Archives for February 2020

The Conference of State Bank Supervisors (CSBS), a nationwide organization of financial regulators, released the newest chapter of its whitepaper titled “Reengineering Nonbank Supervision,” and the new chapter is all about debt collection.

The whitepaper’s new chapter covers an overview of the collections process, including the history of debt collection, the different types of debt collection entities, the types and volumes of different types of debts in collection, and federal and state supervision and enforcement efforts. 

All About Debt

The whitepaper goes into detail about the different types of consumer debts that are at play. Citing a 2014 study by the Urban Institute, CSBS states that “roughly 77 million Americans, or about one third of adults, have a debt in collection status.” A frequent source of delinquency in debts is either a divorce, an unexpected job loss, or a medical issue. 

The types of debts that most frequently find their way to collections are student loans, credit cards, auto finance, mortgage lending, and medical debts. Student loan debt takes up a whopping portion of the unsecured debt marketplace, followed by credit card debt. The whitepaper references that secured mortgages account for the largest amount of debt at $11 trillion, but mortgages have a relatively low default rate and don’t go into collections as often as the others.

CSBS specifically calls out—and dedicates an entire section of the whitepaper to—student loan debt due to its sheer volume, continued growth, and high rate of delinquency on its own as well as compared to other debts.

Debt Collection Entities

The whitepaper shows that CSBS clearly understands the difference between a third-party debt collector and a debt buyer, a distinction that is sometimes overlooked by advocates and regulators.

Editor’s Note: In the same breath, the whitepaper states that “[d]ebt buyers are considered debt collectors even though they own the accounts.” This is a legal issue that is making its way through the judicial system but has not yet been fully explored and decided by the U.S. Supreme Court.

Some benefits of creditors using third-party debt collectors include that they are “specialized and regulated,” “experts in the legal method of communicating with debtors,” “experts in state laws impacting the debt collection business,” and that “they understand compliance under the FDCPA.” 

The whitepaper also discusses debt relief companies that offer different kinds of services, such as debt consolidation and debt management plans. 

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Future of Debt Collection Industry

CSBS believes that the number of debt collection agencies will decrease over time, largely due to the high barrier of entry. Smaller agencies, who can’t keep up with the ever-growing licensing and compliance requirements, will likely either close shop or become acquired by larger agencies, who are better able to absorb the burdens.

At the same time, CSBS notes that “[t]he industry is struggling to keep pace with modern technology and changing consumer needs” and acknowledges that it is because of the lack of advancement in relevant laws and regulations. 

Problems with Collection Litigation

CSBS calls out some problems related to the process of proceeding with litigation against a consumer for unpaid debts. Due to the high volume of collection lawsuits filed, court dockets have become packed, which led to more automated processes. Three specific issues were addressed:

• The difficult burden of proof for consumers.
• Consumers often don’t appear in court because they didn’t know the court date or were not properly served.
• Overwhelming evidence produced by collection attorneys leads to summary judgment motions. 

CSBS concludes…

Debt collection is a large and growing segment of nonbank financial services. The growth of all forms of consumer credit, and the too often unfortunate end state of that credit in delinquency will continue to fuel the need for debt collection and debt relief by both creditors and consumers. State regulation of debt collectors, debt relief and student loan servicing is an emerging area within the system of state supervision.

Greater effort in developing uniform and comprehensive standards for regulation throughout the state system would result in better supervision of debt collection practices. And as the need for consumer protection and industry oversight expands, regulators will undoubtedly sharpen their focus on this area and state legislatures will likely respond with new or enhanced laws focused on this important part of the nonbank marketplace.

insideARM Perspective

The highlight of this whitepaper is that it seems that CSBS understands the industry, its benefits, and the challenges it faces. The whitepaper shows an understanding of: the differences in types of debt collection entities; how outdated laws prevent collectors from using modern means of communication; how there are legitimate debt collectors who genuinely try to comply with laws and regulations; and how the industry is expected to change over the years due to technology advances and consumer preferences. It’s a good read.

Something interesting that comes to mind when reading the section about collection litigation is how these issues will only become more apparent if debt collectors are not able to communicate with consumers. If creditors can’t collect on accounts using more less formal means like collecting through a third-party agency, then collection litigation or selling the debt are the creditor’s last resorts. One great stumbling block in communication right now, as mentioned in the whitepaper, is how collectors are held back from modern forms of communication due to outdated laws and regulations. And now, as regulators like the CFPB look to clear some of those roadblocks, some consumer advocates put forward misrepresentations—or, at best, misinformed representations—that debt collectors will send “unlimited” text messages and emails. Without also mentioning that debt collection laws and regulations contain natural limits to how often a collector can communicate with a consumer, regardless of medium, this comes off as nothing more than a scare tactic. Just some food for thought.

What can happen when you turn a deaf ear to a court order to cease illegal calls to consumers advertising your carpet cleaning business? The answer is the court can call you on its own carpet in handcuffs for potential civil contempt. That is the message of State of Texas v. Kevin J. Calvin, 2020 U.S. Dist. LEXIS 22245, CA No. 4:14-cv-00654-O, United States District Court for the Northern District of Texas, filed January 6, 2020.

Mr. Calvin was among a group of defendants that the State of Texas sued for violations of the Telephone Consumer Protection Act (TCPA), in his case for telemarketing calls about his carpet cleaning business. After his “no show” before the bench, the Court granted the State’s motion for default judgment, ordered that it recover damages and attorneys’ fees, and “entered a permanent injunction ordering the defendants to cease their illegal telephone marketing activities….” At the end of April 2019, Mr. Calvin, by affidavit, “testified” that he had received and read the Court’s orders doing so.

But did Mr. Calvin get the message? Lesson learned? Apparently, not so.

Two months later, in June of 2019, the State asked Judge Reed O’Connor to order Mr. Calvin to show cause as to why he should not be held in contempt because those illegal carpet cleaning telemarketing calls persisted. The Court agreed he should be called to task and ordered Calvin to respond by July 15. The State used all manner of communications – including Facebook Messenger – to serve the directive on the defendant. Silence ensued – another no show.

After Judge O’Connor referred the matter to Magistrate Judge Hal Ray, he issued a second show cause order, summoning the offender to a hearing in early November of 2019. Again, service through various channels. Again, no Mr. Calvin.

Enough is enough. Magistrate Judge Ray found that Mr. Calvin had violated the terms of the permanent injunction and recommended that the Court, “once Kevin J. Calvin is arrested or at such other time as set by Judge O’Connor,” hold a hearing as to why the defendant should not be found in civil contempt.

Just last week, on February 7, the Judge agreed and ordered the elusive Mr. Calvin “to surrender to the custody of the United States Marshall service.” If he does not, “the United States Marshall Service or any duly authorized law enforcement officer is ordered to arrest the Defendant and produce him before” the Court.

Such can be the consequences in TCPAWorld of thumbing your nose at a Court injunction to “stop calling.”

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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. 

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

During the waning hours of the first session of the 116th Congress, robocall practices were attacked with lightning speed in the form of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act. Sponsored by South Dakota Republican Senator John Thune and New Jersey Democratic Congressman Frank Pallone, this bipartisan bill was signed into law by President Trump on December 30, 2019. 

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Arguably hidden behind its stated purpose, which was to modify sections of the Telephone Consumer Protection Act at 47 U.S.C. § 227 (TCPA), the TRACED Act is essentially a codified directive to the Federal Communications Commission (FCC) to enact rulemaking on a number of issues relating to robocalls. This was a very formal way for Congress to push the sticky business of reforming the TCPA to the chief regulator of the communications industry, the FCC. 

For all practical purposes, the TRACED Act is a win for both consumers and the telecommunications industry. But it represents a devastating loss for third-party debt collectors.

ARM Industry Concerns Left Unaddressed

Since 2005, the accounts receivable management (ARM) industry has fervently lobbied Representatives and Senators on both sides of the aisle for amendments to the TCPA. During this time, the industry also advocated before the FCC for modifications to the agency’s 2003 TCPA regulations. 

The ARM industry’s proposed changes sought clarification of the following issues:  

• Consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
• Revocation of consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
• The definition of an automatic telephone dialing system (ATDS) and its alter ego, a manual contact system; and
• Transferability of consent when a carrier reassigns a mobile number from one person to another. 

Unfortunately, not one of the amendments offered by the ARM industry was included in last year’s landmark legislation.

Notwithstanding this defeat, third-party debt collectors as well as organizations or businesses that call consumers need to understand the TRACED Act and how it may impact them. This is not because their calls should be placed in the same category as robocalls launched by bad actors, but because in its zeal to stomp out robocalls from the bad actors, Congress included legitimate calls in its regulatory web.

Summary of the TRACED Act’s Key Provisions

As outlined by Contact Center Compliance DNC.com, the main provisions of the TRACED Act are as follows:

• Stopping Robocalls — The TRACED Act directs the FCC to take final action on its June 2019 Declaratory Ruling on Advanced Methods to Target and Eliminate Unlawful Robocalls.
• SHAKEN/STIR — Service providers are required to implement SHAKEN/STIR, or Signature-based Handling of Asserted Information Using toKENs (SHAKEN) and the Secure Telephone Identity Revisited (STIR). These are authentication protocols for digitally validating a phone call as it passes through the complex web of telecom networks, allowing phone providers to verify that the call is actually coming from the party that appears to be placing the call.
• Monetary Penalties — The FCC is authorized to assess penalties of up to $10,000 per call for violation with intent.
• Statute of Limitations — The statute of limitations for a general violation is one year, while the statute of limitations for violation with intent is four years.
• Protections from Spoofed Calls — The TRACED Act instructs the FCC to enact a rulemaking to “help protect a subscriber from receiving unwanted calls or text messages from a caller using an unauthenticated number.”
• Report on Reassigned Number Database — Within a year of the date of enactment, the FCC must give a report to Congress on its progress in implementing its proposed official database of reassigned phone numbers.
• Protection from One-Ring Scams — The FCC is required to “initiate a proceeding to protect called parties from one-ring scams.” 

Each of these provisions requires careful analysis. The SHAKEN/STIR requirements alone present challenging call authentication protocols that will be fleshed out by the FCC over the next months and years and enacted in the form of new rules. 

It would behoove members of the ARM industry to study any proposed rules published by the FCC and to file comments. For in the end, any violation of the TRACED Act could trigger a penalty as high as $10,000 per violation. Whether SHAKEN or STIRred, that’s one costly martini.

5 Things You Must Do to Mitigate Your Risks

We at Ontario Systems have closely monitored the robocall movement for several years. We’ve participated in work groups on behalf of various industries, advocated before the FCC, and monitored the TRACED Act legislation as it moved through both chambers of Congress. We’ve also conferred with our clients about their concerns with the TRACED Act. 

Based on what we know, here’s what we recommend. If you communicate with consumers—whether you’re a third-party debt collector, credit issuer, healthcare provider, or Federal, State, or local government—you should seek the advice of independent legal counsel to determine exactly how the TRACED Act may impact your communications with consumers. 

You should also consider the following next steps and ongoing practices:  

1. Enhance consent and revocation of consent documentation per consumer and per number.
2. Establish a process to pull reports on caller ID display on all outbound calls.
3. Ensure outbound calls are made using numbers associated with the proper company.
4. Monitor and analyze fraud and scam scores assigned by carriers to your outbound calls.
5. Ensure all outbound calls comply with state, Federal, and client call restrictions. 

For additional information about the TRACED Act and other contact/compliance management issues, visit Ontariosystems.com or reach out to me at Rozanne.andersen@ontariosystems.com.

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Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2020 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

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.

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It is fun to watch the law evolve.

In Salcedo v. Hanna the Eleventh Circuit Court of Appeal held, definitively, that receipt of a single unwanted text does not always cause Article III harm allowing a federal case. While a text might cause harm—for instance, if you fall off a ladder trying to reach your phone—in the ordinary course of things, hearing a single “chirp” is not sufficient to cause harm in the real world.

Except Salcedo actually involved two text messages—albeit received simultaneously. So it is not, and never was, sufficient to deem Salcedo a “one text” case—even though the essence of the Salcedo holding had nothing to do with the number of texts received but the qualitative nature of the Article III assessment—because more than one text was at issue there.

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That was precisely the issue picked up on by the Court in  Fenwick v. Orthopedic Specialty Inst., PLLC, CASE NO. 0:19-CV-62290-RUIZ/STRAUSS, 2020 U.S. Dist. LEXIS 21566 (S.D. Fl. Feb. 4, 2020). There the Court held that not 1, not 2, but 3 unwanted text messages did not cause Article III harm and recommended dismissal of the suit. As to texts 1 and 2, the Court interpreted Salcedo as applying in the multi-text scenario. It is not enough that more than one text was received—rather some harm from the texts musts be alleged. And the Court took much comfort in the fact that Salcedo actually involved two texts, and not one. So there.

As to the third text, this was a mere ”confirmatory” text, which the Court found does not violate the TCPA at all as a substantive matter. (Not to quibble, but doesn’t the rule permitting confirmatory texts derives from the idea that initial consent is presumed to be broad enough to encompass a single text sent after a stop notification and where no initial consent was received the confirmatory text actually might violate the TCPA? Can this result also be justified on a holding that there’s a presumed consent to receive a confirmation/informational text anytime you interact with a shortcode? Hmmmm.) And since the text did not violate the law it cannot have caused Article III harm.

So there you go—you can get up to three consent-free texts in the Eleventh Circuit without consequence these days. Then again, after Glasser probably would have required dismissal on a substantive basis anyway.

Also, BONUS holding—for those of you playing along at home. The Plaintiff’s bar is now arguing that the TRACED Act ameliorates the holding of Salcedo because it specifically mentions text messages in imposing one of its reporting requirements on the FCC. This is a bad argument—TRACED does not modify the definition of “call” or otherwise impact the scope of the TCPA. It simply requires the FCC to report on certain instances of text misconduct, presumably so that Congress can consider adding texts to the statute later. In any event, the argument is quite popular with the Plaintiff’s bar—they’re usually more creative than this—but Fenwick rejects it outright:

Nothing in the cited language, which concerns the streamlining of information sharing with the Federal Communications Commission, clearly evinces a Congressional intent at odds with the Eleventh Circuit’s analysis in Salcedo.

Bingo.

Nice little case to keep in your back pocket TCPAWorld.

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The iA Case Law Tracker can help you keep up with new court decisions and conduct quick, incisive legal research in less time than it takes to pour your morning cup of coffee.

Rochester, N.Y. –- Continental Service Group, Inc., d/b/a ConServe, Jeans for Charity Program achieves a milestone in January, surpassing $1,000,000 in charitable giving to non-profits since the program’s inception.  ConServe launched the program in 2007 to make a difference in the community by assisting health and human services, educational, diversity, civic and economic development, and cultural organizations. Good corporate citizenship is at the core of ConServe’s mission statement, of which “helping to improve the human condition” is an integral part of their success.

ConServe hosted a special recognition event on February 5, 2020, bringing together their employees and members of the community to share in this celebratory milestone.  Perinton Ambulance was one of the Jeans for Charity Program recipients in January and their President, Jon LeRoy also attended this special event. ConServe’s gift to Perinton Ambulance was the donation that lead ConServe to $1M in charitable giving.  Goodwill of the Finger Lakes and Hillside Children’s Foundation also participated in the celebration and have also been past recipients of the Jeans for Charity Program.

“2020 commemorates yet another milestone,” said Mark E. Davitt, ConServe Chief Executive Officer and Jeans for Charity Founder.  In 2014, Mark was so inspired by the generosity of his employees that he decided to enhance the program to introduce, ConServe Matching Gift Program, which matches employee’s monthly contributions to the Jeans for Charity Program.  Mark Davitt said, “We practice what we preach; doing the right thing, at the right time, the right way.  ConServe is steadfast in partnering with our Clients, employees, vendors and community as a whole to foster financial freedom, creating positive change and to make a difference.”  

ConServe plans to continue the program and is proud of its employees and the contributions this program has made in the community. 

About ConServe

ConServe is a top-performing and award-winning provider of accounts receivable management services specializing in customized recovery solutions for our Clients. Anchored in ethics and compliance and steadfast in our pursuit of excellence, we are a consumer-centric organization that operates as an extension of our Clients’ valued brands.  For over 35 years, we have partnered with our Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals.  Visit ConServe online at: www.conserve-arm.com

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About ConServe’s Jeans For Charity Program

ConServe’s Jeans For Charity initiative began in 2008 when their employees had an idea to launch a program that would provide a way of giving back to their communities.  ConServe employees can participate in monthly charitable donations, benefitting a wide-range of not-for-profits (501-C-3) organizations, in exchange for having the option of dressing down and wearing jeans to work for the entire month. The funds raised by the employees’ generosity are supplemented by the organization’s Matching Gift Program – symbolizing ConServe’s commitment to good corporate citizenship. This ongoing initiative is just one of the ways in which ConServe supports varied and diverse community agencies. To date, the program has donated over $1,011.037 to local community organizations.  

About the Perinton Ambulance

The Perinton Ambulance is known as a “combination service,” utilizing volunteers and hourly personnel to maintain the staffing necessary to meet the service needs of the community. Every day, they have two full crews on duty around the clock and staff an additional ambulance during high volume hours. The remaining vehicles are staffed as the needs of the community dictate.

Visit them online:  www.perintonambulance.org

This article is part of the iA Think Differently series. 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.

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It is undeniable that the world has changed in the last 40 years. That is, with the exception of the Fair Debt Collection Practices Act (FDCPA). Enacted in 1978 — and not updated since — the law mentions telegrams and came about decades before mobile phones, email, or the Internet. As a result, just like the law, much of the collection industry also remains stuck in the last century. It is time to catch up. Consumers are no longer reachable by snail mail or landlines. We all know this but what can we do about it?

The consumer you are trying to reach has gone digital, and the industry needs to follow. While there is still hope that a final rule from the Consumer Financial Protection Bureau (CFPB) will allow for text messages and email to consumers, this is just one piece of a digital strategy. There are many other things to do that do not put you at risk if you start thinking about a holistic digital strategy now. 

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The collection industry actually has an advantage.

Consider the amount of technological development over the past 40 years since the FDCPA was passed. While other industries spent the last 40 years attempting to find the best practices with developing technology, the collection industry can now take a giant leap forward by employing what those industries have learned through trial and error. This permits a collection agency to take a fully holistic approach to its digital strategy.

The primary objective of a collection agency is to recover funds owed by a consumer. The first milestone of that goal is to communicate with the consumer. According to the TransUnion Aite Group Report, The State of Third-Party Collections, 58% of survey respondents believe it is more difficult to contact consumers today than it was five years ago. They also state that “Getting consumers to respond is perhaps the biggest challenge in the industry today.” As you plan your future strategy, ask yourself the questions below.

1. Are you providing all of the preferred methods of communication?

Communication with the consumer can occur in two ways, inbound or outbound. We all know that inbound communication has the greatest chance of achieving the overall goal of collecting payment because the consumer is engaged. Until there are safer methods than a written letter sent through the US Postal service, a letter is still the primary method of generating inbound communication. 88% of respondents in the TransUnion Study mail a letter when the account is placed. Certainly, your phone number is on this letter, but how many calls do you get from a g-notice? Consumers have gone digital. They will rarely call you to have a conversation that is likely to be embarrassing for them. They prefer the more anonymous communication methods of text, email, or webchat. Do you provide them with those opportunities?

While a g-notice may prompt a few payments, it typically requires the consumer to write a check and mail it to you. Have you provided the consumer with their preferred method of payment? Some consumers prefer an automated telephone payment through an IVR, others prefer payment via the Internet at a payment portal. Some may have a question and want to interact with a chatbot on your website. What if they don’t recognize the debt? From the first communication, they should be able to find your website, read about your company, dispute or pay the debt, register their communication preference by text, email or phone, and provide consent – which you then record and keep on file.

2. What is the quality of your user experience?

All of these methods relate to a full digital strategy focused on the user experience. It offers every conceivable method of payment and the possibility to communicate in whatever channel the consumer prefers. As you might imagine, the heart of your digital strategy for collections will be your website and directing traffic there will be the goal of your communications strategy regardless of the method of communication. Voicemail, voicemail drop, email, text message, limited content message, private LinkedIn or Facebook message: the options for communication with consumers will continue to grow. The strategy, however, will be the same. You need to generate an inbound communication from an engaged consumer. Generally speaking, your website will be the easiest method for the consumer to gather more information in a safe, non-confrontational way.

If the consumer is ready to pay without questions or objections, the communication needs to offer all methods of making a payment that your digital strategy can offer. Consumers have many different preferences to make a payment: IVR, payment portal, chatbot, text payment, etc. None of these methods need to involve one of your employees. These methods are therefore the most financially effective methods of collecting. Your website can be the hub to funnel the user to their preferred method of communication and payment. For text messages, calls to a cell phone or even email, you should be tracking consent to communicate for each particular method. This can be handled easily by your website. Disputes? The website should also allow a consumer to register a dispute and provide reasons for the dispute. It can also function as entry to a payment portal, link a cell phone to an IVR for payment, provide a link to speak to “customer service” or allow the consumer to provide you with a cell number or email for a message back. If your collectors use a chat function on your website, the consumers can ask questions, provide consent, pay their bill or dispute a charge.

A holistic approach to a digital strategy can open a multitude of opportunities for a consumer to make a payment. All of them are easier and less expensive than actually reaching a consumer on their landline. And, the consumers prefer it!

3. Are you sending the wrong message to the wrong audience?

After review of several hundred collection agency websites, it appears that the majority of the sites are not mobile-first, offer no assistance to the consumer, and probably confuse them by marketing their services to attract new clients. That is the wrong message to the wrong audience. There is a wealth of free information available about how to design your website to provide a successful user experience. The easier it is for a consumer to pay, the much more likely it is that they will pay. It is time to embrace a holistic digital strategy and to approach the strategy with a “user experience” perspective. No need to wait on the final rule to roll out a digital strategy. Just add to your strategy once it does come out.

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Matthew Snedden is Chief Operating Officer of PDC Flow, part of the Beyond Investments, Inc. family of companies, and a member of the iA Innovation Council. 

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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. 

2020 members include:

The Consumer Financial Protection Bureau’s (CFPB) structure has seen many challenges in the past couple of years. The highest-profile item is the pending U.S. Supreme Court review of the CFPB’s single-director structure where the director may only be removed by the President for cause. The CFPB’s financial independece—specifically, it’s ability to set its own budget and get funding directly from the Federal Reserve System—is another often-challenged item, most recently in the President’s 2021 proposed budget.

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President Donald Trump released his proposed budget yesterday, calling for the CFPB to be subject to the appropriations process. What does that mean? In the separation of powers of the U.S. government, Congress traditionally has the “power of the purse.” This means that Congress generally controls where the government’s money goes through an appropriations process. When the CFPB was created, it was designed to circumvent the appropriations process so that it can be “independent” of bipartisan politics. If the President’s proposal were to go through, the CFPB would need to seek funding from Congress rather than directly from the Fed.

The President has proposed a similar structural change in the past, but it never came to be. Chances are slim that it would make it through this time around.

GENESEO, N.Y. — Coast Professional, Inc. (Coast) has hired Brad Rounding as Information Security Officer. He will be working closely with both the IT and Compliance Departments in the Geneseo office. This hire is a direct result of the company’s significant growth over the past year.  

Brad is a Certified Information Systems Security Professional (CISSP) with over 15 years of industry experience. He will be responsible for the evaluation, selection, and implementation of Coast’s new information and device security products. Brad possesses an in-depth knowledge of network security best practices and protocols and will oversee the continued compliance with regulatory and certification requirements.

“Brad has extensive knowledge and experience in every aspect of this field, including security engineering and security incident response,” said Annmarie Buchanan, Chief Information Officer. “His skills align perfectly with Coast’s overall vision and strategic goals. He will bring immense value to Coast and I’m excited to welcome him to our ever-growing team.”

Brad received his bachelor’s degree in information technology from RIT (Rochester Institute of Technology), and his master’s degree in network security from Capitol College. 

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About Coast Professional, Inc.:

Coast Professional, Inc. is an accounts receivable management company, dedicated to the respectful and ethical collection of higher education and government debt. Coast provides professional collection services to over 200 campus-based colleges, universities, and government clients. Coast is a six-time honoree on the Inc. 5000 list for American’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2019, was recognized for the fourth time as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. Since 1976, Coast has worked closely with clients to increase recoveries by assisting consumers in resolving their financial obligations. Coast’s success is exemplified by exceptional recoveries, superior service, and dedication to the highest levels of compliance. More information about Coast can be found at www.coastprofessional.com.

LOWELL, Mass. — Fonative, the Compliant Communications™ company, today announced the live customer deployment of its Trusted Entity Calling solution by a Fonative customer, Ontario Systems, a leading provider of receivables management software to healthcare providers, ARM agencies, and government collections departments. This solution is powered by Numeracle™, the pioneer of robocall blocking and labeling visibility in the calling ecosystem.

“Since adding Trusted Entity Calling we have seen a measurable increase in the call completion rate in the first month of use,” said Rip Harris, Ontario Systems’ Director of Product Management. “This bodes well as our call center customers need to be able to reach the people they call. Given the rise in robocalls, and numbers being marked as suspicious, having the means to make the outbound numbers trusted will only help their bottom line.”

Fonative’s Trusted Entity Calling provides customers, like Ontario Systems, with phone number registration to increase the connect rate on outbound calls, resulting in more and more effective customer conversations. To accomplish this, Fonative deployed Numeracle’s NumeraCert™ and NumeraList™ solutions to vet and verify trust in the calling party’s identity and register phone numbers across the wireless ecosystem. 

The cloud-based process is enabling call centers utilizing Ontario Systems’ Omni Voice service to register phone numbers associated with verified entities, laying the groundwork for STIR/SHAKEN call attestation. By validating the numbers with NumeraList, the legitimate calls are identified to the network. As a result, outbound calls to consumers originating from the Ontario Systems’ customer call centers will not be mislabeled and incorrectly displayed as FRAUD or SCAM calls.

“We’re here to provide a path and a process for legal, compliance-focused entities, like Ontario Systems and its customers, to identify themselves as ‘trusted’ across the call delivery ecosystem,” said Rebekah Johnson, Numeracle founder and CEO. “Through this process, we’re also able to identify fraudulent actors and prevent those types of entities from registering phone numbers through our platform and further dissolving trust in voice communications.”

Fonative’s carrier-grade CPaaS platform supports leading North American call centers that focus on healthcare-related and financial activities. Calls placed often surround payment and collection matters which involve the sharing, or collecting, of protected health information and payment data. As an intelligent solution, NumeraCert and NumeraList complement Fonative’s best in class, HIPAA, and PCI-compliant communications cloud-based API. 

“With carriers and the FCC cracking down on robocalling, it’s now critical to be bringing services like this to the market that validate, and certify, legitimate callers,” said Steve Smith, Founder and CEO of Fonative. The FTC’s recent letters warning voice service providers of the consequences of assisting with the delivery of illegal robocalls is evidence that a dedication to watchful compliance will be even more critical in 2020.

About Numeracle 

Numeracle is working with telecom carriers, call blocking and labeling analytics providers, device manufacturers, and industry leaders to deliver a path to visibility and control in the new calling ecosystem. Through the company’s technology vision and industry leadership, Numeracle is laying the foundation for returning trust and transparency to customer communications. To learn more about Numeracle’s call blocking and labeling solutions for call originators and call centers, visit www.numeracle.com.

About Fonative

Fonative helps businesses connect with customers through voice and text, providing compliant communications as a Communications Platform as a Service (CPaaS). The company’s technology enables developers to easily incorporate calling and messaging capabilities into business applications, without the need to maintain servers, infrastructure, network, and telecommunication carriers. Combining carrier-grade technology with advanced call center capabilities and regulatory compliance, Fonative is the only suite of telecommunication services to meet the stringent requirements necessary in key industries such as medical, financial services and government. For more information about Fonative’s Compliant Communications™ efforts, visit the company’s website, www.fonative.com.

Fonative is a registered trademark and Compliant Communications is a trademark of Fonative, Inc. Numeracle, NumeraCert and NumeraList are trademarks of Numeracle, Inc.

An interesting twist occurred in the battle against credit repair agencies that flood debt collectors with dispute letters. Last July, a jury in Texas returned a $2.5M verdict in favor of the plaintiffs—The CBE Group and RGS Financial—against Lexington Law and Progrexion, finding that the credit repair organization participated in a fraudulent scheme. On Thursday, Judge Sam A. Lindsay overturned the verdict, despite not being a fan of Lexington Law’s conduct.

The judge issued an order on several post-verdict motions filed by both parties in the lawsuit. Ultimately, the court denied plaintiffs’ motion for entry of final judgment and granted Lexington Law’s motion for judgment as a matter of law (which challenges the legal sufficiency of the verdict).

The ultimate effect of this is that the jury verdict is effectively canceled and “all allowable and reasonable costs are assessed against Plaintiffs.”

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So, what happened?

Lexington Law’s motion rested on the argument that plaintiffs’ fraud claim fails due to the failure to demonstrate two required elements: that the credit repair law firm knowingly made a material false statement and that, even if they did, there was no reasonable reliance on plaintiffs’ part. Plaintiffs’ motion, on the other hand, argues that all elements were met with the evidence presented at trial and Lexington Law failed to present contrary evidence.

The court found that, based on the evidence presented, Lexington Law did not make any material false statement. The court cites Lexington Law’s retainer agreements for its clients, which specifically states that Lexington Law may: act as the client’s agent or attorney in fact for disputing problematic credit report information; send communications on behalf of the client “and will not be identified as being sent by Lexington”; and sign letters on the client’s behalf.

According to the court:

The evidence presented at trial demonstrated that Lexington Law Firm was acting in accordance with the retainer agreement, and that each client explicitly consented to Defendants disputing certain of their credit lines and signing their names on the letters. In light of this evidence, the court fails to see any actionable misrepresentation on the part of Defendants. Plaintiffs have not explained convincingly—at the July 1, 2019 oral argument or in their postverdict briefing—how Defendants’ conduct amounts to an actionable misrepresentation.

The court also found that there was no evidence presented that Progrexion—Lexington Law’s co-defendant, made a misrepresentation. This is because Progrexion, while creating templates of letters for Lexington Law, does not itself send letters.

While the court overturned the verdict, it did not have praise for Lexington Law, stating that its conduct is not “cause for approbation.”

Now we wait to see if CBE and RGS appeal the judgment.

insideARM Perspective

This is an unfortunate turn of events in the fight against a practice that ultimately harms consumers. Legitimate debt collectors understand the importance of accurately reporting account information to the credit bureaus, and they build robust compliance processes and procedures to ensure they are reporting correctly and are able to quickly investigate—and, if necessary, correct—disputed information. It is believed that many credit report disputes, such as the ones from credit repair organizations, are not legitimate; instead, they are an attempt to remove correct, but unwanted, derogatory items from credit reports. If debt collectors are flooded with these illegitimate disputes, it makes it more difficult to separate the wheat from the chaff and help consumers who have legitimate disputes.