Archives for August 2021

That’s fine. It’s their money, not mine.

But anytime you take a case–particularly a bad case (or in
this situation an extremely ridiculously bad case)–on appeal you never quite
know what sort of unintended consequences might occur. Indeed, its almost
guaranteed under the universal law (you know, Murphy’s Law) that something bad
is going to happen.

And so it has.

As I reported yesterday, in Loyhayem, No. 20-56014 (9th Cir.
2021)–available here–the Ninth Circuit Court of Appeals held that prerecorded
job recruitment calls to cell phones require express consent under the TCPA.
And, of course they do. All prerecorded calls do. There is literally no valid
basis to argue otherwise.

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But in framing its decision the Ninth Circuit made a really
big oversight-probably because Appellee wasn’t really focused on the details in
this one.

The Ninth Circuit states in summation that the TCPA requires
“that prior express consent [must] have been given either orally or in writing
[for informational calls].”

“Either orally or in writing.” That’s it. Two options. And
“by giving out a phone number” is not among them.

Now this is not, strictly speaking, a holding. And the issue
of whether or not prior express consent can be presumed from a consumer
supplying a number was not before the Ninth Circuit. But this line is a real
problem–district courts may misinterpret it as a limitation on the sort of
“presumed” express consent callers rely on every day.

That is, I expect Plaintiff’s lawyers to now argue that
under Loyhayem the presumed consent rule is dead and express consent for
informational calls must be given in writing or orally, only. I mean, that’s
what the decision (sort of) says. And you compound this with Satterfield’s
requirement of “clear and unmistakable” consent and we’re back to consumers
having to suffer through long-winded scripts and agents haggling to convince
folks to accept disclosures over the phone–just to provide an update on an
account.

Hopefully I’m overreacting and courts see Loyhayem as
holding nothing more than that informational calls require express
consent–however lawfully provided under existing law–but we’ve seen things like
this spiral out of control before in TCPAWorld.

I’ll keep an eye on things but if you happen to know the
Defendant (or their counsel) you might want to ping them and see if they’ll try
to amend the ruling. (Any Trades that want to get some amici briefs out there
in support let me know)

LOCKPORT, N.Y. —  Spire Recovery Solutions is grateful for
the recent opportunity to contribute to the scholarship program for the LT Michael P. Murphy Memorial
Scholarship Foundation. The signature fundraising event for the LT Michael P. Murphy
Memorial Scholarship Foundation, the official Murph Challenge, takes place annually on Memorial Day.

Spire recently focused on a campaign of contributions to
nonprofit organizations honoring fallen Special Operations heroes killed in
action. As veterans, Spire owners Jacob Torriere and Joseph Torriere wished for the campaign to call
attention to the true meaning of Memorial Day, the bravery and sacrifice of
fallen warriors and the multiple dedicated nonprofit organizations continuing
their legacy with heroic acts of giving. 

Lieutenant Michael P. Murphy

Lieutenant Michael P. Murphy, known as
“Murph,” was born May 7, 1976, in Smithtown, NY, and raised on Long Island. He
grew up finding success as both a student and an athlete. After attending Penn
State and receiving acceptance to several law schools, he decided instead to
become a US Navy SEAL. After successfully achieving his goal in 2002, he began
a series of Special Operations deployments in Iraq and Africa. After
demonstrating his strong leadership and competence, he was deployed to
Afghanistan to support Operation Enduring Freedom in 2005. 

Final Mission

On June 28, 2005, Lt. Murphy was officer-in-charge of a
four-man SEAL team on a reconnaissance mission to locate a known terrorist. The
mission was intercepted by goat herders who spotted them and reported their
location to Taliban fighters. As gunfire ensued, Lieutenant Murphy put himself
at risk by entering open terrain to transmit a call for help for his men.
Despite a shot to the back, Lt. Murphy completed the call and continued the
fight to protect his men. A battle ensued with casualties on both sides.
Lieutenant Murphy, along with 2 of his men and several men in the rescue
helicopter that was shot down, was killed in action. The call made by Lt.
Murphy, however, led to the rescue of one SEAL and the recovery of the remains
of the other 3 men.

Legacy of Service, Education, Athleticism

According to his family, “Murph” was a literary
enthusiast, and his favorite saying was “education will set you free.” Hence
the family’s decision to memorialize and continue his legacy by providing
educational scholarships to other focused and driven young people like him. The
funds are raised by donations as well as The Murph Challenge. In partnership with Forged since 2014, The Murph Challenge has grown to become a popular workout challenge with
official hosts throughout the US. Well-known among CrossFit and other gym and fitness enthusiasts, the challenge is preceded
by an intense physical training schedule leading up to the actual
challenge. 

The foundation was able to continue fundraising during the pandemic through t-shirt sales and crowdsource-style hosting options. In 2020, the foundation raised more than
$250,000 to finalize the construction of the LT Michael P. Murphy Navy SEAL
Museum/Sea Cadet
Training Facility in Long Island, NY. Additionally,
the foundation was able to award 32 more scholarships. 

About LT Michael P. Murphy Memorial Scholarship Foundation

The LT Michael P. Murphy Memorial Scholarship Foundation was created in 2007 by the late Navy SEAL’s parents and brother,
2 years after Michael was killed in action in Afghanistan during a 2005 Special
Operations reconnaissance mission in support of Operation Enduring Freedom. An
avid reader, Michael had earned a double major at Penn State with a Bachelor of
Arts degrees in political science and psychology. The scholarship foundation
was born as a natural extension of Michael’s legacy of scholarly appreciation
for education and literature. The foundation’s success, funded through
donations and The Murph Challenge annual fundraiser, has led to
approximately 30 scholarships awarded annually and the construction of the LT Michael P. Murphy Navy SEAL
Museum. 

To learn more or make a donation, please visit murphfoundation.org, murphsealmuseum.org, or themurphchallenge.com.

About Spire Recovery Solutions 

Spire Recovery Solutions was founded by U.S. Veterans Joseph Torriere and Jacob Torriere.
Spire is located in Lockport, NY, is a professional, nationally licensed
full-service debt collection agency that assists creditors in the recovery of
outstanding balances while providing consumers with exceptional customer
service. Their company’s customized processes and state-of-the-art technology
provide transparency and compliance that clients and consumers trust and rely
on while working together toward account resolution.

ATLANTA, Ga. — First Financial Asset Management (FFAM360), an organization that provides revenue-centric solutions to address
all phases of the credit and revenue lifecycle, is proud to support the J.R. Stewart 141 Foundation (Foundation) alongside FFAM360’s
Chief Operating Officer and former police officer, Paul Allen. The Foundation is dedicated to the continued legacy of deceased
former police officer J.R. Stewart, with whom Mr. Allen formerly served. Mr.
Stewart left a legacy of extensive volunteer efforts and law enforcement
advocacy in his local community as well as many deep friendships in Las Cruces,
NM.

Legacy of J.R. Stewart

Ray “J.R.” Stewart died tragically at the age of 61 on November 27, 2017. The retired police officer was riding his
motorcycle when he was fatally struck by a stolen vehicle fleeing law enforcement during a high-speed chase. Mr. Stewart was loved and respected
within his community and served as a Las Cruces Police Officer for 35 years. He
was an involved member of various police, military veteran, and church
organizations where he regularly volunteered his time to serve his community. He
was survived by his wife, daughter, grandchildren, siblings and in-laws,
mother, nieces and nephews, godchildren, extended family, and many dear
friends. 

Mr. Stewart was known as a “friend to all.” According to a
2017 statement by the Las Cruces Police Department published in the Las Cruces Sun News, “J.R. was quite possibly the
most loved and respected officer our community has known. He served his country
and community with honor, and volunteered much of his time to those
organizations he held dear to his heart.” Soon after his death, his friends and
family united to create a foundation to honor and continue his good work and
further the efforts of the causes most dear to him.

Second Annual Golf Tournament

On Friday, September 10, 2021, the Foundation will hold
the 2nd Annual Golf Tournament at Sonoma Ranch Golf Course in Las Cruces, NM. Registration is open for both morning and afternoon tee times. The day will include fun, friends, food, and prizes. Business sponsorships are also available. Funds raised
will be directed toward the Foundation’s efforts supporting causes that were
close to the heart of Mr. Stewart, including Shop with 141 (which addresses low
police funding in the area by taking children of law enforcement shopping for
back to school supplies, holidays, etc.), NMSU scholarships for children of law enforcement officers, and a sponsorship program for sending young officers to
Washington, D.C. to attend the National Law Enforcement Memorial Week Services.
Funds will also support the JR Stewart “Buckle Up” campaign, a car seat initiative supported by the organization. 

Mr. Stewart was an advocate for law enforcement and their
families. The ongoing and increasing need for law enforcement support from the
community makes this a timely and effective opportunity for individuals and
businesses. Those who would like to support the fund without attending the
tournament are invited to donate online. 

Mr. Allen served with Mr. Stewart when the two
were both active police officers and counted Mr. Stewart as a good friend. Mr.
Allen will be participating in the upcoming golf tournament and would love to
see you there. he shared,  “I’m looking forward to seeing old friends and am thankful
to FFAM360 for helping to support this cause. It’s personal for me but beyond
that, it’s important to take an active role in supporting our communities and
the officers working to keep them safe. We hope others will join in and make a
difference.” 

About The J.R. Stewart 141 Foundation

The J.R. Stewart 141 Foundation is a 501(c)(3)
nonprofit organization dedicated to serving the Las Cruces, NM community to
continue the legacy of fallen retired officer J.R. Stewart. The foundation
raises funds for initiatives such as the J.R. Stewart Endowed Scholarship at
New Mexico State University, a Car Seat Safety Clinic with child safety seat
donations (with the assistance of a grant from Allstate Insurance), the Shop
with a Cop program for children in need, and more. The organization was founded
in 2018 following the tragic November 2017 loss of J.R. Stewart. The foundation is a means for his family, friends, and community to
honor his legacy and continue the service and community-building for which he
was known and loved. To learn more about the foundation or to make a donation, please visit the foundation’s website or Facebook Page.

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. FFAM360 is headquartered just outside Atlanta, GA, with additional
offices in Phoenix, AZ and Paso Robles, CA.

GENESEO, N.Y. — Coast Professional, Inc. (Coast) has recently established a
presence within a new business vertical: Business Process Outsourcing (BPO).
With Jim Benjamin as the newly hired Director of Business Development at the
forefront of this endeavor, Coast is eager to begin developing relationships
and generating business within the market. Benjamin has over 38 years of accounts
receivable management (ARM) experience and is an expert in business development,
operations, acquisitions, and corporate growth strategies.

Utilizing 45
years of experience developing programs for private and public entities, Coast
enters the BPO market to assist U.S. based businesses and the onshore
components of their operations to create cost savings. Specializing in contact
center operations, Coast develops service offerings for businesses that require
sensitive, empathetic, and detailed communications with consumers.

Prior to joining Coast, Benjamin
served as Vice President of Sales and oversaw the Sales and RFP (Request for
Proposal) teams as they focused on acquisitions within Financial Services, Healthcare,
Education, Government, and Contact Center verticals. At Coast, Benjamin will be
responsible for driving sales by developing relationships with potential
clients. He will lead the effort to acquire BPO opportunities and tailor
Coast’s offerings for customers that require expert incoming and outgoing
contact center services.

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“I am excited to join the Coast
family as we begin our emergence into new verticals,” said Benjamin. “Coast’s
reputation for superior performance and client service has earned them
well-deserved respect within the ARM and BPO industries. I look forward to expanding
our footprint in the marketplace.”

According to Coast President and
Chief Financial Officer Micah Pulliam, Benjamin’s experience expanding business
verticals is key to the company’s ongoing success and growth.

“We are excited to welcome Jim [Benjamin]
to our Coast family,” said Pulliam. “His ability to achieve company growth
initiatives will position Coast to expand its business model, hire additional
employees, and provide both contact center and back-office functions for clients.
We are eager to begin a new phase of our operations and help clients across the
United States focus on their overall mission and improve the lives of
consumers.”

Benjamin resides in Dublin, Ohio.
He has been a member of The Association of Credit and Collection Professionals
(ACA International) and the Healthcare Financial Management Association (HFMA)
since 1992.

About Coast Professional, Inc.:

Coast Professional, Inc. is an
accounts receivable management and call center-based company, dedicated to the
respectful and ethical communication with consumers. Coast provides
professional call center services to hundreds of campus-based colleges, universities,
and government clients. Coast is a seven-time honoree on the Inc. 5000 list for America’s Fastest-Growing
Private Companies provided by Inc.
Magazine and in 2021, was recognized for the sixth time as one of the “Best
Places to Work In Collections” by insideARM.com
and Best Companies Group. Since 1976, Coast has worked closely with clients to
increase recoveries by assisting consumers in resolving their financial
obligations. Coast’s success is exemplified by exceptional recoveries, superior
service, and dedication to the highest levels of compliance. More information
about Coast can be found at www.coastprofessional.com.

ROCHESTER, N.Y. — Continental Service Group, Inc., d.b.a. ConServe is
proud to announce that Pam Murphy, Vice President of Compliance & Privacy
Officer, was recognized and received the Fred Kirschner Instruction Achievement
Award for conducting 75 seminars at the 2021 ACA International Annual
Convention held in Las Vegas, NV on July 30, 2021.

The Fred Kirschner Instructor Achievement Award is
presented to ACA Certified Instructors who have reached milestones in their
volunteer teaching careers with ACA. 
Named for former ACA Certified Instructor and Past President, Fred
Kirschner, these awards are given to instructors who have taught 25, 50, 75,
100, 125, 150 and more ACA seminars.

Pam previously
received this recognition in 2016 for completing 50 seminars, and now again in
2021 for completing 75 seminars.  ConServe
President, Richard Klein commented, “Pam serves as an inspiration and wonderful
role-model, mentor and visionary to our employees and the collection
industry.”  Pam Murphy said, “I’m
thrilled to be a part of a corporate culture that
values and contributes to both industry and community education efforts.   As
a certified instructor, I’m able to provide impactful training and guidance to
our employees and industry experts that allows them to be successful. 
This empowerment translates to the attainment of excellent compliance and operational performance
for our valued Clients and the industry as a whole.”

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Join ConServe on Tuesday, September 21, 2021 where Pam
Murphy will be the presenter at ConServe’s next industry webinar regarding The
Consumer Financial Protection Bureau (CFPB) Update and the impact on
Collection Agencies and the effect that will occur for commercial lenders,
credit unions and higher education institutions.  To learn more and register for ConServe’s webinars,
click here.

About ConServe

ConServe is a top-performing accounts receivable management
service provider specializing in customized recovery solutions for their
Clients. Anchored in ethics and compliance, and steadfast in their pursuit of
excellence, they are a consumer-centric organization that operates as an
extension of their Clients’ valued brands.  For over 35 years, they have
partnered with their Clients to provide unmatched customer service while
simultaneously helping them achieve their accounts receivable management goals.  Visit us
Conserve at: www.conserve-arm.com

Maine has amended its Consumer Credit Code to target loans made using a bank partnership model.  The amendments include an anti-evasion provision under which a purported agent or service provider is deemed a “lender” subject to Title 9-A, Article 2 of Maine Revised Statutes.  Article 2 contains a licensing requirement and rate and fee limits for consumer loans.

SP 205/LD 522 added a new Part 7 to  Article 2.  Part 7 contains the following key provisions:

• Any entity covered by Article 2 (i.e. entities making or servicing consumer loans) “may not engage in any device, subterfuge or pretense to evade the requirements of this Article, including, but not limited to…making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration or charge than is permitted by this Article through any method.  A loan made in violation of this Part is void and uncollectible as to any principal, fee, interest or charge.”

• A purported agent or service provider for another entity exempt from Article 2 will be deemed a lender subject to Article 2 if it (a) holds, acquires or maintains, directly or indirectly, the predominant economic interest in the loan, (b) markets, brokers, arranges or facilitates the loan and holds the right, requirement or first right of refusal to purchase the loan or a receivable or interest in the loan, or (c) the totality of the circumstances indicate that the entity is the lender and the transaction is structured to evade the requirement of Article 2.  The circumstances that would weigh in favor of an entity being deemed the lender include, without limitation, when the entity:

          – Indemnifies, insures or protects an exempt entity for any costs or risks related to the loan

          – Predominately designs, controls or operates the loan program, or

          – Purports to act as an agent or service provider for an exempt entity while acting directly as a lender in                 other states.

• If a creditor violates the anti-evasion provisions, the debtor is not obligated to pay the loan and can recover any payments made on the loan from the entity violating the provisions or an assignee of that entity’s rights who undertakes direct collection of payments or enforcement of rights arising from the debt.

The new Maine anti-evasion provision regarding when a purported agent or service provider will be deemed a lender subject to Article 2 closely tracks the anti-evasion provision in the Illinois Predatory Loan Prevention Act which became effective in March 2021.

So now it makes sense.

As I just reported, a couple of consumers got blown up after suing Credit One for purported TCPA violations. I knew there had to be more to the story so I took a look at some of the filings on the docket. The reply filed by the Defendant tells the story (I don’t know if any of this is true BTW, just reporting what was filed):

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[On] July 13, 2017, Mr. Lieberman called Credit One. The Arbitrator included a lengthy excerpt of the call in his decision and stated that the call was “remarkable for what it says about Claimant’s conduct with reference to the collection calls and the credit card debt owed by his spouse.”

In the excerpt, Mr. Lieberman intentionally jammed together a request for calls to his number to stop with another question about “what’s cooking,” in a transparent attempt to confuse the Credit One representative into missing the request that the calls stop. Id. But the agent heard the request and asked Mr. Lieberman to simply verify the number that he wanted Credit One to stop calling. Id. at 13-14. Mr. Lieberman did not want the calls to stop because he was trying to manufacture a TCPA claim. Stopping the calls is bad for manufacturing a TCPA claim, for which liability increases with every additional call. So, instead of verifying the number that he wanted Credit One to stop calling, he clumsily and falsely changed course claiming things were complicated (they were not) and that he needed to talk to his wife (he did not). Id. at 13-14.

It was telling to the Arbitrator that Claimant had every opportunity to stop the calls in this conversation, but intentionally did not do so. Id. at 14. Instead, Mr. Lieberman wrote two identical letters claiming to be written on behalf of Mrs. Lieberman, but she did not know about them. Id. Credit One answered each letter by writing to Mrs. Lieberman asking for a power of attorney from Mrs. Lieberman, so they could discuss Mrs. Lieberman’s account with Mr. Lieberman. Id. at 14-15. Mr. Lieberman received the response letters, but never shared them with Mrs. Lieberman and Credit One never received the requested power of attorney. Id.

The Arbitrator observed, “In the abstract, one might, albeit with great difficulty, conclude that all of the Claimant’s and his spouse’s conduct this this case was innocent and there was a simple misunderstanding” but the “reality, however, is that Claimant decided to bring an arbitration and is seeking compensation in the hundreds of thousands of dollars for what is decidedly a fraud.” Id. at 14.

Another significant basis for the Arbitrator’s decision was his finding that “Claimant along with the attorneys representing him here” have brought highly similar TCPA lawsuits against six other financial institutions. Id. at 15. In each case Mr. Lieberman falsely applied for an account in his wife’s name and provided his (not her) cell phone number on the applications, the accounts went into default, the creditors called the false phone number that he provided on the false account application, and then he sued. Id. at 15-16. Settlements in these other cases during the relevant period generated upwards of 30 percent of Mr. and Mrs. Lieberman’s annual household income. Id. at 15-16. Id. The Arbitrator concluded, “These claims appear to be a clear business model for Claimant . . ..” Id. at 16.

Also important to the Arbitrator’s finding is Mr. Lieberman’s personal history of fraud. In 1997, Mr. Lieberman pled guilty and was convicted of securities fraud and conspiracy to commit securities fraud with a resulting sentence of nine months in jail and an obligation to repay $14.5 million in restitution and penalties. Id. The Arbitrator stated, “[Mr. Lieberman’s] conviction for fraud is … highly relevant on the issue of his credibility and his willingness to deliberately further his self-interest at the expense of society.” Id. The Arbitrator accurately recounted the elements of fraud and stated that those elements were proven. Id. at 17. According to the Arbitrator, “It is clear beyond peradventure that Claimant instituted this arbitration to fraudulently collect damages.” Id. at 17.

The Arbitrator found that Mr. Lieberman could have stopped the calls during the call on July 13, 2017, and otherwise, but he purposefully did not, because doing so would have been counter to his objective to manufacture a TCPA claim against Credit One. Id. This was a pattern he had followed against six other financial institutions. Id. at 15-16. Credit One was damaged by being required to expend attorneys’ fees and costs to defend against Mr. Lieberman’s fraudulent claim and to bring the Counterclaims. Id.
at 17-18.

So now it all makes sense. The arbitrator apparently determined the case arose out of an effort to manufacture TCPA lawsuits–this stuff happens all the time folks–and acted decisively to shut it down. Good on Credit One–and its capable lawyers!–for putting an end to this scheme (if that’s what happened.)

Ever since Stoops, of course, I’ve been the number one advocate for shutting down manufactured lawsuits and I love to see the scammers and abusers of the legal system get shut down. Stories like these should make everyone’s skin crawl.

BURLINGTON, Mass., — Ontario Systems, a leading provider of enterprise workflow automation software—which accelerates revenue recovery and removes friction from the payments process for clients in the accounts receivable management (ARM), healthcare, and government markets—is pleased to officially announce the appointment of Raj Sethuraman as Chief Technology Officer. 

Sethuraman, who joined the organization in May, brings more than 25 years of industry experience, building and scaling market-leading enterprise software solutions and teams for noteworthy brands including, Wolters Kluwer Enterprise Legal Management Solutions, Entertainment Partners, Intuit, and Cognizant to name a few.

“We are thrilled to welcome Raj to the Ontario Systems Senior Leadership Team,” said Tim O’Brien, CEO of Ontario Systems. “As we continue to build upon our four decades of expertise in the revenue recovery space, his leadership and more than two decades of experience driving technology transformations across the enterprise, will be crucial as he takes the helm of our product engineering and software development activities for all offerings within the company’s growing portfolio.”

As Ontario Systems’ CTO, Sethuraman is responsible for defining and delivering the company’s SaaS product vision, building upon its existing best-in-class customer excellence and innovations across the totality of Ontario’s end-markets.

“I see my role as understanding what the fundamental needs of our customers are and how we can better help them to address those needs through the use of our technology,” said Sethuraman. “Technology creates long-term transformation, and I am excited to ensure that ours emboldens that sentiment, as opposed to a short-term fix that exists in a vacuum.”

Sethuraman is a graduate of Harvard Business School’s Advanced Management Program and he’s earned his MBA from the University of Southern California, a Master of Science from the SJCE School of Engineering in Mysore, India, and a Bachelor of Science in Electronics and Instrumentation from Annamalai University in Chidambaram, India.

About Ontario Systems

Ontario Systems is a premier provider of enterprise technologies that streamline and accelerate revenue recovery for clients in the accounts receivable management (ARM), healthcare, and government markets. Through process automation and modern, compliance-minded communication and payment tools, Ontario Systems helps its client partners generate more revenue at reduced cost and fulfill their organizational mission by effectively engaging patients, constituents, and consumers.

With offices in Indiana, Massachusetts, New Mexico, and Washington state as well as employees across the country, Ontario Systems is building on 40 years of success using a distinctly client-centric approach to innovation and service. A recognized brand in the ARM market, Ontario Systems serves eight of the 10 largest ARM companies in addition to state and municipal governments across the United States. Ontario Systems also helps 600+ hospital networks—including five of the 15 largest systems in the U.S.—optimize cash collections and provide a single, satisfying patient financial experience.

To learn more about Ontario Systems, visit www.ontariosystems.com.

The U.S. Court of Appeals for the Seventh Circuit recently affirmed judgments entered in separate cases consolidated on appeal in favor of several credit reporting agencies rejecting consumers’ claims of violations of the federal Fair Credit Reporting Act (FCRA).

In so ruling, the Seventh Circuit held that the consumers’ allegations concerning the identity of the owners of their debts were not factual inaccuracies that the CRAs were statutorily required to guard against and reinvestigate under sections § 1681e(b) and § 1681i of the FCRA, 15 U.S.C. § 1681, et seq., but primarily legal issues outside their competency.

A copy of the opinion in Chuluunbat v. Experian Information Solutions is available at:  Link to Opinion.

Seven unrelated consumers incurred credit card debts that were allegedly sold and assigned to other creditor debt collectors.  The change in ownership was reported to the three prominent credit reporting agencies. 

One of the debt collectors filed suit against three of the consumers to collect payment, but voluntarily withdrew the suits after the consumers claimed that the debt collector did not own their debts, demanded proof of ownership, and requested arbitration.  The other four consumers were not sued but sent letters to their respective debt collectors similarly challenging their purported ownership of the debts.

The consumers then contacted the CRAs requesting an investigation into the accuracy of their reports to determine if the purported debt collectors, in fact, owned the debts.  The debt collectors responded to the CRAs’ inquiries by confirming ownership, but did not produce the original sale or assignment agreement in any case.  Relying upon these representations, the CRAs informed the consumers that the ownership was confirmed and their investigation was complete.

Each consumer separately filed suits against the CRAs claiming that their inclusion of allegedly false debt ownership information on their credit reports and failure to fully investigate their claims violated sections § 1681e(b) and § 1681i of the FCRA. 

In each case, the trial court entered judgment on the pleadings or dismissed each suit in the CRAs’ favor for various reasons, but all concluding that the consumers did not plead the type of inaccuracies in their credit reports that the CRAs had a duty to correct under the FCRA.  The instant consolidated appeal followed.

As you may recall, the FCRA primarily tasks furnishers (creditors, debt collectors, and the like) with providing accurate information to the CRAs, but also requires that CRAs “follow reasonable procedures to assure maximum possible accuracy of” information in credit reports (15 U.S.C. § 1681e(b)) and “conduct a reasonable reinvestigation” to determine whether information disputed by a consumer is inaccurate (15 U.S.C. § 1681i(a)(1)(A)).  A threshold requirement for claims under both sections is that there must be an inaccuracy in the consumer’s credit report.

The Seventh Circuit initially noted that it recently held in Denan v. Trans Union LLC, 959 F.3d 290 (7th Cir. 2020), that “inaccurate information under 1681i… mean[s] factually inaccurate information,” rather than “legal inaccuracies” which are outside the competency of the CRAs, and that a consumer’s defense to a debt is a legal question to resolve in an action against the creditor, not a duty imposed on the consumer reporting agencies by the FCRA.  Denan, 959 F.3d at 296.

Here, the consumers argued that whether the creditors were assigned and now owned their respective debts was a factual question, thus triggering the CRAs’ obligations under sections 1681e(b) and 1681i(a)(1)(A), relying upon the Court’s holding in Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714, 720–21 (7th Cir. 2003), that a party’s intention to assign something is a question of fact for a jury.  The consumers reasoned that upon receipt of a dispute, a straight-forward factual inquiry by the CRAs to request the relevant purchase and sale agreement would determine whether the creditor or debt collector owned the debt.

The Seventh Circuit noted that, although no clear line has been drawn between legal and factual inaccuracies in the FCRA context, review of its own decisions and that of its sister circuit courts showed that the central question is whether the alleged inaccuracy turns on applying law to facts or simply examining the facts alone.  Consumer reporting agencies are competent to make factual determinations, but they are not charged with reaching legal conclusions or resolving alleged inaccuracies under the FCRA.  Denan, 959 F. 3d at 295.

Unlike a challenge to the existence or amount of the debt, the Seventh Circuit concluded that the question of whether the disputed debts were assigned was a question that required a legal determination.

In each case here, the CRA reached out to the debt collectors and asked them to confirm ownership of the debts, which they did.  Any further investigation into whether the debts were actually assigned to the debt collectors involved more than just determining if an assignment agreement exists, but also interpreting the legal validity of any assignment —- a legal judgment outside the scope of a CRA’s competency.  See Brill v. TransUnion LLC, 838 F.3d 919, 921 (7th Cir. 2016), (holding that consumer reporting agency was not required to hire handwriting expert to determine whether plaintiff’s signature was forged on loan agreement as plaintiff claimed). 

The Seventh Circuit further noted that the consumers did have alternate recourse in that they could confront the creditors who are in the best position to respond to assertions that they do not own the plaintiffs’ debts (Brill, 838 F.3d at 921), or make notations of their disputes on their credit reports pursuant to 15 U.S.C. § 1681i(c), to notify future employers or creditors that they dispute the ownership of these debts.

Because the alleged inaccuracies here involved interpreting legal rights to a debt and making legal judgments, the Seventh Circuit agreed with the trial court’s holding that the CRAs bore no burden under the FCRA to determine whether the consumer’s debts were validly assigned to the debt collectors, and affirmed each judgment entered in the debt collectors’ favor.