Archives for November 2023

On October 31, 2023 a district court in Nevada held that an undated, model form debt validation notice does not violate the Fair Debt Collection Practices Act (FDCPA). In Bergida v. PlusFour, Inc., the defendant sent a debt validation letter to the plaintiff that followed the model form provided by the Consumer Financial Protection Bureau (CFPB). The letter was not dated. The plaintiff claimed the letter violated FDCPA §§ 1692d, e, f, and g because she could not determine what date was “today” and “now,” which allegedly misled her about the status of the debt, confused her, made the letter seem illegitimate and suspicious, and caused her to spend time and money trying to figure out whether the debt was valid. When considering the defendant’s motion to dismiss, the court applied the least sophisticated debtor standard and found that the plaintiff failed to state a claim.

The court rejected the defendant’s claim that using the CFPB model validation notice provided it a safe harbor from suit. The court noted that while Regulation F states use of the model letter provides a safe harbor from claims under 12 C.F.R. §§ 1006.347(c) and (d)(1), the safe harbor provision does not shield debt collectors from liability under any other statutes.

However, an analysis of the plaintiff’s claims under the FDCPA still resulted in judgment in the defendant’s favor. The court found the defendant did not violate § 1692g(a), which requires the debt collector to state the amount of the debt. Nothing in § 1692g(a) requires a date on the notice and the plaintiff did not plausibly allege how omitting the date impacted information about the amount due. The court noted the model notice does not include a date either.

Similarly, there was no overshadowing in violation of § 1692g(b). The plaintiff claimed that without a date, she could not verify the defendant sent her the notice within five days of the initial communication and provided her 30 days to respond. The court noted there was no allegation of any prior communication and because the 30-day time period begins from the date of receipt of the letter, the date it was sent is irrelevant.

The plaintiff’s remaining claims fared no better. The court agreed with the defendant that not including a date on a letter does not rise to the level of harassment, oppression, or abuse prohibited by § 1692d. The plaintiff asserted a violation of § 1692e(2)(A) alleging the letter falsely represented the true character or status of the debt, but failed to state how the information in the letter was false or incorrect. Her claims under §§ 1692e(10) and (g) that the lack of a date made the letter false and misleading because she was unsure about its legitimacy failed because a least sophisticated debtor would not be misled about the legitimacy of the letter simply because it did not have a date. The district court rejected the plaintiff’s § 1692f claim that failing to include a date omitted a material term from the letter which prevented her from making an educated decision. Even for the least sophisticated debtor, the court found, the letter itself offered ways to validate the communication.

The court ultimately granted the defendant’s motion to dismiss, holding that the plaintiff could amend her complaint only if she could assert other conduct that would support a violation of the FDCPA.

DULUTH, Ga. — Crown Asset Management, a receivables acquisition and management firm near Atlanta, GA, was thrilled to participate in a successful Habitat for Humanity build day in Loganville, GA as September drew to a close. The weather was perfect, and the team showed up in full force to put in the work necessary to make a full day’s effort toward the build. 

Gwinnett / Walton Habitat for Humanity

The CAM team partnered with their local Gwinnett / Walton Habitat for Humanity organization to take part in a nearby build for a full volunteer workday. 

“It was a highly successful day, and I couldn’t be more proud of our team for their hard work in making it a worthwhile effort. It is always rewarding to join together and use the combined power of teamwork and work ethic to make an impact right here in our community. We were honored and privileged to have the opportunity to take part in building the future home of a local hard working family who was carefully selected and extremely grateful as the recipients of this new home,” said Brian Williams, CEO at Crown Asset. 

Affordable Housing Worldwide

Habitat for Humanity is a well-known global nonprofit organization dedicated to building affordable homes through volunteer labor, new homeowner sweat equity, donor funding, and no profit from sales (including no-interest mortgages). Founded in 1976, the international operational headquarters are located in Americus, Georgia with the administrative headquarters located in Atlanta. 

Potential homeowners must submit to an application process including criminal background and credit checks, income review, and ability/willingness to pay an affordable mortgage. Additional requirements may include workshop attendance (for financial literacy, home/yard maintenance, and more) as well as a required number of hours of “sweat equity” building the home or the homes of others in the program. Local locations exist all over the US and around the world, and some selection criteria/future homeowner requirements are made at the local level. 

To learn more about Crown Asset Management or their community involvement initiatives, visit crownasset.com. 

About Crown Asset Management

Founded in 2004, Crown Asset Management, LLC, is a professional receivables management firm that outsources purchased accounts to a nationwide, proprietary network of collection agencies and law firms. Crown’s mission is to continually strive to enhance the ethical and respectful treatment of consumers, while providing an inclusive working environment for its dedicated, knowledgeable, and innovative team. Crown Asset Management is an RMAI Certified Receivables Business headquartered in Duluth, GA.

On November 7, the CFPB proposed a rule to supervise large non-bank fintech firms that offer services like digital wallets and payment apps, applicable to larger firms handling greater than 5 million transactions per year, in the same way many large banks and credit unions are supervised. While fintech agencies offer consumer banking services, they are not regulated as stringently as banks are.

The CFPB found that many consumers from middle- and lower-income backgrounds now prefer using digital consumer payment applications over cash. This shift from traditional banking puts consumers at risk since fintech  applications are not subject to “traditional banking safeguards… like deposit insurance.” The CFPB’s proposed rule ensures these non-bank companies:

• Adhere to federal consumer financial protection laws that encompass protections against unfair, deceptive, and abusive practices, consumers’ rights when transferring money, and privacy rights. The CFPB would supervise larger participants to ensure compliance.

• Follow the same rules as banks and credit unions, fostering fair competition and consistent enforcement of federal consumer financial protection laws.

The Consumer Financial Protection Act (CFPA) provides the CFPB with the authority to conduct supervisory examinations over all non-bank companies in the mortgage, payday loan, and private student loan industries, as well as those who serve as service providers to banks and credit unions. In addition, the CFPB can supervise individual entities that pose a risk to consumers, as well as larger participants in other markets. This proposed rule would give the CFPB greater regulatory authority and oversight over large technology firms in consumer financial markets.

GENESEO, N.Y. — Coast Professional, Inc.(Coast), a leading firm specializing in contact center and Accounts Receivable Management (ARM), is pleased to announce the appointment of Matthew Isaacson as Vice President of Business Development. Mr. Isaacson brings over 20 years of extensive experience in designing and executing highly successful sales, marketing, and brand strategies, with expertise in ARM, Business Process Outsourcing (BPO), and leadership.

In his role as Vice President of Business Development, Mr. Isaacson will spearhead Coast’s sales strategy and lead the company’s sales team. His responsibilities include driving revenue growth, nurturing client relationships in established and emerging sectors, and analyzing industry trends to enhance the sales process.

“Matt’s track record in increasing revenue and leading high-performing teams make him an outstanding fit for this key role,” said Micah Pulliam, President & Chief Financial Officer of Coast. “We believe that his extensive career journey and financial acumen will undoubtedly steer Coast to sustained success and growth while delivering top-tier services to our clients.”

Mr. Isaacson’s experience includes partnering with growing businesses in a diverse range of sectors, including Professional Services (in areas such as ARM, BPO, and Revenue Cycle Management), Banking/Financial Services, Energy/Utility, Government, Healthcare, Non-Profit, Private Equity, and Retail/e-Commerce. His expertise lies in optimizing revenue teams, processes, and initiatives. 

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Mr. Isaacson’s professional accomplishments are supported by a Bachelor of Science from St. Cloud State University. He has also devoted substantial time to community service, with key roles in organizations such as the Minority Business Growth Alliance, the Brighter Days Family Grief Center, and Fairview Health Services of Minneapolis. 

“Coast has full confidence in Matt’s extensive experience, unwavering dedication, and passion for fostering growth, making him an invaluable asset to the company’s leadership team,” remarked Jonathan Prince, CEO of Coast. “His appointment as Vice President of Business Development marks an exciting new milestone for Coast, and we look forward to significant success with Matt as an integral part of our business development efforts.”

About Coast Professional, Inc.:

Coast Professional, Inc. is a contact center and accounts receivable management company dedicated to respectful and ethical communication with consumers. Coast provides essential collection and business process outsourcing services to hundreds of campuses, universities, federal, state, and county governments, municipalities, and courts. Coast is an eight-time honoree on the Inc. 5000 list for America’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2021, was distinguished for the sixth time as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. More about Coast can be found at www.coastprofessional.com.

Recently, the Third Circuit Court of Appeals provided a reminder that demand letters subject to multiple interpretations violate the Fair Debt Collection Practices Act (FDCPA). Of perhaps more importance, despite pre-dating Reg F, the case illustrated the difficulties of collecting medical debt and accurately conveying medical debt balances to past due patients. 

In Huber v. Simon’s Agency, Inc., 22-2483 (3rd Cir. Oct 12, 2023) a patient filed a class action lawsuit alleging that a letter a debt collection agency sent to collect a medical debt was confusing and thus violated the FDCPA. The letter included an ‘Account Summary’ that provided the two figures: in one box, the specific debt the debt collector sought to collect, titled ‘Amount,’ and in another box, a second figure, titled “Various Other Accts Total Balance.” The patient alleged the two boxes were confusing because they could be read in multiple ways.

The letter at issue, sent September 6, 2018 was the fourth letter the debt collector sent. Previous letters were sent May 24, 2018, June 14, 2018, and July 12, 2018. The debt collector challenged the class allegations, the patient’s standing to bring the action, and argued that the patient could have deduced the meaning of the letter by comparing the September letter with the May, June, and July letters. Specifically, the debt collector explained, “Each correspondence was about a separate account and the ‘Total Balance’ identified increased each time by the amount owed for that specific amount.”

The court rejected the debt collector’s argument. Noting that the fourth letter was sent nearly three months after the first and second letters and nearly two months after the third letter, the court opined that in those intervals a patient “may have lost the [prior letters] and forgotten the amount of the debt completely.” Thus, because the letter could be read two different ways, and one of those ways was inaccurate, the court found the letter was deceptive and violated the FDCPA

insideARM Perspective: 

Though the letters sent in this case pre-date Reg F, the Huber case still provides a valuable lesson. Collecting medical debt can involve multiple doctor visits, multiple accounts, and detailed accounting and collection agencies have struggled to present accurate information both within the confines of the Model Validation Notice and without. With the disclaimer that you should always consult with your own counsel, all debt collectors, and especially those who collect medical debt, should look at their letters through the eyes of the consumer or patient. Make the letter as clear as possible and spend time evaluating whether your letters can be subject to multiple interpretations, whether or not your agency chooses to use the Model Validation Notice.

In September 2023, the CFPB updated its UDAAP Examination Manual to remove the changes it made in March 2022 which provided that unfair acts or practices encompassed discriminatory conduct, even in circumstances to which federal fair lending laws, such as the Equal Credit Opportunity Act, did not apply.

It has been suggested that this update means the CFPB has retreated from its position that discriminatory conduct can be the basis of a UDAAP violation.  In our view, the update has little significance and was intended only to implement the Texas district court’s order vacating the March 2022 changes.  We do not believe it should be seen as an indication that the CFPB has decided to revisit its interpretation that unfairness can encompass discrimination.  

The CFPB’s continuing adherence to its interpretation is evidenced by the fact that the CFPB has filed a notice with the Texas federal district court that it is appealing its order to the Fifth Circuit.  In its briefing in the district court, the CFPB took the position that the source of its authority to interpret the unfairness prong of UDAAP to encompass discrimination is the unfairness prong itself, and its interpretation did not need to be effectuated through the changes it made to the UDAAP Exam Manual.  Thus, the CFPB in effect has argued that the changes it made to the Exam Manual were superfluous.  

In that regard, there has been some confusion about whether the CFPB’s appeal is timely.  Under the Federal Rules of Appellate Procedure, non-governmental parties must file a notice of appeal within 30 days but the government has 60 days in which to file a notice of appeal.  The district court’s order was entered on September 8 and the CFPB filed its notice of appeal on November 6.  Accordingly, there is no question that the CFPB’s appeal is timely.

In the first blog of this series (Unlock the Power of Data: The Key to Successful Digital Debt Collection), we discussed why setting up a robust data collection process is the foundation for an effective digital collections strategy. Even with a good dataset on file, your data is worthless if you aren’t able to extract the proper insights from thorough and meaningful data interpretation and analysis. Because these insights drive how you engage with your customers on an ongoing basis, they can make or break the quality of those interactions. Thorough and meaningful data interpretation and analysis are areas in collections, in which many organizations can fall short.

This blog, the second in this series, explains the importance of taking a methodical approach to debt collection data analysis to validate findings that will enhance your existing contact strategies and enable a positive customer experience.

1. Define the question or use case being solved to determine your data sources.

Your understanding of the business goal and objective allows you to identify which data sources to include or exclude. You’ll also need to establish Key Performance Indicators (KPIs). Once you have those business goals, objectives and KPIs, measure your results back to the source to ensure that you have the right data to report on and can effectively track results.

2. Practice good data hygiene by removing bad data.

As the saying goes, “bad data in, bad data out.” Inaccurate debt collection data analysis will deliver flawed insights that can both harm the customer experience and invite unwanted regulatory exposure on you, the lender. To avoid this pitfall and create an accurate analysis framework, ensure that you have a structured data set and remove:

• Irrelevant data points
• Invalid fields (e.g., a date where a dollar amount should be)
• Duplicates
• Data that cannot be tracked back to the SOR (e.g., calculated fields).

3. Analyze trends and patterns closely to find customer behavior patterns.

Try overlaying customer profile data points with digital response rates to help you determine critical customer behavior patterns. You might find that certain risk segments and demographics have a higher response rate to SMS versus email, or that younger customers may prefer to pay via mobile. As an example, for one UK lender’s early-stage credit card and portfolio strategy, I saw that SMS yielded a higher click-to-payment rate versus email.  Of the customers who opened the SMS, 90% logged into the self-service option and an additional 50% scheduled a payment. In another test conducted for that same lender using a US charged-off credit card portfolio, three quarters of customers who did not answer a phone call did choose to open an email.

4. Act on the new information that you’ve learned.

Combining updated information from your customers with the data you have on file is a very powerful part of your contact strategy. Pre-emptive contact strategies are a natural way to retain customers, build loyalty and verify demographic information before a customer falls past due. Do this by proactively soliciting key information from a customer before they are in collections. You can gain information during the application/originations process, during servicing and part of your ongoing strategy.

Having an interactive SMS, E-mail, WhatsApp, or other digital mechanism not only makes it easy for the consumer to communicate, but also will reduce inbound call volumes.  If a two-way contact strategy foundation exists within your company’s infrastructure, then it is most critical to store and track that information correctly in your pre-defined data structure. In an SMS message, you have 160 characters to convey the call to action to the customer, such as Thank you for being a loyal customer, we would like to offer a promotional interest rate of X for the next Y months. Please click the link to opt in or Thank you for being a valued customer, please confirm if text is still your preferred contact message. Reply STOP to opt-out. The continuous updates that you collect will allow you to effectively refine your contact strategy.

5. Align your strategy across platforms to simplify the customer journey.

Another critical component that is often overlooked is whether the lender has the operational readiness to complement the desired digital strategy outcome. Often, I find that the tools (offers) agents have to discuss with the customer are not aligned with the digital channel tools. As a result, the customer may receive different offers from different platforms (for example, call center versus email). Misalignment here creates a confusing journey for your customer AND your agents.

At the end of the day, while these five actions cover a diverse range of areas, they all have something in common: They each require that you employ a customer-centric view to your contact strategy to successfully execute in each channel.

Maintain Focus on the Customer Throughout your Digital Collections Strategy

Keep the customer-centric mindset throughout planning and executing your digital collections strategy.  And, at a minimum, clearly communicate all contact strategy changes to the operations team in advance, including your agents. In fact, if it’s possible, train your agents on the changes to your strategy to ensure that they can effectively support it in their customer interactions.

BIRMINGHAM, Ala. — McGlinchey Stafford is pleased to announce the addition of Colin T. Dean to our Birmingham office as Of Counsel. Colin is joining the firm’s Financial Services Litigation practice group, bringing valuable experience to this team’s nationally recognized group of attorneys.

“We are excited to welcome Colin to our growing bench of versatile litigators here in Birmingham,” said Chris Bottcher, Managing Member of the firm’s Birmingham office. “His commitment to providing tailored solutions and adept navigation of regulatory complexities make him a welcome resource for our team and clients alike.” Colin is the third attorney to join McGlinchey’s Birmingham office in the past year.

Colin’s practice encompasses financial services litigation, transactional matters, and FINRA arbitrations  across multiple states, including Alabama, Florida, and North Carolina. He skillfully represents mortgage lenders, loan servicers, and other consumer lenders facing individual and class action claims involving fraud, breach of contract, and violations of consumer protection statutes. Specifically, he advises on disputes brought under the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Fair Housing Act (FHA), the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), and the Fair Debt Collection Practices Act (FDCPA), as well as their state counterparts. Colin also provides guidance on regulatory matters.

“Having worked with Colin in the past, it is my privilege to add an attorney of his caliber to our national team,” said Shaun Ramey, co-chair of McGlinchey’s Financial Services Litigation group. “His 360-degree perspective on the financial services industry positions him to meet our clients’ diverse needs.”

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Before joining McGlinchey, Colin served on an in-house compliance team, advising senior management and internal business units on contract negotiation, drafting, interpretation, and review within the reinsurance division of a national life insurance company. He brings more than a decade of experience in private practice, focusing on both consumer financial services litigation and compliance.

Colin earned his J.D. from the University of Alabama School of Law, magna cum laude, and holds a B.S. in Public Relations from the University of Florida. He is admitted to practice in Alabama, Florida, and North Carolina.

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 nearly 160 attorneys licensed in 34 states, McGlinchey operates from 17 offices nationwide. The firm currently has 23 attorneys and 12 practice areas recognized in Chambers U.S.A. and Chambers FinTech 2023, and 65 attorneys recognized by Best Lawyers, 40 attorneys recognized in various Super Lawyers rankings, 44 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.

MINNEAPOLIS, Minn. — DCM Services, Inc. (“DCMS”), the industry leader in estate and specialty account recovery solutions, is pleased to announce the appointment of Steve Barker as Senior Vice President of Human Resources. 

Steve has been a leader in Human Resources for over 20 years and brings expertise in aligning strategy, people, capabilities, and culture to deliver results and accelerate growth. He has held various leadership positions at top-tier organizations, most recently at Garda Capital Partners, Securian Financial, and U.S. Bank where he partnered with executive management and provided strategic HR solutions, aligned with business objectives, aimed to help achieve and exceed business goals. He has built his career in various HR leadership positions, evolving HR from traditional task-oriented operations to one focused on PEOPLE throughout their entire life cycle, from recruitment to retirement. 

Michael Rosenthal, Chief Executive Officer of DCM Services commented, “Steve is an accomplished human resource leader who has proven to be innovative and a proactive advocate for employees. DCMS employees are critical to our success and I am thrilled to have him on board, and look forward to his enhancement of our HR strategy.”

About DCM Services

Minneapolis-based DCM Services is the industry leader in estate and specialty account resolution services, maximizing the value of client portfolios across financial services, healthcare, auto, retail, telecom, credit union, government, and utility industries through innovation and performance. Its recovery solutions offer a full range of services, from proprietary web-based solutions to full outsourcing, maintaining an unmatched spectrum of innovative solutions that increase recoveries, protect brand value, and enhance survivor relationships – with respect and sensitivity. For more information on all DCM Services’ offerings, please visit www.dcmservices.com.

WASHINGTON, D.C. — The National Creditors Bar Association (NCBA) announced on November 13, 2023 the appointment of Daniel Lipner as VP of Government Affairs at the federal level. The appointment represents an addition to NCBA’s government affairs team and comes at a time when NCBA’s impact and influence are growing.

Due to member requests for increased support on state level issues and our growing influence in Washington, we decided, with the support of the Board, to separate the Government Affairs Officer position into two distinct roles: State and Federal. Nathan Willner, as the VP of Government Affairs (State), will continue his indispensable advocacy work at the state level including working with State Creditors Bar Associations (SCBAs) and sister trade associations. The collaboration of Nathan and Dan will create an even more robust advocacy team, ensuring NCBA’s place at the legislative and regulatory tables of power.

An Emory Law graduate with over 20 years of experience as an attorney and political consultant, Daniel has experience with political and issue campaigns, lobbying, grassroots organizing, relationship building, communications, and political crisis management.  He has worked on Capitol Hill, in the White House, at the National Labor Relations Commission, for nonprofits, and at private law firms. 

“Daniel’s appointment comes at a pivotal time for NCBA as state issues ramp up, but we cannot let our guard down on the federal issues impacting our membership. Adding this position means creditors rights attorneys will have a voice and seat at the table on state and federal issues, requiring the full team and collaborative efforts of Nathan and Daniel,” said Liz Terry, Executive Director, NCBA. “We look forward to Daniel’s efforts and advocacy on the Hill. This will help us strengthen existing relationships and broaden our reach on behalf of our more than 1,700 attorneys and roughly 350-member law firms.”

“I am excited to join the team of phenomenal professionals at NCBA, and I’m already impressed by the work being done,” Daniel said on day one. “I see tremendous opportunities to expand the footprint of our organization and our membership locally and nationally to ensure that NCBA is not only at the table when decisions are made but recognized as the sought-after expert representing creditors rights attorneys.”

To increase the involvement and awareness of the creditors rights practice of law, Daniel will manage NCBA legislative and regulatory efforts at the federal level. He will also support NCBA judiciary efforts and work with sister trade associations to help advance the creditors rights industry.

As a team, Nathan and Daniel will report to Liz Terry, Executive Director, and continue to advocate and grow NCBA’s presence at the State, Federal, and Grassroots levels.

About National Creditors Bar Association (NCBA)

NCBA is the premier bar association dedicated to serving law firms engaged in the practice of creditors rights law. Currently, our membership is comprised of over 350 law firms and individual members, totaling approximately 1,700 attorneys, in the areas of creditors rights law, defense and in-house counsel. Members practice in over 20 different practice areas in the 50 states, Puerto Rico, and Canada. Our attorney members are committed to being professional, responsible, and ethical in their practice and profession. http://www.creditorsbar.org