Archives for May 2021

With new Regulation F rules on consumer preference, the CFPB has given even more power to consumers to determine how creditors and agencies can communicate with them. But this trend towards customer-centric collections is not new. Many of us in accounts receivable saw this coming for at least a decade. It started with the internet and was greatly accelerated by the smartphone. Now we are asking ourselves where does it all end?  

The good news is there is an end in sight. The bad news? Many of you aren’t going to like it. 

[article_ad]

Best practices in collections strategy and consumer communication will not be determined by what creditors want collection agencies to do, or even what agencies want to do. It will be driven by consumers. Design and communications-obsessed tech companies have radically changed what consumers consider reasonable standards for and means of communication. And we as consumers, really customers, have used technology to change the way we do everything. Why would we think it would be different with debt collection? 

The CFPB Put the Customer in Charge 

The future of debt collection strategy is customer-driven collections. 

As if the writing on the wall was not clear enough, the Consumer Financial Protection Bureau codified this change when they published section 1006.14 of Regulation F. Section 1006.14 is mentioned 594 times in the new rule. While most may have been focused on section 14(b)(2) Telephone call frequencies; presumptions of compliance and violation, also known as the 7/7/7 rule, section 14(h) Prohibited communication media is what puts the power squarely in the customers’ hands when it comes to the way debt will be collected going forward. 

In connection with the collection of any debt, a debt collector must not communicate or attempt to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person.

What does this mean? It means, like it or not, creditors and agencies need to adopt a customer-centric collections practice. The customer now has the right to tell you how they want you to communicate with them, whether it is via phone, email, text, letter, or any other channel. And they can even tell you when they want to be contacted by telling you specifically when not to contact them. See section 1006.6(b)(i). 

The Customer Wants Convenience and You Should Give It to Them 

What do we need to do? Besides making our systems and operations compliant with the new rule, we need to change the way we think about collecting debt from CUSTOMERS. We need to figure out how we can provide as many communication channels, or the ones customers really want like email and text, so that we can contact them and they can contact us in ways they consider convenient. We need to look at our hours of operations so we can respond when customers want to communicate with us (which can be done with a live person or in some cases a digital solution). We need to give customers clear information and options, the ability to calendar time with us, frictionless online solutions, especially payment portals, and their channel of choice.

Customer-Centric Collections Strategy Can Be Good for You and the Industry

The benefits for the customer are clear: control over how and when we communicate with them. They can demand – and get – the communication they want when they want it. Are there benefits for us, too? There are and they’re considerable. 

Companies that can meet this new standard for customer-determined, customer-driven communications will get lower customer complaints and lawsuits. This will lead to a reduction in internal work, reduced regulatory oversight, and lower litigation costs. We will get to see dramatically higher accounts per agent ratios as customers self-serve vs having to talk with a person. This means higher gross margins. 

Finally, we have the chance of changing the way debt collection is done and reducing the shame of being in debt. This means for the first time in our history, we may even be able to change the perception of debt collection itself. 

The race has already begun, and the companies that can meet their customer needs, dare I say delight their customers in helping them resolve their accounts, will be the ones successful in the decades to come. 

Tim Collins, Chief Customer Officer at InDebted, Le’nore Caldwell, Manager of Audit at Spring Oaks Capital, and Carrie Coker-Aivaliotis, Director of Market Planning at LexisNexis will discuss the future of consumer preference at iA Strategy & Tech, a digital briefing and networking event for creditor and agency executives in collections strategy – July 13-15. Learn more.

For several quick, easy ways to optimize consumer preference practices, try “5 Ways to Improve Your Consumer Communication Preference Strategy.” 

Want more collections strategy insight like this delivered right to your inbox? Sign up for the iA Strategy & Tech Newsletter.

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. 

2021 members include:

Yesterday, as expected, in the case of Hunstein vs. Preferred Collection & Management Services, Inc, 994 F.3d 1341 (11^th Cir. 2021), counsel for Preferred filed its Petition for Rehearing en banc. The Petition asserts that the Hunstein panel of judges reached the wrong result in its April 21, 2021 decision and requests that the full panel of 11^th Circuit judges rehear the matter.

The Case:

By now, the facts and holding of Hunstein should be pretty familiar. That said, here is the short version:  on April 21, 2021, the 11^th Circuit Court of Appeals held that (1) transmitting data to a mail vendor is an unauthorized third-party disclosure under 15 USCA 1692c(b), and (2) a violation of 15 USCA 1692c(b) gives rise to a concrete injury in fact under Article III of the Constitution. 

In reaching its conclusion regarding third-party disclosure, the court reasoned that transmitting such data to a vendor is a communication “in connection with the collection of a debt.”  It’s important to note here that the court did not make a legal finding that the transmission of data was a communication. Instead, Preferred’s counsel acquiesced on that point and made no attempts to argue that the transmission was not a communication. There’s been quite a bit of discussion regarding whether this admission was or was not a critical misstep. Suffice it to say, however, that in the Hunstein opinion, the court saw fit to thank Preffered’s counsel for refraining from arguing this point.   

In reaching its conclusion regarding Article III standing, the court relied heavily on the common law tort of public disclosure of private facts. Specifically, the court appeared to find that sending a data file to a vendor was of the same caliber as a news station disclosing a person’s personally identifiable information and viewing habits to an unrelated third party.  

The Petition for Rehearing:

It is against this backdrop that Preferred’s newly engaged counsel filed the Petition for rehearing en banc. In light of the limited word count of the motion required by the 11^th circuit rules, counsel for Preferred highlighted only the most crucial legal errors made by the Hunstein Panel, including the following:

• The transmission was an automatic, ministerial, electronic transmission of data privately to an agent of a debt collector for the sole purpose of facilitating a communication to the consumer by the debt collector so that a letter could be mailed to Mr. Hunstein. The data was not viewed by human eyes nor published to the public.

• The decision was contrary to decisions from the U.S. Supreme Court and previous precedent set by the 11^th Circuit Court of Appeals.  

• There is no connection between the electronic transmission of data to a private server maintained by an agent of the debt collector and the tort of public disclosure of private facts since a private server does not pertain to or affect the community or the people as a whole.

• The electronic transmission of data to a private server of an agent of a debt collector is not a harm congress identified when it enacted the FDCPA.

• The FDCPA explicitly allows telegrams which are the 1977 equivalent of letter vendors.

• In a similar case, Flood v. Mercantile Adjustment Bureau, 176 P.3d 769 (Colo. 2008), the Colorado Supreme Court analyzed a state provision equivalent to 15 USCA 1692c(b) and held that use of a letter vendor presents no harm to consumers.

• The CFPB has found no consumer injury in the use of letter vendors, and the ruling is contrary to Regulation F, which will go into effect on November 30, 2021.

Now that the Petition is filed, there will likely be a flurry of amicus briefs filed by interested parties. We will continue to keep you posted on this case as it unfolds. 

The complete Petition for Rehearing can be found here.

insideARM Perspective:

While there are numerous legal flaws in the Hunstein decision, which the Petition for Rehearing eloquently addressed,  make no mistake about it: if left standing, the Hunstein case will cause immeasurable harm to consumers. Accounts receivable entities use vendors due to their expertise in operational matters which intersect with the collections process. Simply put- vendors have the expertise and the technology to handle certain aspects of the collection process better than debt collectors themselves. Unfortunately, this ruling essentially asks accounts receivable entities to take a step back about forty-five years. Instead of performing critical functions through experts, which act as their agents, Hunstein may require debt collectors to be a master of all trades.

The net result is that consumers will suffer. Correspondence will be disrupted; all those clear, concise, and timely communications the CFPB discussed in Reg F?  No chance. Debt collectors simply don’t have the technology or expertise to handle letters like letter vendors. A consumer who would like to pay their bill through a web portal? Try again- that won’t be allowed either under Hunstein; after all, the payment portal has to confirm a consumer is who they say they are. Consumers better stock up on checks, stamps, and envelopes and shouldn’t even think about receiving a payment confirmation.  And let us not forget about the creditors will sue consumers without ever placing an account with a collection agency- after all – why take the risk?  The list goes on and on, but we’ll stop there. 

Hopefully, upon reviewing the points raised in the Petition, and the additional points which will surely be raised in amicus briefs, the court will realize its ruling doesn’t match the law, and its error is going to have a catastrophic effect on the consumers it correctly asserts the FDCPA exists to protect.

ST. GEORGE, UT — TCN, Inc., a global provider of a comprehensive cloud-based call center platform for enterprises, contact centers, BPOs, and collection agencies, today announced the launch of its Voice Analytics, a set of advanced tools for search and discovery combined with automated call transcription and reduction. The new set of tools, offered initially as a free 60-day trial, includes a highly flexible search engine for quickly and easily finding and retrieving calls through free-form combinations of keywords, phrases, acoustic measures and call metadata.

“Our new Voice Analytics tools can help to reveal the deep business insights that are hidden inside every customer interaction,” said Jesse Bird, chief technology officer of TCN. “By retrieving and extracting information from customer interactions over the phone, TCN Voice Analytics uses advanced speech recognition technology to identify certain words, phrases and even the amount of silence on a call to help your organization better understand your customers.”

TCN Voice Analytics uses audio from recorded calls and converts them into structured data for searching and analyzing. The set of tools also utilize other associated data, such as customer profile information or when the customer interaction occurred. As the audio goes through the speech recognition system, a text transcript is extracted from the call.

In addition to providing full-text transcripts for every call, TCN Voice Analytics provides enterprise-level engagement analytics and seamless integration into TCN Operator, TCN’s flagship contact center platform. Its features include advanced search and filtering, enterprise-grade speech recognition and transcription, contextual call playback data, tagging and commenting, transcript visualization, and full Payment Card Industry (PCI) redaction.

TCN Voice Analytics’ benefits include:

• Increased Contact Center Efficiency: Discovering long calls and high silences with TCN Voice Analytics helps reduce average handle time (AHT). Increase first-call resolution (FCR) by searching for repeat call language and analyzing short calls.
• Improved Agent Performance: TCN Voice Analytics’ capabilities help identify areas for improvement and simplify the playback review process by searching for undesired behavior and tag calls for reviewing later 
• Better Customer Experience: Conducting incident analysis with TCN Voice Analytics helps identify instances of customer dissatisfaction and allows call centers to improve customer experience.
• Reduced Risk & Compliance: TCN Voice Analytics allows call centers to find and analyze calls with problematic language, which helps lower the likelihood of fines and lawsuits.

TCN is offering Voice Analytics as a free 60-day trial. For more information, go to https://go.tcn.com/speech-analytics-demo.  

About TCN, Inc.

TCN is a global provider of a comprehensive, cloud-based call center platform for enterprises, contact centers, business process outsourcing firms (BPOs) and collection agencies. Founded in 1999, TCN combines a deep understanding of the needs of call centers with a unique approach to pricing – no contracts, monthly minimums or maintenance fees – that supports rapid scaling and instant flexibility to changing business needs. TCN’s flagship platform for contact centers, TCN Operator, features a holistic set of easy-to-use, automated agent tools and advanced apps for omnichannel communications, workforce engagement, compliance & data management, integration & automation, intelligence, reporting & analytics and collaboration & accessibility. Its suite of compliance tools helps businesses meet the requirements of the Telephone Consumer Protection Act (TCPA) and other state and federal regulations, including new and updated debt collection rules issued by the Consumer Financial Protection Bureau. TCN Operator integrates seamlessly with leading APIs and is accessible to agents with visual impairments. TCN is trusted by Fortune 500 companies and enterprises of all sizes in multiple industries in many countries. For more information, visit https://www.tcn.com/ and follow on Twitter @tcn.

CHESAPEAKE, Va. — Spring Oaks Capital, LLC has hired Wyatt Shaw as Director of Partnership Services. Wyatt will report to Chief Operating Officer Jason Collins

Wyatt joins from Global Lending Services (“GLS”) where he built a world-class de novo recovery platform for the automotive lending platform. Prior to GLS, Wyatt served as Senior Vice President of Performance at InvestiNet, orchestrating a global vendor network and driving superior results during his tenure. Wyatt joined InvestiNet as an experienced consumer finance executive, with experience at several of the leading banking and recoveries platforms in the industry, including Fifth Third Bank and Resurgent Capital Services. 

Spring Oaks Capital is deeply rooted in compliance, technology, and serving as a consumer-centric partner to all its stakeholders. Maintaining rigorous standards in selecting and managing partners is a critical component of this mission.

Jason Collins, Chief Operating Officer of Spring Oaks Capital, stated, “We are excited to add Wyatt to the Spring Oaks Capital management team. Wyatt brings a tremendous amount of leadership, knowledge, and industry experience that will support our continued growth. I look forward to working with him again. He will be a key component of our success as we continue to expand our world class operations infrastructure.”

[article_ad]

Wyatt stated “Joining Spring Oaks Capital is a key milestone for me. After a wide-ranging career spanning banks, alternative lenders, and recovery firms, joining a dynamic platform like Spring Oaks is a tremendous opportunity to work with a highly talented management team and share my diverse experience.”

About Spring Oaks Capital, LLC

Spring Oaks Capital is a national financial technology company, focused on the acquisition of credit portfolios. The Company subscribes to an employee and consumer-centric operating philosophy that creates high-value jobs, a significant performance lift, and the highest standards of compliance. Spring Oaks’ business strategy is rooted in innovative data-driven technology to maximize collection results and a contact platform that offers multi-channel options to meet each consumer’s communication preference. Spring Oaks has the management vision and experience to nurture a culture and DNA that is unique in the space. The executive team maintains deep experience end-to-end across the consumer finance lifecycle with some of the largest global banks and innovative FinTech platforms. To learn more about Spring Oaks and our revolutionary FinTech platform, please visit www.springoakscapital.com.

In this episode, Stephanie Eidelman, insideARM President & CEO, interviews Ray Peloso, CEO of Katabat, about what he thinks will happen with charge-offs, and what he believes will be essential to success in the future. Watch Stephanie’s conversation with Ray, or read it below.

Stephanie Eidelman:

Hi, I’m here today with Ray Peloso. He’s the CEO of Katabat. Ray is one of my favorite people in the industry in part because I LinkedIn-stalked him about six or seven years ago. He didn’t know me and he was kind and generous enough to respond to me and so began a great friendship. Ray is also a great thinker. So I’m sure this is going to be a very interesting discussion.

Ray Peloso:

Great. Thanks, Stephanie. As always, it’s a pleasure to spend a few minutes with you chatting about industry topics. So thanks for inviting me.

Stephanie Eidelman:

Briefly tell us about your company, who are your customers, and what pain points do you address?

Ray Peloso:

We’re Katabat. We sell a suite of best-in-breed debt collection systems to clients in North America, the greater APAC region, and Europe. In a nutshell, we help our clients collect more dollars and reduce charge-offs by helping them deploy collection strategies, omnichannel strategies and synchronize and orchestrate offers across the entire collection spectrum. Key pain points we normally address — certainly, in the last few years, the ability to execute digital omnichannel collections has been a really hot area for us. Secondly, for some of our larger clients, we’re a full enterprise-class collection system. So we’ve got some pretty robust deployments with some larger well-known financial institutions. And then the third pain point, I think that’s common across all of our clients, is that we’re really an auditable infrastructure. So it’s obviously a highly regulated industry. So the controls and the ability to manage audits and compliance is a part of our value proposition.

Stephanie Eidelman:

All right, let’s get into this. The current economic conditions have certainly been changing. Are they what you would have expected them to be six months ago? Or if not, how did things unfold differently?

Ray Peloso:

We could spend hours on that one. I don’t believe anybody could have predicted where we are. I think we’re in amazing uncharted territory. I’ll offer four statistics. One is that savings rates, from a generational perspective, are through the roof positive. Who would have predicted that six, nine months ago? Second, delinquency’s way down. I was taking a look at some longer-term trends. The 2012-2020 period was a generational low as you and I know having been in this industry, and we’re now at half that — because, number three, the US government printed $4 trillion of cash and threw it into the economy. So you have all these crazy dynamics going on. And then, fourth, just with first-quarter earnings, all the banks threw loan loss reserves way up this time last year, and then took them way down this year. So if I told you I saw this coming I be probably making it up a little bit.

Stephanie Eidelman:

Seeing that through, we know that charge-offs were way down in Q4 of last year, so we’ve got lower delinquency rates so far this year. What should companies be doing now, during this relatively stable time, to prepare for what you might call the inevitable debt boom? Or, what I would even ask you — Is a debt boom actually inevitable in the coming quarters?

Ray Peloso:

Yeah. Great question. I think in analogies too often. I feel like we’re in calm waters in a boat and it feels pretty good, but then we look down and we actually don’t even have a steering wheel or a compass. So we think we’re okay, but we’re not actually sure where we’re going or how we’re going to get there. It is a strange analogy, but, you know, the industry has relied upon decades of vintage data and historical data to drive good decision-making. And I think that’s all thrown out. Honestly, I think we’re in a 12-month period right now where everybody should be uncomfortable. So yeah, I think that boom is coming. Do I know exactly when? No, I think about this as everybody should be planning for uncertainty right now, which is a little bit of a broad statement, but it’s true.

[article_ad]

So if you’re calm right now, I don’t think you shouldn’t be, I think you should be actually quite anxious. For example, as I’m sure you know, inflation is starting to pick up, the stimulus programs are going to come to an end. There’s been these artificial distortions and consumer behavior. I wouldn’t bet that those are long-term enduring patterns. I think things could really pivot relatively quickly. That’s the first point. The second point I would make is, forgetting all that, the consumer revolution continues. Like my daughter is 17 and Tik Tok didn’t exist three years ago. And her whole generation sees the world through Tik Tok. And so if you’re not forward-thinking, if you’re not anticipating a 12-month cycle or even a six-month cycle, I think it’s actually quite dangerous.

Stephanie Eidelman:

That’s a great point. I have also a teenage daughter who is also on Tik Tok and what they use social media for is not something you and I would have imagined. So as it relates to innovation and thinking about communicating with consumers, gosh, it’s so hard to imagine the regulations even keeping up with things like Tik Tok. How are you innovating and what are you doing to anticipate things like that?

Ray Peloso:

Yeah. So I’ll talk about innovation in a second, but back to the comments that came out when we spoke earlier about sales cycle and velocity. It’s amazing to me, the speed of decision-making that I think is the burden on all of us in the industry now. If you wait three or four quarters, because you think you can defer some of these decisions, you can miss the cycle. Anyway, that’s to the Tik Tok point, it’s just fascinating to me the cycle of change that occurred, and we just sort of operated through it.

In that vein though, we’ve got a couple of areas of innovation that we’re pretty excited about. As you know, we announced the acquisition of Simplicity Collections a few months ago. And so we’re rapidly building some integrated products that we expect to roll out, and we see a real need in the third-party market for combined system of record and omnichannel capability.

That’s certainly the feedback we received, which led us to want to partner with Simplicity. So we’re in the process of generating some products for rollout later part of this year. Secondly, it’s a buzzword, RPA, or robotic process automation, but essentially it’s using technology to automate and reduce routine tasks. We’ve got some products that we’re working on — sort of a virtual collector product that many of our clients are interested in, which allows the routine work to go to a bot so that the more complicated work can then flow through your agents. So we think there’s an opportunity in the marketplace for that which we’re excited about. And then thirdly, we’ve got a few Regulation F-related products. We think we can build this kind of compliance roadmap into the platform to help our clients navigate. We’ve got a partner we’re working with, so it wouldn’t be technology people giving the interpretation. We’ve got smart people that know how to interpret regs and we would deliver it.

Stephanie Eidelman:

Yeah. Anything that’s going to increase the consistency of handling is certainly going to be helpful for adhering to new regulations. Well, is there anything I didn’t ask you that I should have?

Ray Peloso:

I think you’ve covered almost everything. You know, it’s interesting when we talk to the marketplace, a lot of our clients are more forward-oriented now than they were in the past. And it shows up in this dialogue that says, we’ve got this temporary hiatus. COVID was a near-death experience (talking business, not the personal tragedy side of it). And so now we’ve got this pause and with this pause, we’ve got this window of opportunity to kind of rethink and reset strategy. So we hear a lot of our clients in the marketplace talking about this window of opportunity to prepare. And so I think that’s interesting because that shows up in a variety of different forms and within a variety of different clients.

Stephanie Eidelman:

It is a real business challenge for people to figure out how to plan for the future while still operating in the current environment. That’s the challenge. How do you get teams to do both at the same time? Or do you hire simultaneous parallel teams to do both? Of course, it’s an investment and it takes some guts. And a little bit of risk.

Ray Peloso:

If you think about last March, April, May, the pandemic hit, and the industry sort of reeled for, let’s call it 30 days. But then it was amazing how the industry pivoted. And the existence of a clear and present danger motivated people to innovate and make change quickly. And now it’s like, oh, well maybe it’s not urgent. So you almost have to create that clear and present danger because it’s possible. And I think last year was a really interesting time for the industry because of how much change occurred. You almost have to trick your mind to say, let’s create urgency now and have an enemy to go after.

Stephanie Eidelman:

I think you’re right. It’s incredible what people achieved. I don’t know if people feel complacent now, as much as they just feel tired. You can only keep up that pace of urgency for so long. So perhaps this is a lull and then that urgency will come back again.

Ray Peloso:

I think that’s true. A favorite phrase of mine is basically, “If you don’t like change, you’ll hate extinction.” Like Tik Tok is illustrative. The world is moving faster and faster. So I get it. I’m tired. You’re probably tired. But the world doesn’t slow down.

Stephanie Eidelman:

Yes. Unfortunately. Well, this was awesome. We hit a lot of really big topics in just a few minutes. So hopefully this will be a pleasurable listen (or watch) for folks. And, I look forward to the next time.

We’re keeping a close eye on the impact of the big Hunstein ruling from the Eleventh Circuit.

On May 18, 2021, a court in Illinois became the first to apply the case, albeit indirectly. But the intersection between debt collection and consumer privacy laws was on clear display.

In Giannini v. United Collection Bureau, No. 20 CV 5131, 2021 U.S. Dist. LEXIS 94150 (N.D. Ill.  May 18, 2021) the Plaintiff argued that supplying a debtor with a collector’s privacy policy constituted a violation of the TCPA for some reason.

While rejecting the Plaintiff’s odd theory, the Court paused to take note of Hunstein and also of the broader possibility that consumer information might be misused in the collection or servicing of a debt.

Specifically:

Giannini has not plausibly alleged that UCB’s inclusion of the privacy notice violated the FDCPA. Indeed, she concedes that the substance of the notice did not contain false, deceptive, misleading, unfair, or unconscionable information. She posits, however, that the notice was not required by law and “totally unnecessary,” so its inclusion was inherently confusing and intimidating. But “unnecessary” is hardly synonymous with “unfair,” and voluntarily including an accurate statement of a creditor’s privacy policy is not a practice that is false or deceptive, let alone unconscionable. And Giannini does not allege that UCB unlawfully collected or shared her information with anyone.

That last line should send shivers down a lot of spines. The idea that unlawful “collection” and “sharing” of information in the context of servicing/collection might violate the FDCPA (or other laws) is something that needs to be kept front of mind in an industry that commonly skip traces and investigates the whereabouts of persons and collateral alike.

As to Hunstein the Court notes that Plaintiff did not allege facts consistent with the Eleventh Circuit’s big ruling:

Hunstein held that a debt collector violated 15 U.S.C. § 1692c(b) when it electronically transmitted the plaintiff’s data to its dunning-letter vendor without the plaintiff’s consent… Here, there is no allegation that UCB transmitted any of Giannini’s information unlawfully or without her consent. And contrary to Giannini’s arguments in her motion, the privacy notice’s suggestion that sharing personal information could, in some instances, comply with the FDCPA is not false or misleading. As Hunstein notes, § 1692c(b) alone includes several exceptions that demonstrate some transmission can be lawful under the FDCPA. 

Notice, then, that the Illinois Court cited Hunstein with approval–albeit on a slightly removed issue–when it could have outright ignored or rejected the decision.

But pay attention to the bolded portion of the reasoning set forth above. The Illinois court views Hunstein as a case about the “transmittal” of “information without consent” i.e. this is a pure data privacy issue divorced from the context of debt collection. That’s quite significant and suggests that future courts applying Hunstein will not be shy about applying it beyond its “dunning letter” roots.

While Giannini’s application of Hunstein arose in a somewhat unusual procedural posture, the case certainly counsels keeping data privacy issues on the front burner–especially when collecting or servicing debt.

We’ll keep an eye on Hunstein for you since I know there is a ton of interest in this non-TCPA case.

Crown Asset Management, LLC (CAM), a receivables management and specialty finance firm in Duluth, GA, is pleased to announce the addition of Annie Gonzales to its growing team of professionals. Ms. Gonzales will serve as Audit and Compliance Manager, bringing with her 21 years of experience and expertise in the Accounts Receivable Management industry. Her responsibilities will include oversight and management of service operational audits, the leadership and coordination with both internal/external audit and compliance staff and internal executive management. 

In her most recent roles, Ms. Gonzales served as Director of Compliance for 4 years and Director of Operations for 2 years prior at a Georgia-based collection agency. She worked in management roles for 7 years at a California-based collection agency, overseeing and managing performance and production for 6 teams on a large client contract. Ms. Gonzales began her career in the ARM industry at a collection agency in Oregon in 2000, where she would eventually help to develop, train, and lead a large collection team for several years. 

“Ms. Gonzales deeply understands the intricate and critical balance between performance and rigorous compliance. Her background demonstrates her strong leadership, organization, and steady thinking skills. We know she will be a solid asset to Crown as we continue to ensure strong compliance and as the regulatory environment evolves. Ms. Gonzales has a clear talent for management, and we look forward to growing together,” stated Crown Asset Management owner Brian Williams.

“Upon meeting the senior management staff at Crown, it was clear very quickly that this was a sincere, respectful, hard-working group of people with a common goal, a good work ethic, and a strong company culture,” said Ms. Gonzales. “I’m honored to join the team and become a part of its ongoing success as a compliant, focused, and highly competent group of professionals.” 

Not only is Ms. Gonzales well-seasoned in collections and compliance management, but her dishes at home are also well-seasoned. Ms. Gonzales’s specialty outside of work is cooking and baking for her family of 6, including her husband of 25 years (The team at Crown is intrigued by her family-renowned taco night with everything made from scratch). She also enjoys reading and volunteering with her youngest son’s high school football team when time permits. 

About Crown Asset Management

Founded in 2004, Crown Asset Management, LLC, is a professional receivables management firm that outsources purchased accounts to a nationwide, proprietary network of collection agencies and law firms. Utilizing a cutting-edge predictive analytical model during pre-purchase portfolio due diligence, their team focuses on achieving appropriate financial returns for investors while ensuring the best possible experience for consumers. They are an RMAI Certified Receivables Business and are headquartered in Duluth, GA.

The CFPB and FTC continue to make clear that their number one mission is protecting consumers, including from entities that claim to offer consumers assistance. On May 17, 2021, both CFPB and FTC issued press releases announcing they are seeking fines and penalties against debt settlement companies for unlawfully charging fees to consumers.

The CFPB’s action against DMB Financial

The CFPB’s May 17, 2021 press release announced that the CFPB requested a federal district court grant a final judgment and order, the terms of which have been agreed to by DMB Financial, LLC  (DMB). DMB is a Massachusetts-based debt settlement company that offers and provides services to settle or renegotiate unsecured debt on behalf of consumers in 24 states.

In December 2020, the CFPB filed a complaint against DMB in federal district court in Massachusetts, alleging that the company had charged unlawful upfront frees before it performed its promised services and before consumers began making payments under any debt settlement. The bureau further alleged that before enrolling consumers in its programs, DMB failed to disclose to consumers when it would make a settlement offer to creditors or debt collectors, and failed to disclose the amount of money or the percentage of each outstanding debt the consumer had to accumulate before DMB would make a settlement offer. If entered by the court, the judgment would require DMB to pay consumers at least $5.4 million and a civil penalty.

Here’s what Acting Director Uejio said about the action:

“DMB Financial preyed on consumers who were struggling financially, charging millions of dollars in illegal upfront fees and hiding the true cost of its services…Charging upfront fees for debt settlement is a violation of federal law, and the CFPB will continue to act decisively when we see companies taking advantage of consumers in this way.”

The FTC’s action against Student Advocates Team

Also on May 17, 2021, the FTC issued a press release announcing that it reached a settlement agreement with a debt relief company, Student Advocates Team (SAT), and other defendants (the complete list can be found in the press release). In its 2019 complaint, the FTC alleged that SAT and other defendants charged illegal upfront fees and led consumers to believe these fees went towards consumers’ student loans. Further, per the FTC, SAT falsely promised that their services would permanently lower or even eliminate consumers’ loan payments or balances, and signed customers up for high-interest loans to pay the fees without making required disclosures.

The settlement agreement bans SAT and the settling defendants from providing debt relief services, prohibits them from violating the Telemarketing Sales Rule, and includes a monetary judgment against certain defendants of more than $24.5 million, which is partially suspended due to an inability to pay. In addition, the defendants will be required to pay $11,500, which will be used for consumer redress, and are prohibited from collecting any further payments from the consumers who purchased their debt relief services.

insideARM Perspective:

The CFPB and FTC seem to be sticking to their objectives to protect consumers, regardless of the source of the harm. Accounts receivable entities have known for a long time that not every entity which claims to help consumers actually does so, and are often able to identify bad actors in the debt settlement/debt relief space before any regulatory body becomes aware of the issue. Perhaps we could all help protect consumers a bit better if the lines of communication were a bit more open and there were ways for debt collectors to report these bad actors when they discover them in their day-to-day business.

The FFAM360 Alliance of Companies announces its continued corporate sponsorship of Promise686, a non-profit charity dedicated to ending the cycle of foster care, and its annual participation in The 2021 Promise Race, uniting people across the country to work towards the common goal of making a difference in the lives of vulnerable children.

Over 450 people, including FFAM360’s Team Maloney, participated in the April 24, 2021 Promise Race that took place both in-person and virtually. The Promise Race was created to raise awareness of the critical needs of children in foster care. Developed around the challenges that children in foster care face, the race brings awareness to the unrelenting and unending cycle of foster care by incorporating special zones, or “cycles” that occur each time a participant completes a one-mile circuit. Named “disruption zones,” each cycle is intended to illustrate a disruption in the life of children in foster care, including family breakdown and placement in an unfamiliar home. This year’s disruption zones included:

• Ups + Downs- hay bales, cargo nets, and belly crawls to highlight the many highs and lows that foster children face
• The Haul- carrying weighted bags to represent the many moves from house to house
• Color Zone- getting covered in color to reflect how foster children’s environments become brighter and happier when they are supported by loving families and churches

[article_ad]

“FFAM360 and the Maloney family have been and will remain to be avid advocates for children in need. Since the outbreak of COVID-19, the foster care crisis has amplified the need for loving families who are willing to open up their homes and their hearts to children who have lost so much and have been struggling to achieve a ‘new normal’ since before the pandemic,” says Matthew Maloney, President and Chief Investment Officer. “Now, more than ever, children need the support of devoted organizations like Promise686. These kids have lost an important support system of school and are also facing the loss of visitations with birth families, delayed court dates, a strained child welfare system, and sadly, so much more.”

Promise686 creates support systems for foster families, adoptive families, and biological families in crisis. They also activate churches to raise up foster families while providing services, supports, advocacy efforts, and more. Their goal is to end the cycle of foster care and mobilize church communities to care for vulnerable children by following their Family Advocacy Ministries (FAMs) model that equips churches to:

• Raise awareness around the needs of vulnerable children
• Help prevent children from going into foster care by supporting biological families in need
• Recruit and equip foster & adoptive families
• Create Care Communities for those caring for at-risk kids

“No donation of time or money is ever too small to make a huge impact in a child’s life,” continues Mr. Maloney. “We hope to lead by example in continuing our support of Promise686 and living our motto to go ‘above and beyond.’ We hope to inspire others to reach out and help their local charities in these times of great need. Together, we can make sure that their services and the beacon of hope that they provide endure in this difficult time.”

If you would like to help Team Maloney and make a donation, you can do so through their official Promise686 team donation page. For more information on Promise686, its mission, and upcoming events, please visit their website. To learn more about how FFAM360 is creating positive change in our communities, please visit our News page.

About Promise686

Promise686 is a 501(c)(3) organization providing grants, education, and practical support to churches and families to address the local crisis in foster care and support those who are called to adopt. Promise686 also works with private agencies to increase foster care awareness and place volunteer teams around foster families. Promise686 is headquartered in Berkeley Lake, Georgia and has taken root in 10 states beyond Georgia.

About First Financial Asset Management (FFAM360)

The FFAM360 Alliance of companies deploys world-class people, operations, and technology to deliver revenue cycle solutions to their clients that optimize their credit and revenue lifecycles. Founded in 2002 with the vision of creating a best-in-class organization that provides comprehensive solutions across the Insurance Subrogation, Healthcare RCM, Financial Services, and Human Resource Staffing sectors, FFAM360 has achieved many significant awards and recognitions including being honored by the Women’s Business Enterprise National Council (“WBENC”) as a Certified Women-Owned Business Enterprise. They are headquartered just outside Atlanta, GA, with additional offices in Phoenix, AZ, and Paso Robles, CA.

Friend or foe?

That’s what TCPA defendants are beginning to wonder about Article III standing principles in the Eleventh Circuit.

Yet another Defendant has been remanded to state court to litigate a federal claim for lack of standing in federal court, and this is just a mess.

[article_ad]

The way things are supposed to work—i.e. 99.99% of times—a federal claim can be litigated in federal court. There’s a federal statute permitting it. There’s Supreme Court precedent around it.

But the TCPA is always a special little snowflake.

Yet, somehow, just because a Plaintiff wasn’t harmed by a defendant’s conduct he/she gets the outstanding benefit of not having to litigate in federal court (which is a much trickier place to sustain a claim than in many state courts.) Plaintiff benefits from not being harmed. Makes no sense folks.

Oddly though this isn’t even the first time courts have determined that TCPA cases were not subject to litigation in federal court. Back in the early days of TCPA litigation the Courts were unsure what to make of the TCPA’s oddly worded private right of action that only authorizes litigation if the rules of the state in which the suit was brought permitted it.

What that language really means—of course-is that a state had to authorize suit and that the TCPA did not have its own standalone private right of action. But that’s not how courts interpreted it. Instead many bafflingly concluded that Congress was closing the doors to the federal courthouse to TCPA claims but allowed such suits to be filed exclusively in state court. The issue made it all the way to the US Supreme Court in Mims back in 2012 in which a unanimous court held that TCPA suits can be brought in federal court.

Except now they can’t again. At least in the Eleventh Circuit.

In Turizo v. Solutions, CASE NO. 21-cv-60289-ALTMAN/Hunt, 2021 U.S. Dist. LEXIS 92775 (S.D. Fl.  May 17, 2021), for example, the Court remanded a TCPA suit back to state court after the Plaintiff argued he had not been harmed by the conduct. The Defendant tried to keep the case in federal court by arguing, in essence “no fair” but the Court was unmoved and remanded for lack of standing.

I continue to believe there is a very clear path to avoid remand and/or secure dismissal from a state court but it requires a declaratory relief action in federal court and leveraging of cases like Mims and those dealing with prudential standing. Punchline: a consumer who lacks standing to sue on a federal claim in federal court lacks prudential standing to sue in state court. (See Stoops.)

Chat soon.