Archives for February 2021

The accounts receivable management (ARM) industry learned some new terms just a few years ago: call blocking and call labeling. This year, the new term you need to be aware of is “text blocking.” It seems that at least one major carrier has declared debt collection texts off-limits, regardless of procedures or level of compliance.

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insideARM recently received a copy of T-Mobile’s Code of Conduct (also referred to as the “Guidelines”), dated November 2020. The document is provided as a compliance and best practice guide to facilitate “high-quality, high-integrity business communications, not SPAM or unconsented messaging” by those who use the T-Mobile Commercial Messaging network.

T-Mobile’s stated goals are to:

• Protect subscriber from unwanted messaging while providing growth for the messaging ecosystem;
• Design minimal, common-sense policies;
• Empower consumer choice;
• Support transparency and open communication with businesses; and
• Stay flexible, so that rules can adapt and evolve.

The Guidelines are meant to supplement the most recent CTIA Short Code Monitoring Handbook as well as the CTIA Messaging Principles and Best Practices (the “CTIA Handbook”) and state that where the two conflict, the T-Mobile Guidelines take precedence.

Non-compliance with the Guidelines may result in

• Suspension of sending rights for a provisioned shortcode, longcode or Toll-Free numbers;
• Restriction daily quota message buckets for 10DLC services;
• Suspension of provisioning rights for new phone numbers; and/or
• Suspension of all network services.

The Guidelines specifically outline definitions and consent requirements related to conversational, information, and promotional messages. For those unfamiliar, debt collection communications fall under the “information” category.

The Guidelines also identify activities T-Mobile considers compliance flags, and which will be flagged and monitored for action:

• High Opt-Out Rates – including a suggestion of immediate suspension (and potentially blocking of numbers) of a message campaign for opt-out rates greater than 4% opt-out within 24 hours.
• Filter Evasion Assistance (sending strategies designed to evade SPAM controls) – including a prohibition of the practice of automatically providing a sender with new phone numbers to replace phone numbers blocked by a receiving network.
• Dynamic Routing (each 10DLC, Shortcode, and Toll-Free number must have a single route in the delivery path to the destination phone number)
• Number Cycling (the practice of using a number until it begins to show signs of deliverability degradation, then discarding the number for a new one).

Finally, the Guidelines specifically define “Disallowed Content”.

The following content categories are considered deceitful and nuisance campaigns which may result in high volumes of SPAM complaints on the T-Mobile network. Due to these issues, we will no longer support any campaign under the following categories, regardless of any prior approval. Messaging use cases that support the disallowed content outlined below may request an official exception in writing by T-Mobile through an official T-Mobile exception approval process. Any exception that existed before September 1, 2020, should be considered invalid.

Such categories include:

• Payday Loans
• Non-Direct Lenders
• Debt Collection
• Debt Consolidation
• Debt Reduction
• Credit Repair Programs
• Cannabis
• Illegal Prescriptions
• Work from Home Programs
• Job Alerts from 3rd Party Recruiting Firms
• Risk Investment Opportunities
• Gambling
• Any other illegal content
• Lead generation indicate the sharing of collected information with third parties
• Campaign types are not in compliance with the recommendations of or prohibited by the CTIA
• Campaign types not in compliance with the recommendations of or prohibited by the CTIA Messaging Principles and Best Practices – 2019 version

insideARM also received a copy of AT&T’s Code of Conduct, dated June 2020. Most of the guidelines are the same/similar, however, as of the version of the document we obtained, AT&T is not expressly prohibiting debt collection content. Their prohibited list (with any exceptions requiring written approval) is shorter than T-Mobile’s:

• Loan advertisements with the exception of messages from direct lenders for secured loans
• Credit repair
• Debt relief
• Work from home, ‘secret shopper,’ and similar advertising campaigns
• Lead generation campaigns that indicate the sharing of collected information with third parties
• Campaign types not in compliance with the recommendations of or prohibited by the CTIA Short Code Monitoring Handbook, Version 1.7 or later.

Sources tell insideARM that Verizon also wrestled with this issue in the past but has not taken the extreme position that T-Mobile has. Sprint (now owned by T-Mobile) has so far remained independent and not adopted the same policy, but MetroPCS (also owned by T-Mobile) has adopted it.

Debt collectors have been texting consumers for quite a while under certain circumstances, such as sending required payment reminders, and they follow all required rules and laws. Nonetheless, will these messages, specifically requested by consumers, now be blocked by T-Mobile and MetroPCS?

It seems text originators would be well-advised to discuss this matter with their platform provider to understand any potential impact. insideARM will continue to follow this matter. 

As TCPAWorld previously reported, the Federal Communications Commission (FCC) may have unintentionally expanded prior express written consent requirements when it recently codified certain Telephone Consumer Protection Act (TCPA) exemptions for informational prerecorded or artificial voice calls to residential lines and imposed number limits and opt-out requirements. https://tcpaworld.com/2021/01/18/written-consent-required-for-informational-calls-how-the-fccs-recent-tcpa-ruling-may-have-unintentionally-expanded-pewc-requirements/

A group of trade associations led by the American Bankers Association (Group) has now formally asked the FCC to issue an erratum correcting this error. On January 27, 2021, the group filed an ex parte presentation notice reporting on a telephonic meeting with the FCC’s Consumer and Governmental Affairs Bureau (Bureau) at which they did so. https://ecfsapi.fcc.gov/file/10128219934025/ABA_JointTrades_ExParteLetter_TCPA_Exemptions_Error_2021_01_27_final.pdf

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The Group pointed out that in amending the language in one section of the FCC’s rules the agency’s Order did so “in a manner that appears inadvertently to impose a prior express written consent requirement on informational prerecorded or artificial voice calls to a residential number made outside of the” codified exemptions. Specifically, the Group explained that “imposing a written consent requirement was clearly in error as it conflicts directly with the text of the Order and other codified regulations in Section 64.1200.” Moreover, the Group noted that “the Order [text] applies a prior express consent standard for calls that exceed the informational call limits and states that such consent could be obtained during exempted telephone calls.” Specifically, the Order explained that “callers may make more than three non-commercial calls using an artificial or prerecorded voice message within any consecutive 30-day period by obtaining the prior express consent from the called party, including by using an exempted call to obtain consent.” Finally, the application of prior express written consent to such informational call exemptions would have required a revision to the definition of that term, which as the Group noted the FCC did not change.

The Group asked the FCC to issue an erratum to maintain “prior express consent” as the level of consent required for an informational prerecorded or artificial voice call to a residential number that is placed outside of” the codified exemptions.

As of this date, the FCC has not responded. TCPAWorld will continue to monitor.

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Acting Consumer Financial Protection Bureau (CFPB) Director Dave Uejio made his third stop in his tour to re-set priorities with each division of the agency. First, he shared a new direction with employees in the Supervision, Enforcement, and Fair Lending (SEFL) division. Then, he asked Research, Markets, and Regulations’ (RMR) to explore options for preserving the status quo with respect to the debt collection rule. Yesterday he announced that he met with staff from the Division of Consumer Education and External Affairs (CEEA), and reinforced his priorities of supporting those affected by Covid-19, and addressing racial equity. One particular tool he intends to focus on is consumer complaints and said data shows that some companies have been lax in their response.

Last week insideARM published an analysis of the increase in complaints over the past year, finding the overwhelming increase was driven by credit reporting issues, many caused by identity theft.

Here is the full text of Acting Director Uejio’s message to CEEA:

Hi all,

I want to convey my broad vision for the Division of Consumer Education and External Affairs (CEEA) in the coming months, as I recently did for RMR and SEFL.

As you know, my policy priorities for the CFPB are (1) relief for consumers facing hardship due to COVID-19 and the related economic crisis and (2) racial equity. So, I’d like to provide clear guidance on how CEEA’s work can immediately advance the CFPB’s priorities at this crucial moment.

Protecting economically vulnerable consumers is core to the mission of the CFPB and one of the reasons the agency was created. We know that the pandemic has hit certain populations especially hard. The National Guard and Reserve activations for pandemic response have been critical to our communities, but costly to those servicemembers and their families. Current college students and recent graduates are facing a mountain of student debt during very uncertain economic times. The death toll and economic stress for those in elder care and nursing homes has been unimaginable. Persistent and pernicious racial inequality continues to compound these problems exponentially for Black and Brown people.

Moving forward CEEA should redouble its efforts to ensure the Bureau engages all consumers who are economically suffering. As I said before, a change in strategic direction is not a reflection on the quality of the work performed by Bureau staff over the past several years. I know that the dedicated staff in CEEA has consistently championed vulnerable populations and advocated for engaging directly with the people we serve. I eagerly anticipate this agency doing exactly that.

One of my top priorities is making sure that consumers who submit complaints to us get the response and the relief they deserve. Consumer complaints are our lifeblood; our direct connection to consumers in distress, and they are at an all-time high right now. I understand that some companies have been lax in meeting their obligation to respond to complaints. It is the Bureau’s expectation that companies provide substantive responses that address the issues consumers describe in their complaints. I also understand that consumer advocates have found disparities in some companies’ responses to Black, Brown, and Indigenous communities. This is unacceptable. I have asked Consumer Response to prepare a report highlighting the companies with a poor track record on these issues. We will be publishing this analysis and the senior leadership of these companies can expect to be hearing from me.

Given the urgency of engaging consumers about their rights amidst the ongoing pandemic, the Bureau must move swiftly to reach those whose financial lives are most precarious in this moment. To help consumers navigate the housing protections for those affected by COVID, I have asked CEEA to:

• Target Bureau resources to reach and help struggling homeowners in delinquency or at risk of foreclosure and renters at risk of eviction to ensure they know their rights.
• Ramp up our coordination efforts with other agencies to provide help and information to at-risk homeowners and renters.
• Collaborate with coalitions of stakeholders, including consumer advocates, civil rights groups, grassroots, community-based organizations, and individual consumers to get these messages to homeowners in languages and terminology they understand.
• Help ensure homeowners and renters can access HUD-approved housing counseling organizations to help them manage the challenges they face due to financial hardships brought on by COVID.

In order to re-orient our work squarely on consumers, I have also directed CEEA to:

• Lead a refresh of our website’s look-and-feel so it is more user friendly, focused on consumers rights, and signals that in no uncertain terms, we are on their side. And expand our social media presence so that we hear directly from the people we serve. To reach consumers where they are, we must keep up with how people access information regardless of device or form.
• Aggressively rebuild and repair our relationships with consumer, civil rights, racial justice, and tribal and Indigenous rights groups. We cannot execute on these bold ideas unless we robustly engage with external stakeholders who support economically vulnerable consumers.

Elevating the voices of those consumers who are suffering due to the pandemic and from racial inequity is the most important way to ensure that the CFPB is doing the best we can for those who need our help the most at this moment in history. The Bureau must transition from treating consumer input as mere anecdotes or stories to a world in which the experience of our neighbors, our families, and our communities serve as crucial data that drives our policymaking. I rely on CEEA to spearhead these efforts and have great confidence that they will deliver.

Best,
Acting Director Uejio

Covid created a need for the Bureau to measure and monitor real-time activity in a rapidly changing marketplace.  The Bureau filled that need by initiating a new supervisory approach for gathering real-time information called Prioritized Assessments, which are “higher-level,” targeted inquires to companies perceived to have a greater potential for exposing consumers to risk due to the pandemic.  Prioritized Assessments enabled the Bureau to obtain a lot of information from a wide range of entities quickly. 

The Bureau recently published a special edition Supervisory Highlights report revealing the results of its 2020 Prioritized Assessment inquiries.  Despite the 9 different market verticals highlighted, the report reveals some common themes of market behavior and consumer risk throughout the financial services sector.  These themes contain value takeaways to enhance our own operations.

Voluntary Accommodations

Although the CARES Act and many State laws mandated certain relief to consumers, the Bureau observed additional voluntary accommodations and consumer relief throughout the financial services marketplace.  Expanded payment assistance, fee waivers, payment deferrals, remediation of negative consequences, and cessation of bank garnishments, levies, and auto repossessions are examples of voluntary accommodations by entities in response to consumer distress. The Bureau also observed increased monitoring of business practices enabling entities to self-identify potential consumer risk and take proactive steps to avoid it such as updating scripts, automating processes, correcting credit reports and account histories, and reversing fees.  Entities increased staff to meet the demands of increased inbound consumer inquiries and work backlogs of consumer requests.  Generally speaking, the Bureau observed the financial services markets respond to the needs of consumers in distress.  But, according to the Bureau, the response was not perfect and the report identifies key areas where entities fell short of meeting consumer needs.

Incomplete or Inaccurate Information Provided To Consumers

The CARES Act is a long and complex statute.  Digesting its requirements and training markets on its new obligations was difficult.  The Bureau reports several examples where entities provided inaccurate or incomplete information on the mechanics of the CARES Act and the consumer relief it provides.  For example, the Bureau observed lending institutions providing inaccurate information about loan forbearance, interest rate reductions, and loan relief eligibility.  Fees and due dates were not disclosed correctly and the impact of forbearance on interest accrual was not properly explained to consumers.  Entities also failed to fully inform consumers of available alternatives to forbearance or loan deferral such as income-based repayment plans for certain student loans.  Some entities fell short of explaining to consumers the consequences of forbearance or deferral on their loan term or payoff amount.  Others provided consumers with false information about how interest would accrue on their accounts during a deferment or forbearance period.

Takeaway:  The solution to these shortcomings is training.  Complete and accurate training disseminated quickly throughout these organizations could have avoided much of the misinformation delivered to consumers.  Consider whether your compliance management system is capable of rapidly deploying new training content throughout your organization in response to sudden and unexpected changes in business operations or the market.   

Inadequate Staffing To Address Consumer Needs

Financial services markets were not immune to the impact of shelter-in-place orders which impeded the ability to serve consumer needs.  In retrospect, the shift to a work-from-home workforce occurred at breakneck speed.  Fairly expected; however, the transition left gaps in processes and consumers underserved.  The Bureau observed call centers suddenly unable to meet inbound demand.  New relief programs required the cessation of automated processes in favor of manual processes, increasing the need for more (unavailable) staff.  Many accommodations offered by financial institutions required new disclosures to be provided to consumers who may not have previously consented to electronic disclosures.  Increased volumes of outbound paper disclosures resulted in delayed processing time for timely notifying consumers of important rights and responsibilities.  These new demands strained staffing and technology resources in ways that increased consumer risk.

Takeaway:  Reviewing and re-reviewing business continuity plans is the key to avoiding these staffing issues.  We plan for technology to fail.  We plan for systems to break.  But, do we plan for nobody to show up for work tomorrow?  Or for your workplace to be  . . . gone?  (We do now!)  Revising business continuity plans to address sudden labor shortages and business location “unavailability” should be on every compliance management system agenda in 2021.

Credit Reporting Errors

The CARES Act amended the Fair Credit Report Act to protect certain consumers from certain negative credit consequences.  Reprograming existing systems to prevent negative credit reporting proved difficult for many furnishers.  The Bureau observed inaccurate credit reporting including the reporting of current consumers as delinquent and advancing the delinquency status of accounts properly enrolled in deferment, forbearance, or other accommodation programs.  The failure of furnishers to timely investigate and respond to consumer credit disputes, though understandable, also exposed consumers to increased risk.  Finally, the Bureau notes inadequate policies and procedures in response to Covid accommodations.  Changes implemented by furnishers to accommodate consumers and establish hardship programs were not properly reflected in the company’s policies and procedures, which the Bureau notes are a requirement of the Fair Credit Reporting Act. 

Takeaway:  These credit reporting issues offer a lesson in auditing.  When changes are made to the system of record to accommodate new legal requirements, furnishers must consider the impact those changes have on credit reporting.  Programing for those changes is important, but auditing to ensure the programing functions as designed is paramount.  Every process (and every change) needs a control and an audit mechanism.

Payment Processing Errors

The Bureau observed several defects in payment processing across the market.  For example, one entity automatically canceled preauthorized electronic funds transfer payments when consumers called-in to inquire about loan forbearance options.  This caused those consumers to miss payments they would otherwise have made.  Other entities had problems ceasing automated electronic payments when consumers took advantage of deferment or forbearance programs, causing them to make payments they were not required to make.  Some entities lacked adequate staffing to process accommodations and so their automated payments kept processing between the time their accommodation was approved and the time the creditor actually processed the accommodation.  Posting payments received from inbound mail also created consumer risk because of delays associated with insufficient staffing to obtain and process inbound mail payments.

Takeaway:  The issues here are twofold – “disconnected” technology and labor shortage.  Most systems are properly programmed to stop automatic payments when the consumer files bankruptcy in the 3^rd month of a 6-month payment plan.  So too should those systems be programmed to stop automatic payments when consumer accounts are placed in a deferred or forbearance status.  The problems identified by the Bureau were avoidable had the system of record been “connected” to the payment processing system to stop automatic payments under certain circumstances.  In terms of the labor shortage, a mature compliance management system might consider cross-training staff to perform inbound servicing tasks in response to sudden and unexpected spikes in demand for certain operational functions. 

Post Accommodation Errors

Many consumers impacted by Covid received a myriad of financial accommodations.  For some entities, however, processing these accommodations and adjusting internal processes to service those accommodations proved difficult and ultimately led to consumer harm.  Many consumers still received default notices and were assessed late fees notwithstanding that their obligations were in a deferred or forbearance status.  Other entities failed to halt regular collection processes, like auto repossession and property foreclosure, even though consumer obligations were temporarily suspended.  Some creditors automatically enrolled consumers in forbearance without a consumer request.  Some student loan lenders failed to stop interest accrual on certain federal student loans and others failed to suspend administrative wage garnishments on eligible loans. 

Financial institutions also had difficulty protecting government benefit funds from internal and external collections.  Some banks failed to cease internal collection processes such as setting off bank balances (containing government benefits) against fees owed, overdrawn accounts, and delinquent loan balances.  Other institutions had inadequate procedures to protect government benefit funds from external collection process such as garnishment.

Finally, the Bureau notes fair lending risks associated with financial institution policies for making Paycheck Protection Program money available to small businesses.  Many institutions accepted applications only from existing consumers, opening the door to discrimination risk.  The Bureau encouraged lenders to consider the impact of its policies and their resulting risks to fair lending compliance. 

In many ways, the compliance and risk-related shortcomings observed by the Bureau were not unexpected.  The pandemic shut down the country.  The report remains valuable, however, to those reviewing their disaster recovery procedures and business continuity plans for future enhancement.  Each Supervisory Highlights report offers “takeaways” to guide operations. This special Covid edition is no exception.

We need a comprehensive solution to the $1.5 trillion student debt problem and not a rush to forgiveness that is both unfair and places a huge burden on taxpayers.

A comprehensive solution should address:

• The fact that the cost of a college education has grown substantially faster than salaries have increased
• The need for better information about what options borrowers have today and what more may be needed
• The fact that choices made by the student borrower often drive up their cost of education
• How to make any forgiveness equitable

The high cost to students

There is no doubt the cost of higher education has skyrocketed in the last 30 years. The amount of student debt has swelled to well over $1 trillion and growing. The Consumer Price Index (CPI) for college costs including books, tuition and living expenses have risen significantly faster than the CPI for all items.

From January 2006 to July 2016, the Consumer Price Index for college tuition and fees increased 63 percent, compared with an increase of 21 percent for all items. Over that period, consumer prices for college textbooks increased 88 percent and housing at school (excluding board) increased 51 percent.

For decades, the costs of higher education have increased across all sectors including public, private, and proprietary. Due to the increased cost of tuition, books and living expenses, the federal student loan limits have also increased over time.

In the chart below, added staff represents the top reason for the cost increase. One has to ask, are today’s institutions cost-effective sources of quality education, or have they become bloated with staff or other initiatives that unnecessarily increase costs?

If there is an expectation that the government should pay for higher education, no forgiveness should proceed until the cost of higher education at the college and university level is addressed. Either the fees charged are tied to CPI or perhaps colleges and universities should contribute to financing any write-off. The total burden should not be on the taxpayers. Also, if we forgive today’s debt, what happens to tomorrow’s debt? What prevents the same $trillion+ in debt from amounting all over again?

A few points on current student debt

Let us address the student debt impact on borrowers.  For years students’ payments were based on the amount they borrowed. For instance, the monthly payment on a $50,000 loan would be higher than the payment on a $10,000 loan.  During the Obama administration, the repayment rules changed so borrowers would pay based on their income, not on what they owe.  This meant that if their income were the same, the $50,000 and $10,000 borrowers’ payments would be identical.  Even for low-income borrowers, the payment amounts are adjusted, and, in some cases, payments are extremely low.  Why have earnings-based payments failed to work to facilitate a reasonable or equitable method to determine monthly payments?

All student borrowers are considered adults at age 18 and many make decisions about where they want to live or attend school without sufficient regard to the debt burden, they would accumulate, nor the income potential for the degree program they choose. The current student debt problem is in large part the responsibility of the student and the choices made.  Do we consider absorbing 100% of the burden for $50,000 in student debt when the borrower could have attended a less expensive institution? 

There has been no discussion about how individual circumstances of borrowers and their financial decisions affect debt.  Borrowers who are now in the workforce make financial and personal decisions that affect where they live, how much they earn, and their ability to pay. We also know the cost of living is significantly different across the country. Do we consider any of these factors in the forgiveness calculation?   

Fairness in the forgiveness discussion

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Currently, the focus for forgiveness is limited to those with current federal loans and based on current income levels.  However, in general, income tends to rise over time as an individual progresses in their career.  Should we forgive loans today for a borrower who is only a few years past graduation? What if their rising income could support their ability to pay off the loans in the future, especially if they are 10 years or more from their peak earning potential?

What about borrowers who have paid their loans in whole or in part over the last 5-10 years often living frugally to pay as promised? Shall we give them tax credits or some other means to recognize their positive actions?

Student loan servicers expend significant effort sending mail and making telephone calls attempting to keep borrowers from defaulting on their loans. Many borrowers do not respond, nor do they call for help.   This is compounded by the political comments on forgiving student debt. Why would a borrower repay if they think the debt will be forgiven?

There are borrowers who are having difficulty and need help.  Current regulations are in place to provide assistance.  For the few who truly have exhausted all avenues, by all means, let us help them.  If necessary, legislation can be crafted for these specific circumstances.

Summary

We need a comprehensive solution that addresses the root cause of our current situation. And, in fact, we have an appropriate vehicle for adopting such a solution; The reauthorization of the Higher Education Act of 1965 as amended. The Act is reauthorized approximately every seven years, and legislative proposals for this process started with the last Congress. Some believe it could be completed this year. Here are a handful of suggestions that might be adopted in the reauthorization:

• Hold institutions of higher education responsible for the high cost of education by first requiring a reduction in costs to current students and to share financially in any debt forgiveness.
• Examine what protections are currently in place for borrowers who are working but have low income or financial difficulty.
• Evaluate monthly payments available under current law to determine if they are truly unaffordable.
• Establish an expanded write-off process where the borrower presents a multi-year pattern of low income rather than a blanket write-off based upon current income only.
• Immediately lower the interest rates for all federal student debt, comparable to current mortgage rates.
• Consider an incentive program where borrowers who proactively try to repay are rewarded with a debt reduction. For example, give borrowers credit for two or three dollars of repayment for every dollar the borrower pays voluntarily.
• Consider a forgiveness tax credit for those who have previously paid rather than reward only those with current outstanding debt.

Imagine you are a juror selected to sit for a case in which the plaintiff contends that the defendant debt collector violated certain provisions of the Fair Debt Collection Practices Act (“FDCPA”).  You and your fellow jurors find that the plaintiff established a prima facie case for a violation of the FDCPA and that the debt collector is liable to the plaintiff.  The judge then provides you with the following jury instruction:

If you decide for the plaintiff on the issue of the defendant’s liability, you must fix the amount of money that will reasonably and fairly compensate the plaintiff for any of the following elements of damages proved by the evidence to have resulted from the defendant’s violation or violations of the FDCPA:

1. Any actual out-of-pocket loss or expense which the plaintiff has incurred, and which is directly attributable to any violation of the FDCPA on the part of the debt collector.

1. Any damages which the plaintiff suffered on account of any emotional distress, humiliation, or mental suffering, proved by the evidence to have been caused by the violation of the FDCPA on the part of the debt collector.

Emotional distress awards under the FDCPA have spawned an avalanche of comments in recent years.  The law does not set a definite standard by which to calculate compensation for emotional distress damages. There is also no requirement that a witness testifies regarding an appropriate amount of compensation for the violation.  The only requirement is that the compensation for emotional distress must be just and reasonable. 

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Without a fixed standard or limit for actual damages, quantifying the emotional distress can be challenging for a jury and may lead to a significant award.  Over the last decade, numerous financial services companies have been hit with multi-million-dollar judgments or jury verdicts based on claims of emotional distress.  Here are a few examples[1]:

In Saccameno v. Ocwen Loan Servicing, LLC, 372 F.Supp.3d 609 (N.D. Ill., 2019), the plaintiff brought an action against a mortgage loan servicer and lender alleging that they violated the FDCPA by engaging in wrongful loan servicing and debt collection practices.  During the trial, the plaintiff testified that she suffered from depression and anxiety as a result of the defendants’ conduct and that she lived in fear that her home would be repossessed.  The plaintiff further testified she was so upset that she was unable to concentrate on her job and was fired. Several witnesses presented testimony during the trial, including the plaintiff’s doctor who testified that he diagnosed the plaintiff with depression and panic disorder and had prescribed medications. After trial, the jury returned a verdict for the plaintiff, which included an award of $500,000 for emotional distress. 

In Portfolio Recovery Associates LLC v. Mejia, No. 1216-CV34184, 2015 WL 13106253 (16th Cir. Ct. Mo. July 20, 2015), the plaintiff filed suit against the defendant debt buyer asserting that it sued the wrong person for a $1,000 credit card account in violation of the FDCPA.  The plaintiff testified that the lawsuit terrified her and that she feared she would lose her house or be arrested.  A Missouri jury concluded that the debt buyer violated the FDCPA and awarded the plaintiff $250,000 for emotional distress.

In Yazzie v. Law Offices of Farrell & Seldin, No. 10-CV-00292 (D.N.M. July 29, 2011), the plaintiff alleged that the defendant debt collector violated the FDCPA by pursuing her for a debt she did not owe arising from an account that belonged to someone else with a similar name.  The jury found that the plaintiff proved her claims against the debt collector and awarded her $161,000 in actual damages for emotional distress.   

In McCollough v. Johnson, Rodenburg & Lauinger LLC, 637 F.3d 939 (9th Cir. 2011), the plaintiff claimed that the defendant law firm violated the FDCPA by filing a lawsuit against him that was barred by the statute of limitations and continuing to prosecute it for eight months.  At trial, the plaintiff testified that the lawsuit caused him anxiety, pain, an increased temper, and conflict with his wife.  The plaintiff also presented evidence of emotional distress through testimony from a clinical psychologist who examined him in July 2008. During the trial, the plaintiff admitted to a disabling pre-existing condition, but characterized the impact of the lawsuit on him as “the straw that broke the camel’s back.”  The jury found in favor of the plaintiff and awarded $250,000 for emotional distress damages.  The Ninth Circuit Court of Appeals affirmed the jury verdict, finding that ample evidence existed in the record to support the award.

While some of the examples above included testimony from a doctor, others merely included self-serving testimony from the plaintiff regarding the alleged emotional distress.  This demonstrates the ease with which some plaintiffs have succeeded in emotional distress claims. 

Going forward, it will be interesting to see whether the more stringent standing requirements in the Seventh Circuit impact emotional distress claims and reduce the number of six-figure awards for actual damages.

[1] All jury trial emotional distress awards are subject to appeal or review.

GENESEO, N.Y. – Coast Professional, Inc. (Coast) is proud to announce it was recently named a 2021 Top Workplaces USA finalist. The Top Workplaces USA awards celebrate nationally recognized companies that prioritize a “people-centered culture.” The award is administered and launched by research partner Energage, LLC, an industry leader in employee engagement and recognition.  

Thousands of companies across the United States entered the survey process to determine if their organization ranked amongst the best in the country. The winners were chosen based on quantitative employee feedback, having multiple locations across the country, as well as optional statements and demographic information. The surveys were anonymous and not mandatory. The Top Workplaces USA awards were divided into five industry categories: Manufacturing, Technology, Financial Services, Healthcare, and Nonprofit. The industries were subdivided by employee size bands; 150-499, 500-999, 1,000-2,499, and 2,500+. Coast placed in the 500-999 Financial Services category.  

According to Jonathan Prince, Coast Chief Operating Officer, being named to a nationally ranked list such as Top Workplaces USA is the result of a company-wide philosophy based on persistence and strict professionalism. 

“The Top Workplaces awards are extremely competitive, and I am proud of each employee within our organization for their consistent effort to persevere, overcome challenges, and remain innovative during the last year,” said Prince. “Our employees will always be our most valued asset and to be recognized based on their opinions is remarkable. We are looking forward to company growth and opportunity in 2021.”  

A complete list of the 2021 Top Workplaces in the USA, including individual company profiles can be found at https://topworkplaces.com/award/top-workplaces-usa/.  

About Coast Professional, Inc.: 

Coast Professional, Inc. is an accounts receivable management and call center-based company, dedicated to the respectful and ethical communication with consumers. Coast provides professional call center services to hundreds of campus-based colleges, universities, and government clients. Coast is a seven-time honoree on the Inc. 5000 list for America’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2020, was recognized for the fifth 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 

Show Notes: 

Georgetown Professor Adam Levitin stops by Clark Hill’s Credit Eco to Go to provide his objective perspective on the CFPB’s Final Debt Collection Rule. 

Overall Adam supports a having clear rules of the road, regardless of whether you agree with the rule itself.  He agrees that having a rule that provides guidance for debt collectors to navigate the electronic ecosystem is very important and was glad to see that a model validation was finalized but believes it will be tweaked over time. Adam does have concerns about the frequency limits with regard to attempts to communicate by telephone and worries that repeated and unwanted calls find their way into harassment.

Finally, Adam was very surprised that the CFPB did not move forward with a final rule on time-barred debt but suspects the issue may still be addressed down the road, maybe in a UDAAP rulemaking.  The conversation about debt collection and the debt collection rule may be headed into extra innings. 

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Funk Game Loop by Kevin MacLeodLink: https://incompetech.filmmusic.io/song/3787-funk-game-loopLicense: http://creativecommons.org/licenses/by/4.0/

SYDNEY, Australia –– InDebted, the Sydney headquartered fintech that specializes in digital debt collection for unsecured consumer debt, today announced that it has acquired Delta Outsource Group Inc. (Delta) in the USA to launch its product and service into the American market, and hired three key executives to help globally scale InDebted.

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The United States is the 4th market that InDebted has entered and will be a key focus for the business moving forward. The acquisition of Delta will expedite InDebted’s launch in the USA and provide a solid foundation for the business.

The rapid growth of InDebted fintech clients, especially in the American market, has prompted InDebted to bring forward its entry into the USA to meet the growing needs of these clients. This combined with the recent policy update by the CFPB with regard to the Fair Debt Collection Practices Act (1977) to allow digital contact methods as valid methods of customer outreach has provided an enormous opportunity for InDebted’s digital collections platform.

InDebted has also welcomed three key executives into the business.

Joe Gelbard joins InDebted as Chief Revenue Officer and is responsible for revenue growth and client engagement.

Tim Collins joins InDebted as Chief Customer Officer and will be responsible for all customer-facing functions as well as legal, risk, and compliance.

John Watson joins the InDebted group as the new CEO of Delta and is responsible for the operations of Delta.

Both John and Joe are based in San Francisco, while Tim is based in Los Angeles. Joe, Tim, and John are all experienced executives with extensive backgrounds in both digital and traditional collections operations in the American market.

Josh Foreman, InDebted’s Founder and CEO commented:

“2021 is off to a flying start for InDebted. Our acquisition of Delta will supercharge our entry into the US which is going to be a very important market for our business, especially in light of the regulatory changes to collections recently proposed by the CFPB that legitimize digital collections across multiple channels, which is what InDebted was built for. I’m also really looking forward to working with Tim, Joe and John who are widely respected in the collections industry and are going to help us scale the InDebted operations both domestically in the USA as well as internationally”.

Joe Gelbard, InDebted’s Chief Revenue Officer commented: “I’ve been following the InDebted story for some time now and when the opportunity came up to join the business I couldn’t say no. InDebted is at the forefront of change in this industry and is the only player with a truly global mindset. I’m looking forward to the journey.”

Tim Collins, InDebted’s Chief Customer Officer commented: “I am excited to be joining this global team focused on creating the best and most compliant debt collection experience for our customers around the world. Now, more than ever it is time to focus on customers and InDebted is doing just that.”

John Watson, new CEO of Delta commented: “It’s an exciting time to be joining Josh and the InDebted team as they enter the collections market in the USA. I’m looking forward to growing the operations of Delta and combining it with the digital-first collections platform that InDebted has built, which in my mind is certainly where the future of the industry is headed.”

About InDebted
InDebted is a Sydney headquartered fintech that specializes in digital debt collection and is building global collections infrastructure. The proprietary debt collection platform built by InDebted uses digital communications, data and amazing customer experiences to deliver the best collections outcomes for both clients and their customers. For more information about InDebted please visit www.indebted.co.

CHICAGO, Ill. — Provana, a leading provider of best-in-class technology solutions is proud to announce its acquisition of Greenlight Office Solutions.  Greenlight, a boutique software development and consulting company is known for delivering custom automation solutions for companies within the ARM industry.

Provana, headquartered in Chicago, IL, has a global presence of over 1,400 employees and invests heavily in building business process automation solutions (BPA) designed to streamline processes, improve compliance, operational efficiency and production capacity for regulated small-medium businesses and networked enterprises.

With the addition of the Greenlight team, Provana will further strengthen its suite of product offerings by leveraging their expertise as well as bolster Provana’s vision of creating a robust ecosystem of automation solutions designed to drive performance and growth.

Melanie North, the Managing Partner of Greenlight Office Solutions, is excited about the synergies this acquisition will bring. “Our experience in the ARM industry meshed with the tech powerhouse that is Provana will expand our ability to deliver quality solutions to our clients.”

Provana will continue servicing Greenlight clients under Provana’s banner without disruption. The integrated service offerings will help showcase the best of both Provana and Greenlight through deeply developed process automation engagements.

“Provana’s commitment to providing the best business process automation solutions requires us to assemble amazing talent. The addition of the Greenlight team will further strengthen our automation solutions, with an initial focus on electronic court communications.”  says Rick Olejnik, Vice President of Platforms at Provana. 

About Provana

Founded in 2011 and headquartered in Chicago, IL, Provana offers leading-edge technology platforms and a large global workforce with depth and breadth of experience to small medium businesses and networked enterprises.  The combination of technology expertise and a global delivery model makes Provana the perfect partner to help your firm increase profitability, improve performance and exceed client expectations.

About Greenlight Office Solutions

Greenlight Office Solutions, a Minnesota based company, was founded in 2018 and provided custom software solutions for firms throughout the ARM industry.   Their industry knowledge, attention to detail and timelines has led to an excellent reputation for delivering quality work for their clients.