Archives for October 2019

AUBURN HILLS, Mich. — Shermeta Law Group, PLLC is proud to announce national certification as a Women’s Business Enterprise, by the National Women Business Owners Corporation (NWBOC), and the Great Lakes Women’s Business Council, a regional certifying partner of the Women’s Business Enterprise National Council (WBENC). These prestigious certifications will provide Shermeta Law Group, PLLC access to the NWBOC and the WBENC’s Corporate Members, and be listed as an approved and qualified organization.

The firm is thrilled to receive the Women Business Enterprise certification, from both the National Women Business Owners Corporation and the Women’s Business Enterprise National Council, and to be recognized as a woman-owned and operated business. We look forward to all of the new opportunities that these certifications will provide us access to, and are ready to engage in new business partnerships as well as growing our existing partnerships.

The standard of certification for both NWBOC and the WBENC is a very detailed process which includes an in-depth review of the business as well as an inspection of the premises. The process is designed to confirm that the business is majority operated and controlled by a woman or women.

About Shermeta Law Group, PLLC
Shermeta Law Group, PLLC, is a multi-state financial services law firm with a concentration in Creditors Rights and Debt Collection, currently servicing the state of Michigan and Ohio. With over 45 years in the industry, Shermeta Law Group, PLLC leverages their vast experience and technology, along with their intense focus on compliance and the customer experience, in order to serve their clients as a trusted and committed partner, delivering collection and legal services with integrity and results.

About NWBOC
National Women Business Owned Corporation was the first organization to create a national certification program for women-owned businesses. The goal for the NWBOC is to increase competition for corporate and government contracts through the implementation of the certification program for women business owners at the national level. For more information visit www.nwboc.org.

About WBENC
Founded in 1997, WBENC is the nation’s leader in women’s business development and the leading third-party certifier of businesses owned and operated by women, with more than 13,000 certified Women’s Business Enterprises, 14 national Regional Partner Organizations, and over 300 Corporate Members. More than 1,000 corporations representing America’s most prestigious brands as well as many states, cities, and other entities accept WBENC Certification. For more information, visit www.wbenc.org.

Editor’s Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

If you read part 1 of this two-part blog series you might have found some of our comments surprising. Perhaps you left with more questions than you’d had going in. Or you wonder how in the world communicating compliantly via email and text—consistently, day in and day out—is even possible.

I understand completely. There’s no shortage of legal requirements and practical issues to wade through, and there’s a lot riding on your communication practices.

Let’s dive straight into it.

Work Email Addresses and Mobile Numbers: Are They Safe to Use?

If a consumer provides you with a work email address or mobile number, you should tread carefully. These channels may not be fully under the consumer’s control. If the consumer ends his or her employment, he or she could miss important communications. If a current or previous employer monitors or accesses email or text messages, you run the risk of third-party disclosure.

Here’s our recommendation:

• Always ask consumers for personal contact information. Your best bet, legally speaking, is to minimize the number of work accounts your organization uses for collection-related communications.
• Get consumers to agree to notify you if their employment status changes. If your terms and conditions are detailed enough, and the consumer assumes responsibility for keeping you informed, you’ll have done your part to ensure the integrity of the collections process. This will afford a good measure of protection in the event of a legal claim.

Text Messages: Navigating Carrier Demands, Consumer Expectations, and the Law

The Cellular Telephone and Internet Association (CTIA) is a self-regulatory body that represents mobile service providers and other industry organizations. The CTIA has its own messaging principles and best practices, but they’re not legally binding. You can’t be sued for violating them.

Still, it’s important to comply with CTIA guidelines so you know your texting practices align with carrier and consumer expectations.

• Use simple, straightforward language. Consumers must fully understand anything they’re signing up to receive. Opt-in mechanisms must be clear, and when consumers unsubscribe, they must receive an acknowledgement of the action.
• Be careful with abbreviations. Acronyms can’t spell out inflammatory words (I’d call this one a no-brainer).
• Terms and conditions are essential. By getting a consumer to agree to terms and conditions upfront, you can effectively nullify gaps and inconsistencies between CTIA and Fair Debt Collection Practices Act (FDCPA) requirements.

E-Sign: How it Applies and How to Comply

A consumer’s E-Sign consent gives debt collectors permission to substitute electronic delivery for snail mail delivery of legally required written documents. You don’t need E-Sign consent to email or text a consumer everyday collection-related communications such as paid-in-full statements, responses to balance inquiries, payment receipts, etc.

However, you DO need to obtain a consumer’s E-Sign consent before you may deliver legally required written documents and disclosures to the consumer electronically. Examples of legally required written documents and disclosures include post-dated payment reminders, validation notices not provided in initial consumer communications, and copies of Reg E recurring electronic funds transfer authorizations.

FACT: Obtaining E-Sign consent is a two-step process

First, you must inform the consumer of his or her rights. There are several ways to inform consumers of their E-Sign rights:

• During a recorded conversation with the consumer;
• In an email;
• In a text message;
• In a writing;
• On a website.

Second, you must ask the consumer to demonstrate his or her ability to access the email address or use the mobile number he or she provided you for E-Sign purposes to receive legally required notices and disclosures.

The consumer can demonstrate his or her ability by: 1) sending you a text message or keyword using the mobile number they provided you for E-Sign; or 2) replying to an email or text message you sent to the email address or mobile number they provided you in connection with their E-Sign consent.

E-Sign consent takes effect only after the consumer has consented to using a particular channel (email or text) AND has demonstrated he or she can use that particular email address or mobile number.

FACT: An initial communication that includes the 1692g validation notice DOES NOT trigger the E-Sign requirement.

This is because there is no writing requirement in play for the initial communication. Section 1692g of the Fair Debt Collection Practices Act (FDCPA) makes clear you only need to “send” the consumer the validation notice [in writing] if you DID NOT provide it in the first communication (e.g., in the body of an email or verbally in a phone call) or if the consumer has already paid the debt.

Since E-Sign consent is required only for notices and disclosures that must be provided to the consumer in writing as a matter of law, it does not apply to the validation notice provided in the first communication.

FACT: A communication subsequent to the initial communication with the consumer DOES trigger the E-Sign requirement.

This is because the FDCPA imposes a writing requirement on a validation notice if it’s provided in a communication subsequent to the initial communication.

For example, if your first communication with the consumer was a text or phone call and you did not include the 1692g validation notice in that communication, you must send the consumer the validation notice within five days of that communication. In this context, the word “send” means by first class or certified mail with return receipt requested.

If you would prefer to email or text the written validation notice to the consumer, you may substitute the U.S. Postal Service mail delivery method with a digital delivery method if you first obtain the consumer’s E-Sign consent to do so.

Just remember: if you have an initial communication with the consumer that did not include the validation notice, you would be legally required to obtain E-Sign consent within the five-day window and electronically deliver the validation notice or link to the validation notice within the same five-day window.

If you fail to obtain the E-Sign consent, the validation notice is not opened, or the link to the validation notice in the email is not clicked within the five days of that initial communication, you must send the validation notice to the consumer using first class U.S Postal Service mail delivery.

TIP: To obtain proper E-Sign consent, provide detailed information and terms and ask for a response.

To obtain E-Sign consent properly, you’ll need to specify, among other things, the scope of consent (e.g., all active accounts now and in the future), the option to withdraw at any time, hardware and software requirements, whether any fees apply, instructions for obtaining paper disclosures, how to update contact information, and how to reach an agent.

When you send disclosures and terms, request a response (for example, “text YES”) so you can confirm the validity of the email address or mobile number and lock down the consumer’s formal consent.

TIP: Always confirm receipt of legally required documents.

There is no mailbox rule for electronic communications. Once you hit “send,” be sure to verify receipt via analytics. You can ask consumers to verify receipt themselves, but having indisputable proof on your end is essential legal protection for your business. Remember to verify open rates of emails as well as any links you use to provide information to the consumer.

Conclusion

Email and text may seem daunting, but you can implement an omnichannel communications strategy with confidence. It’s easier than you think, especially with compliance-minded tech that streamlines collection operations while safeguarding your business by helping prevent noncompliant communications.

It’s 2019, we have IVR systems that sound like you are talking to a human. We have AI technology that can analyze and form collections treatment. We can process payment via SMS messaging. Is it silly to think that the “right” letter strategy could possibly outperform a live collector? A letter series is delivered most commonly today using e-mail and/or through the customer’s account portal. Let’s dig in.

In my travels and conversations, a very succinct theme is the question, “Who collected the money? Did my collector’s efforts bring in the cash? Or was it something else?” 

Often businesses can’t be 100% sure if it was a collector’s efforts that brought the money in or not. Did the customer just pay the bill on their own because they suddenly could afford to? How much of the money was recovered by no one making a call? Could a letter strategy replace a collector, or should it enhance the collector’s efforts? These questions are normal things to consider. As a credit and collections leader, I think it’s always important to give your collectors the ability to utilize as many resources and tools to enhance their efforts.

Step One: Is your current letter strategy set up to aid the collector’s efforts or compete with the collector? Are you using the letter strategy in tandem with a collector’s dials or instead of their dials? You must decide if a letter series is going to replace the collector’s efforts or if it is going to be assisting there collection efforts.

Quick Exercise: If you’d like to put your collectors’ efforts to the test, discontinue the use of customer touches via letter strategy. Create an escalated letter series that runs without a collector making a phone call. I would measure it for 60, 90, and 120 days and measure the collector’s recovery rate. Is the collector performing at lower, higher or the same rate of recovery? How did the customers that never got phone calls and only got the letter series perform? How much cash came in without a collector calling?

Step Two: Is your current letter strategy saying the same thing each time or does it have escalated intent in the verbiage? If you want to make the most of your letter series, they should look and sound different.

Letter 1– Should be sent about a week before the invoice is due and include a copy of the invoice. This way, if they lost or didn’t receive, the invoice for the first time, you are automatically resending.

Letter 2- Should be sent a week after the invoice is due, notifying the customer you haven’t received payment. If they want to avoid late fees, maximize discounts with you, etc. they should process payment immediately online. If you are sending this via email or pop-up message on their portal, the link should be included to process payment. Automatically offer the customer the discounted rate if they process payment before end of business day.  If you don’t have a payment portal, honor the discounted pricing with payment process via phone that day.

Letter 3- Should be sent approximately 10 business days after letter 2 if payment still hasn’t been received. You should be mentioning possible service interruption, loss of discounts and/or late fees if unresolved. You want it to be clear that the account is in jeopardy of service interruption if not resolved within 5 business days.

Step Three: Does your letter strategy have dates and accountability? You want to ensure that urgency can be read in the tone and verbiage chosen. It shouldn’t be open ended, and it should always offer the customer the ability to resolve the delinquency. If they haven’t filed an invoice dispute with you by now, that’s a problem. If you don’t receive the payment be prepared to temporarily disrupt service.

Letter 4- Should be sent approximately 5 business days after letter 3 if payment hasn’t been received. You should include a date for service interruption, loss of discounts and/or late fees, and mention reporting the delinquency to the credit bureaus.

Quick tip: If you want the customer to make you a priority than you should be reporting your delinquent customers monthly. You can set up to automatically send an aging report to the credit report providers. This is a great tool to help the customer in making you a priority for payment.

Step Four: Does your letter series clearly communicate the penalties if payment is delinquent after service interruption? Does the customer understand if you have to send them to a third-party collection agency that they will incur additional costs?

Letter 5- Should be sent 5 business days after letter 4. It should include an incentive to pay you immediately. However, it should clearly state if payment isn’t received the incurred actions taken and fees associated. This should be your final demand for payment.

My recommendation is for the letter strategy to be used in addition to collector calls. If you want to maximize the efforts of your collectors than you should use a dual strategy. Many organizations use a dual strategy today but don’t sleep on the fact that you could have a very effective letter series, if developed and executed properly.

I hope you see purposeful 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.

ROCKVILLE, Md. — The iA Institute and the Consumer Relations Consortium (CRC) are excited to announce the launch of the Legal Advisory Board (LAB) for 2020. The LAB is an exclusive membership group of not more than ten outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. 

The purpose of the LAB is to serve as a legal resource to the CRC and iA Innovation Council membership and to assist in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.

LAB members must be licensed, practicing attorneys as outside counsel in good standing with the state bar governing the law in the state where their practice is located. Attorneys’ applications must be supported by three CRC members in good standing, with membership approved by the CRC’s Regulatory Steering Committee. LAB members receive complimentary subscriptions to the iA Case Law Tracker and iA Research Assistant. 

Five of the ten LAB positions remain open. More information is available here. Attorneys interested in LAB membership can fill out an application here. 

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

Learn more at www.crconsortium.org.

About the iA Innovation Council

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders who envision the future of collections and map how to get there. Group members meet throughout the year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

Learn more at www.iainnovationcouncil.com.

[article_ad]

About The iA Institute

The iA institute (iA) is a media company that produces handcrafted news, events, and education for the consumer and commercial debt industry. The iA team believes that the value of your investment in our content should be undeniable, so we thoughtfully design everything we do with a focus on the details that make a difference. iA initiatives bring a range of stakeholders to the table in candid and intimate environments to inform, to collaborate, to innovate, and to make profitable connections. The iA institute, under the name insideARM LLC, is a certified woman-owned and woman-controlled business (WBE).

Learn more at www.theiainstitute.com.

CHERRY HILL, N.J. — MRS is pleased to welcome Chief Financial Officer, Jim Curham, to the company. With more than 25 years in finance leadership roles in the technology and services sector, MRS is confident that Jim’s expertise will make an immediate impact. Jim’s positive attitude and vast knowledge pairs perfectly with MRS values and vision and the company believes that his transition will be a seamless one. 

Co-CEOs Saul and Jeff Freedman said, “We are thrilled to welcome Jim to MRS as our new CFO and as a member of our Executive Team. Jim has a wealth of experience in all facets of corporate finance and executive management that will aid us in meeting our corporate goals and initiatives. Furthermore, MRS has put digital collection strategies at the forefront of our business model; Jim’s background in technology and software services will help us in broadening the suite of services we offer our customers.”  

“MRS is an industry pioneer in the use of the latest software and technology that is revolutionizing customer service and efficiency in all phases of collections. I am excited to join the team at such an important stage in the growth of the business,” said Curham.

Curham is a Certified Public Accountant and Chartered Global Management Accountant, with Bachelor’s and Master’s degrees from Rutgers University.

About MRS BPO, LLC

Founded in 1991, MRS has served the accounts receivable management needs of companies within the Healthcare, Banking, Financial, Government, Student Loans, Telecommunications, and Utility sectors for 26 years.

[article_ad]

MRS BPO, LLC is a full-service accounts receivable management firm based in Cherry Hill, New Jersey. The company’s unique combination of experience, technology, and compliance management processes allows them to provide industry-leading debt recovery solutions while enhancing their client’s brand and reputation. For more information on MRS BPO, LLC, visit them online at http://www.mrsbpo.com.

The Wall Street Journal and the Atlanta Journal-Constitution reported today that A. Wayne Johnson said he intends to resign from the Department of Education to seek appointment to the U.S. Senate seat held by retiring Sen. Johnny Isakson. Johnson, 67, and a Republican, also said he would endorse the cancelation of most outstanding student debt held by the Federal government.

Johnson’s journey with ED began in June 2017 when Secretary Betsy DeVos announced her intent to appoint him as Chief Operating Officer for Federal Student Aid. Previously, he held positions at VISA USA, Providian Financial, and First Data Corporation, and was CEO of First Performance Corporation and Reunion Student Loan Finance Corporation. DeVos said at the time,

“Wayne is the right person to modernize FSA for the 21st Century. He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers.” 

The term for the position was expected to be five years. However, in January 2018, Secretary DeVos announced that Johnson would instead take on the leadership of a new unit called the Office of Strategy and Transformation. His primary responsibility in this role would be to implement the Next Generation Processing and Servicing Environment (NextGen) for student loans.

Johnson’s term at ED was a tumultuous one for private debt collectors, who sued the Department over what they felt was a botched solicitation for large PCA services. The litigation that began in 2015 did not start on Johnson’s watch, but it did end there.

That Johnson is a Republican and would call for the forgiveness of all student loans is interesting because this argument has been the domain of such progressives as presidential candidates Sen. Bernie Sanders and Sen. Elizabeth Warren.  Johnson told the Atlanta Journal-Constitution that he would be the kind of conservative Republican who works across the aisle.

Sen. Isakson’s seat will initially be filled via appointment by Georgia’s Governor, Brian Kemp, and would then be up for election both in November 2020 and 2022.

insideARM Perspective

This departure is a significant development. A. Wayne Johnson was the mastermind behind the NextGen system that is expected to revolutionize the way Federal Student Aid services borrowers. We will see whether other exits from his team follow his departure and whether the loss of his leadership will change the implementation schedule.  

Or, as I digress for just a moment, can you imagine a Sanders/Johnson or Warren/Johnson cross-party ticket that wins on the basis of eliminating all student debt? Perhaps someday NextGen will be moot.

UPDATED 12:55 PM 10/24/19: 

It seems (and sources tell me) that this departure has been in the works for some time. Johnson has launched this website for his Senate campaign, with “the battle to end student debt” as his cornerstone. According to a press release published today,

[H]is plan would provide students with a $50,000 grant for their college education wherever they attend, including both public and private colleges. The grants would also cover work training, professional licensing and vocational and trade schools. Those who have current debts would see the money owed reduced by up to $50,000. Those who paid their debts in the past would receive income tax credits up to $50,000. The program would be funded with a 1% tax on revenue generated by all employers including corporations and non-profit organizations. He would also seek to remove from credit bureau files all negative information related to federal student loans.

Editor’s Note: This article is published on insideARM with permission from the author.

—

In Rotkiske v. Klemm, the Supreme Court has the opportunity to do what many plaintiffs’ attorneys have dreamed of for years: effectively expand the FDCPA’s one-year statute of limitations by applying the “discovery rule” to all FDCPA claims. Under the discovery rule, the limitations period begins to run (that is, the one-year clock starts ticking) not upon the occurrence of the statutory violation, as specifically called for by the law, but only when the plaintiff discovers the alleged violation. This could have the effect of exposing debt collectors and others to liability under the statute long after the one-year period Congress intended.  

At oral argument last week, however, none of the nine justices appeared convinced that the discovery rule applies broadly to all FDCPA claims.  With the usual caveat—that predicting how the Supreme Court may rule in any case is always hazardous—the high court seems unlikely to disrupt the normal application of the FDCPA’s one-year limitations period, although it may leave the door open to applying the discovery rule to FDCPA claims in certain, limited situations.

Case Background

As I previously wrote in this space, the case centers on a credit card debt owed by Kevin Rotkiske that was referred for collection in 2008 to Klemm & Associates. After an initial failed attempt to effectuate service, Klemm eventually served the debt collection suit on an adult at what turned out to be Rotkiske’s prior address. After filing an affidavit of service and other necessary papers in the Philadelphia Municipal Court, Klemm obtained a default judgment in March 2009. Rotkiske claims he was never served with the lawsuit and only learned about the default judgment when he applied for a mortgage loan years later, in September 2014.  

In June 2015—within one year of learning about the default judgment—Rotkiske filed an FDCPA action against Klemm in federal court alleging that Klemm wrongly obtained the default judgment. The FDCPA provides that a lawsuit to enforce the statute may be brought “within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). In this case, the alleged violation (obtaining the default judgment despite allegedly deficient service of process) occurred years earlier, in 2009. Rotkiske, however, argued for application of the “discovery rule,” a doctrine that delays the beginning of a limitations period until the point when the plaintiff knew or should have known of the alleged violation. Applying the discovery rule, Rotkiske argued, his claim was timely because the one-year limitations period did not begin until he discovered the default judgment in 2014.  

The District Court rejected Rotkiske’s argument and dismissed the case as untimely. On appeal, the Third Circuit affirmed the lower court’s decision, noting that the “one-year limitations period begins to run when a would-be defendant violates the FDCPA, not when a potential plaintiff discovers or should have discovered the violation.” Rotkiske appealed to the U.S. Supreme Court, which agreed to hear the case in light of a clear split of opinion on this issue among the lower courts of appeal. Both the Fourth and Ninth Circuits have held that FDCPA claims are subject to the discovery rule, in contrast to the Third Circuit’s holding in Rotkiske’s case.  

Oral Argument

The Supreme Court held oral argument on October 16. The justices and the advocates for each side spent considerable time defining and attempting to explain the many different doctrines that may affect how a statute of limitations is interpreted. Statutory wording, common law principles, and equitable doctrines are all part of the calculus. (For those interested in reviewing the finer points of the discovery rule, equitable tolling, equitable estoppel, and other related doctrines, Justice Breyer at oral argument referred to the Judge Posner opinion in Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir. 1990) as his “bible” on the issues.)

At bottom, in light of the oral argument, the outcome of the case seems likely to turn on three issues.  

The first is whether the common law discovery rule applies to FDCPA claims across the board. This was Rotkiske’s primary argument in his merits brief. To pursue this angle, Rotkiske differentiates his FDCPA claim from the Supreme Court’s decision in TRW Inc. v. Andrews, 534 U.S. 19 (2001), involving the Fair Credit Reporting Act. In that case, the Court held that the common law discovery rule does not generally apply to FCRA claims. Rotkiske argues that the TRW ruling depended heavily on the fact that the FCRA—unlike the FDCPA—contains an express exception to its normal two-year limitations period, allowing claims for willful misrepresentations to be brought within two years of the plaintiff’s discovery of the misrepresentation. The inclusion of an express exception, the Supreme Court noted in TRW, forecloses application of any other unstated exception. Rotkiske’s lawyer argued in court that, without any express exceptions, in enacting the FDCPA “Congress clearly did not intend to foreclose” application of the common law discovery rule. Justice Ginsburg noted, however, that:

If you are arguing an across-the-board discovery rule applies to the FDCPA, I think that TRW weighs very heavily against you.

The second issue is whether a “fraud exception” to the statute of limitations applies in this case. As described by Rotkiske’s lawyer, in the case of “fraud that prevented the plaintiff from knowing about their cause of action” a plaintiff may file an otherwise untimely claim. The crux of the issue here is whether Klemm’s attempts at service of process—coupled with his eventual filing of an affidavit of service, which led to a default judgment—constituted fraud sufficient to justify an equitable extension of the limitations period. Justice Breyer probed Rotkiske’s attorney on this repeatedly, stating that even if there was a mistake in the service of process “it doesn’t sound like common law fraud to me.”  

The third issue is whether Rotkiske waived his arguments with respect to any equitable doctrine that could enlarge the limitations period. Justices Kavanaugh and Kagan pressed this issue to Rotkiske’s lawyer, who conceded that equitable tolling was not an issue before the Third Circuit below. Instead, he argued that the inclusion in Rotkiske’s briefs of certain cases involving equitable extensions of time should be enough to warrant remanding the case for further briefing on the application of those doctrines. Klemm’s lawyer noted in response that the word “fraud” was not mentioned at all in Rotkiske’s petition for review by the court. “If it had, we might have had an argument in our brief in opposition for why this case doesn’t present a fraud case.” He continued by stressing that “the only question before this Court is […] whether there’s an across-the-board discovery rule” in FDCPA cases. 

While the justices appeared generally skeptical of Rotkiske’s arguments, Klemm’s lawyer also faced pointed questions from the bench. Justice Breyer, for example, wondered whether the issues relating to fraud or the application of equitable doctrines should at least be remanded to the lower courts for further consideration. Justice Ginsburg suggested that the fraud exception may apply and, if so, it wouldn’t matter whether the discovery rule applies or not. Klemm’s lawyer emphasized that those arguments were waived and, in any event, Congress’s deliberate choice to peg the limitations period to when a violation occurs “would overcome any common law discovery rule.”  

Conclusion

To some degree, the potential application of common law and equitable principles will always inject a measure of uncertainty in the calculation of a limitations period. However, it became clear at oral argument that the FDCPA’s express appeal to the moment when a “violation occurs,” as the basis for calculating the one-year limitations period, creates a formidable presumption against the broad imposition of a discovery rule in all FDCPA claims, as sought by Rotkiske. His apparent waiver of some arguments relating to equitable relief also likely will weigh heavily in the Court’s final decision. The case is Rotkiske v. Klemm, No. 18-328.

Here’s a pumpkin-spiced TCPA musing for the afternoon coffee break: I’m not sure why Defendants continue to bring motions to dismiss ATDS allegations in federal district courts in California but let me just say—it ain’t working.

In Bodie v. Lyft, Inc., Case No.: 3:16-cv-02558-L-NLS 2019 U.S. Dist. LEXIS 172998 (S.D. Cal.  Oct. 4, 2019) the Defendant moved to dismiss the complaint arguing that the ATDS allegations are conclusory and that the allegations demonstrated human intervention was needed to make the texts at issue. Following Marks the district court had little trouble denying the motion. In the Bodie court’s view the SAC “clearly” alleges that an ATDS was used in this case. In the Court’s view, the SAC alleges that the text platform at issue allows a user to “automatically send text messages to [a] stored list of cellular telephone numbers.” That plus allegations that the platform was actually used to send “notifications en masse to a stored list of cellular telephone numbers without the need of individuals to dial the numbers” was sufficient to state a claim.

[article_ad]

The takeaway here is that unless you have a complaint containing highly specific allegations regarding how a piece of equipment works that plainly demonstrates the dialer does not call “automatically” there is little incentive to bring a 12(b)(6) challenging ATDS allegations within the Marks footprint. Allegations that the system is “automatically” dialing from a list of stored numbers are probably going to pass muster at the pleadings stage.

That said, the Marks formulation does remain vague as to the meaning of the word “automatic” so there is room for defense victories yet—and perhaps some will come at the pleadings stage where the complaint is richly adorned with allegations demonstrating human intervention—but they will most likely come at the Rule 56 stage. Pick and choose your shots folks.

Now back to work.

—

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.

This article is part of an ongoing Think Differently series, launched in October 2019. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

—

It’s no secret that artificial intelligence (AI) is flattening specific challenges across different industries and types of operations, from preserving the world’s honeybee populations to improving customer service. The same way collections firms transitioned from analog to digital over the last 20 years, building a fully artificially-intelligent enterprise with machine learning is the next wave of mass tech adoption. But where do you start?

There are many AI and machine learning products available to ARM firms, but most are narrow in focus, for instance, offering conversational AI, call monitoring and other real-time guidance for agents. While these solutions can boost revenue a bit in the short-term, a foundational approach to automation is a smarter investment and long-term game-changer. 

Can you explain machine learning in the context of the collections process? 

Yes. First, we should clarify the difference and relationship between AI and machine learning. The simplest metaphor is a garden, where machine learning models are the individual plants, and the healthy, thriving collection of plants is “AI.” The plants (Machine Learning models) are cross-pollinated with information that is exchanged between them and constantly evolves. The data that’s fed to these models are like rain and nutrients for the machine learning models to grow and get smarter, and they all originate from algorithms that are like seeds for the whole enterprise.  

A simplified collections process looks like this:

1. Receive accounts placed with your company or purchase a portfolio
2. Scrub the accounts for certain information (bankruptcies, deceased contact, phone append, etc.)
3. Enrich the accounts with outside data
4. Score the accounts to build your collection strategy
5. Segment the accounts
6. Allocate the accounts
7. Attempt collection
8. Collect payment

The steps above are essentially your operational algorithm. To achieve a level of automation for this process, you can implement machine learning models across the different steps of your collection process and connect them via an API framework — sort of like the connective tissue between muscles in your body (sorry to mix metaphors here) — so they can pass information back and forth to each other and intelligently power the different software used to store information and contact consumers.

Okay, but where do I start?

The first step to this ideal AI-powered outcome is to apply the historical data you have to train the machine learning models incrementally, so it’s not too much of an initial time sink, and you can realize gains in the short term. For example, you can use your CRM data to build a scoring model, payment model, risk model, workflow model, etc. Another approach would be to use your telephone, email, letter, and text data to predict the optimal times to contact consumers or the most effective messaging to power a chatbot, text, or email campaign.

It’s important to note that this data must include an “outcome,” so the algorithm can learn which accounts do and do not pay, pick up the phone, open an email, etc. If your data isn’t tied to outcomes, this may be the first step you need to take. Also important to note is that results will be much better if your historical data has been enriched with some external data so you can continually improve going forward.  

I’ve already taken the first steps – what’s next?

Now that you’ve got your desired Machine Learning models and have started to see increased revenue, how do you automate and realize reduced costs?

Let’s keep it simple with three different models:

1.     Propensity-to-pay model
2.     Preferred method of communication model (making sure you have the necessary consent)
3.     Time-to-contact model

You may not have too much control over how and when accounts are placed with you, but if they are transferred digitally, you can create an automated process for moving the accounts into your machine learning pipeline. 

With accounts in your pipeline, you can trigger the data formatting and enrichment process that has been automated via API internally or by leveraging a vendor. Once that process is complete, the system can push the accounts into the different models, scoring them, deciding how to contact the consumer (if that’s an option), predicting the time to contact them and suggesting the most effective messaging.

At this point, you’re fully equipped with machine learning and already have a huge competitive edge, but you can take it even further by going from machine learning to becoming a fully AI-powered enterprise. For instance, connecting your CRM or outbound communications system to your various machine learning models is what makes your enterprise “intelligent.” Before your system makes a call, sends an email, or delivers a text message, it should ask your model what to do.

Building your way to becoming an artificially-intelligent enterprise may not be as quick or easy as a plug-and-play Band-Aid for a narrow line of front-office operations, but you’ll find the outsized payoff of a foundational approach (which can include leveraging AI to help your firm decide which accounts to purchase, service or sell in the first place) is worth the effort. 

— 

Gregory Allen is the Founder and CEO of Pairity, an AI platform that offers Machine Learning as a Service to the accounts receivable industry.

—

About the iA Innovation Council

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

Learn more at www.iainnovationcouncil.com

2019 members include:

Discovery in TCPA suits is a major driver of cost and frustration for TCPA Defendants. Even Plaintiffs in individual suits will often serve overly broad and abusive discovery demands seeking, inter alia, all records of previous TCPA complaints, lawsuits, or settlements. The Plaintiff will claim this information is relevant to prove “willfulness,” yet no TCPA willfulness formulation turns on whether a Defendant has violated the TCPA in the past and/or whether the Defendant willfully violated the statute as to someone else.

While this battle often plays itself out in the discovery phase, the final incarnation of the fight—of course—occurs at trial; i.e. will the Court admit evidence of past purported violations of the TCPA as evidence that the Defendant violated the TCPA as to a specific Plaintiff. Well in  Johnson v. Capital One Servs., Case No. 18-cv-62058-BLOOM/Valle, 2019 U.S. Dist. LEXIS 178160 (S.D. Fl. Oct. 15, 2019) the court held directly that such evidence would not be admissible because it simply was not relevant to the case.

The analysis here is short and sweet: “ Capital One seeks to preclude Plaintiff from presenting evidence of other litigation or settlements involving Capital One. The Court agrees that any information or evidence pertaining to other litigation and settlements is irrelevant, and the lack of probative value of any such evidence is substantially outweighed by the danger of unfair prejudice. The Motion as to this issue is granted.”

Nice, no?

And the Defendant goes further and asks the Court to find that no evidence of any communication with anyone else is relevant to the case at all—good thinking guys—and the Court also agreed: “The Court agrees with Capital One that any introduction of evidence relating to Capital One’s communications with individuals other than Plaintiff, or communications to any number not ending in 2114, is irrelevant. The Motion as to this issue is granted.” One phone number at issue. One Plaintiff case. No other calls matter. Perfecto.

The Defendant also made a few arguments that were…more exotic. For instance, the Defendant asked to exclude a handwritten call log as hearsay, and evidence of Plaintiff’s experience hearing clicks and pauses when she received a call as irrelevant. Those requests were summarily denied.

We’ll keep an eye on this trial. However it turns out, this pre-trial ruling should prove quite helpful for TCPA defendants seeking to avoid the unnecessary production of information related to claims or complaints by third parties in individual TCPA suits.

—

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.