Archives for April 2021

The CFPB has issued an interim final rule that requires “debt collectors” as defined under the FDCPA who seek to evict tenants for non-payment of rent to provide written notice to tenants of their rights under the Centers for Disease Control and Prevention (CDC) Order that establishes an eviction moratorium.  The interim rule also prohibits FDCPA debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium.  The rule becomes effective on May 3, 2021 and comments on the rule must be submitted by May 7, 2021.

In its discussion of the rule, the CFPB states that the rule is based on its interpretation of FDCPA sections 807 and 808.  Those sections, respectively, prohibit a debt collector from using false, deceptive, or misleading representations or means to collect a debt and from using unfair or unconscionable means to collect a debt.

Disclosure requirement.  The CDC Order generally prohibits a landlord, owner of a residential property, or other person with a legal right to pursue eviction (including an agent or attorney acting on behalf of a landlord or owner) from evicting tenants for non-payment of rent in any jurisdiction in which the Order applies during the effective period of the Order.  The CDC Order has been extended three times, most recently through June 30, 2021.  To be eligible for the moratorium, a tenant must submit a written declaration attesting to certain eligibility criteria generally establishing that, because of the tenant’s financial situation, the tenant is unable to afford full rental payments and would likely become homeless or have to move into a shared living setting if evicted.

The rule prohibits a FDCPA debt collector from filing an eviction action for non-payment of rent against a consumer to whom the CDC Order may reasonably apply without disclosing that the consumer may be eligible for temporary protection from eviction under the CDC Order.  The disclosure must be clear and conspicuous and in writing and must be provided on the date the FDCPA debt collector provides the consumer with an eviction notice or, if no eviction notice is required by law, on the date the eviction notice is filed.  A FDCPA debt collector can provide the notice even if the consumer might not be covered by the CDC Order.  The commentary to the rule includes sample disclosure language that a FDCPA debt collector can use to comply with the rule’s requirement.  A violation of the disclosure requirement is deemed a violation of FDCPA Section 808.

The CFPB notes in its discussion of the rule that a large number of states and localities have adopted their own eviction moratoria.  It states that in light of this, the Bureau has not made a finding in the interim rule that it is unfair or deceptive under the FDCPA for a debt collector in a jurisdiction in which such a moratorium applies to file an eviction action against a consumer without disclosing that moratorium to the consumer.  However, the Bureau also states that nevertheless, a FDCPA debt collector’s failure to disclose such information to a consumer could violate the FDCPA’s prohibition on deception or unfairness (or both), particularly if the state or local law offers greater protection than the CDC Order.  The CFPB indicates that providing a disclosure using the alternate sample language in the rule “likely cures any deception or unfairness under FDCPA sections 807 or 808 that would arise from the failure to disclose a more protective [state or local law].”  It also indicates that nothing in the rule’s disclosure requirement affects a debt collector’s obligation to provide any moratorium-related disclosure required by state r local law.

A landlord would generally not be directly subject to the rule because a landlord is typically not a “debt collector” covered by the FDCPA.  However, it is possible the rule could influence how a state regulator or court might apply a state debt collection law that applies more broadly to creditors and incorporates FDCPA prohibitions.  

False representations.  The rule prohibits a debt collector covered by the FDCPA from falsely representing or implying that a consumer is ineligible for protection from eviction under the CDC Order.  A violation of this prohibition is deemed a violation of FDCPA Section 807.

New Jersey — Maxwell and Graves Solutions, LLC (M&G), a consulting firm with expertise in collections and servicing in the financial lending space, announced the addition of industry veteran Jeremy Nixon as a Senior Consultant.   

Jeremy brings with him 15 years of experience in operations leadership positions, analyzing and managing performance across multiple portfolios, industries, and verticals. Through his experience leading in the debt collection agency industry, he has worked with government agencies, publicly-traded companies in the telecommunication and financial services space as well as startups.

During his time with CBE Companies, Jeremy’s area of expertise included revenue and profit growth, call center and strategy design, expense control, process improvement, operations leadership, financial planning, and performance reporting. Michael Cassidy, Managing Partner of M&G, said “We’re excited Jeremy chose to join our team at M&G. His depth of experience leading on the collection agency side of the business will complement our team’s experience and strengthen the broad offering to our clients. We thrive to offer our clients specific solutions instead of generic recommendations, Jeremy’s unique perspective further strengthens our ability to deliver this to clients.”

About Maxwell & Graves Solutions, LLC

M&G Solutions is an industry-leading consulting firm with expertise delivering world-class operational performance and execution in the financial lending space. M&G Solutions combines years of first-hand experience working for Fortune 500 and other innovative companies within financial service, BPO, and Fintech industries to help our clients identify, deliver and sustain the necessary enhancements to drive their business. To learn more, visit www.maxgraves.com and follow us on LinkedIn.

Here’s a bit of good news in an otherwise chaotic week for the accounts receivable industry: On April 13, 2021, in the case of Anderson v. I.C. System, Inc., 3:20-cv-00263 (W.D. Wis. April 13, 2021), a district court granted summary judgment in a debt collector’s favor on a bona fide error defense. Before you say, ‘this is just a district court case, why should I care in light of all of the other things-which-will-not-be-named going on this week?’… a positive case is a positive case, and this particular case covers a situation likely familiar to any entity which is credit reporting.

In the Anderson case, I.C. System received a letter from a consumer’s attorney, which referred to Charles D. Anderson and Carol Ann Hamblin and provided their social security numbers and address. According to the Court, the letter was ‘vague,’ as it did not list the actual accounts in dispute. Instead, the letter stated it was to serve as “written notice that the above referenced individual(s) is in fact and in law represented by this office for all debts that he or she may have” and “the above referenced individual(s) dispute the debt which you are attempting to collect.”  The letter did not include any additional information.

Using the information provided in the letter, I.C. System found two accounts for Ms. Hamblin; however, none of the 600 accounts tied to a “Charles Anderson” matched the address or social security number provided in the letter. Unfortunately, one of those 600 accounts did belong to the correct Mr. Anderson. Mr. Anderson filed a lawsuit claiming I.C. System violated the FDCPA when it failed to report the dispute. I.C. System defended the lawsuit by claiming the failure to report the dispute resulted from a bona fide error.

To be successful on a bona fide error defense, a defendant must establish three elements: (1) the presumed FDCPA violation was not intentional; (2) the presumed FDCPA violation resulted from a bona fide error; and (3) the defendant maintained proper procedures reasonably adapted to avoid any such error.  The Court found that I.C. System met each of these requirements.   

I.C. systems met the first requirement because it looked for an account for  Mr. Anderson but could not locate one using the information provided in the letter; thus, the mistake was not intentional.  I.C. Systems met the second and third requirements by providing evidence regarding its written policy and procedures, including auditing procedures and testimony from employees regarding how they carry out the policy and procedures. This evidence included a step in I.C. Systems policies where if an employee is unable to locate an account, they send a “can’t find” letter. No such letter was sent in this case because I.C. System did locate two accounts for Ms. Hamblin.

In ruling in favor of I.C. System on the bona fide error defense, the Court reasoned the dispute letter “was ambiguous about whether both Hamblin and Anderson were disputing debts and about how many debts were in dispute.”  The Court further noted that “it was reasonable for I.C. System to conclude from the letter’s ambiguous language that Anderson did not have a debt with I.C. Systems to dispute,”  since the information in the letter did not match the information tied to the “Charles Anderson” accounts in I.C. System’s records. Further, the Court found that I.C. System provided sufficient evidence to show it had reasonable procedures in place to ensure that disputed debts were matched correctly with consumer accounts, flagged as disputed, and reported as disputed to credit reporting agencies.

Mr. Anderson argued that I.C. System’s policy was insufficient because it did not cover this exact scenario. However, the Court rejected this theory holding the “FDCPA does not require debt collectors to take every conceivable precaution to avoid errors; rather it only requires reasonable precaution.” (internal quotations omitted). The Court also noted that “Anderson’s counsel could “easily have prevented the problem in several ways: by including more identifying information in his letter disputing the debt, such as Anderson’s previous addresses; by specifically identifying the debt that Anderson disputed; by sending separate letters for Anderson and Hamblin; or by stating clearly in the letter that both Anderson and Hamlin had debts they disputed. The FDCPA does not require I.C. System to anticipate every potential omission or ambiguity in a debt dispute letter.”

The Court’s Order on I.C. System’s motion for summary judgment can be found here.

insideARM Perspective:

We cannot stress this enough: if your business is credit reporting, you really, really, really, should have policies and procedures in place to cover both FDCPA and FCRA compliance. Bona fide error defenses can be tricky to prove; to be successful, a defendant has to show the Court that they had reasonable procedures in place, and despite those procedures, an error occurred.   There is no bright-line rule indicating what is or is not a “reasonable procedure.”  Notably, in this case, I.C. System went above and beyond the bare bones of their procedure providing staff testimony and auditing procedures; since the Court specifically mentioned these pieces of evidence in its Order, it’s fair to say that the evidence had an impact on the Court’s determination.

While it may be true that compliance doesn’t necessarily generate revenue for accounts receivable entities, compliance sure can save an organization from being on the wrong side of a lawsuit.  This case may have had a completely different outcome if I.C. system did not have a compliance group that was able to: (a) show it had procedures in place; (b) provide evidence that its staff followed those procedures, and (c) provide evidence showing that it audited the procedure to ensure compliance.

Well this is a big one. And although it doesn’t relate directly to the TCPA, the cross-over issues here are pretty clear.

So there’s this agency–the FTC– and it has a number of powers at its disposal. But much like the FCC, its enforcement capabilities are limited by certain statutes that give it those powers. Some of them are pretty broad–like Section 5 of the FTC Act–and some of them seem pretty narrow –like Section 13 of that Act. Essentially Section 13 just gave the FTC power to seek injunctive relief–not to recover any money in Court.

The FTC has acted (very slowly and incrementally) to unilaterally expand its powers under Section 13 over the years because its way faster than using its other powers. Essentially it gave itself the right to go to court and quickly recover profits that were obtained by clearly illegal conduct in “exceptional cases.” And over time it used this power with increasing frequency–now bringing dozens of these cases each year.

Well today the Supreme Court–in another 9-0 decision–put an end to these lawsuits. Much like the textualist approach it adopted in Facebook the Supremes explained that the FTC lacks the power to seek monetary recovery under Section 13 because.. the statute doesn’t give it the power to do that:

Several considerations, taken together, convince us that §13(b)’s “permanent injunction” language does not authorize the Commission directly to obtain court-ordered monetary relief. For one thing, the language refers only to injunctions. It says, “in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”

And in a statement that echoes Facebook‘s “take it up with Congress” narrative:

Nothing we say today, however, prohibits the Commission from using its authority under §5 and §19 to obtain restitution on behalf of consumers. If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority.  

On that topics, members of Congress have acted swiftly (perhaps too swiftly?) to convene hearings following the Supreme Court’s ruling today.

Indeed, Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky (D-IL) announced today that the Consumer Protection and Commerce Subcommittee will hold a fully remote legislative hearing on Tuesday, April 27, at 1 p.m. (EDT). The hearing is entitled, “The Consumer Protection and Recovery Act: Returning Money to Defrauded Consumers.”

In their words:

“The Federal Trade Commission (FTC) is the nation’s premiere consumer protection agency, but its ability to return money to people who have been scammed is under attack in the Courts. An uncertain impending Supreme Court decision on the FTC’s 13(b) authorities has given scammers new opportunities to take advantage of people, including those who are isolated at home due to the pandemic. Next week, we will hold a hearing to consider legislation that would restore the FTC’s longstanding authorities to provide redress to consumers who’ve been scammed.” 

The hearing will be conducted remotely via Cisco Webex video conferencing. Members of the public may view the hearing via live webcast accessible on the Energy and Commerce Committee’s website.  Information for the hearing, including the Committee Memorandum, the legislation to be discussed, witnesses, testimony, and a live webcast will be posted HERE as they become available.

Contrast this swift action to the lack of Congressional action on the TCPA–called it. 

(BTW-NO ONE on the defense side better be lobbying Congress on the TCPA without chatting with me. I’m leading this effort. Organize folks.)

The Supreme Court’s decision is AMG Capital Management v FTC and it is available: here. 

ROCHESTER, N.Y. — Today ConServe announced it will award sponsored Continuing Professional Education (CPE) credits through its ConServe University^® quarterly Webinar Series. CPE is a requirement for most CPAs and financial leaders to maintain their professional competence and provide quality professional services.

These new sponsored credits are a natural extension of the company’s long-standing commitment to training excellence, as ConServe has earned – for the seventh consecutive year – a spot on Training magazine’s 2021 Training Top 100 (f/k/a Training Top 125). This annual list ranks excellence in employer-sponsored training and development programs. 

Michelle Hartmann, Vice President of Sales said, “In addition to providing innovative, customized recovery solutions, our Client training programs provide a fantastic forum to share knowledge and solutions in an efficient and effective manner.  We have invested in the right technology to continue to interact with our Clients and provide valuable tools, resources and complimentary effective training, including industry updates, professional development and networking with other collection experts.”

The idea for awarding CPE credits for their training programs was brought to them by their Clients, and ConServe delivered by taking appropriate action through the National Association of State Boards of Accountancy (NASBA). State boards of accountancy have final authority on the acceptance of individual courses for CPE credit*.

About ConServe:

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients.  Anchored in ethics and compliance, and steadfast in their pursuit of excellence.  As an insideARM^® 2020 Best Places to Work in Collections recipient, ConServe is proud to also earn in 2021 the Better Business Bureau of Upstate New York’s BBB Torch Award for Ethics and Training magazine’s, 2021 Training Top 100.  These annual rankings demonstrate ConServe’s commitment to being the “Best”, excellence training practices and overall commitment to ethical business practices.  Visit them online:  www.conserve-arm.com

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About NASBA – National Registry of SPE Sponsors”

Since 1908, NASBA has served as a forum for the nation’s 55 State Boards of Accountancy, which administer the Uniform CPA Examination, license more than 650,000 Certified Public Accountants and regulate the practice of public accountancy in the United States.  Visit them online:  https://nasba.org/ 

About Training magazine:

Training magazine is the leading business publication for learning and development and HR professionals. It has been the ultimate resource for innovative learning and development—in print, in person, and online—over the last 50-plus years.  Training magazine and Training magazine Events are produced by Lakewood Media Group. For more information about the 2021 Virtual Training Conference, please visit: www.trainingconference.com.  Visit them online at:  https://trainingmag.com/

*ConServe is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.

On April 22, 2021, the CFPB announced that it filed a complaint in federal court to seize a $1.6 million home; the ownership of which it alleges was transferred fraudulently by the operator of a massive and now-defunct debt-collection scheme.

In 2019, the CFPB and New York Attorney General reached a settlement with Douglas MacKinnon, Northern Resolution Group, LLC, Enhanced Acquisitions, LLC, Delray Capital, LLC, and Mark Gray. The CFPB had sued Douglas MacKinnon, Mark Gray, and their companies for harassing, threatening, and deceiving millions of consumers across the nation into paying inflated debts or amounts they did not owe. The companies routinely added $200 to each debt they purchased and attempted to collect, used spoofing technology to make it appear as though they were calling from government agencies, and sent threatening messages to consumers to frighten them into paying. MacKinnon and his companies were permanently banned from the debt collection industry and ordered to pay $60 million in consumer redress and penalties.

The new complaint alleges that Douglas MacKinnon transferred ownership of his home to his wife and daughter for the sum of $1 shortly after learning of the federal and state investigation into his companies. It then asks the court to declare the transfer void and order the seizure and sale of the property to partially repay MacKinnon’s outstanding debt to the federal and state governments for his illegal conduct.

“Douglas MacKinnon operated a brazen scheme, fraudulently inflating consumers’ debts, and he was equally brazen in trying to fraudulently conceal his own assets,” said CFPB Acting Director Dave Uejio. “Today’s action shows that attempts to defraud the federal government and evade the consequences of breaking the law will not succeed. I thank Attorney General James for her partnership in shutting down this scheme and in bringing MacKinnon to account.”

insideARM Perspective:

This complaint is more proof that Acting Director Uejio means business. The CFPB will continue to seek out and punish bad actors, and those caught committing such actions will not be able to skate on restitution and fines.  Further, this move indicates the CFPB does not consider its job complete once it reaches a settlement and intends to see bad actors pay their penalties. Bad actors do nothing to foster a culture of compliance within the industry. Good actors in the accounts receivable industry should support the CFPB in its efforts to see that real punishments are delivered to those who exploit the industry for personal gain.

SACRAMENTO, Calif. — The Department of Financial Protection and Innovation has filed a Notice of Proposed Rulemaking with the Office of Administrative Law. The Commissioner of the Department of Financial Protection and Innovation, formerly the Commissioner of the Department of Business Oversight (“Commissioner”), is proposing adding the following sections to subchapter 11.3 of title 10 of the California Code of Regulations to adopt the license application and requirements to obtain a debt collection license under the Debt Collection Licensing Act (Cal. Fin. Code, § 100000, et seq.):

Section 1850 – defines terms used in the regulations

Section 1850.6 – requires electronic filing of license application and related information through NMLS

Section 1850.7 – sets forth the license application and information requirements

Section 1850.8 – requires appointment of the Commissioner as agent for service of process

Section 1850.9 – requires fingerprinting through the California Department of Justice

Section 1850.10 – requires investigative background report for non-residents of the United States

Section 1850.11 – provides notices concerning information practices and privacy

Section 1850.12 – sets forth the process to challenge information in NMLS

Section 1850.13 – provides for sharing information with other government agencies

Section 1850.14 – clarifies “financial responsibility” for purposes of denying a license

Section 1850.15 – sets forth grounds for denying a license

Section 1850.16 – requires designated email address to receive communications from Department

Section 1850.30 – provides process for reporting changes to information in the license application

Section 1850.31 – provides process for reporting new officers, directors and other key personnel

Section 1850.32 – provides process to register new branch office or change of existing branch office

Section 1850.50 – requires surety bond of at least $25,000 and sets forth the bond form

Section 1850.60 – provides license is effective until revoked, suspended or surrendered

Section 1850.61 – provides process to surrender license

A copy of the Notice, Initial Statement of Reasons, and proposed Text can be found the Department of Financial Protection and Innovation’s website here.

The 45-day public comment period ends on June 8, 2021.

Comments may be e-mailed to: regulations@dfpi.ca.gov or mailed to: Department of Financial Protection and Innovation, Attn: Sandra Sandoval, 300 S. Spring Street, Suite 15513, Los Angeles, California 90013.

On April 19, 2021, the University of Virginia Health System announced that it would be canceling a pool of judgments and liens dating back to the 1990s.  The move will apply to all liens and judgments filed against households that make less than 400% of the federal poverty level, or about $106,000 for a family of four.

UVA has been suing patients for unpaid hospital bills for decades. Since Virginia law allows for post-judgment remedies, many of these lawsuits resulted in wage garnishments and liens which attached to real property and had to be satisfied before selling the property.  Those families that already paid due to lawsuits or liens will not get their money back.

In September 2019, UVA created a new advisory council to make suggestions and draw up more fair and equitable policies. For the past year and a half, that team has been diving deep into various solutions. The policies were developed following consultation with a local community advisory council empaneled to ensure the local community was represented as part of policy decision-making. In addition, a study of national hospital peers’ billing and collections practices for low-income, underinsured and uninsured patients was also conducted to help inform final policies. These policies build upon previous changes to UVA’s billing and collections policies instituted in January 2020.

“We have been very deliberate in studying this. We did not take it lightly, and we committed to fixing it. I think we’ve absolutely hit a home run here,” said  Douglas E. Lischke, UVA Health’s chief financial officer Lischke, “We feel that it is on par, better than most health systems, and we’re proud of that.”

In addition to forgiving liens and judgments of patients meeting the required criteria, UVA will establish an Ombudsperson’s office to help patients navigate payment options and ensure a fair, impartial assessment of individual cases. UVA Health has also developed a policy for catastrophic care to ensure public access to emergency services.

insideARM Perspective:

Despite the industries efforts to provide guidance regarding best practices in collecting medical debt in the face of increased accounts entering the medical collections cycle, in just the last two weeks, we’ve seen a new law related to healthcare collections passed in New Mexico, and now this announcement from the UVA Healthcare.  Thus, it seems like the focus on healthcare collections isn’t going anywhere any time soon.  With the current laser focus on medical collections, we can surely expect additional legislation and perhaps similar announcements from other healthcare facilities.

SYRACUSE, N.Y. — Capital Collection Management (CCM), a full-service accounts receivable partner offering compassionate, compliant, and innovative revenue recovery solutions, is proud to announce that industry veteran Tammy Vandenbroek has joined the team as Vice President of Institutional Relationships. 

With over 30 years of experience in the accounts receivable management industry, 12 of which were spent managing collections in higher education, Vandenbroek brings a wealth of knowledge to the CCM team. In this role, she will be responsible for CCM’s growth and expansion into new markets: building and managing industry partnerships, bringing CCM’s full suite of solutions to the medical, financial, academic, and government sectors, and driving revenue across the business.

“CCM takes an empathetic, consultative, and compliance-driven approach to revenue recovery, but what truly differentiates us from other agencies is our people,” said Jacob Corlyon, Co-Founder and CEO of CCM. “Tammy’s passion for building relationships and her ability to provide long-term payment solutions make her a welcome addition to the team. We’re lucky to have someone as experienced and well-respected in the industry as she is joining us.”

In addition to accelerating CCM’s growth, Vandenbroek will be instrumental in launching new services and solutions to clients.

“Having built my career in this space, I understand the unique challenges that credit unions, healthcare facilities, government, and higher education institutions face and the need for an accounts receivable partner who offers great service,” said Vandenbroek. “CCM is unlike any other agency I’ve come across in my career and I couldn’t be happier to join a company who is disrupting the perception of collections by helping companies and their customers strengthen their finances.”

Vandenbroek previously served as an Executive Vice President at Reliant Capital Solutions and was with ConServe for more than a decade.  

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She is an ACA-certified collector and supports the ACA Women in Consumer & Commercial Finance Conference. She is active in community nonprofit organizations including Habitat for Humanity and Amani House. Vandenbroek earned her bachelor’s degree from the University of Toledo.  

About Capital Collection Management  

Capital Collection Management (CCM) provides modern, technology-driven revenue recovery solutions, debt purchasing, and litigation services for enterprises that need engagement with empathy, experience with compliance, and excellence in revenue recovery. Leveraging state-of-the-art analytics and machine learning combined with a service-focused approach, CCM helps organizations from a variety of industries protect their brands and improve their bottom lines. To learn more, visit www.capitalcollect.com and follow us on LinkedIn.  

BLOOMINGTON, Minn.– Absolute Resolutions Corp., headquartered in Bloomington, MN, announced today that in honor of financial literacy month they have made a financial contribution to the Minnesota Council on Economic Education (MCEE).

MCEE was founded in 1961 when a group of local leaders met to discuss economics in Minnesota schools. They recognized that the most powerful way to promote economics is to train and prepare teachers so they can promote financial literacy in the thousands of students they impact over the course of their careers. Since its inception, the MCEE has trained over 32,000 teachers by providing workshops and other resources to deliver meaningful economics and personal finance lessons.

“At ARC we know the importance that a solid foundation in financial literacy provides not only for young students but also to under-served communities.” Said Chris Winkler, ARC’s Chief Executive officer.

In 2005 MCEE added community programs that have now equipped over 100 organizations to provide high-quality personal finance and economic lessons for vulnerable Minnesota communities and populations. They have various centers located throughout the state to support both the teacher and community education programs.

“We are proud to donate and support MCEE. The resources they provide to support teachers, students, and communities is truly invaluable” finished Winkler.

About Absolute Resolutions Corp.

Absolute Resolutions Corp. is a certified professional receivables company headquartered in Bloomington, MN with offices in San Diego, CA and Scottsdale, AZ.

www.absoluteresolutions.com

About Minnesota Council on Economic Education

MCEE provides workshops, training, and resources to support teachers in delivering relevant and meaningful lessons in economics and personal finance in the classroom.

www.mcee.umn.edu/mcee