for both personal and business debt.

Recommendation

1. If they are a prospective client, refer to your company credit policy and current risk tolerance.
2. If they just created a new entity after previously being discharged, they could be a professional debtor. Professional debtors are people that know how to scheme the systems and will run up the debt again.
3. You have to trust in your credit analyst and sales personnel for the warning signs. An example warning sign: how many businesses appear with them listed as the Principal or executive. If it’s a laundry list, chances are you are dealing with a professional debtor.
1. I would suggest prepayment, COD, personal guarantee, and very tight automatic payment terms if choosing to move forward. Remember, your credit department can review this client in 90-120 days to monitor the payment trends.
2. It doesn’t have to be a forever requirement, but always better to be safer. In the end, if they refuse all these options, the organization will have to determine the risk versus reward.
4. If this is an existing customer, I would suspend the services immediately and file paperwork with the courts to see how much you can recoup.

In closing, I would ensure that you have bankruptcy and an action plan in your current credit policy. Don’t ignore a bankruptcy alert or mailing.  Do your research to be educated, and make informed decisions. Bankruptcy doesn’t always mean the business is going to disappear, but even after continuing to operate, it could still dissolve.  I would closely monitor those customers in active bankruptcies. You want to take all the necessary precautions you can so you aren’t left holding the bag.

I hope that you see thoughtful decision-making throughout the steps mentioned above. If not, feel free to reach out to me via email at keich@theiainstitute.com. I would love to hear your thoughts. Even better, #chimein on my personal LinkedIn page where this article will be shared and published for open comments.

I look forward to seeing you at our upcoming strategy workshop and helping your organization maximize revenue without increasing your bad debt!

San Francisco — LiveVox Inc., a leading provider of cloud contact center solutions, announced that LiveVox General Manager of Digital Solutions, Boris Grinshpun, and Sr. Director of Product Marketing, Jim Lynch, will join Mike Rosenthal of Alorica Financial, and Alan Clayton of Frost-Arnett, to share how leading financial institutions are preparing their agent workforces to evolve from traditional voice-only contact strategies to seamless digital engagement.

As the number of contact channels has continued to grow, agents have in turn been faced with more complex and frustrating calls. While consumers have been empowered with new tools, agents largely have not. Hear from financial services contact center leaders and digital solutions innovators as they provide insight and keys to navigating this challenge and easing the transition from voice to digital engagement.

On the event, Alan Clayton, Chief Operating Officer at Frost-Arnett Company, states “As contact center leaders look to incorporate new channels to meet customer demands, they often overlook the very critical component of agent training. While customers may wish to engage digitally, they continue to expect the same unified experience and high level of service that they receive over the phone. I look forward to joining industry executives at this educational event to help share the latest innovation and best practices for optimizing agent performance in today’s digital age.”

About the event:

• Event: InsideARM First Party Summit 2019
• Session: Preparing Your Agent Workforce for the Digital Age
• Date/Time: June 19^th at 10:45am CT
• Location: The Loews Hotel; Nashville, TN
• To register: click here.

About LiveVox, Inc.
LiveVox is a leading provider of enterprise cloud contact center solutions, managing more than 12+ billion interactions a year across a multichannel environment. With over 15 years of pure cloud expertise, we empower contact center leaders to drive effective engagement strategies on the consumer’s channel of choice. Our leading-edge risk mitigation and security capabilities help clients quickly adapt to a changing business environment. With new features released quarterly, LiveVox remains at the forefront of cloud contact center innovation. Supported by over 450 employees and rapidly growing, we are headquartered in San Francisco with offices in Atlanta, Bangalore, and Colombia. To learn more, visit LiveVox.com or email us at Info@LiveVox.com.

ATLANTA, Ga. — FLOCK Specialty Finance announces the appointment of Reid Simpson, former CFO of Asset Acceptance, to its Board of Directors. Simpson will work with the leadership team to support the Company’s continued growth and advise FLOCK on its capital raising strategy and investment decisions. 

“Reid is an outstanding leader who was instrumental in the turnaround of the Asset Acceptance Capital Corporation and the successful $438.6 million sale to Encore in 2013,” said Michael Flock, Chairman and Chief Executive Officer at FLOCK Specialty Finance. “He will be an outstanding addition and asset to our board.”

Simpson is currently CFO of GeoTix in Traverse City, MI.  He is a seasoned financial executive, with more than 30 years of chief financial officer positions with large and small companies across varied business industries such as information, software and services, technology and financial services in both a public and private environment. His CFO roles include within Dun & Bradstreet Corporation, CCC Information Services, eCollege, Gogo, Asset Acceptance Capital Corporation, Career Education Corporation, ShopperTrak, and Rainbow Child Care Centers.

Simpson also led the successful liquidity events at eCollege in 2007, ShopperTrak in 2013 and Rainbow Child Care in 2018. He is a current board member at Helix Education. He holds a Bachelor of Science in Accounting from Michigan State University.

“I am honored to serve on the FLOCK Board of Directors,” said Simpson. “FLOCK is a leader of financing in the middle market of the debt buying industry, creating new analytic-based financing solutions for its clients, and developing long term relationships more than just transactional support.”

About FLOCK Specialty Finance

FLOCK Specialty Finance is dedicated to alternative funding in a variety of specialty finance segments. FLOCK’s mission is to provide clients with capital and expertise for the purchase of both charged-off debt portfolios, as well as, for the financing of subprime consumer obligations. FLOCK believes its funding is “More Than a Transaction”. FLOCK’s proprietary financing structure provides growth-minded clients with a competitive advantage in multiple asset classes. Founded in 2007, FLOCK is headquartered in Atlanta, Ga.  

On June 25, the Consumer Financial Protection Bureau (CFPB) will host the first symposium of a series it announced back in April. This inaugural symposium will focus on unfair, deceptive, or abusive acts and practices (UDAAP).

According to the CFPB, the Federal Trade Commission (FTC) has substantially defined the terms “unfair” and “deceptive” over the years. However, the term “abusive” in UDAAP is still elusive and unclear. The symposium will aim to provide clarity, as promised by Former Acting Director Mick Mulvaney during remarks at the Mortgage Bankers Association’s annual conference in October 2018.

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The agenda for the event indicates that both Director Kathleen Kraninger and Deputy-Director Brian Johnson will provide remarks. The symposium will contain two panels, one related to policy issues related to the “abusive” standard and the other about abusiveness in practice. A moderated discussion will follow both panels.

The June 25 symposium, which runs from 9 AM to 12:20 PM Eastern, will be available via live stream for those who cannot attend in person. Registration for both the live stream and in-person attendance is available on the CFPB’s website.

insideARM Perspective

The CFPB has, for the most part, held to its word that it intends to provide rules of the road to covered entities. The recently released Notice of Proposed Rulemaking provides comprehensive instruction to debt collectors, specifically about how to bring the industry into the 21st century in regards to modern communication channels. This first symposium takes a step towards providing clarity on a term that everyone knows and uses, but is not as substantively defined as its related terms of “unfair” and “deceptive.” Mark your calendars, folks, this should be a good one to watch.