Archives for June 2023

NEW YORK CITY, N.Y. — McGlinchey Stafford is pleased to announce that the firm’s New York City office has strengthened its prominent Financial Services Litigation and Commercial Litigation practices with the addition of Jason Lipkin, who joined as of counsel, and Melisa Zukic as an associate. Jason and Melisa mark six new hires in McGlinchey’s New York City office in the past six months, following the recent additions of Brittany Adikes and Camille Singh.

“We are pleased to welcome Jason and Melisa to McGlinchey’s growing team here in New York City,” said Mikelle Bliss, managing member of the New York City office. “Their in-depth knowledge of the particular regulatory regimes governing the financial services, commercial, and real estate markets in New York and New Jersey will be a great asset to our financial services and other clients nationwide.”

McGlinchey now has 12 attorneys practicing in its Albany and New York City offices, and a total of 15 attorneys licensed to practice in New York.

Jason, a former attorney at Winston & Strawn, brings his 17 years of experience representing a diverse group of clients across a broad spectrum of financial services, real estate, and commercial and insurance matters in New York and New Jersey state and federal courts. Prior to that role, Jason was a founding member at a boutique commercial litigation firm. He also spent several years at a large insurance defense firm, representing Fortune 500 companies in product liability and toxic exposure cases, and is admitted to practice in New York and New Jersey. His primary focus upon joining McGlinchey will be in the financial services litigation space.

As a consumer financial services attorney, Melisa advises creditors, banks, mortgage servicers, corporations, and insurers in complex litigation and arbitration matters and on appeal. She represents financial institutions in CFPB investigations and in complaints filed with the New York State Department of Financial Services. She also defends lenders and mortgage servicers in a broad array of disputes and litigation.

Before joining McGlinchey, Melisa served as litigation counsel at Hinshaw & Culbertson. Melisa received her J.D. from Touro College Jacob D. Fuchsberg Law Center in 2015, and  is admitted to practice in New York.

“This industry is constantly evolving, and both Jason and Melisa understand the dynamic nature of litigating matters and the challenges our clients face,” said Shaun Ramey, co-chair of the firm’s nationwide Financial Services Litigation practice group. “They bring insight into our clients’ business operations to develop strategic legal solutions to their challenges.”

McGlinchey’s nationwide  Financial Services Litigation practice group is the firm’s largest, with 65 attorneys licensed to practice in 25 states. Since 2022, the group has hired 18 new attorneys in 11 of the firm’s 17 offices. The team’s attorneys are recognized nationally and in New York as industry leaders, with Best Lawyers and Super Lawyers honors.

Their collective experience includes federal and state regulatory and enforcement proceedings, hundreds of class actions in state, federal, and bankruptcy courts, and tens of thousands of consumer litigation matters. The group represents every type of financial services company, including national and state-chartered banks, finance companies, mortgage lenders and servicers, reverse lenders, manufactured housing lenders, credit card issuers, automobile lenders, student lenders, community banks, thrifts, credit unions, FinTechs, and insurance providers.

The attorneys in McGlinchey’s New York City office focus on consumer financial services litigation and other commercial litigation matters, representing many of the largest financial institutions in the United States.

About McGlinchey

McGlinchey Stafford is a premier midsized business law firm offering services in nearly 30 practice areas through a highly integrated national platform. McGlinchey attorneys leverage bold innovation, diverse talent, and leading-edge technology across our powerful network to serve clients at the local, regional, and national level. With 150 attorneys licensed in 32 states, McGlinchey operates from 17 offices nationwide. The firm currently has 23 attorneys and 9 practice areas recognized in Chambers U.S.A. 2023 and Chambers FinTech 2023, 53 attorneys recognized by Best Lawyers, 40 attorneys recognized in various Super Lawyers rankings, 49 practice areas recognized by Best Law Firms, and was named a “Top Performer” by the Leadership Council for Legal Diversity (LCLD) since 2018. To learn more, visit www.mcglinchey.com.

Organizations in the ARM industry have embraced the use of digital channels to not only communicate with customers, but to also improve the collections process. But that is just the first step. Organizations must also leverage artificial intelligence to identify and contact the highest-potential accounts at the most opportune time by leveraging machine learning algorithms.

Knowledge is power

The better you know your customers, the better you can serve them. That’s not an earth-shattering revelation. Organizations spend a significant amount of time and budget to do just that. What they’ve discovered is that consumers prefer to be treated as individuals and in a way that is relevant and tailored to their preferences.

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To provide this kind of personalization, organizations need to dig a little deeper to understand consumers’ preferences.  With a better understanding of how consumers prefer to communicate and pay, you can improve consumer engagement and operational efficiencies to drive revenue growth.

This data is also critical to drive your digital strategies. For example, organizations often focus on digital natives – those who grew up online, using computers, tablets and smartphones practically since they were born. However, that’s a little short-sighted.

According to a recent survey, consumers 55 years and older are more comfortable paying bills online than their younger counterparts. These consumers, sometimes referred to as baby boomers, have adapted to the digital era and continue to take advantage of the convenience of conducting business and paying bills online.

The same study also confirms that education level impacts communication and payment preferences. The higher the level of education in U.S. adults, the more comfortable they are with communicating through digital channels. For example, a large gap exists in the percentage of those who prefer to receive payment reminders and billing statements via email for those who have a high school diploma or less versus those who have a bachelor’s degree.

Survey data, such as this, is helpful in getting to know your customers. But this type of static data only paints part of the picture. To get a complete look at your customers, you need more. And you can use technology to get it.

Better to know you with

ARM organizations focus the most time and effort on the accounts that are most likely to pay. Traditionally, they determine this using the scores from credit reports. Yet, this type of static data can’t be updated in real-time and only gives organizations a limited view of the customer.

Organizations need to leverage dynamic scoring models that can be updated in real-time to get a more accurate look at their customers.

Machine learning (ML), one kind of artificial intelligence (AI), can help with this when combined with historical data along with alternative data sources, such as spending behavior, social media activity, online presence, and more.

This ongoing process of gathering and evaluating data provides a more holistic view of consumer behavior. And that can provide huge benefits.

The proof is in the pudding

An advanced segmentation solution that uses ML can breathe new life into your portfolios and increase the value of accounts you might not be working today. The algorithms that drive decision-making and guide account work are easily understandable and “explainable,” alleviating collectors’ and regulators’ concerns around disparate impact.

But don’t take my word for it. Organizations that have incorporated a solution that uses advanced segmentation have reported:

• More than a 50% increase in revenue per call
• More than a 20% increase in right party contact rate
• More than a 40% increase in average yield per account
• A 50% increase in overall collections.

Agencies that embrace the digital technology that allows them to better understand and connect with their consumers will quickly set themselves apart from the competition.

On June 6 2023, the Consumer Financial Protection Bureau (CFPB) issued a report analyzing the use of chatbots in consumer finance and the impact on customer service. The report notes that financial institutions are increasingly using chatbots to reduce the costs of human customer service agents, and moving away from simple, rules-based chatbots toward more sophisticated technologies, such as large language models and generative chatbots and others marketed as artificial intelligence (AI).

The report found that while chatbots may be useful for answering basic questions, their effectiveness lessens as the questions become more complex. According to the CFPB, “[r]eview of consumer complaints and of the current market show that some people experience significant negative outcomes due to the technical limitations of chatbots functionality.” Additionally, the CFPB warns that financial institutions may risk violating federal consumer protection law when deploying chatbot technology. In addition to potential privacy and security risks, the CFPB states that “[w]hen chatbots are poorly designed, or when customers are unable to get support, there can be widespread harm and customer trust can be significantly undermined.”

Chatbots are computer programs that mimic human interaction by processing a user’s input to produce an appropriate output. “Rule-based chatbots use either decision tree logic or a database of keywords to trigger preset, limited responses. These chatbots may present the user with a set menu of options to select from or navigate the user between options based on a set of keywords and generate replies using predetermined rules … More complex chatbots use additional technologies to generate responses. Specifically, these chatbots may be designed to use machine learning or technology often marketed as ‘artificial intelligence’ to simulate natural dialogue.” Chatbots have been widely adopted by banks, mortgage servicers, and debt collectors. In 2022, over 98 million consumers interacted with a bank’s chatbot and that number is projected to grow to 110.9 million users by 2026.

According to the CFPB, while the use of chatbots has increased, so have the consumer complaints, including complaints concerning:

*Difficulties in recognizing and obtaining dispute resolution.

• Chatbots process only specific words or syntax to recognize a dispute and begin the process of dispute resolution. So the ability of chatbots to discern disputes may be limited.

• Even when chatbots do recognize a dispute, their ability to reach a resolution can be limited. “In some cases, customers are disputing transactions or information that is incorrect. Chatbots that are limited to simply regurgitating the same system information that the customer is attempting to dispute back to them are insufficient.”

• Importantly for fair lending concerns, a chatbot’s limited syntax may be problematic for consumers with limited English proficiency.

*Difficulties obtaining accurate or sufficient information.

• Studies have shown that chatbots sometimes generate inaccurate data that go undetected by some consumers. Specifically, researchers have found that chatbots are ill-suited for tasks that require logic, specialized knowledge, or current data.

• According to the CFPB, “[w]hen a chatbot is backed by unreliable technology, inaccurate data, or is little more than a gateway into the company’s public policies or FAQs, customers may be left without recourse. Providing reliable and accurate responses to people with regard to their financial lives is a critical function for financial institutions.”

* Difficulties obtaining meaningful customer service.

• A chatbot’s scripted responses may fail to answer a customer’s questions and instead lead to “doom loops” or “continuous loops of repetitive, unhelpful jargon or legalese without an offramp to a human customer service representative.”

* Difficulties obtaining intervention from human customer service representatives.

• Consumers complain about the lack of access to or unreasonably long wait times for human customer service representatives. The limitations of chatbots and lack of access to a human customer service representative may not be apparent to customers when they are initially signing up with a specific financial institution.

• Moreover, chatbots may be less likely to waive fees or negotiate on prices.

* Difficulties keeping personal information safe.

• Fake chatbots can be used by fraudsters to conduct phishing attacks.

• Customers must validate themselves as the owner of a specific account by providing personally identifiable information. Therefore, these chat logs provide another venue for privacy attacks.

The report concludes by warning financial institutions that the difficulties listed above can not only lead to dissatisfied customers, but also to violations of federal consumer protection laws. “Deficient chatbots that prevent access to live, human support can lead to law violations, diminished service, and other harms. The shift away from relationship banking and toward algorithmic banking will have a number of long-term implications that the CFPB will continue to monitor closely.”

Troutman Pepper’s Take:

We believe this is the first regulatory statement about the use of chatbots by financial services companies, and it follows the now-familiar theme of hostility to AI and algorithms, underscoring that relationship banking is at risk of being replaced by algorithmic banking. Although the statement certainly appears aimed at causing financial institutions to pay close attention to the problems asserted by the CFPB, it remains to be seen whether the CFPB will truly elevate what seems like customer service issues to alleged violations of law. We’ll be watching this issue closely.

POTOMAC, Md. – Women in Consumer Finance (WCF) is proud to announce that the opening keynote session for this year’s leadership summit (December 11-13, 2023 in Palm Springs, CA) will be presented by Sallie Krawcheck, Co-Founder and CEO of Ellevest, an investment and wealth management platform built by women, for women. 

A leading authority in the world of finance and a passionate advocate for building women’s wealth, Sallie Krawcheck has been called both a “Top Female Founder” and “The Last Honest Analyst” by Fortune Magazine. With an extensive background in finance — including roles as CEO of Merrill Lynch, Smith Barney, and Sanford Bernstein, as well as CFO of Citi — Krawcheck has centered her professional attention on helping women reach their financial goals. She shares WCF’s belief that doing so will improve the lives of women and have a lasting positive impact on their families, their communities, and the broader economy. 

Krawcheck shared, “We women make up more than 50% of the workforce; we direct 80%+ of consumer spending; and we have literally trillions of dollars in wealth. Yet we have less room for error in our financial planning than men do — given lower earnings, more career breaks, and longer lives. That’s why I’m thrilled to speak at this year’s Women in Consumer Finance leadership summit to ensure more of us are tapping into our financial power and continuing this conversation.”

Driven by the mission to get more money in the hands of women, Ellevest was founded on real, hard data about women’s lives, like the fact that they are paid less, stop getting raises a whole decade earlier, live longer, pay the pink tax, have more debt, do more unpaid labor, and get fewer promotions than men. The harsh realities of these factors can fundamentally change what women need to build their best financial futures. Ellevest offers digital investing, financial planning, and private wealth management, an innovative approach that uniquely meets clients wherever they are in their financial journey with holistic financial guidance.

In addition to Krawcheck’s keynote, Ellevest Private Wealth Advisor Ashley Bleckner, CFP®, CDFA®, MA, will lead a session on financial planning on December 11, 2023. This workshop will cover retirement and estate planning, investing opportunities, and more, as well as provide ample opportunity to ask questions in a supportive environment. The goal of this session, which is optional and pre-conference, is to provide a solid foundation for setting personal finance goals and investment planning.

“The alignment between Ellevest and Women in Consumer Finance couldn’t be more perfect. Ellevest wants to get more money into women’s hands. WCF wants to get more women to decision-making tables. We both provide a platform for achieving these goals that is a safe space, designed for women,” said Stephanie Eidelman, Co-Founder and CEO of Women in Consumer Finance.

About Women in Consumer Finance

Women in Consumer Finance is a leadership summit and community for women at all levels in the context of a common industry. If you work in any role at a lender, creditor, servicer, law firm, or technology or service provider, this event is for you. We provide inspiration, a guiding hand, and a support system women can leverage to recharge or advance their careers and deliver value to their employers. WCF is not about finance. It’s about women, our common personal and professional challenges, and how to craft our own career journey and reach our full potential. We take a unique team-based approach to creating an emotional shared experience, which helps participants build confidence and ensures everyone establishes meaningful connections. The impact of participating in WCF is deep and lasting. www.womeninconsumerfinance.com

About Ellevest

Ellevest is an investing and wealth management company built by women, for women that provides a holistic, modern approach to financial guidance. As the experts in building and managing women’s wealth, Ellevest’s offerings include digital investing, financial planning, impact investing, and retirement planning, as well as private wealth management for high net worth individuals. Founded in 2014 by Sallie Krawcheck and Dr. Sylvia Kwan, Ellevest has $1.6 billion in assets under management, and was named Best Mission-Oriented Investing Service by Bankrate. See ellevest.com for more information.

Contact:

Stephanie Eidelman

Co-Founder & CEO, Women in Consumer Finance

stephanie@womeninconsumerfinance.com

For Ellevest:

Sunshine Sachs Morgan & Lylis  

press@ellevest.com or ellevest@ssmandl.com 

Don’t miss your chance to hear from Sallie and participate in this transformative event. Spots are limited, and tickets are selling fast! Secure your place at WCF 2023 before June 30th to save $250 on your ticket with our early bird pricing.

Navigating the debt collection industry can be challenging as legal trends as well as state and federal regulations continue to evolve. Despite the challenge, staying up to date on these critical issues is crucial to maintaining a compliant operation and reducing financial risk. 

To help you keep up, we have put together some key takeaways from the insideARM Legal Advisory Board’s (LAB) recent webinar “ARM Industry Legal Trends to Know Now, Part 2” presented by the Consumer Relations Consortium (CRC). In the May 24, 2023, webinar, LAB members Jessica Klander of Bassford Remele, John Rossman of Moss & Barnett, and Jonathan Floyd of Troutman Pepper addressed the following issues:

• Litigation trends
• The most treacherous states for collections; and 
• Standing isn’t settled after Hunstein- where are we now?

You can watch the full webinar here but see below for some of the key points.

As always, neither the notes below nor any of the content in the webinar should be considered legal advice, and you should always consult your own counsel for legal advice.

FDCPA and FCRA Trends

Jessica Klander shared her insights on current legal trends, noting that FDCPA litigation has quieted down in the wake of Regulation F, but FCRA litigation is on the rise. These cases generally center on disputes and Jessica provided some helpful tips on the topic to avoid potential litigation based on the recent litigation trends:

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• Be wary of simultaneous attempts to dispute the debt and ask that the collector cease communication.
• Be wary of validating the debt if a consumer has asked for it outside of the validation window while also asking for a cease in communication.
• Be aware of “Refusal to Pay” as opposed to a cease and desist. Many consumers are being advised to use this language to bait collectors into violations.
• Including a disclaimer of “This is not an attempt to collect a debt” in responsive letters without an “ask” to collect is not a solid and sure fire protection strategy.

The Most Treacherous States for Debt Collection

John Rossman discussed the most treacherous places for collections. He singled out New York City and Washington D.C. as two of the most difficult places to collect debt and provided the following insights and advice:

New York City

• Collectors are only allowed to make two calls per week per consumer.
• Consumer consent is required to email them.
• Collectors must identify the amount of the debt in every communication, so you essentially cannot leave a voicemail message.
• New York City has its own licensing requirement and regulator.
• The number of disclosures needed for the collection letter makes accuracy challenging.

District of Columbia

• Adequate documentation (copy of signed contract/application/other documents) within 15 days of a consumer request is required. Those collecting in DC should consider putting this in their client contracts.
• Collectors are only allowed to make four calls per week per consumer.
• The number of text messages/emails allowed is restricted to five. After five, you must get consumer consent again or wait until the next week

Standing isn’t settled after Hunstein- where are we now?

Jonathan Floyd spoke about the circuit split that has developed on Article III standing since the final Hunstein decision came out. With courts still reaching different conclusions on what constitutes “concrete harm,” Jonathan clarified that:

• The 2nd, 5th, and 9th circuit have all held that conclusory allegations of loss or mental and emotional distress are not sufficient to confer Art. III standing.
• The 10th and 11th circuits have held that emotional injuries and other intangible harms are sufficient for Article III standing. 
• The others are still undecided.
• A Washington Federal Court recently rejected the Hunstein Decision altogether.

In other words, when it comes to standing nothing is settled and this area of law is still devleoping. 

Staying compliant in the debt collection industry can feel like a never-ending task with constantly changing laws and regulations. We appreciate the valuable insights provided by Jessica, John, and Jonathan.

You can watch the full webinar here.

For more info on the Legal Advisory Board click here.

For more info about the Consumer Relations Consortium, including how to apply for membership, click here and follow CRC on LinkedIn here. 

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is a premier organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

About the Legal Advisory Board

The Legal Advisory Board (LAB) is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB is limited to ten law firms and is comprised of fourteen total attorneys. The 2023 members can be found here. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.

NEW YORK, N.Y. –– Skit.ai the leading Conversational Voice AI solution provider in the Account Receivable Management (ARM) sector, announced its partnership with Transfinancial Companies LLC. This strategic collaboration empowers Transfinancial, a Louisiana-based collection agency that has over 30 years of experience in the healthcare sector, to overcome prevalent challenges in debt collection by streamlining their process and accelerating revenue recovery. 

Transfinancial Companies, was grappled with common industry challenges like agent scarcity, escalating collection costs, low consumer connectivity, difficulty achieving scale, and meeting compliance requirements. These difficulties are symptomatic of broader ARM industry issues, accentuated by stringent regulations and volatile economic conditions. By implementing Skit.ai’s Augmented Voice Intelligence (AVI) platform Transfinancial Companies, has incised a pivotal shift in their debt collection process. With this solution, apart from enhancing the consumer experiences the company has achieved significant outcomes such as an over 53% engagement rate, a high Right Party Contact (RPC) of over 25%, while dialing over 200,000 calls, leading to a remarkable increase in the overall return on investment.

Anthony Verdicanno, President & C.O.O. at Transfinancial Companies, stated, “Skit.ai’s technology has proved very effective, breaking-even very early and moving beyond it. Their platform smoothly integrated with our payment gateways, effortlessly handled high call volumes, and adhered strictly to compliance standards. Furthermore, the improvements in collections also testify that consumers have begun to prefer conversing with Skit.ai’s Voice AI solution and are becoming habitual in making on-call payments. This is the right step in improving consumer experience as we can now reach them at the right time, with the right message, and make their repayment journey more pleasant.”

Skit.ai is not merely transforming collection processes for Transfinancial; it’s leading a paradigm shift within the entire ARM industry. This partnership is a significant milestone for Skit.ai as it underscores that its Voice AI solution has yet again found rapid acceptance with consumers who have begun to enjoy the convenience that comes with intelligent automation. 

“Our solution has proven to be a cost-effective option for the ARM industry. Transfinancial Companies have tackled critical concerns such as the availability of skilled agents and retaining them with our product. Since our deployment, they have reached out to over 200,000 consumers and achieved a significant milestone of a 53% engagement rate. Collection agencies that deploy our solution will be able to experience similar results and provide an enhanced consumer experience.” Stated Sourabh Gupta, Founder and CEO of Skit.ai

To learn more about how Skit.ai’s has modernized debt collection processes of Transfinancial Companies, LLC  book a meeting and speak to an expert at Skit.ai.




About Transfinancial Companies, LLC.: 

Transfinancial Companies Credit Recovery and Management Systems Is a collection agency located in Baton Rouge, Louisiana. They have been in business since 1992.Transfinancial Companies collect debts for hospitals and other providers in the healthcare industry. https://www.transfinancialco.com

About Skit.ai: 

Skit.ai is the leading Conversational Voice AI company in the ARM industry, enabling collection agencies to streamline and accelerate revenue recovery. Skit.ai’s Compliant, Configurable, and Easy-to-deploy solution enables enterprises to automate nearly one million weekly consumer conversations. Skit.ai has been awarded several awards & recognitions, including Disruptive Technology of the Year 2022 by CCW; Stevie Bronze Winner 2022 by The International Business Awards; Gold Globee CEO Awards 2022. Skit.ai is headquartered in New York City, NY.  https://Skit.ai

The CFPB has issued a data spotlight that shows bank overdraft/non-sufficient funds (NSF) fee revenues have declined significantly from their pre-pandemic levels.  

The report states:

Overdraft/NSF revenue for the fourth quarter of 2022 alone was approximately $1.5 billion lower than in the fourth quarter of 2019 – a decrease of 48% compared to before the pandemic, suggesting an annual reduction of over $5.5 billion going forward.  This decrease suggests average annual savings of more than $150 per household that incurs overdraft or NSF fees; many households that have typically paid a high number of overdraft or NSF fees annually have saved much more.

The report also states:

Evidence continues to suggest that financial intuitions are not increasing other checking account fees to compensate for reduced overdraft/NSF revenue.  Across all reporting banks, combined account maintenance and ATM fees remained flat from 2019 to 2022.

In a press release about the CFPB report, the Consumer Bankers Association (CBA) sets forth important findings of the Brookings Institute based on recent research and of the global intelligence firm Curinos in an August 2022 study that supports the CFPB’s analysis.  CBA observes that banks “are working to lower costs while simultaneously protecting access to overdraft because there is a clear need.”  The press release also cites recent comments from leading regulators, legislators, and academics from across the political spectrum that have recognized the positive impact of these changes.  Such comments include CFPB Director Chopra’s statement at CBA LIVE in March 2023 that  “[t]here has been very, very important shifts.  We are very gratified that this industry seems like it’s competing again on [overdraft]. […] This has been a healthy move.”

Despite these positive trends, the CFPB states in the new report, as it did in its Fall 2022 rulemaking agenda, that it is “considering rulemaking activities related to [overdraft/NSF] fees.”  It also states in the new report that it “will also continue to follow other listed fees to discern to what extent these fees might create barriers to account access.”  Such “listed fees” are periodic maintenance fees and ATM fees.

The new data clearly calls into question the need for CFPB rulemaking on overdraft/NSF fees.  We share the CBA’s view that “[a]s the CFPB considers future action, policymakers should recognize these reforms from the nation’s largest banks have occurred without regulatory or legislative intervention and collectively represent a transformational moment in time for the industry.”

STERLING, Ill — VeriFacts, the gold standard for employment and residential verification services in the receivables management industry, is demonstrating their commitment to technology and data science with the addition of Adam Parks to their leadership team as Chief Information Security Officer. 

“VeriFacts has long been known as an organization with an amazing culture that is focused on our people. By adding Adam and his team, we take another step toward our vision of being a technology company, focused on data, and verified by people”, said VeriFacts CEO Stephanie Clark. “We are very excited to be taking our technology to the next level and finding new ways to enhance the services through the application of data science.”  

Adam Parks is a serial entrepreneur with almost 20 years of receivables industry experience focused on the deployment and management of technology and communications systems for creditors, debt buyers, collection agencies and law firms. Through Adam’s other organizations, Adam and his teams will continue to provide communications, technology, and marketing services to their clients. 

“VeriFacts sets the standard for employment verification services and I could not be more excited to be joining the team! They have built a culture of the best people in the industry and my job is to empower them with actionable intelligence and efficiency through technology and data science,” said Adam Parks. “We are growing a team of technology professionals to help update systems and find ways to improve on the quality of VeriFacts’ best-in-class services.” 

As part of this commitment to technology, VeriFacts is re-evaluating all of their existing systems and data workflows looking for opportunities. The application of data science has already started driving workflow changes internally that are yielding immediate results. This new partnership is expected to create opportunities for new products, new data and an improved experience for customers. 

About VeriFacts

VeriFacts, LLC is the top employment location and verification service for the receivables management industry. Having been in business for over 30 years, they are committed to offering guaranteed customer location and employment verification services to creditors across the nation. The VeriFacts brand has become synonymous with high-quality service and a positive customer experience. Over the years, their services have expanded into residential location information, data verification, and unique data aggregation. VeriFacts is proud to be a Certified Women-Owned Business by the WBENC.

The U.S. Court of Appeals for the Seventh Circuit recently affirmed the dismissal of a consumer’s lawsuit against a debt collector, holding that the consumer lacked Article III standing to sue because his allegations of ʺconfusion” and “alarm” were not sufficiently concrete to result in an injury in fact.

A copy of the opinion in Pucillo v. National Credit Systems, Inc. is available at:  Link to Opinion.

The consumer previously leased an apartment, and when he filed for Chapter 7 bankruptcy, he listed as a debt past‐due rent he allegedly owed the property management company. The bankruptcy court proceeded to grant the consumer a discharge, including any debt owed to the property manager.

That bankruptcy discharge was listed on the consumer’s credit reports, but the property manager was not notified of the consumer’s bankruptcy. Ten weeks before the discharge, the property manager placed the consumer’s account with a collection agency. Over the next 18 months, the collection agency sent the consumer two collection letters, stating that if payment was made, the collector “will update credit data it may have previously submitted regarding this debt.”

The week before the consumer received the second letter, he filed suit under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692e, for allegedly demanding payment of a debt not owed and Section 1692c(c) for purportedly failing to cease communications and cease collections. The consumer alleged that the collection agency’s continued communications “confused and alarmed” him. The collection agency did not give information to a credit reporting agency — before or after his bankruptcy discharge.

The trial court dismissed the consumer’s complaint for lack of Article III standing, and the consumer timely appealed.

Article III of the U.S. Constitution limits the jurisdiction of federal courts to cases and controversies. U.S. CONST. art. III, § 2. To establish Article III standing to sue, “[a] plaintiff must have (1) a concrete and particularized injury in fact (2) that is traceable to the defendant’s conduct and (3) that can be redressed by judicial relief.” Pierre v. Midland Credit Mgmt., Inc., 29 F.4th 934, 937 (7th Cir. 2022).

On the first element, a concrete injury is “‘real,’ and not ‘abstract.’” Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016). “Qualifying injuries are those with a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” Pierre, 29 F.4th at 938.

The Seventh Circuit began by noting that the ruing of the Supreme Court of United States in TransUnion LLC v. Ramirez limited the intangible harms that can be considered concrete. 141 S. Ct. 2190, 2210 (2021). Specifically, the Supreme Court held that a risk of harm qualifies as a concrete injury only for claims for “forward‐looking, injunctive relief to prevent the harm from occurring.” Id.

The Seventh Circuit reasoned that the Supreme Court’s TransUnion decision weakened the consumer’s standing argument because he was only seeking monetary damages in this action. Additionally, although the consumer claimed that he was “confused and alarmed” about the status of his bankruptcy discharge and his credit score, he provided no facts showing that his emotional response led to actionable injury. Because the consumer did not “otherwise act to [his] detriment in response to anything,” Pierre, 29 F.4th at 939, the Court concluded that the risk he pleaded of possible futility to his bankruptcy or potential harm to his credit did not satisfy the standing requirement of a concrete and particularized injury in fact.

Resisting this conclusion, the consumer argued that his injuries were of the same kind held actionable under common law invasion of privacy tort theories, specifically “invasion of privacy” and “intrusion upon seclusion.” An intangible harm can qualify as a concrete injury in fact, but only when the harm bears a “close relationship” to a traditional harm given redress in courts at common law. Spokeo, 578 U.S. at 340–341.

The Seventh Circuit observed that ʺinvasion of privacy” and “intrusion upon seclusion” are actually not distinct torts. Instead, “invasion of privacy” encompasses four theories of wrongdoing, including “intrusion upon seclusion.” Persinger, 20 F.4th at 1192. Intrusion upon seclusion “occurs when a person ‘intrudes … upon the solitude or seclusion of another or his private affairs or concerns’ and this ‘intrusion would be highly offensive to a reasonable person.’” Persinger, 20 F.4th at 1192 (quoting RESTATEMENT (SECOND) OF TORTS § 652B)

The Seventh Circuit noted that the phrase “intrusion upon seclusion” did not appear in the consumer’s complaint or his supporting declaration. Conceding that the consumer did not need to include this precise phrase in his pleadings, the Court determined that none of his allegations spoke to such a theory of injury in any way. Instead, the consumer’s appellate briefing tried to shoehorn his allegations within that tort theory.

Furthermore, each time the consumer invoked “intrusion upon seclusion,” he claimed that the collection agency’s letters undermined his belief that his bankruptcy discharge created a “fresh start.” However, the Court held that this specific injury was not actionable under the “intrusion upon seclusion” theory, as the potential for the consumer’s bankruptcy case to be undone presented only a risk of harm.

Accordingly, the Seventh Circuit concluded that the trial court correctly found that the consumer had not alleged a concrete and particularized injury in fact, and that there was no Article III standing. Therefore, the Court affirmed the dismissal of the case for lack of standing.