Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful, and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

I guess I should have seen this coming, but I didn’t. After forcefully battling to keep the TCPA on the books just last term, the U.S. Government has weighed in on the new Supreme Court TCPA ATDS debate. Instead of arguing for an expansive reading of the statute, the Government is asking the Supreme Court to narrowly interpret the statute to only apply to dialers that randomly or sequentially generate numbers to be called. This really does change everything.

And no, I’m not just talking about the compelling legal points raised in the brief, though the brief is outstanding. The brief reads with much more persuasive force than the Opening briefs in Barr. The grammatical analysis of the TCPA’s ATDS definition is elegant and compelling—far better than most of the tortuous I’m-trying-to-explain-something-I-don’t-really-understand arguments you tend to see in these briefs. And the cut-to-the-chase policy analysis is outstanding as well.

[article_ad]

Yes, as with most Supreme Court briefs, the Government’s position is confidently and directly conveyed and seemingly leaves little room for doubt. But the potent advocacy in the brief is not the key here. Rather, it’s that the Government has now (finally) spoken authoritatively on the scope of the TCPA’s current ATDS definition. 

After all of the battling, all of the wrangling, all of the advocacy to the FCC—there it is. A quiet filing the afternoon before Labor Day that nearly everyone missed. The Government has now had its say: the TCPA only applies to random fire dialers. Great. Now we know.

Pack it up, folks. We win. Right?

I mean, that’s everything right there. This isn’t like Barr where the government was arguing whether the TCPA is constitutional; this is the government weighing in on what the TCPA was intended to cover. That feels pretty authoritative; just like an FCC ruling interpreting the Act but from a different wing of the federal government. And sure, technically, a position statement taken by the US Government made in an advocacy piece to the Supreme Court is probably not binding (probably), but do we really expect the Supreme Court to disagree?

Sure, it’s technically too early to call this one for the good guys, but read this brief folks (Facebook–Government Brief). I’m convinced. And I have a very hard time believing that SCOTUS will ignore the Government’s position on the intended narrow reach of a federal statute.

I wonder whether Mr. Duguid himself—and his counsel—might start to think about simply laying down their weapons at this point. You’re on the wrong side of this thing, guys. The TCPA was not designed to do what you thought it was. Accept it and move on.

Let’s discuss policy to the policymakers, not to SCOTUS. That’s not where you want to be with this Court and you know it. (Big picture guys.) It’s in everyone’s best interest to get this statute cleaned up but that has to start on the Hill.

[Updated 9/8/2020 at 2:40PM Eastern: See update below.]

In response to Hurricane Laura, the State of Louisiana enacted a state of emergency which, among other things, prohibits any form of telephonic solicitation. The prohibition will remain in place until the state’s Emergency Operations Center lifts it. While there was initially some confusion about whether this prohibition applies to debt collection calls, an ACA Member Alert clarifies that debt collection calls are included.

Initially, Louisiana’s Public Service Commission Do Not Call Program Manager Brenda Headlee informed the industry association that debt collection calls were not encompassed by the state of emergency. Unfortunately, Headlee’s office had uploaded the wrong statement to its website and provided an incorrect interpretation of the rule to the association. The corrected statement is now on the state’s website, and, according to ACA, the new statement encompasses debt collection calls.

There is some question about the applicability considering the definition of “telephone solicitation” in Lousiana’s Do Not Call Program General Order. In the order, telephone solicitations include calls for several purposes, including “for the purpose of encouraging an extension of credit for property, consumer goods, or services; … or services or an extension of credit for such purposes, or for the solicitation of a contribution to a charitable organization.” However, the general order does carve out an exception for calls “[p]rimarily in connection with an existing debt or contract, payment or performance of which has not been completed at the time of such call.”

Update: insideARM has heard from several sources that Ms. Headlee that collection calls are to stop during the pendency of the emergency order, and that it will likely expire later this week.

NORTH ANDOVER, Mass. — The founders of F.H. Cann & Associates (FHC), a company that delivers world-class accounts receivable management and contact center solutions, are pleased to announce that they have awarded two $1,000 scholarships to recent graduates of Lawrence High School in Lawrence, Massachusetts. 

To learn more about F.H. Cann & Associates and the services that they offer, please visit https://www.fhcann.com. 

Sheri Traficante-Cann, President/CEO of FHC, noted the scholarships were awarded through the Exchange Club of Lawrence and the Andovers. Frank Cann, Executive Vice President of F.H. Cann & Associates, is a board member of the organization. 

Remy Garcia is one of the recipients of the F.H. Cann & Associates Scholarship. She is a recent graduate of Lawrence High School and plans on attending Salem State University in the fall.  

“She was awarded the Yale Book, which is given to a high school student who has an outstanding personal character and intellectual promise,” Sheri Traficante-Cann noted, adding that Remy also received the L-PIN award and was a member of Top Notch Scholars, through which she has volunteered at the Cor Unum Meal Center. 

“Remy was also a member of the Outdoors Club and the Yearbook Club.” 

The second recipient of the F.H. Cann & Associates Scholarship is Gladdys Jiminian, who also graduated from Lawrence High School. Gladdys will attend NECC. 

As Ms Traficante-Cann noted, Gladdys was a member of the Lawrence Youth Council, activities volunteer at the Edgewood Retirement Home, and Next Generation Leadership Network.  

“Gladdys also participated in the Dual Enrollment at Northern Essex Community College, and she was also a member of the Dance Team at Lawrence High.”

The fact that F.H. Cann & Associates awarded two scholarships to local high school graduates will not surprise the many clients who have worked with the company since it first opened in 1999.  

The company’s team has earned a well-deserved reputation for giving back to the community; in addition to the recent work with the Exchange Club of Lawrence and the Andovers, F.H. Cann & Associates has been involved with a number of other organizations, including the Pulmonary Hypertension Association and Lazarus House Ministries.

About F.H. Cann & Associates

F.H. Cann & Associates, Inc. (FHC) was established in 1999 and has provided best-in-class accounts receivable management services and contact center solutions for over 20 years. More information can be found on their official website: https://www.fhcann.com

Let’s set the stage. A plaintiff, represented by a plaintiffs’ firm well-known in this industry, files a putative class action in the Eastern District of Wisconsin–a hot spot for FDCPA litigation–back in early 2019. For the next year and a half, extensive litigation occurs: lots of motions practice, attempts to get a class certified, and discovery disputes. In other words, a lot of money and attorney hours thrown into the ring by both sides. Then, all of a sudden, plaintiff fails to file a response to a motion for summary judgment. That’s what happened in Nagan v. Optio Solutions, LLC, and this caused the court to end the case in defendant’s favor.

[article_ad]

The underlying case

Putting procedural issues aside for a moment, let’s discuss the claims alleged in the complaint. Defendant sent a collection letter to plaintiff which listed a settlement offer that “expires in 45 days” and also provided an itemization of the debt. The itemization mirrored the information provided to defendant by the creditor: principal, fees, interest, and balance due.

Plaintiff filed a putative class action in Eastern District of Wisconsin alleging that the letter violated both the FDCPA and California’s Rosenthal Act (likely because plaintiff claims defendant has a principal place of business in California). Plaintiff claimed that the settlement offer was false and misleading because it causes a false sense of urgency for the consumer to pay the debt despite defendant having flexibility with the settlement offer (e.g., ability to extend the due date, ability to offer more of a discount later). Regarding the debt itemization, plaintiff claims that it gives a false impression that the balance would increase.

Procedural history

Since this case was filed in February 2019, there has been extensive litigation. This includes a motion to certify a class, several motions for summary judgment, modifications to scheduling orders, and discovery disputes. This culminated in telephone conference held on June 11 of this year, where plaintiff’s counsel discussed several open discovery issues that still needed to be remedied. During this conference, the judge provided 30 days to hold the depositions that plaintiff’s counsel said were needed, and then 30 days after the deposition is held for plaintiff to file its response to defendant’s motion for summary judgment. 

According to the court, plaintiff failed to do the latter.

The court’s decision

Procedurally, since plaintiff did not file a response to defendant’s motion, the court was to consider the statement of facts provided by defendant to be true. Based on this, the court found that summary judgment was appropriate for defendant.

Right off the bat, the court rejected the California Rosenthal Act claim since there was no evidence presented that plaintiff was ever a resident of California.

Regarding the settlement offer, the court found that the letter did not contain the Evory safe harbor language (“we are not obligated to renew this offer”), but that’s okay. This is because: 

[The letter] did not represent that no future settlement offers would be available or that it was Plaintiff’s only opportunity to settle the debt. Instead, the letter represented an amount that Defendant was willing to settle Plaintiff’s account for at that time and included an invitation to Plaintiff to discuss the debt. 

The court also found no issue with the debt itemization for two reasons. First, the debt itemization in the letter appeared exactly how defendant received it from the creditor. Second, the letter on its face provides no indication that the amount due is different than the balance listed. 

Although Plaintiff argues that the phrase “balance due” falsely implies that the debt is or could be increasing, stating the balance due without implying that it is different than the stated amount does not constitute a violation of § 1692e.

For these reasons, the court granted summary judgment for defendant.

Want short and sweet summaries of all industry-related court decisions?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

STERLING, Ill. — VeriFacts is a team with a big heart, and this month, we’re helping one of our own and participating in the Natalie Strong Virtual 5k to raise money that will help to give a young teen the gift of life through a second heart transplant. 

The VeriFacts team is ready to lace up our running shoes for the Natalie Strong Virtual 5K on Sunday, September 13, 2020. This event will raise money for Natalie Buck, an immediate family member of VeriFacts’ own Anjie Persico. Natalie is 13 years old, on the list for her second heart transplant, and fighting hard; but she and her family need support. For the past 4 months, Natalie has been in the care of a hospital in Chicago and we know that she has a very long road ahead of her. Heart transplants can be a massive financial burden with costs that can include family relocation to be near the hospital or transplant center, long-term medications and therapies, follow-up medical care, and more.

“There’s no greater gift than the gift of life.” –organdonor.gov

That’s why the VeriFacts team is participating in this life-changing virtual 5k which will provide financial assistance and access to the critical care and treatment that Natalie needs throughout her lifetime. While the VeriFacts team will run together, this virtual 5k is open to anyone who would like to join us in our efforts to give the gift of life to Natalie.

 Interested participants, families, or groups must register before September 4 by visiting the official race page. Each race registration costs $25 and all proceeds will go directly to COTA (Children’s Organ Transplant Association) in honor of Natalie and help with a lifetime of transplant-related expenses. Participants can walk, run, hike, bike, or swim to complete the race in their choice of location: home, pool, trail, or street. The virtual 5k begins on Friday, September 11, and ends on Sunday, September 13.

We would love for others to join our VeriFacts team by walking, running, jogging, biking, or swimming in their own neighborhoods across the country. In fact, VeriFacts’ CEO Stephanie Clark and Finance & Compliance Specialist Anjie Persico have committed to doing 10 pushups for every person who registers for the Natalie Strong Virtual 5k! You read that correctly, 10 pushups for each participant; so 25 participants = 250 pushups!

Even if you can’t participate in the race, please consider supporting Natalie and her dreams of a chance to live. For more information, to register, or to give now, please visit the COTA for Natalie’s Journey website. Let’s show our support for Anjie and help Natalie’s family get closer to their $25,000 goal. Together, we can help our own and get Natalie one step closer to the life-saving second heart transplant that she needs. 

Want to learn more about becoming an organ donor? Visit organdonor.gov.

About Children’s Organ Transplant Association

The Children’s Organ Transplant Association (COTA) helps children and young adults in need of a life-saving transplant by providing fundraising assistance and family support. COTA’s services are completely free of charge and 100% of funds raised can be used throughout a patient’s lifetime for almost any transplant-related expense. 

About VeriFacts, LLC

A leading service provider to the receivables management industry for over 25 years, VeriFacts, LLC is 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.

ATLANTA, Ga. — For the fifth straight year, the FFAM360 Alliance Of Companies is hosting a back to school supply drive for local school-aged children to ensure that kids have the supplies they need as they return to the classroom. 

“As a result of the coronavirus pandemic, the needs in our communities are greater than ever. This year, the FFAM360 Alliance of Companies workplace philosophy is ‘Clearly Go Above and Beyond.’ Charitable giving and volunteerism are one of the cornerstones of our company culture; our employees and leadership are committed to helping the children in our communities start the school year ready to learn,” says Matthew Maloney, President and Chief Investment Officer of the FFAM360 Alliance of Companies. “In 2019, 15 million children, or 21% of all children, in the United States were living in poverty. We recognize the widening financial and educational achievement gaps caused by the ripple effects of the pandemic. Many families can’t afford the rising cost of school supplies and this disadvantage can cause social, emotional, and academic challenges. We don’t want families to choose between paying rent and giving their children a shining start to the new year.” 

According to a recent survey by the National Retail Federation, COVID-19 is predicted to push back-to-school shopping to a new record. Parents of K-12 school-aged children spent an average of $696.70 per family last school year. This year, those families are planning to spend approximately $786.49. For only traditional pencil and paper supplies, the cost is expected to average $131.37, up from $117.49 last year. This staggering increase comes as a shock for many families who are struggling financially, battling food insecurity, and trying to figure out how to meet the demand for school supplies that they can’t afford. 

“Many parents and guardians are overwhelmed with trying to provide basic necessities, let alone budgeting for school supplies,” continues Mr. Maloney. “Families are facing increasingly hard times but still fighting to give their children the tools they need to succeed. Whether families are preparing for at-home learning or the return to brick-and-mortar classrooms, it’s more important than ever for us to help make sure that students are prepared to begin the new year. This year, our teams are personifying our motto to ‘Clearly Go Above and Beyond’ by donating backpacks filled with assorted school supplies, along with other necessities. Preparedness is a key factor in success and we want children to feel prepared and confident from the very first day. We hope that others will follow our lead and get involved. Today’s children are our next generation and the positive effect of what we do today will be felt for decades.” 

To learn more about how we are active in our communities and embodying our commitment to intentional living and our motto, Clearly Go Above and Beyond, please visit the FFAM360 News page. 

About FFAM360

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

California shows that a pandemic won’t slow its government down. In addition to California’s Attorney General finalizing CCPA regulations roughly two weeks ago, California’s legislature has now passed a new piece of legislation, the Debt Collection Licensing Act (SB 908). The Act is now awaiting the governor’s review. If he chooses to, Governor Gavin Newsom has until the end of September to veto the bill. If passed, the requirements would go into effect on January 1, 2022.

Licensing

As its name suggests, the Act calls for the licensure, regulation, and oversight of debt collectors by the Commissioner of Business Oversight from the Department of Business Oversight (DBO). It would require debt collectors located in California and those who collect debts from California residents, regardless of office location, to obtain a license. It would also require such businesses to comply with regulatory oversight, including examination and reporting, of DBO.

According to the Legislative Council’s Digest:

This bill would require each licensee to, among other things, file reports with the commissioner under oath, maintain a surety bond, and pay to the commissioner its pro rata share of all costs and expenses reasonably incurred in the administration of these provisions, as estimated by the commissioner. The bill would authorize the commissioner to enforce these provisions by, among other things, adopting regulations, performing investigations, suspending a license, issuing orders and claims for relief, and enforcing the provisions, as specified.

Actions Forbidden by the Act

The Act prohibits certain acts and practices. Some of these are nothing new to debt collectors, such as not using profane language, annoying consumers by causing their phones to ring repeatedly, or communicating so frequently with consumers to the point where it constitutes harassment.

A new addition to the prohibitions includes sending communications–either written or digital–without displaying the California license number in at least 12-point type.

[article_ad]

Advisory Committee

The good news for debt collectors is that the Act requires DBO to create a Debt Collection Advisory Committee to advise the Commissioner on matters related to debt collection. The committee would consist of 7 members, one of which must be a consumer advocate. Committee members shall be appointed by the Commissioner and shall serve 2-year terms.

Potential Rulemaking

The Act also gives authority to the Commissioner to adopt regulations necessary for the DBO to be prepared to perform its regulatory duties by January 1, 2022. This means that we very well may see proposed rulemaking within the next year. 

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

Pleading a TCPA claim is usually not the tricky part for a plaintiff, and courts normally do not dismiss TCPA lawsuits on the pleadings alone. But a recent decision provides instructive guidance for the sort of threadbare allegations that fail to clear that initial hurdle.

Namely, the United States District Court for the Eastern District of Virginia recently dismissed a bare-bones TCPA complaint and putative class action filed by Craig Hicks. Hicks v. Alarm.com Inc., No. 1:20-cv-532, 2020 U.S. Dist. LEXIS 157433 (E.D. Va. Aug. 6, 2020). Mr. Hicks alleged that Alarm.com violated the TCPA because he received two text messages and one call from “Alarm.com.” Recounting Mr. Hicks’ allegations, the Court described them as “lean,” and observed that the “connection between these communications and” Alarm.com were “factually flimsy.” As a result, the Court agreed “that there are no facts detailing Alarm.com’s involvement in placing any calls,” nor did Mr. Hicks allege any facts to suggest Alarm.com sent the texts at issue. The Court also refused to credit Mr. Hick’s “conclusory” allegations and so it dismissed Mr. Hicks’ complaint.

Notably too, Mr. Hicks expressly disclaimed any theory of vicarious liability, which the Court described as “curious” given the absence of other supporting allegations. The Court noted that Alarm.Com had faced other lawsuits based on conduct by third-party dealers, but did not address the issue in greater detail given Mr. Hicks’ “abandonment” of the vicarious liability “legal theory.”

And, though not material to the dismissal, the Court criticized Mr. Hicks for relying on anonymous online complaints. The Court explained that “a total of nine anonymous online entries” did not qualify as “myriad online complaints” as Mr. Hicks argued. The Court found that Mr. Hicks’ characterization was “hyperbolic and unsupported.”

The Hicks case offers useful guidance for TCPA Defendants facing a new TCPA lawsuit. Where a plaintiff cannot link a call or text to a particular company, but instead resorts to hyperbole, anonymous internet allegations, and innuendo, the claim may fail on the pleadings alone. 

Want short and sweet summaries of all industry-related court decisions?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

One of the most frequent issues arising in TCPA cases is personal jurisdiction over a Defendant. This is true because calls can be made from anywhere to anywhere. And while courts generally find jurisdiction can be asserted over a corporate Defendant (the rule is different for employees) may exist where that Defendant intentionally calls into a forum in the hopes of contracting business there, the law is quite different where the consumer crosses jurisdictional bounds without the Defendant’s knowledge.

In Fiorentine v. Sarton P.R., Civil Action No. 19-3424 (CKK), 2020 U.S. Dist. LEXIS 157018 (D. D.C. Aug. 29, 2020), for instance, the Court faced a jurisdictional challenge to a suit brought in D.C. against a company that transacts all of its business solely within Puerto Rico. The Plaintiff used to reside in Puerto Rico and—although the specific facts surrounding how the Defendant obtained the number were unclear—the assumption is that the Plaintiff supplied his number to the business while in Puerto Rico. When the Plaintiff moved to D.C., however, the company continued to text him-allegedly in violation of the TCPA. Plaintiff sued in his home forum—D.C.—but the Defendant stated that it could not be sued there since it did not business in D.C.

While the Court questioned whether sending text messages would even constitute “doing business” in D.C. for purposes of the applicable long arm statute—an issue the Court made sure to note (repeatedly) was missed by the parties—it assumed that the Constitutional jurisdictional framework applied rather than the statutory one. Applying due process rules the Court determined that Defendant’s only conduct in D.C. was text messages which were only sent to D.C. because of the Plaintiff’s unilateral decision to move there. Nothing the Defendant had done intentionally resulted in communications being sent to D.C. –it was continuing to send messages to the same P.R. customer it had always sent messages to and it was only due to Plaintiff’s travels that a text landed in D.C., where Defendant does not do business.

The Fiorentine case is a good one for TCPA Defendants to keep in mind. In today’s mobile society, a text sent from jurisdiction A might be unwittingly received in jurisdictions B, C, or 22. Where the Defendant is intentionally contacting those jurisdictions it can likely be hauled into court there, but that is not the case merely because the Plaintiff traveled or moved to the new forum jurisdiction.

Want short and sweet summaries of all industry-related court decisions?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee. 

Yesterday the Consumer Financial Protection Bureau (Bureau) issued a report examining the early effects of the COVID-19 pandemic on consumer credit.  Based on credit record data, the Bureau’s research found that consumers have not experienced significant increases in delinquency or other negative credit outcomes since the onset of the COVID-19 pandemic.  The report focuses on mortgage, student and auto loans, and credit card accounts from March 2020 to June 2020.

According to the report,

• The reported rate of new delinquencies on mortgage loan, auto loan, student loan, and credit card accounts fell between March 2020 and June 2020, after being flat or increasing gradually for the year prior. The reported share of already delinquent accounts that became more delinquent also fell. Breaking our sample out by credit score and demographics, the reported share of new delinquencies fell for all groups.
• Beginning in March of 2020, there was a sharp increase in the share of accounts reported with zero payment due despite a positive balance, indicating some type of payment assistance. This was most pronounced for mortgages, where we observe around 6 percent of all outstanding first-lien mortgages reporting zero payment due by June 2020, up from essentially zero in February 2020.11 Assistance was more likely to be reported for borrowers residing in areas with more COVID-19 cases, with majority-Black or majority-Hispanic populations, and with larger changes in unemployment since the start of the pandemic.
• There was a slight reduction in the availability of credit card debt between March and June 2020. Credit limits on existing credit cards declined slightly, where prior to March 2020 there was a general trend of increasing limits. There was also an uptick in the closure of accounts by credit card issuers. In absolute terms, borrowers with very high credit scores accounted for the majority of account closures.
• Consumers did not appear to be accumulating credit card debt as a means of staying afloat financially. On average, credit card balances decreased by around 10 percent between March 2020 and June 2020, a drop consistent with other data that show a decline in consumer spending. Moreover, when we break out our sample by credit score and consumer demographics, we find declines in balances across all groups, including consumers residing in both high- and low-income census tracts.

Clearly, the CARES Act is largely behind these results. The report notes that the Act generally requires furnishers to report as current certain credit obligations for which they make payment accommodations to consumers affected by COVID-19. Since consumers receiving assistance can maintain a current account status rather than go, delinquent, the expectation is that there will be fewer month-to-month transitions into delinquency than would have been the case absent the CARES Act provisions. This is especially true for student loan accounts, for which the CARES Act automatically suspended payments and mandated furnishing requirements that apply to more than two-thirds of the market from March through September 30, 2020. On August 8, President Trump directed the Secretary to continue to suspend loan payments, stop collections, and waive interest on ED-held student loans until Dec. 31, 2020.

In addition to the aggregate study, the Bureau examined results by credit score group. The table below reflects their finding no evidence that delinquencies on major forms of credit increased during the early months of the COVID-19 pandemic, in contrast to the U.S. experience in the Great Recession.

Source: Consumer Financial Protection Bureau

The Bureau concludes that at least part of the reason for the absence of delinquency impacts is likely the policy interventions at the federal, state and local levels. Beyond direct income supports such as higher unemployment insurance benefits, these policies include programs aimed specifically at providing payment assistance to consumers with certain types of credit.

Worthy of a final note is that the CFPB acknowledges what they consider to be important limitations of the study, due to its reliance on credit reporting data to be timely and accurate. Additionally, the report notes that the results only represent the experience of consumers with a credit report–roughly 90 percent of adults in the United States—and only with respect to those types of credit the Bureau focuses on. It’s important to highlight that this report does not examine medical debt. 

iA Perspective

So, what does this portend for the debt collection industry over the coming months? In the early months of the pandemic, there was a clear trend of consumers using their available cash — whether from the CARES Act, a reduction of spending, or other sources — to pay down delinquent debts…for some debt types. This was positive for the industry, creditors, and consumers alike. No matter the reason, many consumers are in a better financial position, at least at the moment. This could mean that for at least some time, there will be a reduction in accounts placed with collection agencies.

Some suggest that, once the effects of the stimulus funds’ July 31st end take effect, the delinquency picture will begin to look different, especially if the unemployment rate does not begin to fall. At a minimum, it seems that the future story for the debt collection industry will vary greatly by industry. 

As for medical debt, this story has yet to play out. While hospitals have been extremely busy in recent months, they’ve been servicing Covid patients. President Trump has said the government will pay those bills. And Congress has kind of said that consumers won’t have to pay those bills. Kaiser Health News reported at the end of May that “Since the passage of the Families First Coronavirus Response Act (FFCRA) on March 18, most people should not face costs for the COVID-19 test or associated costs.” Most people. Should not. I think this story is yet to fully play out. What’s also happened is that thousands of would-be patients put off routine or non-Covid-related procedures. So it will take time to replenish that receivables pipeline.

As for federal student loan debt collectors, the story has been disastrous. I predict there will be unintended consequences for consumers arising from the implementation of some elements of the CARES Act. As I wrote in this article back in June, the Act prohibited Private Collection Agencies from sending collection letters or making outbound collection calls to defaulted federal student loan borrowers, which means PCAs may not reach out to borrowers to inform them, for instance, that $0 payments to an Income-Driven Repayment Plan during the forbearance period would apply towards the requirement for forgiveness. But the borrower must be fully enrolled with completed documentation. The only way a borrower could learn about them is if they happen to read the FAQs on the Federal Student Aid website. This will only come to light months from now when it’s too late.