Archives for June 2021

While defendants in consumer-related lawsuits may often claim suits are meritless or filed in bad faith, it’s not so often that a court agrees. It is even less frequent for a court to enter sanctions against a consumer’s attorney, but that’s precisely what happened in the Eastern District of Wisconsin this week, where at least one Judge appears to be tired of frivolous actions and sloppy motions practice.

The Cases:

In March, we told you about two cases in the Eastern District of Wisconsin which were dismissed through scathing orders written by Judge Brett H. Ludwig. The cases, filed by Paul Strouse and Thomas Napierala, are Herron v. Credit One Bank, et al., case #20-cv-0844 (E.D. WI) and Butler vs. 1st Franklin Financial Corporation, et al., Case #20-cv-0842 (E.D. WI). In each case, the consumer filed suit against Enhanced Recovery Company, LLC (ERC) and other defendants alleging all defendants failed to correct and report accurate credit information.

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In light of the “cookie-cutter” nature of the complaints, on his way to dismissing the actions for the failure to meet the injury in fact requirements of Article III, Judge Ludwig took the time to probe the consumer’s counsel about their pre-trial conduct and whether the cases were filed for a proper purpose. Ultimately, as a result of the unsatisfactory responses to those questions, Judge Ludwig required each attorney to show cause as to why they should not be sanctioned. (Note: by issuing an Order to Show Cause regarding sanctions, the court essentially said, ‘I am going to fine you if you don’t show me a reason why I shouldn’t’).

The Sanctions Orders:

On June 22, 2021, in another set of identical blistering orders, Judge Ludwig made it clear that he was highly displeased with the responses to his inquiries. First, the Judge took issue with the substance of the responses to the orders to show cause. He admonished the consumers’ counsel for incorrectly describing the “case” as having standing when the issue is whether the “plaintiff” has standing. Further, Judge Ludwig noted that the case upon which the consumers’ counsel relied to avoid sanctions “says not a word about standing.” Holding back nothing, he went on to state the consumers’ counsel’s choice in citing that particular case “suggests they have either failed to read [the] decision or still do not understand the basics of Article III standing, despite having had four cases dismissed based on this fundamental jurisdictional doctrine.”

Next, Judge Ludwig specifically cited the numerous examples of sloppy legal work by the consumers’ counsel. He characterized the response to the order to show cause as “plagued with errors.” He provided specific examples, including that the response cited a “‘goof’ faith belief” and “duplicitous” complaints (instead of “duplicative”). Again, making his opinion of Mr. Strouse and Mr. Naperiela’s legal work quite clear, in addition to providing a laundry list of errors in a footnote, Judge Ludwig offered the following critique:

“[The] sloppiness and general disregard for the Local Rules fails to meet even the most basic expectations for federal court practitioners. While anyone can make a mistake in the hectic practice of law, the Court expects greater care than this, particularly in responding to an order to show cause. And, unfortunately, these blunders are simply a continuation of similar mistakes that have plagued this entire series of cases.”

Finally, Judge Ludwig noted that the consumers’ counsel failed to respond to his direct inquiry regarding whether the case was filed for an improper purpose and failed to come forward with any facts that would even suggest a proper purpose; therefore, sanctions were warranted. In deciding the amount of sanctions to award to each defendant, he noted that although he had the power to award all of the defendants all of their attorneys’ fees, he would show Mr. Strouse and Mr. Napierala “mercy” by only requiring them to pay $2,000.00 to each remaining defendant for a total of $6,000.00.

Regarding the $2,000 it will be receiving as a result of the sanction orders, ERC’s Shelly Gensmer stated, “ERC is, of course, pleased to see the court recognize the need for holding attorneys accountable when cases are litigated in bad faith. Any industry win on Article III standing is immensely valuable! We hope all of the defendants found this to be a positive push towards the overall good fight for the industry.”

You can find the Sanctions Order for the Butler matter here and the Sanctions Order in the Herron matter here.

insideARM Perspective:

It is difficult to recall the rebuke of a consumer’s counsel as strong as that doled out by Judge Ludwig in these orders. That said, Mr. Strouse and Mr. Napierala are not alone in the practice of recycling the same complaint over and over. Anyone who has spent any time in the litigation department of an accounts receivable company has seen cases from consumer attorneys which are nothing more than a recycled version of a complaint filed the previous day, week, or month. These types of cookie-cutter-with-few-actual-facts lawsuits can be exceedingly frustrating for both accounts receivable entities and litigators. 

It is important to note though, that while extremely satisfying to read, this may be a fact-specific case that may not be so easy to apply to other serial filers. Although referenced, Judge Ludwig’s frustration was not directed at the ‘cookie-cutter’ nature of the complaint alone. Instead, by reading the Orders dismissing the case (linked in this article) and the Orders for Sanctions (linked above) together, it appears Judge Ludwig’s irritation with the lack of facts presenting Article III standing in the complaint was exacerbated by compounding and repeated errors. These errors include both failures of the consumers’ counsel to present a plausible reason for standing after repeated requests to do so and the failure to follow basic court rules.

While nothing in these orders is likely to cause an immediate seismic shift in the world of defending cookie-cutter complaints, it is good to remember that orders like this exist. Particularly so if (1) a serial filer fails to present sufficient facts after being allowed to amend a complaint or otherwise fails to respond to a court’s direct inquiry regarding the actual basis for the complaint; or (2)  if you happen to be in the Eastern District of Wisconsin.  Kudos to ERC and the other defendants for calling some attention to this extremely frustrating issue and potentially setting up other accounts receivable entities to make similar arguments against serial filers. 

SACRAMENTO, Calif. — On April 23, 2021, the Commissioner of the California Department of Financial Protection and Innovation (DFPI) issued a notice of rulemaking to adopt the license application and procedures for applying for a debt collection license under the Debt Collection Licensing Act.

On June 23, 2021, the Commissioner is issuing the following notice of modifications to this rulemaking action. The Commissioner will hold a 17-day comment period.

Deadline to submit comments: Monday, July 12, 2021.
Submit comments by:

• Email to regulations@dfpi.ca.gov,
• Fax to (213) 897-8860, or
• Postal mail addressed to Department of Financial Protection and Innovation; Attn: Sandra Sandoval; 300 S. Spring Street, Suite 15513, Los Angeles, California 90013.

Notice of Modifications – PRO 02/20 (PDF)

Proposed Modified Text – PRO 02/20 (PDF)

MINNETONKA, Minn. — Last month, the Central Portfolio Control team engaged in a friendly competition while raising money for charity. The winner of the contest selected Ronald McDonald House at Children’s Minneapolis hospital as the recipient of the funds raised.

To engage employees in a fun team-building event and raise money for a local charity, Central Portfolio Control executives hosted a paper airplane contest. Each employee who chose to enter paid a small admission fee. At the end of the contest, the winner selected the charity to which all proceeds would be donated. Participants were provided with a piece of paper and could decorate it without adding anything to the paper that would change the weight (paperclips, tape, staples, etc.). Each competitor was given one throw with no do-overs. Paper airplanes were launched from the second-floor balcony with the goal of being the one that landed closest to the designated finish line. The winner of the paper airplane contest, Georgi, selected Ronald McDonald House at Children’s Minneapolis hospital as the recipient of the funds raised! 

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Creating A Stronger Team

CPC’s team members are the reason for their success. A lot of companies may say they appreciate their employees, but CPC believes in showing their employees how much they appreciate their dedication and hard work. CPC plans team-building events that are actually fun, treat their employees with respect, provide industry-leading compensation, and welcome open communication between their teams and executives. As a way to express their gratitude for the incredible results, their employees produce, CPC treated every team member to lunch from Dine-1-1 MN, a popular local food truck, for Employee Appreciation Day. 

Actively Supporting Our Community

Community involvement is an important part of Central Portfolio Control’s workplace culture. CPC is committed to helping its neighbors in need by supporting charitable organizations that create positive change in the community. CPC is proud to support Sharing & Caring Hands, Meals on Wheels, and other charities that provide critical services to those in need. To learn more about how CPC is actively involved in creating positive change, please visit our News page.

About Ronald McDonald House Charities, Upper Midwest

The Ronald McDonald House Charities’ Mission is to partner with each community to provide a comfortable and caring home-away-from-home that supports keeping families together and reduces stress during a child’s serious illness. They provide everything a family needs so they can focus on the well-being of their child including lodging, meals, kitchen access, and fully-stocked pantries, laundry facilities, an accredited K-12 school, and supportive, family-focused programming. Ronald McDonald House Charities has 5 locations in Minnesota. 

About Central Portfolio Control Inc

Headquartered in Minnetonka, MN, Central Portfolio Control, or CPC, is a full-service and nationally licensed collection agency focused on the recovery of distressed accounts receivable. The company manages accounts on behalf of creditor clients while maintaining the highest ethical and legal standards regarding collection activity. Since being founded in 1998, the CPC team has continued to grow the company by providing top-quality services to clients and creating jobs within the local community.

Today I’m interviewing Ray Peloso, CEO of Katabat, a software company that helps 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. Ray truly embodies the theme of this series because he is indeed a different thinker.  Watch our interview (or read it below) about deep thinking, collaboration, and how to minimize distractions to make your team as productive as possible.

Stephanie Eidelman:

Hi, I’m Stephanie Eidelman, CEO of The iA Institute and insideARM. I’m here today with Ray Peloso, who is the CEO of Katabat. Ray was recently here with me, but now he’s back for a different kind of conversation. This one is under the banner of our Innovation Council Think Differently series. And let me tell you, Ray is a different thinker. So this will be very interesting.

Ray Peloso:

Great. Well, as always, Stephanie, it’s a delight to spend time with you. So hopefully we can have a bit of a controversial conversation today.

Stephanie Eidelman:

We’ll do our best. So we agreed to talk about two topics that we’ll weave together. The first one is, What book or of any genre really has expanded your thinking the most and how and why? The other is, Do your best ideas come from collaboration with others or deep thinking on your own, and how does this process work in your organization? I’ll leave it to you to get started on your thoughts.

Ray Peloso:

Great. I think the setup is important here, which is we are a software company and for years we’ve had a distributed workforce. We’ve been able to recruit and hire people offshore as well as onshore. We’ve had headquarters in Delaware, but we’ve always over the years supplemented with hiring talented people wherever they live. All of which becomes really interesting in the post COVID world of do you bring, people back into the office, or do you allow people to live where they want to live? So it unpacks a whole bunch of interesting questions. To tie that together, as a backdrop with the book I read, it’s a book called Deep Work and the author’s name is Cal Newport. For any of your listeners, I’d be delighted to talk a lot about it. We read it as a management team probably two years ago and we’ve had controversial, but I think really productive, discussions and even practices around some of the key lessons that came out of that book. When I saw your list of topics, I thought it’d be fun to talk about.

Stephanie Eidelman:

I love that. What are some of those key lessons?

Ray Peloso:

I’m going to start with one quote and then we’ll make the rest of this conversation. In the introduction, what he writes is, “In the age of network tools, knowledge workers increasingly replaced deep work with shallow work, constantly sending and receiving emails and texts like human network routers with frequent breaks for quick hits of distraction.” I remember reading that thinking, wow, that sounds like how I spend a lot of my days. And I’m pretty sure it’s how a lot of my team spends a lot of their days. There are a bunch of fundamental ideas here, but a core idea is that in a knowledge economy, none of us manufacture anything. I don’t manufacture cars or widgets. Your brain and your individual contributions ultimately are what create value and differentiate you.

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Ray Peloso:

So how you think about how you manage your knowledge and tap into your talents is critical. This will weave into collaboration and I’ll let you leave me with a couple of questions, but to throw out a little controversy, there has been a lot of research in the last decade or so around workplace design looking at whether collaborative open table structure is productive, not productive, more effective, less effective, etc. That’s too long a topic to go through, but there is a body of thinking that Deep Work presents that says if there is a wild amount of distractions, it actually erodes the ability of the individual in a knowledge economy to be productive. I’ll stop there so you can guide me from here.

Stephanie Eidelman:

I would say a number of things. First of all, I think you’re right. And I have been both in those big open offices in the mid-1990s, I worked for an internet startup and we had balls and we had stuffed animals and people throwing things and yelling and having fun. And meanwhile, you had to have business development conversations on the phone in the midst of it. And it was just all part of it. And as a business owner, I have created that open space as well. And I think you’re right. I have learned that you need that place to do deep work. Now in our company, what happens is you walk into a space that’s open that has people there, but it’s silent. Everybody has headphones on and they’re doing their work. And sometimes, you know, we have collaboration, but that’s why, because of this challenge you raised.

Ray Peloso:

So let me give you two thoughts and then we can unpack. First is it goes well beyond ambient noise. There’s absolutely distraction of somebody walking by or talking. The book really drills into all of those IMs all day, all of those emails that happen all day…the sort of “environment of distraction.” And they tell anecdotes that are always helpful in book writing. Carl Jung and great inventors by and large went off and spent time alone to allow their minds to focus on the big problems.

New Speaker:

The second point I would make is that they sort of articulate the chemical costs of your brain constantly getting distracted. In a nutshell, every time your brain is distracted, it takes a few seconds to refocus. When you do the math of how many times an hour, a day, a week, you’re distracted and then how long it takes you to refocus. So the book really goes through the costs of collaboration. Because if somebody just swings by your cubicle with hey, I’ve got a great idea, it actually has distracted you.

Stephanie Eidelman:

Yes. It rings true for me. I’m one of these people who does get distracted by the task. I like to keep things moving. I know that if somebody asks me a question and for me, it typically happens on email, but it might be an IM as well, I want to answer it. I want to keep them moving. I’m very conscious of not stopping their progress. So whether it’s me reminding them to answer their own question or me answering for them.

However I see that I advance my company most when I do that deep thinking work, those are the times that I have really pushed a ball forward. What I wonder though is that the noise people have, you mention the constant IM chatter, for instance, which definitely happens in my world. I know that my team is often chatting with each other. But you can’t dictate though that they can’t do that. It won’t stop the mind from wanting to do that.

Ray Peloso:

Right. Gosh. So the first thing I’ll tell you is that doing what we talked about is really hard. So I don’t want at all to suggest that we’re perfect because we struggle every day with how to take these ideas and put them into practice. I empathize with your comment which is that very often I think my best contribution to the company is keeping things moving. But I’ve actually learned that my personal discipline to stop trying to move things along and to actually think through what I want to move along and why can actually be quite more impactful. This leads to the classic point of one or two things done really well is probably a lot more valuable than 35 things done simultaneously and rapidly. And so we continue to try to think through those lessons.

I’ll pull in one other concept to give the listeners some practical applications. There’s this infamous thing called the Bezos memo.

Ray Peloso:

So Amazon (you can go Google this) around, forcing people not to use PowerPoint decks, but to actually write out their arguments in long-form memos. Part of the practice we’re adopting is to take a few hours each day or one hour each day, and articulate your thoughts and organize your thoughts in written form in the form of deep work. And we have found better ideas, more well thought out, more persuasive. So there’s something that Jeff Bezos and Amazon really tapped into. So we’re not making up new ideas. We’re sort of stealing good ideas that we’re reading about elsewhere. But it ties into deep work, which is you can’t write a thoughtful coherent argument if you’re constantly distracted.

Stephanie Eidelman:

I think that’s very true. Here’s another thought that’s related. Something I’ve noticed in our company is that when we have a management meeting and we’ve got five people there and somebody brings up a topic, I noticed that discussion is not necessarily as productive with five people as it is with two people. Although you think five people, five minds, you get more input, but people I think are reluctant to step on each other or say something that somebody else might think is stupid or inappropriate or whatever the barrier is. It’s interesting that getting that unit down to two people — and I see it over and over again — and maybe even one person in certain circumstances, is even the better unit. It’s probably for the same reason.

Ray Peloso:

Yeah. Two thoughts. Number one is… I think it might be Bezos or maybe Elon Musk…somebody has this pizza pie rule, which is any meeting that requires more than one pizza pie is probably too large a meeting, which is just kind of a small team rule which we find to be useful. And we use the Bezos memo. So I’ll work with my chief product officer or my engineer and we’ll actually have small group discussions with these — my second point, which is having a straw man. So again, this topic sort of bumps into collaboration. And how do you collaborate? How do you make collaboration effective? There is absolutely a great role for collaboration in the workplace, but “Hey, here’s an open topic, let’s just go around the room for an hour and a half” is less productive in my opinion than somebody going off doing a first draft. Here’s what I think we should go do and why. And then using that strawman in an iterative way, over a period of time to collaborate. That’s what we try to do.

Stephanie Eidelman:

A hundred percent. That rings so true from our work in the Innovation Council. We can’t possibly bring an open-ended topic to the group. There’s got to be a straw man that people are asked to respond to or at a minimum, small groups are assigned specific questions to answer.

Ray Peloso:

Right. So there’s a point in the book because I think this whole thing started around this book where they talk about the perfect physical architecture of the workplace. And it’s a theoretical point, but it’s like hub and spoke, which is Stephanie has her office because it’s really important for her to have quiet deep work time, but she can leave her office and go into the common area to get a sounding board, to get a reaction, to pull someone in and say, Hey, critique my thinking, critique my work. Again, it’s an academic book, but it reinforces the point that there is absolutely a critical role for collaboration. People shouldn’t be working in isolation, but designing collaboration is what’s important.

Stephanie Eidelman:

It’ll be interesting to see how that comes about in this world where many people are working remotely; how do you design that common area? It’s of course, when you say, “Okay, on Thursday we’re all going to get together, or once a quarter”…Creativity and collaboration don’t happen on a schedule like that. But if you did have a physical space where everybody had an office, and then you had this cool collaborative area, would people be in that collaborative area at the same time?

Ray Peloso:

Going through the logistics of it is hard. That’s why these guys are college professors writing books.

Stephanie Eidelman:

And that’s where the IM actually comes into play. To some degree, maybe there’s a combination of calendar management and that kind of disruption or mechanism for disruption. Because if I want to ask something of someone on my team, I try to look at the calendar first and make sure that they’re not on a call or in a meeting. Of course, they may be doing deep thinking at that time, in which case we’d have to have the discipline to mark that on our calendar too. Maybe there’s a clue in there as to when people are interruptible and when they’re not.

Ray Peloso:

It’s logistics, but how each of us manages our calendar and how each of us manages our calendar with our coworkers is a huge part of all this because there’s randomness and chaos throughout the day unless tribal rules are established. And we struggle with that. We want our colleagues to carve off time. One of the things we’re doing very tactically, by the way, is we’re creating office hours. We’re basically saying the product managers are available every day from 8:30 to 9:00 to answer questions. And in exchange, we’re going to ask you to leave them alone from 9 to 12 so they can work on their work. So we’re trying a lot of things to figure out a way within an ecosystem of lots of moving parts and people and activity to reinforce this idea.

Stephanie Eidelman:

Have any of the things that you’ve tried stuck?

Ray Peloso:

Yeah. So one of the points I was going to make as we wrap all this up is that deep work is really hard. You know, you’re left with your private thoughts, you’re left with your own ingenuity. And it is hard to turn off all of those stimuli that now we’ve all become so used to and actually train the brain. So I feel like there’s a lot of days where I sort of fail. I want to focus on a topic and my brain gets tired. So it’s really, really interesting for anybody interested in trying it. It’s actually easier to read the book. It’s a lot harder than you realize to practice.

Stephanie Eidelman:

That’s an excellent point to end on and give people some food for thought. We will continue because it’s always wonderful to hear your thoughts.

Ray Peloso:

If any listener wants to chat about it, have them call me directly. I think it’s a great topic and we really are trying all of these things to be a great company.

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:

insideARM is proud to announce the 2021 Best Places to Work in Collections winners. This survey and award program is designed to celebrate excellence among call center work environments in customer care, collections, and outsourcing. 2021 marks the 14th year that insideARM has recognized the industry’s best places to work, primarily as rated by employees.

To be considered for participation, companies had to fulfill the following eligibility requirements:

• Be a for-profit or not-for-profit business or government entity;
• Be a publicly or privately held business;
• Must be in business a minimum of 1 year;
• Must have U.S. call center operations with at least 15 employees, providing either customer care, outsourced services, collections, or online chat services. Only employees working in the United States are eligible to be surveyed.
• Separate call center locations were asked to apply separately. 

As always, our program is administered by Best Companies Group, which conducts over 60 local, national and industry “Best Places” programs each year. insideARM was not involved in any way in the review of submissions or determination of awards. 

Companies from across the U.S. entered the rigorous two-part survey process to determine the Best Places to Work in Collections. The first part consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. 

This year, an incredible 56 companies met the standard to be selected. The Best Places to Work in Collections list is divided into three size categories: Small (15-49 employees), Medium (50-149 employees) and Large (150+ employees). 

All of us at insideARM applaud the winners on this great accomplishment — especially in the middle of a pandemic that has changed almost everything about the way we work today. This is a rigorous process – it is NOT a pay to play contest. We encourage all organizations that meet the criteria to participate next year. Winning is a great badge of honor. However even those who don’t make the list get something extremely valuable – a blueprint for how they can improve – for practically no cost.

Click here to view the rankings by size category, and profiles on all of the winners.

The following are this year’s winners:

Small Employer Category (15-49 US Employees)

• CST WorldWide
• Eastern Revenue, Inc.
• The Stark Collection Agency
• Credit Collection Partners
• Automotive Credit Corporation – Collections Department
• Pro Com Services of Illinois, Inc.
• Agency of Credit Control Inc
• Capital Collection Management
• American Profit Recovery, Inc.
• Michael Andrews and Associates
• Todd, Bremer & Lawson, Inc.
• CenterPoint Legal Solutions, LLC
• KLS Financial Services
• Healthcare Management / A-1 Collection Agency
• Oliver Adjustment Company Inc, dba OAC
• Alliance CAS
• Merchants Credit Association

Medium Employer Category (50-149 US Employers)

• CCR Recoveries
• Choice Recovery
• Credit Solutions LLC
• Spring Oaks Capital, LLC
• KeyBridge Medical Revenue Care
• ACSI
• Mnet Health
• Unifund CCR, LLC
• Credit Management Services, Inc
• LHA Inc.
• Account Recovery Specialists, Inc.
• Associated Credit Services
• Sentry Credit Inc.
• Credit Service Company, Inc.
• Revenue Enterprises, LLC
• National Service Bureau
• Accelerated Receivables Solutions and Magnet Solutions
• CollectionCenter, Inc.
• Gulf Coast Collection Bureau
• Advance Financial
• Crown Asset Management
• Active/Balanced Healthcare Receivables, LLC
• GB Collects

Large Employer Category (150+ US Employees)

• Credit Control LLC
• Williams & Fudge, Inc.
• Professional Finance Company, Inc.
• State Collection Service
• Altus Receivables Management Inc.
• NACS
• IC System
• Parallon
• Brown & Joseph, LLC
• ConServe
• Americollect Inc.
• Coast Professional, Inc.
• Credit Management Company
• Revco Solutions, Inc.
• BC Services, Inc.
• Hollis Cobb Associates

The 2022 program will open for registration in the fall.

Click here to give us your contact information If you’d like us to notify you when that happens.

Well this is a big one folks.

We told you the same day that Facebook was decided that the Plaintiff’s bar was looking to make use of FN7, and they’ve just drawn first blood.

The first case finding a system may be an ATDS under Facebook at the MSJ phase is out and its not pretty.

In Carl v. First Nat’l Bank of Omaha, Docket no. 2:19-cv-00504-GZS, 2021 U.S. Dist. LEXIS 111889 (D Me.  June 15, 2021)  court held that the dialing system used by Defendant may have had the capacity to “store numbers using a random or sequential number generator.” This is the first time that issue has survived summary judgment in a case folks. Ever.

Nonetheless, the Court held the system did not actually use that capacity to send the messages at issue to the named Plaintiff. So there was a question of fact present—and it was all about dialing sequence.

Here is how the system worked:

• Defendant utilized a “dialer team” to make daily decisions regarding whom to call, at what number, and whether a message would be left.
• Defendant then used a LiveVox branded Dialing System to  place calls.
• The system operated “campaigns,” which consisted of files with a list of accounts to call.
• These campaigns were loaded into the system and stored for later automatic dialing.
• The system was configured so that, if an automatically dialed call connected, the call would be immediately transferred to an agent.
• The system  also could be configured, in the event it connected with an answering machine or voicemail, to automatically (1) leave a message employing an artificial voice, (2) pass the connection to an agent, or (3) leave no message and disconnect.

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On this record the Court found that the creation of the dialing campaign did not trigger the TCPA but the operation of the system in executing on the dialing command might under footnote 7. Here’s the key analysis:

Viewing the record in the light most favorable to Plaintiff, there is a trialworthy question as to whether the Voice Portal system had the capacity to “store a telephone number using a random or sequential generator.” Id. However, it is less clear that the “campaigns” Defendant loaded onto its system  involved the actual use of a random or sequential generator. Nonetheless, the Court acknowledges, as Plaintiff has argued in his supplemental briefing, that Duguid suggested that an ATDS could potentially fall under TCPA if it “use[s] a random number generator to determine the order in which to pick phone numbers from a preproduced list. [and] then store[s] those numbers to be dialed at a later time.” Duguid, 141 S. Ct. at 1172 n.7. While this description may encompass Defendant’s dialing system, the issue is not amenable to summary judgment on the current record.

So the Court relies on footnote 7 to determine that the LiveVox system at issue in that case may be an ATDS. Pretty incredible, no?

Now a jury would ultimately have to decide the issue but this Carl demonstrates exactly what I have been saying as of late—the sequence of dialing is now the critical issue following Facebook.

There is a bright side to this case as well, however—but it is hard to see it through the clouds of fn7-related tragedy.

Those of you that attended the big Masterclass on revocation last week already know that contractual consent cannot be revoked under the doctrines of the Second and Eleventh Circuit courts of appeal. Well the district court in Carl applied that same logic and concluded that consumers cannot opt out of consent provided as part of a bargained for exchange. So Defendant was ultimately able to win the case.

Keep that one in mind folks!

BUFFALO, N.Y. — In May 2021, Erin Kerr at the IA Institute wrote an article entitled Why Your Self-Service Portal is Under-Performing and What You Can Do to Fix It (insidearm.com), in which she mentioned ensuring ADA Compliance in Service Portals. 

In 2019, there were approximately 10,200 lawsuits filed for ADA Title III website violations. In 2020, those numbers rose approximately 12%, even with the pandemic shutdowns.  Some industry experts believe that number will exponentially increase as the pandemic eases and businesses return to normal.

Keeping this in mind, Concepts2Code has addressed this issue for years with its TakeWebPayments payment portal. The solution provides enhanced consumer accessibility in order to address any potential Americans with Disabilities Act (ADA) Title III issues.

According to Mark Reinhard, President and Senior Software Architect, “It is simply good business sense. Not only are we providing access to everyone to pay their bills, but we are also helping our client partners stay compliant and reduce any potential litigation.“

TakeWebPayments is just one of Concepts2Code’s ARM products that focus on accessibility and compliance. In 2018, they released the EasyWebDocs solution, a communications manager for mass emails and letter campaigns. All Concepts2Code solutions interface seamlessly with virtually all debt collection software, are PCI and industry compliant, and are designed for ease of use for the Consumer and your staff.  

About Concepts2Code

For the past 10 years, Concepts2Code has been providing collection agencies and municipalities with web payment and contact management solutions. Today, they service some of the largest and most recognized receivable management firms in the industry.  Whether it be ADA compliance, compliance with the Reg F changes, or maintaining PCI level 2 compliance, Conspets2Code’s goal is to increase client revenue while reducing their risk at a more reasonable cost.

For more information or a demo of the Concepts2Code solutions, please visit concepts2code.com.

Believe it or not, there have been other things happening in the accounts receivable world outside of Hunstein and Reg F. Unsurprisingly, California has remained busy. In recent weeks, the California Privacy Protection Agency (CPPA) held its first meeting, the California Department of Financial Protection and Innovation (DFPI) released FAQs regarding its upcoming licensing requirement, and the Commissioner of the DFPI stepped down.

California Privacy Protection Agency Meeting

Yes, the CCPA is still out there, and things are still happening with it, including the first-ever public meeting regarding the Act. In November 2020, California voters approved Proposition 24, the California Privacy Rights Act (CPRA) which amends the California Consumer Privacy Act. Among other changes, the CPRA established the California Privacy Protection Agency (Agency), which is governed by a five-member Board. The Agency is responsible for adopting additional regulations and enforcing the CCPA.

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The meeting was several hours long; however, the key takeaways are as follows:

• The CPPA Board needs to make high-level hires to meet its July 1, 2022 deadline to issue final regulations under the CPRA, which goes into effect on January 1, 2023.

• Once proposed regulations are drafted, the public will have at least 45 days to provide comments to proposed regulations.

DFPI FAQ’s Regarding Licensing

On June 9, 2021, the California Department of Financial Protection and Innovation released FAQs regarding the upcoming licensing requirement. The FAQs cover a wide variety of topics. Although the licensing requirement is slated to go into effect in approximately six months on January 1, 2022, the comments submitted to the CA DFPI in response to its Notice of Proposed Rulemaking remain under consideration.  

DFPI Commissioner Announces Departure.

In its monthly bulletin, the CA DFPI announced that Commissioner Manuel P. Alvarez’s last day was June 18, 2021. While we wait for the Governor’s Office to appoint the Next Commissioner, Chief Deputy Commissioner Chris Shultz will serve as Acting Commissioner.  

SANTA BARBARA, Calif. – The National List of Attorneys (The NL) announced the promotion of R. Geoffrey Stevens to President, while longtime owner and industry visionary Jeffrey Zuck will take on the role of Chief Executive Officer. Stevens will now oversee the daily operations of the company, freeing up Zuck to expand the market for contingency-fee collections and subrogation legal claims.

“Geoff brought more than 20 years of technology marketing, sales, and operations management experience to The NL when he joined us as our Sr. Vice President of Revenue in 2017,” Zuck said. “His in-depth knowledge of how digital analytics and pay-for-performance accountability revolutionized the advertising industry was a roadmap for restructuring The NL to deliver objective, measurable results to help improve financial outcomes for our premium network of forwarder and legal clients. The NL has been rewarded with 26% year-over-year growth even during the pandemic’s unprecedented impact on the ARM community.”

Stevens said, “I look forward to leading the ongoing development of The NL’s unique cloud-based, data-driven technology and service offerings that provide market intelligence to our clients. Through both the alternative-fee-arrangement (AFA) attorneys in the company’s exclusive NL Advocate™ network and our wide range of collection agencies, factors, debt purchasers, insurance providers, and other clients that forward legal claims at an enterprise level, we all can improve our ROI by using performance data and industry benchmarks to make better-informed decisions about our business.”

As CEO, Zuck will focus on expanding the industry’s total market size through outreach to single proprietors, gig workers, and similar small businesses (SMB) not currently engaging third parties for collections. Traditionally underserved by the current ARM industry due to low individual claim volume compared to overhead costs, many SMBs face existential cashflow consequences from uncollected receivables. The company’s latest NL Advantage™ product provides an outsourced pay-for-performance solution to efficiently aggregate, streamline, bundle, and refer these claims, providing new business and revenue streams for The NL’s engaged collection agency, debt purchaser, and attorney clients.

About The National List of Attorneys

The National List is the cloud-based B2B hub for the world’s premier network of Pay-for-Performance collections and subrogation attorneys, along with the forwarding business clients that engage them to legally improve financial outcomes. For more information, visit NationalList.com.

In the last issue of the CRA Advisor I explained “Why You Need an FCRA Compliance Manual”. In summary, liability under the Fair Credit Reporting Act, 15 U.S.C. §1681 (FCRA) often turns on whether the CRA has “reasonable procedures” for compliance. A CRA with a properly drafted and implemented FCRA Compliance Manual can prevail in an FCRA lawsuit by establishing that it has such reasonable procedures. In this issue I discuss the important provisions that should be included in your Manual.

Permissible Purpose Procedures

Your Compliance Manual should include procedures for complying with §1681e(a) to ensure your clients have one of the permissible purposes for your reports specified in § 1681b(a). These procedures should require new clients to identify themselves and certify their permissible purposes and that reports will be used for only those purposes. The Manual should include procedures for verifying the identity of new clients and their certifications.

Procedures for Assuring Maximum Possible Accuracy

Your Manual should contain procedures for complying with §1681e(b) to assure the maximum possible accuracy of the information in reports. This includes standards for matching records to consumers, properly classifying crimes, and procedures for situations where records are unclear or conflicting.

Report Content Procedures

Your Manual should specify procedures for complying with §1681e(a) to ensure reports do not contain information prohibited from being reported under § 1681c, such as arrest records, eviction records and other adverse items other than records of convictions of crimes which predate reports by more than 7 years and bankruptcies which predate reports by more than 10 years.

Consumer Dispute and Reinvestigation Procedures

Your Manual should contain procedures for fielding consumer disputes and standards for conducting reinvestigations of disputed items in reports under §1681i(a). These should include procedures for treatment of inaccurate or unverifiable information and procedures for timely reporting reinvestigation results to consumers. You should also include procedures for responding to frivolous or irrelevant disputes, procedures for continued disputes and procedures for preventing the reappearance of deleted information.

Employment Use Certifications

If you issue reports for employment purposes your Manual should include procedures for obtaining the certifications required by clients under §1681b(b). These include a certification that before obtaining the report your client provided the consumer who is the subject of the report with a “clear and conspicuous” written disclosure “in a document that consists solely of the disclosure” that a report may be obtained for employment purposes and that the consumer authorized the obtaining of the report in writing. They also include a certification that before taking any adverse action based on the report your client will provide the consumer with a copy of the report and a written description of their rights under the FCRA. They also include a certification that your client will not use your report in violation of any applicable Federal or State equal employment opportunity law or regulation.

“Strict Procedures” for Employment Reports

If you issue reports for employment purposes your Manual should include your “strict procedures” to ensure that public record information likely to have an adverse effect on a consumer’s employment is complete and up to date as required under §1681k(a)(2), unless pursuant to §1681k(a)(1) you opt to notify the consumer at the time you issue the report of your client’s name and address and that you are reporting public record information.

Investigative Consumer Report Procedures

If you issue investigative consumer reports your Manual should include procedures for complying with §1681d (a) and (b) regarding consumer disclosures and disclosures upon a consumer’s request of the “nature and scope of the investigation”. You should also include procedures for complying with §1681d(d)(4) so if the person interviewed is not the best possible source of information you can demonstrate that you have reasonable procedures for obtaining confirmation of the information from an additional source that has independent and direct knowledge of the information.

Reseller Procedures

If you resell reports or information issued by other CRAs (such as TransUnion, Equifax or Experian) your Manual should include procedures for complying with §1681e(e)(2)(A)&(B). These include procedures for ensuring that (a) reports are resold to only those with permissible purpose; (b) those to whom reports are resold (i) identify end users, (ii) certify purposes, and (iii) certify reports will be used for no other purpose; and (c) your procedures for making reasonable efforts to verify these identifications and certifications.

Other Recommended Procedures

Other recommend Compliance Manual procedures include procedures for (a) responding to requests for reports and files; (b) complying with state-specific credit and criminal reporting laws; (c) complying with municipal credit and criminal reporting laws; (d) employee training; and (e) conducing compliance audits.

Conclusion

A proper FCRA Compliance Manual can help you efficiently comply with the FCRA and insulate you from liability if mistakes occur. Feel free to contact me at (312) 334-3440 or jmesser@messerstrickler.com if you would like assistance with the preparation and implementation of a Compliance Manual.

The CRA Advisor is our periodic publication on legal issues facing Credit Reporting Agencies. If you would like to discuss topics or add someone to our distribution list contact Joseph Messer. at jmesser@messerstrickler.com