Archives for April 2020

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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On April 24, Minnesota’s Department of Commerce issued new regulatory guidance that extends its former guidance—issued on March 13—allowing debt collectors to temporarily work from home. The March guidance permitted collectors to work from home through April 30. The new guidance extends this allowance ” through any extension of the Stay At Home Order initially issued by Governor Walz on March 25, 2020.”

The new guidance mirrors the four criteria from the original March guidance: 

1. The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
2. The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason.
3. None of the activity will be conducted in person with members of the public from the home location; and
4. The licensee shall, at all times, exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.

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The new guidance makes it clear that the Department of Commerce is temporarily suspending the requirements of only Minn. Stat. § 332.33, subd. 3, and that all other requirements remain in force.

Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

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Effective June 11, purchasers of consumer debt will face tougher requirements when initiating debt collection lawsuits in Washington state. A copy of the recently passed law is available here. 

The law applies only to a “legal action,” which is not defined but is used in the context of the filing of a complaint. Also, a legal action must concern a “claim,” which is defined as “any obligation for the payment of money or thing of value arising out of any agreement or contract, express or implied.”  Activities directed at collection of a “claim” that do not include a “legal action” are not impacted. 

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A Very Broad Definition of a “Debt Buyer” Likely to Capture Unsuspecting Lenders and Investors 

A debt buyer is defined here as “a person or entity that is engaged in the business of purchasing delinquent or charged off claims for collection purposes, whether it collects the claims itself or hires a third party for collection or an attorney for litigation in order to collect such claims.” The language is almost verbatim from legislation passed in Colorado in 2017. And, like Colorado, there are no stated exceptions for bank and non-bank lenders and others who may acquire defaulted or charged-off debt incidental to a larger portfolio, as is the case in earlier legislation passed in Oregon in 2017. 

“Legal Action” Requirements for Complaints and Default Judgments 

When filing a complaint or seeking a default judgment in Washington state to collect a claim, debt buyers will be required to satisfy requirements for various documents or information which must either be attached to or provided in the complaint or submitted to a court, in the case of an application for a default judgment. In many ways, the requirements are similar to those in Colorado. 

For example, if the lawsuit alleges a breach of contract, a copy of the terms and conditions in place at the time of the most recent monthly statement recording a purchase transaction, payment, or extension of credit must also be attached. It does not impose a similar requirement for lawsuits alleging “account stated” or other legal claims.

Another requirement concerns claims, “based on a credit card debt for which a signed writing evidencing the original debt does not exist.” In those instances, a debt buyer must attach “the most recent monthly statement recording a purchase transaction, payment, or other extension of credit.” In this context, it is unclear what is meant by “a signed writing evidencing the original debt.” Unless the extension of credit was made simultaneously with the extension of credit, a credit card agreement itself does not create any indebtedness. Besides, the vast majority of credit card agreements are never signed by debtors, rather an application is signed requesting a credit card product. 

More Disclosures 

Debt buyer complaints must also contain six disclosures: 

1. That the action is being brought by, or for the benefit of, a person or entity that is engaged in the business of purchasing delinquent or charged off claims for collection purposes; 
2. The date the claim or obligation was purchased; 
3. The identity of the person or entity from whom or which the claim or obligation was purchased; 
4. That the plaintiff may have purchased this claim or obligation for less than the value stated in the complaint; 
5. If the claim or obligation was at any time sold without any representation or warranty of accuracy, a statement to that effect; and 
6. That the action is being commenced within, and is not barred by, an applicable statute of limitations. 

Covered Purchased “Claims” 

Not all purchased debt will be subject to the new requirements. Since Washington limits the scope to “claims,” the debt must arise from an express or implied contract for the payment of money or “a thing of value.” And, even if the debt would qualify, the new requirements only apply to debt acquired after June 11. 

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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The saga builds! To summarize our previous coverage: Navient has turned the tables and sued a plaintiff firm – The Lohman law firm – for allegedly coaching clients to bilk Navient out of millions of dollars.

The alleged scheme: the Lohman firm had students stop paying their debts to Navient (and pay other entities); and gave a word-for-word script for the students to instruct Navient to cease all phone calls to them. Once students defaulted on their monthly payments, Navient would call about their accounts. The Lohman firm patiently waited for the phone calls from Navient to synthetically rack up TCPA fines past the debt amount, and eventually would sue Navient. 

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The Lohman firm had rained down suits. Last year, Navient smelt foul play and fired back a lawsuit. Now, Navient is going with both barrels at the Lohman firm in Navient Sols., LLC v. Law Offices of Jeffrey Lohman. Navient asked for records of the Lohman firms’ communications with their student loan debtor clientele. The Lohman firm objected and asserted the attorney-client privilege protection. Navient filed a motion to compel for the attorney-client discussions. Navient argued it’s entitled to the usually protected info under the ‘crime exception’ to the attorney-client privilege. Magistrate says, I’ll allow it; the Court agreed.

A crime-fraud exception breaks the attorney-client privilege when communications are made “for the purpose of committing or furthering a crime”. Lohman’s firm argued that only the attorneys are being accused of committing a fraud, so the crime-fraud exception was inapplicable here. The Court ruled: “At bottom, it is clear that discovery of the communications at issue, which concern an allegedly sweeping scheme to defraud one of the country’s largest loan servicers at the expense of student loan debtors… would both serve the public good and advance the search for truth. Accordingly, the crime-fraud exception can apply where, as here, the attorney alone purportedly committed a crime or fraud of which the client was a victim.”

The Court did take off sanctions imposed by the magistrate on the Lohman firm for needlessly increasing litigation costs with supplemental briefings. The court noted a new firm has taken over representing the Lohman firm which has recently been complying with discovery, but warned there will be no hesitation to impose future sanctions for frivolous litigation tactics. Battle won by Navient. Will keep an eye on this unfolding story.

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Want to quickly search for other court decisions where the court calls out plaintiffs’ counsel? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

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

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This week, Ontario Systems hosted its third weekly COVID-19 webinar for third-party collectors, “Voices from the Trenches: How Leaders Are Leading During the Crisis.” I had the pleasure of speaking with three agency executives who shared their experiences and perspectives on a variety of operational concerns related to COVID-19.

Joining us on the panel were: 

• Laura Jensen, Chief Acquisitions Officer, Absolute Resolutions Corporation (ARC);
• Tim Haag, President, State Collection Service; and
• David White, Senior Vice President, Performant.

Like all of us, these leaders and their organizations were forced to adapt quickly to COVID-19—not to mention a shifting legal landscape that’s been particularly challenging for the receivables industry.

How have these leaders managed to successfully navigate the COVID-19 crisis? Here are some notable excerpts from our conversation, in the panelists’ own words.

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A Study in Contrasts: 30 Days Ago vs. Today

David White, Performant

Generally speaking, our business was not remote. We were close to 100%  brick and mortar. The clients we partner with didn’t have a desire to maintain remote workers.

So fast forward to the pandemic: we’re 95% remote in our capabilities today. We’re very lucky to have client partners that have moved very quickly with us to migrate our operations to remote capacity. We’re very excited to be where we are today, and I think we’ve adapted pretty well to the situation.

Laura Jensen, ARC

Over the past couple of years, we’ve worked towards having our staff going remote. So our transition was fairly easy. We have about 95% of our staff currently working remote. We have some essential services in our office—payment, posting mail, HR, and some IT support.

We had a mixed experience [with companies we outsource to]. Some of our servicers had intended to offload calling to a remote site in the Philippines, and the Philippines went on lockdown before the U.S. So that pandemic plan didn’t bear out. This has definitely challenged a lot of people’s business continuity plans.

Tim Haag, State Collection Service

We’ve been working with remote staff, both admin and reps, for about four or five years now. So we had some experience—obviously not to where we’re at today, but we had roughly 80 people working remotely prior to COVID-19. Now, I would say 85-90% of our staff [of nearly 500 people] is remote. I’m so proud to say all that’s working well.

When communicating with consumers, the big thing is scripting. We got on that right away, started changing scripting, making less outbound calls, less texting. And I think the main thing is we continue to listen to the consumer and do what’s right to solve problems.

Meeting the Challenge of Managing Remote Workers

David White, Performant

We had individuals on the admin side and management side who were working remote, but to transition our entire staff remotely meant we had to adapt them pretty significantly to meet our clients’ requirements. We’ve got some clients at the government level that have very high expectations for data security.

Think about all the different digital assistants around your house—your Alexa, your Google, your smartwatch, your phone. When we’re working and we’re in range of those types of digital assistants, how do we ensure our customers’ data are not being picked up? How do we not have risk and exposure? We had to adapt policy and procedure wise.

Tim Haag, State Collection Service

We utilize speech analytics. We’re monitoring in a live version, so all the supervisors know exactly what’s taking place on all those calls as they’re happening. We also have the use of Artiva Magnify™, so we can jump in and listen into calls, coach calls, text messages to the representatives, or ultimately take over the call.

Prior to COVID-19, for those who did get a chance to work from home, we expected them to have a 5% improvement in productivity, If they didn’t do that, they were asked to come back into the office until that productivity came back. As time goes on, as people get more comfortable working from home, we hope to see that productivity increase with all the rest of the staff.

Engaging Consumers and Patients Suffering Hardships

Laura Jensen, ARC

We’ve consistently pushed our servicers to honor hardship policies and make sure their hardship policies are adjusted to the extent they need to be for people who are ill or out of work for COVID-19.

David White, Performant

It’s about trying to find the right payment plan for these individuals. That may mean pushing out those payment plans for a period, it may be extensions, it may be reductions in what those payoffs may be. Most of our clients have been very, very willing to work with us as it relates to finding the right solution for consumers.

Tim Haag, State Collection Service

Consumers, when we do reach out to them, are very thankful that we’re offering up solutions right away. “Hey, I see you’re on a payment plan. Do you need to defer this plan for the next 60 days?” They’re kind of surprised, like, “Wait—you’re on my side. You’re here to help. I really appreciate your reaching out.”

Keeping Remote Teams Connected and Energized

Tim Haag, State Collection Service

For a supervisor to communicate with their representatives or the agents, we utilize Microsoft Teams. So now we’re doing team meetings and individual one-on-ones using that platform.

We’ve also been using a gamification system for about two or three years. This helps keep the  excitement piece that exists inside the office, we’re still able to do that, and they can track their stats. So they can still have friendly competition. We’ve been throwing some extra carrots out there, and that’s been a lot of fun.

David White, Performant

We’ve got a very cool intranet that we utilize. The intranet allows us to do a ton of different posts on a daily basis of updates, shout outs to individuals, our CEO posts, articles once a week of feedback, what’s going on in the business, the industry—what we’re doing on all those different types of things.

Also, as part of this intranet, we can do group discussion boards that work very well. So we’ve got email, we’ve got chat, but this group discussion board is for when we have situations that come up that someone’s like, “Okay, is this unique? I’ve talked to this person, this is what was said, how do we handle this?”

Managing Compliance and Client Communications

David White, Performant

Our general counsel manages the process for us. We’ve got a moving document that’s living and breathing based on all the changes coming out of COVID-19, so that document is reviewed on a regular cadence in leadership meetings. Originally, we were meeting daily, but now we’re doing it every other day—a pandemic team call with the key stakeholders within our company.

We’ll cover all the changes that happened in the previous 24 hours. We’ll communicate what direction clients have provided us relating to that. Then we’ll typically provide guidance to our account management team, sales, and business development team about where we stand with this and the changes we’re making. And then we’ll say, “Convey this to the client and let them know what we’re going to be doing on our side, and see if that lines up with their expectations.”

Tim Haag, State Collection Service

You would actually think that [healthcare providers] aren’t worried about the day-to-day collections environment, but now they are, because there’s nobody in hospitals right now, and they’ve cancelled all surgeries. So their revenue is going down. Cash is extremely important to them right now. So we’re getting more of their attention.

We put together right away a COVID-19 response team. We meet every morning . . . for about 30 minutes to talk about communication that we’re going to send to our clients. We actually came up with a new procedure for our compliance change management process. That goes to our general counsel, and from there, he makes the change. When all this settles, we can go back and make sure all those changes were back to normal.

Lessons Learned

Laura Jensen, ARC

The biggest lesson I’ve taken away is management related: show up every day, show up for your staff, show up for your company. For me to do that, it’s getting up and having a positive attitude. It’s getting ready and being present. There’s a lot of chaos, and everybody’s scrambling and nobody knows what to do, but show up. Be present. Be a leader.

My second [lesson] is, always have your best staff. I have the best staff, and I trust my staff implicitly. I think that has been a huge help in getting through this.

Tim Haag, State Collection Service

I think continuing that communication with [employees]—”Hey, guys, it’s going to be alright; we’re going to get through this”—it means a lot. And I have been focused more not on the day-to-day things now, but let’s see what happens after this. So let’s not worry about tomorrow, but let’s start thinking about next month, six months from now, a year from now, and how we can come out on top.

David White, Performant

In a limited time, we’ve had to be remote. Hopefully our clients are understanding that this is an opportunity for the long haul, not just through the COVID-19 situation—that after we get through this, there’s an opportunity for us to adapt our workforce and adapt our offerings. I’m not advocating for 100% remote, but some flex opportunity for us to be effective.

Catch Up on Previous Discussions, and Join Us Next Week

Our past COVID-19 weekly webinars were full of valuable insights and tips related to compliance management and business continuity. You can find detailed summaries with links to the webinar replays in these recent blog posts:

• Navigating the Crisis: What ARM Agencies Must Do to Say on Course and Compliant
• 10 Things You Need to Know About the CARES Act and SBA Loans
• You can also listen to this week’s webinar, “Voices from the Trenches: How Leaders Are Leading During the Crisis,” in its entirety. Click here to download the recording.
• Be sure to register for next week’s COVID-19 crisis management webinar, “Product-Centric Solutions for COVID-19 Challenges.” We’ll explain how the Ontario Systems solutions you currently have in place can help smooth the transition to normal operations as we emerge from this crisis. It’s a critical (and welcome) discussion you won’t want to miss.

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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Chase Bank has marked its territory in TCPAWorld.com! 

Last year, Chase was sued in New Jersey for alleged auto-dialer violations. Chase answered by asserting an unclean hands defense.  Chase pursued a subpoena on the plaintiff’s law firm – M. Harvey Rephen & Associates – for documents and a deposition.  Harvey Rephen telephoned counsel for Chase to tell him he was out of the country and wouldn’t be able to sit for a deposition.  Chase filed an action in New York to compel the Rephen Firm.  The Court fined the Rephen firm $100 a day for non-compliance, to spike to $500 per day if they continued to not produce documents and their corporate representative.  The Rephen Firm chose to ignore this.  Chase doubled down, fully briefed the issue again and requested the sanctions.  

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“The story continued to unfold,” the court narrated. After Chase filed against the Rephen Firm, the plaintiff in the underlying New Jersey proceeding had testified she moved out of the country, and dismissed her case.  The court terminated the TCPA action, but kept Chase’s outstanding sanctions motions alive.

The New York court held a conference before judgment.  Counsel for the Rephen Firm repeated the same excuse, namely that Harvey Rephen was out of the country, only adding that recently business was slow, and the Rephen firm wouldn’t be able to cough up Chase’s accrued sanctions.  Chase moved on them for $231,441 in attorneys’ fees, as well as $23,400 in sanctions.  Chase additionally applied for a writ, and an order that the Rephen Firm must provide an accounting of assets to satisfy judgment if necessary.

The result: Chase won the $250,000, and the court is ensuring Chase gets relief, keeping an asset seizure if the judgment is not satisfied on the table.  Rock solid victory! 

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Want to be the first to learn about and track trends on industry-impacting issues like this? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

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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There’s no shortage of consumers and companies rocked by COVID-19. The speed and degree with which this has touched every entity in our country are unlike anything any of us have ever seen. Although this period has been filled with moments of sadness, loss, fear, confusion, uncertainty, and anxiety, many companies have led the charge to make sure their employees and customers are cared for by finding ways to adapt and thrive despite these unforeseen circumstances.

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The Big Picture

In collections and recovery, we are no strangers to helping consumers when they’re going through difficult times. However, this cycle is different. The sheer volume of consumers that will suddenly be faced with short and long term unemployment is staggering. TransUnion recently published in their COVID-19 Pandemic’s Financial Impact on U.S. Consumers report that 61% of consumers surveyed indicated their household income has been impacted. The report also says that the hardest-hit states in the West are California (68%), Washington (70%) and Nevada (77%). In the Northeast, New York comes in at 67% and notably, in the south, Louisianna is an outlier at 71%. Of these, 8% believe this will impact them in the future and 14% are unsure what the future holds.

Short and Long Term Impacts

Taking this data into account, many collection leaders are re-forecasting delinquency and losses in a world of firsts and with a lot of unanswered questions. How long will jobs be affected in the short-term? How many will be affected indefinitely due to companies’ inability to survive or remain viable during this time? TransUnion reports that 66% of consumers are concerned about their ability to pay current bills, with the highest concern being their ability to repay credit cards, utilities, mortgage payments (this percentage is higher for those with children) and rent.

The Industry Response

As many of us know, when delinquency and losses rise, especially at this speed and to this degree, companies have to make significant strategic decisions. Based on conversations with leaders and a look at various forecasts, I predict the first light wave of delinquent and impacted customers will flow through to charge-off beginning in September. This is significant because you will have pandemic-related delinquency in every single bucket, on top of the pre-COVID-19 delinquency that already existed and has likely only gotten riskier.  Companies will need to take immediate action to be prepared for when peak pre and post-charge-off delinquency levels hit the system. Here’s what I anticipate to be the top collection strategy priorities for the remainder of the year:

Immediate Considerations

A whitepaper recently published by the team at Boston Consulting Group and 2nd Order Solutions offers several solid suggestions and considerations for the immediate term: reallocate any underutilized staff, prepare for the reality of reduced outbound calling, clarify roles — especially among decision-makers — to ensure quicker deployment of desired changes, increase non-phone outreach (letters, SMS, etc.), and proactively design offers to help consumers through the immediate decline in their ability to pay.

Long Term Considerations

Many collection strategy execs are hustling through an exercise to size increased delinquency, re-forecast expenses and do their best at estimating future losses. While all leaders are trying to figure out the impacts, conscientious leaders are also working on the other side of the equation and determining how to offset all of those impacts. After all, that’s what collection strategy professionals get paid to do. 

After companies have pulled out all of the stops to help customers, it will be time to buckle down and design the plan for what’s to come. I break this down into three categories 1) capacity 2) expense reduction (to offset the increased delinquency costs) and 3) loss mitigation.

Capacity 

After forecasting the future demand, a solid and well-thought-out capacity plan will be essential. Considerations need to include the future insource/outsource allocations, as well as the viability of other traditional post-charge-off streams; debt sales (lower price due to higher available volume), legal referral, internal and agency. Any companies that haven’t outsourced before should seriously consider this as part of their ongoing strategy. As with every delinquency bubble, there will be an initial first-party peak starting anywhere from July – September (depending on loan terms) and lasting for the unforeseeable future. After that, we’ll slowly start to see a decline as consumers purge through (brace yourselves third party). Flexibility in staffing will be the most cost-effective and streamlined way to adjust month to month. 

Expense/Loss Mitigation

Increasing staff due to higher demands will inevitability increase the cost to collect. The smartest way to offset this increased need in staffing is to look for ways to fully deploy any and all self-service options available to you.

1. SMS and Email – If you haven’t already done so, you should accelerate the adoption of SMS and email. They are easy to stand-up and well-tested in the industry.
2. Self-Service Web Portal – In an environment where consumer education and the need to reduce capacity demands are top priority, a self-service web portal is a no-brainer. It can serve as a centralized place to educate consumers on their options, as well as help them to guide themselves through negotiations; payments, payment plans, settlements, etc. This will significantly streamline the process for consumers and will help alleviate some of the capacity constraints and expenses for lenders. When sourcing a solution, finding one that allows for the greatest amount of customization is your best bet. You’ll want the flexibility to modify the decision engine and models behind the portal as frequently as you need to given the uncertainty surrounding this ever-changing crisis. 
3. Virtual agents should come to the forefront. This technology has been tested throughout the industry and I believe COVID-19 will be a catalyst for further adoption. 

Conclusion

This will be a long and challenging time for many consumers. But we’re built for this and are best positioned to help them as they navigate this unknown territory. Many for the first time. This is a starting, high-level list based on what we know now, but the number of solutions and levers is unlimited and will be ever-changing and evolving as we learn more. While I’ve cited some solutions requiring initial investment, I’m confident 1) the right solutions will pay you back and 2) there are a lot of levers that do not require an investment that can be pulled immediately. We’ll talk about those and others as we work to keep you informed.

Want to learn more?

Join me on the first of our new Webinar Series: Leading Strategically Through the Recovery: The Industry Outlook, TOMORROW, April 22nd at 1 PM EDT, sponsored by LiveVox.  

Then plan to attend our upcoming iAST – Strategy and Tech Digital Conference July 21st – 23rd.

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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 (and lately, virtually) 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:

Editor’s Note: This article was originally published on Messer Strickler’s blog and is republished here with permission.

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Many business owners have incurred, and will continue to incur, substantial financial losses as a result of the COVID-19 pandemic. Because these losses may be covered by commercial business insurance policies we have been assisting our clients by reviewing their policies and making claims for coverage.  Not surprisingly, insurance companies are quick to provide coverage for COVID-19 related losses.  This, however, should not deter you from pursuing coverage in appropriate cases.  We are glad to assist you in determining whether your business insurance policy provides coverage and making a claim if appropriate.

Lawsuits are already being filed regarding COVID-19 insurance coverage.  One lawsuit which we are following, Big Onion Tavern Group, LLC et al. v. Society Insurance, Inc. is particularly instructive. This lawsuit was filed in the U.S. District Court for the Northern District of Illinois on March 27, 2020. 

The Big Onion Shutdown & Insurance Claim

Big Onion Tavern Group, LLC (“Big Onion”) operates several Chicago area restaurants.  After Illinois Governor Pritzker issued Executive Orders closing restaurants and all “non-essential” businesses in an effort to stop the spread of the coronavirus (the “Closure Orders”) Big Onion and its restaurants made claims for business interruption coverage under their Commercial Business Owners Insurance Policies issued by  Society Insurance, Inc. (“Society”).  

According to Big Onion, even before it could make these claims Society’s CEO had issued a memorandum to its agents stating that Society’s “…policies would likely not provide coverage for losses due to a ‘governmental imposed shutdown due to COVID-19 (coronavirus)’.”  Society thereafter denied the Big Onion claims on the grounds that the losses were not covered because “…the ‘actual or alleged presence of the coronavirus,’ which led to the Closure Orders that prohibited Plaintiffs from operating their businesses, does not constitute ‘direct physical loss’.” 

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Big Onion Sues for Insurance Coverage

Quickly thereafter Big Onion and its restaurants filed a Complaint for declaratory judgment, indemnification, breach of contract and bad faith denial of coverage in the U.S. District Court for the Northern District of Illinois.  In its Complaint, Big Onion argues that the  Commercial Business Owners Insurance Polices provide coverage for losses incurred due to a “necessary suspension” of their operations, including when their businesses are forced to close due to government orders, such as the Closure Orders.  Big Onion argues that Society’s denial of the claims is contrary to the law because “Illinois courts have consistently held that the presence of a dangerous substance in a property constitutes ‘physical loss or damage’.”

Claim for Loss of Business Income Coverage

In its Complaint, Big Onion argues that pursuant to its Policies Society “…agreed to ‘pay for the actual loss of Business Income’ sustained by Plaintiffs ‘due to the necessary suspension’ of Plaintiffs’ operations during the period of business interruption caused ‘by direct physical loss or damage to covered property’ at the insureds premises.”  Big Onion claims that “[w]ith respect to business interruption losses, ‘suspension’ means (1) ‘the partial slowdown or complete cessation of your business activities’; or (2) ‘that part or all of the described premises is rendered untenantable if coverage for Business Income applies.’” Big Onion further claims that Society “…also promised to ‘pay necessary Extra Expense’ Plaintiffs incur during the period of interruption that they ‘would not have incurred if there had been no direct physical loss or damage to covered property at the described premises.”  In this connection Big Onion claims that “[t]he continuous presence of the coronavirus on or around Plaintiffs premises has rendered the premises unsafe and unfit for their intended use and therefore caused physical property damage or loss under the Policies.”  

Big Onion further argues that its Policies, unlike many other commercial policies, do not include an exclusion for loss caused by viruses. Big Onion argues that the existence of such exclusions in policies indicates that when policies such as theirs don’t include such exclusions that coverage should be provided.  The logical conclusion here is that “… if a virus could never result in a ‘physical loss’ to property, there would be no need for such an exclusion.”   

Claim for Civil Authority Coverage

Big Onion also claims that the “Civil Authority” coverage provision in the Polices provide coverage.  Specifically, Big Onion claims that through its Policies Society had “…promised to provide coverage for losses incurred due to government actions ‘taken in response to dangerous physical conditions,’ even if those dangerous physical conditions cause damage to property at locations other than those insured under the policies.”  Big Onion claims: “Civil Authority coverage is triggered when any non-excluded cause results in ‘damage to property other than property’ at the Plaintiffs’ premises and is intended to cover losses resulting from governmental actions ‘taken in response to dangerous physical conditions.’” 

Here Big Onion claims it is entitled to coverage because the March 15, 2020 Closure Order was issued by Governor Pritzker “… in direct response to these dangerous physical conditions, and prohibited the public from accessing Plaintiffs’ restaurants, thereby causing the necessary suspension of their operations and triggering the Civil Authority coverage under the Policies.” Similarly, Big Onion argues that the March 20, 2020 Closure Order triggered Civil Authority coverage by closing  “non-essential” businesses in Illinois including restaurants “…in direct response to the continued and increasing presence of the coronavirus on property or around plaintiffs’ premises.”  

Big Onion’s Claim for Bad Faith Claims Handling 

Finally, Big Onion asserts a claim against Society for bad faith denial of coverage under the Illinois Insurance Code.  Big Onion claims that Society acted in bad faith by denying the insurance claims immediately upon receipt, without conducting any investigation, “…let alone a ‘reasonable investigation based on all available information’ as required under Illinois law. See 215 ILCS 5/154.6.”  Big Onion claims that this as well as Society’s “…failure to provide reasonable and accurate explanations of the bases in its denials” constitute “improper claims practices” under the Insurance Code.  Accordingly, Big Onion is seeking damages and its attorneys’ fees and costs incurred in prosecuting its claim for coverage pursuant to the Insurance Code under 215 ILCS 5/155.

Conclusion 

If your business has incurred substantial financial losses as a result of the COVID-19 pandemic and you have a business insurance policy you should determine whether you have coverage for those losses.  Don’t be dissuaded if your agent tells you there is no coverage. As was the case with Society, your agent may have been instructed to turn you away at the gate.  But like Big Onion, you have several facially credible arguments for coverage  It is always best to understand your policy and know your arguments for coverage before making a claim.  This helps you avoid rejection by insurers which practice the “three D’s of insurance companies; Deny, Delay and Defend.”  

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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Adding an arbitration clause to previously-agreed upon terms and conditions (Ts and Cs) does not automatically ensure that a subsequent TCPA dispute is arbitral – at least under New York law. It all depends – of course – on the facts.

In Engen v. Grocery Delivery E Services USA Inc., 2020 U.S. Dist. LEXIS 63658, Case No. 19-cv-2433 (ECT/TNL), United States District Court for the District of Minnesota, decided April 10, 2020, Amanda Engen opened an account online with Grocery Delivery EServices USA Inc. (HelloFresh) and clicked a box next to the phrase, “I accept the terms and conditions and I have read the privacy policy.”

The words “terms and conditions” were hyperlinked to the then-effective Ts and Cs (as of January 21, 2017), including the right of HelloFresh “to revise and amend… [them] from time to time to reflect changes in market conditions affecting our business, changes in technology, changes in payment methods, changes in relevant laws and regulatory requirements and changes in our system’s capabilities.”

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The language went on to state that Mrs. Engen would be subject to “the policies and terms and conditions in force at the time that you order Products from us, unless any change to those policies or these terms and conditions is required to be made by law or governmental authority (in which case it will apply to orders previously placed by you), or if we notify you of the change to those policies or these terms and conditions before we send you the Confirmation (in which case we have the right to assume that you have accepted the change to the terms and conditions, unless you notify us to the contrary within seven working days of receipt by you of the Products).”

After agreeing, Mrs. Engen placed an order for a meal kit, but after receiving the product, she purportedly “deactivated” her account. Thereafter, in February of 2017, HelloFresh added an arbitration clause to the Ts and Cs, which was amended in June 2018 to include a class action waiver provision.

Two years after her original order, in January of 2019, the plaintiff logged on to her account, “reactivated” her meal kit subscription and placed an order, which she cancelled the same day. HelloFresh then called her several times allegedly trying to get her to “re-subscribe and purchase meal kits.” As a result of those calls, Mrs. Engen’s TCPA class action lawsuit ensued.

HelloFresh moved to compel arbitration, arguing that under the original Ts and Cs it had properly added the arbitration clause, that promotional emails it had sent thereafter and before Mrs. Engen reactivated her account provided “‘actual, or at least constructive notice’” of the new terms and that she had agreed to those Ts and Cs (including the arbitration clause) “by reactivating her subscription and placing the meal-kit subscription order” in January 2019. Thus, she had agreed to arbitrate disputes. Mrs. Engen asserted she had no notice and never agreed to the revised Ts and Cs, including the arbitration clause.

In the final analysis, District Judge Eric C. Tostrud sided with Mrs. Engen. Applying New York contract law, as provided under the Ts and Cs, the Court blessed the HelloFresh addition of the arbitration clause but would go no further.

As to those HelloFresh emails that ostensibly provided Mrs. Engen actual or at least constructive notice, the Court noted they were not sent to notify Mrs. Engen of the modifications to the Ts and Cs and do not even mention such changes. True, there was a single sentence with a “Terms of Use” hyperlink in each email, but “it is not clear and conspicuous. It is ‘buried at the bottom of the page’ where a recipient is not likely to see it and less likely to understand its significance.” The Court parried HelloFresh’s reliance on other cases where the purpose of the “email…was to notify customers of the revised terms of service…and mentioned the addition of an arbitration clause explicitly, and … described how a customer’s continued use would bind him to the revised terms.” Here that was not the case.

As for the January 2019 website visit, Judge Tostrud noted that “HelloFresh acknowledges that Mrs. Engen’s January 6, 2019 visit to its website cannot alone show that she had notice of or assented to the 2018 Terms and Conditions. This makes sense. As far as the record shows, that visit did not require Mrs. Engen to affirmatively acknowledge HelloFresh’s Terms and Conditions through a clickwrap or similar feature, and no record evidence suggests that the visit placed her on inquiry notice of the revised Terms and Conditions.”

TCPAWorld lesson learned? – under New York law, at least, obtain affirmative acknowledgment of arbitration or other claim-related modifications to previously-agreed upon Ts and Cs as the best way to avoid the fate of HelloFresh here.

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SUNNYVALE, Calif. — Nearly 22 million have Americans lost their jobs over a few short weeks due to the coronavirus pandemic. Record-high unemployment numbers pose unique challenges for collections agents as borrowers find it increasingly difficult to repay their debt.

Prodigal’s Natural Language Engine identified a surge in consumer stress beginning March 15 amidst the pandemic, with borrowers expressing fears about both their health (particularly among elderly borrowers) as well as loss of employment or a reduction in hours. Prodigal was able to automatically identify these trends due to its scale of anonymized speech data aggregation across multiple customers.

Prodigal’s smart reports were shared with all clients for free within two weeks of the announcement of enforceable shutdown orders. All agencies and lenders receiving reports with domain-specific trends on borrower behavior benefited from Prodigal’s economies of scale and Unifin was able to react swiftly to address the evolving situation. 

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Unifin prides itself on its initiatives of supporting, assisting and educating borrowers throughout the debt repayment process. All agents are highly trained to engage and collaborate over the phone. However, some agents had inadvertently failed to acknowledge the stressful situation borrowers might be in and thus did not show the requisite level of empathy. Agents are typically primed to collect debt as quickly as possible but Unifin wanted to encourage a different behavior in response to the current situation. “Unifin has a very thorough and graded coaching program for agents.  They were not only early to empathize with the situation the borrowers were in but also swift in incorporating the right response to the crisis” said Shantanu Gangal, Prodigal CEO.

At Unifin, any sort of aggressive behavior by agents to collect from borrowers constitutes a high-level infraction. Unifin was particularly interested in identifying violations from among thousands of daily calls in order to proactively educate collectors on increasing empathy towards borrowers during these troubled times. Prodigal provided Unifin with a quick mechanism to identify agents violating the moral code of conduct established during the pandemic. 

“Prodigal has time and again demonstrated its deep understanding of the ARM industry and their 40+ domain-specific tags were a powerful tool to slice and dice infractions by our agents,” said Clint Daoud, Unifin EVP. Prodigal independently flagged all conversations of this nature and made the trends prominently visible on its interface, simplifying the process of identifying agents who were repeat offenders or in need of coaching.

Thanks to Prodigal’s input, Unifin was able to incentivize recommended behaviors among its agents by swiftly identifying dozens of calls where agents had shown great consideration. Prodigal’s data also enabled Unifin to identify agents who had committed severe infractions so they could be guided to improve. By partnering with Prodigal, Unifin has been ahead of the curve in responding to an unprecedented ongoing macroeconomic situation.

Further analysis of the trends observed by Prodigal can be found in this whitepaper. 

About Prodigal

Prodigal’s machine learning-driven speech intelligence software empowers ARM executives with actionable insights on 100% of the calls towards higher revenue and lower compliance risk. For further information about Prodigal products, feel free to reach out to shantanu@prodigaltech.com or (650) 802-7795.

About Unifin

Unifin, Inc. is a full service BPO and Accounts Receivable Management firm licensed and bonded nationally. For additional information about Unifin’s services, Inc. please contact sales@unifinrs.com or (847)-787-1980.

CAMAS, Wash. — The Intelitech Group, a leading consulting and business analytics provider in the Accounts Recovery industry, has begun offering their Collector Training solution, StackUp™, to recovery organizations through the end of June 2020 to assist with COVID-19 related issued.  StackUp has been modified to address many of the problems agencies are dealing with as a result of the pandemic.

“We’ve been receiving a good amount of feedback from recovery organizations with the struggles they are going through and wanted to help.” Said Bryan Houston, Managing Partner at The Intelitech Group. “StackUp seemed like a good fit of something we could offer to help with COVID-19 as it’s already setup for training.” Continued Houston.

StackUp is Intelitech’s latest training solution that utilizes gamification providing an enjoyable way for collectors to be educated on topics like industry changes, communications, compliance, as well as industry regulations such as HIPAA, TCPA, FDCPA, GBLA and additional CFPB topics.

In order to receive the offer, organizations will need to insert a promotional code during the setup process, which is available on Intelitech’s StackUp landing page.

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About the Intelitech Group

The Intelitech Group™, a pioneer in delivering account scoring and segmentation to the ARM industry since 1999, provides consulting and technology solutions to help agencies work smarter to achieve optimal results. Leveraging industry expertise and market intelligence with machine-learning, The Intelitech Group brings extensive knowledge, insights and practical tools to help agencies delve deep into all facets of the organization to measure, analyze and implement results-oriented solutions. For additional information, visit www.intelitechgroup.com.