Wilmington, DE — Katabat, a leading global provider of debt management software solutions for lenders, fintechs, and collection agencies, announced today a strategic growth investment from Tritium Partners, a growth-focused private equity firm with extensive experience investing in fintech and financial services companies, and Terminus Capital, an enterprise software private equity firm. The investment provides Katabat with significant resources to expand and enhance its industry-leading suite of debt collection products. The transaction also represents an exit for Katabat’s venture backers, including Camden Partners, Osage Venture Partners and Activate Venture Partners. Terms of the transaction were not disclosed.

Katabat is a recognized global leader in cloud-based debt collection managed service software products. Founded by consumer lending experts, the Katabat platform has been built from the ground up to provide unparalleled ease and flexibility. The software synchronizes customer offers, implements customer workflows, and builds integrated content and treatments across all customer channels. Powered by machine learning, Katabat’s products are easily deployed to enable speed to ROI for its clients, and its products ensure full compliance with policy and regulatory guidance.  

“We were made for this moment. Having begun operations during the 2008 financial crisis, we are battle-tested and ready to support our clients, both today, as they grapple with the economic effects of Covid-19, and in the future,” said Ray Peloso, President and CEO of Katabat. “We recognize the criticality of product functionality, flexibility, speed and auditability as our clients require unprecedented speed to react to today’s rapidly shifting credit environment.” Mr. Peloso added, “We are thrilled to have Tritium and Terminus as our partners as we enter the company’s next phase of growth.”

Chris Steiner, Principal at Tritium Partners, commented, “Katabat has created a world-class platform that delivers a clear and compelling return on investment to its clients, making it the debt collections software solution of choice for credit and collection professionals. We see significant potential for Katabat as a leader in a market that is increasingly seeking out intelligent, compliance-minded, and data-driven work-flow management capabilities that enable a true omni-channel experience for consumer customers throughout the entire credit lifecycle. No other platform can duplicate the unique capability that Katabat offers to its clients.”  

Alex Western, Managing Director at Terminus, added, “We are focused on ensuring a quality customer experience and creating a transparent, positive presence in the sector. We are investing to expand Katabat’s go-to-market team and further enhance its product differentiation to meet the demand from clients who seek technology to improve operational success and better serve consumers.” Mr. Western also commented, “We are thrilled to be partnering with Ray Peloso, CEO, and Ye Zhang, Co-Founder and Head of Product Strategy, and we are confident that the company is well-positioned to dominate the market for debt collection software.”

About Katabat

With more than a decade of experience delivering debt collection solutions to global banks and debt collection agencies, Katabat combines collections and machine learning expertise to help clients engage with customers and increase collections. Katabat partners with lenders and collectors across multiple industries to stay at the cutting edge of debt management, machine learning, automation, regulatory compliance, and data security. To learn more about our full range of debt management products, contact Katabat at info@katabat.com. 

About Tritium Partners

Founded in 2013, Tritium is a private equity firm focused on companies with exceptional growth potential. For over 17 years, both at Tritium and prior vehicles, Tritium’s founders have deployed over $850 million of equity capital while partnering with talented founders and executives to build market-leading companies. Tritium’s approach emphasizes creating long-term value through strategic growth initiatives and acquisitions, with a focus on internet and information services, financial and business services, and supply chain and logistics.

About Terminus Capital

Terminus Capital Partners is a private equity firm focused on business software companies, founded in 2017 and based in Atlanta, GA. Differentiated by its industry expertise, sourcing engine, operations playbook, and buy-and-build methodology, Terminus strives to be the premier partner for capital providers, bankers, and management teams in the enterprise software sector.

CORAL SPRINGS, Fla. — MCU Holdings, LLC, announces support of our nation’s fallen special operations heroes through a donation to Naked Warrior Project, a nonprofit organization that helps to preserve the memory of the fallen while providing support for their families. 

“Few deserve our gratitude and respect more than our fallen military heroes who gave the ultimate sacrifice to protect our country and our freedoms,” says MCU Holdings’ Managing Member Alan Malke. “Our team proudly supports our nation’s active military, veterans, and fallen heroes. The Naked Warrior Project is an amazing organization with an incredible mission: to honor the fallen and support their families. It is our honor to support them and the meaningful services they provide.” 

After the death of Navy SEAL Ryan Owens, his family started Naked Warrior Project in memoriam of their beloved hero. Understanding the great loss that other veterans and families endure, the organization was created to support the memory of our nation’s fallen Navy SEALs and Special Operatives. Through education, connecting families, fundraising events, and erecting accessible memorial sites in fallen warriors’ hometowns, Naked Warrior Project honors the fallen, supports their families, and provides a sense of community for those who have faced similar challenges. 

“MCU Holdings exists not just in our offices, but also in our communities,” continues Mr. Malke. “We support organizations and charities that are working to create positive change. Through our support of Naked Warrior Project, we are helping to preserve the memory of our fallen heroes and all they have done through their service and sacrifice. As their families reach out for support, we want to help ensure that Naked Warrior Project is able to respond.” 

For more information about Naked Warrior Project, please visit nakedwarriorproject.org.

About Naked Warrior Project

Naked Warrior Project is a 501(c)(3) nonprofit organization established in 2017 to honor and preserve the memory of our fallen Navy SEAL and Special Operations heroes. The organization also provides support and a sense of community to the Gold Star Families left behind. The mission of the Naked Warrior Project is to honor the fallen and support their families through donations and funds at hosted events. The Naked Warrior Project is based in Deerfield Beach, FL.

About MCU Holdings

MCU Holdings is a professional third-party debt collection company providing customized debt collection programs for creditor businesses and best-in-class experiences for consumers. The Company is located in Coral Springs, FL.

CHICAGO, IL — TransUnion, a global information and insights company, is currently fielding its 2nd annual third-party collections industry survey. The collections industry has endured unprecedented challenges—insights gained from the survey will serve as a benchmark for how communications and technology are changing, the extent to which the fallout from the COVID-19 pandemic is reshaping the industry, and other key trends.

If you are a collections professional at a business process outsourcing company, debt buyer, collections agency, or law firm that collects debt, TransUnion wants to hear from you. Please note that your responses will be reported in aggregate; your name and company will not be disclosed to any party.

Click Here to Start the Survey.

Survey participants will receive benchmarking data in advance of a summary report, to be released later this Fall. Last year’s report is available for free download here.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®

A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.

transunion.com/industry/collections

Editor’s Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

Consumer attorneys have found a new weakness in the debt collector’s compliance armor: consumer-facing websites. As debt collectors increase their use of and reliance on consumer-facing websites to support their collection efforts and facilitate payments, the number of consumer lawsuits claiming these websites violate the FDCPA are also increasing. The recent case of Odneal v. Midwest Recovery Systems LLC (N.D. Ind. April 24, 2020), highlights the risks associated with consumer-facing websites used in a third-party debt collection context.

The Facts and the Ruling

In this matter, Plaintiff Odneal discovered a debt on his credit report owned by the defendant, Midwest Recovery Systems. Odneal promptly went to Midwest’s website to get more information and was directed to Midwest’s online payment portal.

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Odneal filed an action claiming the defendant violated the Fair Debt Collection Practices Act by failing to disclose the time-barred nature of the debt that appeared on its website and the risk of reviving the debt if Odneal made a payment.

Note the defendant did not invite the consumer to visit its consumer portal; rather, the consumer found it all by himself in a google search, after learning of the debt on his credit report.

In response, the defendant debt collector brought a motion to dismiss the case on the grounds its website was not a communication in connection with the collection of a debt and therefore did not trigger the requirement to include disclosures otherwise required in letters, texts, emails, and calls. The Court denied the defendant’s motion explaining it is plausible that a payment portal satisfies the definition of a communication under the FDCPA (the conveying of information regarding a debt directly or indirectly to any person through any medium), and therefore survives the motion to dismiss.

The Standard of Review

In making its decision to deny the defendant’s motion, the Court did not apply the least sophisticated consumer standard or the unsophisticated consumer standard, nor did it apply a strict liability standard. Rather it applied the very broad trickery standard of review. The court explained the FDCPA is an extremely broad statute and is “essentially a rule against trickery.” Rueda v. Midland Credit Mgmt., Inc., No. 19 C 1739, 2019 WL 3943681, at *1 (N.D. Ill. Aug. 21, 2019) (quotation marks and citation omitted).

The Take-Aways for Debt Collectors

It remains to be seen how the Court will ultimately decide this case. It is possible the defendant will prevail and this Indiana Court will agree a debt collector’s website is not a communication in connection with the collection of a debt, particularly if the debt collector did not invite the consumer to its website. However, I highly doubt it. Litigation over this issue is rampant.

In the short span of time between the date this motion was briefed and the time the Court issued its ruling, the Central District of Illinois alone issued three decisions[1] addressing debt collection websites in favor of “confused and misled” consumers based on fact patterns similar to the case at bar.

Practitioner Tips

#1 – Understand the FDCPA defines the term “communication” as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” 15 U.S.C. § 1692a. As such, courts may interpret your consumer-facing websites as 1) having conveyed some information, 2) regarding the consumer’s debt (the amount due), and 3) through a medium (the portal itself) in satisfaction with the statutory definition of a communication, albeit indirect.

#2 – To be safe, consider your consumer-facing websites and consumer facing payment portals to be communications in connection with the collection of a debt and respond accordingly.

#3 – Include a terms and conditions document on your website that can be accessed, printed and saved by the consumer or patient for future reference. Be sure to require the consumer to click to agree to each iteration of your terms and conditions document.

#4 – Do not forget to include any state disclosure requirements that apply to communications with consumers in connection with the collection of their debt.

#5 – Several states require unique disclosures for the collection of accounts for which the statute of limitations has expired. Make sure you display such disclosures in connection with any time-barred debts/accounts.

#6 – Make sure you have outside counsel review your consumer-facing websites on a regular basis as you do your paper letters, email templates, and text templates.

#7 – Recognize that by including the full Miranda warning as required by the FDCPA (“This communication is from a debt collector. This may be an attempt to collect a debt. Any information obtained would be used for that purpose.”), courts may consider the disclosure to be objective evidence that you are using your website as an indirect means to collect a debt.

#8 – Understand defending a case against a debt collector alleging its website is a communication in connection with the collection of a debt becomes increasingly more difficult as the interactions with the consumer become more direct. For example, offering the consumer an opportunity to accept or negotiate a settlement, negotiate and arrange a payment arrangement, log a dispute, or request information about their debt using your website may be closer to a direct communication in connection with the collection of a debt than if the consumer finds their way to your website on their own.

#9 – Ensure your website, as well as its mobile-friendly counterpart, are easy, intuitive, and in full compliance with the Americans with Disabilities Act (ADA). Visit the Resources page on the Ontario Systems website to read my additional blog articles on ADA compliance.

#10 – Include your agency’s privacy statement on your website and provide consumers with information explaining how they may ask you to delete their information. [Note: There are reasons why you may not need to comply with such a request if the information you have collected about the consumer is subject to an exemption.]

Bottom line – As these lawsuits continue to increase in volume, you must prepare for the risks associated with consumer-facing websites used in a third-party debt collection context. Protect yourself by following these 10 basic tips. 

Want to easily pull up all cases regarding the definition of a communication?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

Yesterday, a group of 30 attorneys general from throughout the United States and its territories issued a letter to members of the U.S. Senate urging stronger federal student loan protections during the COVID-19 pandemic.

Previously, the Department of Education suspended the collection of its student loans on March 25. Then CARES Act, which became law on March 27, provided certain protections for borrowers whose student loans were held by the federal government. However, there was some concern that commercially-held student loans fell by the wayside, and borrowers of such loans were left in the dust.

The attorneys general letter urges the Senate to move forward with S. 4237, titled the Student Loan Fairness Act of 2020. The letter states that the proposed law would help close the gap and extend protections to borrowers of commercially-held FFEL loans and institutionally-held Perkins loans.

insideARM is proud to announce the 2020 Best Places to Work in Collections winners. This survey and award program is designed to celebrate excellence among call center work environments in customer care, collections, and outsourcing. 2020 marks the 13th year that insideARM has recognized the industry’s best places to work, primarily as rated by employees.

And this year, the process occurred during a pandemic that has upended and reorganized a lot of companies.

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

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

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

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

This year, an incredible 51 companies met the standard to be selected. The Best Places to Work in Collections list is divided into three size categories: Small (15-49 employees), Medium (50-149 employees) and Large (150+ employees). 

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

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

The following are this year’s winners:

Small Employer Category (15-49 US Employees)

• Eastern Revenue, Inc.
• CST WorldWide
• Automotive Credit Corporation – Collections Department
• Investment Retrievers, Inc.
• Michael Andrews & Associates LLC
• Mnet Health
• Team Recovery, Inc.
• Credit Collection Partners
• KLS Financial Services, Inc.
• The Stark Collection Agency
• National Service Bureau
• Crown Asset Management
• CenterPoint Legal Solutions, LLC
• Capital Collection Management
• Todd Bremer Lawson
• United Credit Service, Inc.
• CBI
• Merchants Credit Association

Medium Employer Category (50-149 US Employers)

• Hunter Warfield, Inc.
• Core Recoveries LLC
• Action Financial Services, LLC
• GB Collects
• American Profit Recovery, Inc.
• Choice Recovery, Inc.
• North American Credit Services
• Automated Collection Services, Inc.
• KeyBridge Medical Revenue Care
• Account Recovery Specialists, Inc.
• Credit Management Services, Inc.
• Gulf Coast Collection Bureau, Inc.
• Sentry Credit, Inc.
• Credit Solutions LLC
• Revenue Enterprises, LLC
• Accelerated Receivables Solutions and Magnet Solutions
• Advance Financial
• Healthcare Receivables Group
• Active/Balanced Healthcare Receivables, LLC (AHR-BHR)
• Brown & Joseph, LLC
• JP Recovery Services, Inc.

Large Employer Category (150+ US Employees)

• PFC USA
• Credit Control, LLC
• State Collection Service, Inc.
• Coast Professional, Inc.
• Williams & Fudge, Inc.
• Parallon Revenue Cycle Point Solutions
• Professional Account Services, Inc.
• ConServe
• Americollect, Inc.
• Altus Receivables Management, Inc.
• Reliant Capital Solutions, LLC
• Enhanced Resource Centers

The 2021 program will open for registration in the fall.

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

ROCKVILLE, Md. — Yesterday, the Consumer Relations Consortium (CRC) filed its comment to the Consumer Financial Protection Bureau’s (CFPB) Supplemental Notice of Proposed Rulemaking for time-barred debts (SNPRM). The SNPRM comment supplements CRC’s comment to the larger Notice of Proposed Rulemaking for debt collection, issued last year. Yesterday’s comment provides a detailed analysis of the proposal, including:

• A recommendation for the final debt collection rules to include a right to cure, especially since the CFPB agrees that calculating when a debt becomes time-barred is a nuanced and complex analysis impacted by many variables;
• A recommendation for a clear safe harbor provision that details which statute of limitations should be used and how the calculation should be applied;
• A discussion of the conflict between the CFPB’s proposal and certain state laws, including a recommendation for an exemption to the CFPB-proposed time-barred debt disclosure in states that already require debt collectors to use specific language to notify consumers of a debt’s time-barred status;
• A discussion of the testing procedures used by the CFPB to survey the effectiveness of the proposed time-barred debt disclosure, and a recommendation to conduct in-market testing of said disclosure through the CFPB’s own Trial Disclosure Testing Program; and
• A legal analysis of how the proposal goes beyond the CFPB’s authority.

CRC would like to thank the editorial board of this comment, which consisted of attorney members of CRC’s Legal Advisory Board, established in 2020. Editorial board members included: 

John Rossman is an attorney with Moss & Barnett and co-host of the podcast The Debt Collection Drill featured in insideARM. John is a long-time member of CRC’s Steering Committee and was heavily involved in drafting CRC’s comments to the CFPB’s proposed debt collection rules from the beginning, including the comments to the Advanced Notice of Proposed Rulemaking and the NPRM. 

Joann Needleman, leader of the firm’s Consumer Financial Services Regulatory & Compliance group, serves as a navigator to her clients seeking advice and guidance in the complex regulatory environment facing the financial services industry. She provides counsel, consultation, and litigation services to a wide array of financial institutions, law firms, credit reporting agencies, as well as venture capital firms looking to invest in the fin-tech space. Joann is a former member of the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board and is the host of the podcast “Credit Eco to Go: Curbside Thought Leadership for Financial Services.

Stefanie Jackman is the leader of Ballard Spahr’s Debt Collection Team and partner located in Ballard’s Atlanta office. Stefanie is nationally recognized for her expertise with respect to applying debt collection laws across all segments of the financial services industry, including traditional financial products, fintech and online lending, healthcare, and student lending. She brings her collections compliance and litigation experience to bear in assisting her financial services industry clients facing state and federal government investigations and examinations, counseling them on complex compliance issues, assisting with debt portfolio acquisition diligence, and defending them in individual and class action lawsuits. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA. 

Robert Horowitz is an attorney with the Horwitz Law Firm, PLLC. Rob specializes in litigation (individual and class actions), regulatory and compliance issues arising under the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), and the Telephone Consumer Protection Act (TCPA). Rob’s vast experience includes making partner at an Am Law 200 Firm (Dykema), managing and handling FDCPA/FCRA/TCPA litigation and a FTC investigation while at Asset Acceptance, LLC where he played a critical role in implementing a compliant framework to comply with the statute of limitations disclosure requirements in a 2012 FTC Consent Decree, and General Counsel and Chief Compliance Officer of RevSpring, Inc.

Katie Neill serves as General Counsel and Regulatory Editor for The iA Institute, is the Chair of CRC’s Legal Advisory Board, and is a member of CRC’s steering committee. Katie is the mastermind behind iA’s Case Law Tracker, a unique, industry-specific legal research tool that allows attorneys and compliance professionals in the credit and collections industry to make informed litigation and compliance strategy decisions with just a few clicks. Prior to joining iA, Katie served as the sole in-house counsel for a large, national debt collection agency. 

About the Consumer Relations Consortium

The Consumer Relations Consortium is an 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.

Learn more at www.crconsortium.org.

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About the iA institute

The iA institute (iA) is a media company that produces handcrafted news, events, and education for the consumer and commercial debt industry. The iA team believes that the value of your investment in our content should be undeniable, so we thoughtfully design everything we do with a focus on the details that make a difference. iA initiatives bring a range of stakeholders to the table in candid and intimate environments to inform, to collaborate, to innovate, and to make profitable connections. The iA institute, under the name insideARM LLC, is a certified woman-owned and woman-controlled business (WBE).

Learn more at www.theiainstitute.com.

Every now and then, the issue of how to properly report medical debts pops up. Should each transaction for medical care provided be reported as a separate debt, or should they all be bound together as one? The Seventh Circuit Court of Appeals (7th Circuit)  previously found that the former is appropriate, and once again reiterated this position to the same plaintiffs’ counsel.

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For the sake of this article, here is an oversimplified overview of a complex and nuanced matter. When a patient receives medical care, they are billed for each medical-service charge separately. If unpaid, healthcare providers send these charges to debt collectors as separate debts. If the debt collector furnishes data to the credit bureaus, then each service charge is reported as a separate debt. This is exactly what happened in the case Zablocki v. Merchants Credit Guide Co. (7th Cir. Jul. 28, 2020). 

In Zablocki, the plaintiff-appellants received multiple medical services within one visit to the provider—for example, one plaintiff-appellant had multiple x-rays done. When he didn’t pay off what he owed for the x-rays, the medical provider placed his accounts with a debt collector, who credit reported the remaining amounts for the services separately. Plaintiff-appellants filed lawsuits arguing that reporting the debts separately—rather than in the aggregate—misstates the character of the debt and is an unfair and unconscionable means of collecting a debt. Shortly after this lawsuit was filed, the 7th Circuit issued its decision in Rhone v. Medical Business Bureau LLC, which stated that reporting debts in the aggregate could be misleading.

The district court dismissed the lawsuit, and the 7th Circuit affirmed dismissal. The 7th Circuit turned to the definition of “debt” as outlined in the FDCPA, and found that it supports a “per transaction” approach (rather than the “per creditor” approach that plaintiff-appellants were pushing).

Next, the 7th Circuit turns to the other claim: that the practice is unfair and unconscionable:

Viewing Merchants’s separate reporting of debts from the perspective of an unsophisticated but reasonable consumer, we see the alleged conduct as falling outside the scope of these terms [“unfair and unconscionable”]. It is reasonable, and not at all deceptive or outrageous, for a collector to report individually debts that correspond to different charges, thereby communicating truthfully how much is owed on each debt. Some consumers may prefer to have their debts reported in a way that conceals debt-specific information, like how much is owed on individual debts, when specific debts were incurred, and which debts are stale. Those consumers may be willing to forego the more detailed information on their credit reports if the aggregated reporting increases their credit scores.  

But a preference does not necessarily equal an injustice, partiality, or deception. And the debt-reporting rule that the plaintiffs propose would conceal debt-specific information that other consumers may prefer, or be entitled, to see on their credit reports. See Rhone, 915 F.3d at 439 (recognizing that aggregated reporting could be misleading). The case before us illustrates the point: had Merchants reported in the aggregate all the debts owed to each creditor, [plaintiff-appellants’] credit reports would not indicate the amounts of each separate debt; when each debt would be removed from the credit report; or other features specific to each obligation.

insideARM Perspective

Here’s a fun little fact: the plaintiffs in the instant case and the plaintiff in Rhone were represented by the same consumer attorney. This means that, shortly after this case was filed, plaintiffs’ counsel was aware that the 7th Circuit filed a precedential opinion that rejects the allegations made. And yet, they continued fighting this case: not only did they not give up when the district court dismissed the claim, they appealed and had the 7th Circuit reiterate the same ruling again. It is a waste of the judicial system’s already slim resources, all done with a hope that the debt collector will settle the case rather than defend—even if they are in the right. Does this sound fishy? It should, because it is. 

Want to arm your FDCPA defense by knowing other questionable tactics used by plaintiffs’ counsel?
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.

Well, here’s something you don’t like to see. A Plaintiff files a patently insufficient certification motion—lacking even basic evidence on the issue of numerosity—but is awarded both another bite at the apple and a little free guidance from the Court as to how to get the case certified. No bueno.

The case is Molinari v. Fin. Asset Mgmt. Sys., No. 18 C 1526, 2020 U.S. Dist. LEXIS 134045 (N.D. Ill.  July 29, 2020). The Plaintiff contends the defendant collection company routinely obtained skip traced phone numbers for debtors and loaded them into an autodialer for collection efforts. That sort of thing can get you in a lot of trouble.

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Despite the seemingly great case, Plaintiff simply could not surmount the procedural hurdles needed to obtain certification under rule 23. Indeed, the Court found that the Plaintiff flat-out failed to introduce any admissible evidence on the issue of numerosity–a crucial (and basic) Rule 23 requirement for a party seeking certification. While Plaintiff argued, in essence, “come on, we know they did this all the time,” the motion seeking certification contained no evidence to that effect—just assertions and allegations.

Similarly, on the issue of commonality, the Court noted that the Plaintiff assumed that common issues existed, without lifting a finger to actually identify them or provide evidence supporting the availability of common findings critical to the outcome of the case.

These sorts of failings are fairly common in TCPA class actions—these cases are not properly certified in most instances—but what comes next is very uncommon. Rather than deny certification and dismiss the claims of unnamed class members, the Court specifically determined the certification denial was without prejudice. What is more, the Court specifically aided the Plaintiff by identifying the evidentiary deficiencies in the original motion, to wit: the need for evidence on numerosity, adequacy of counsel and commonality.

To put a fine point on it, the Court very specifically addressed the required showing Plaintiff must make on commonality in his next go round: 

he should ensure that he ‘connect[s] the common evidence’ he proposes to use for each proposed class ‘to the elements required to make a prima facie showing for each cause of action’ that he wishes to pursue on behalf of that class.

Gees. That’s quite the hint. Usually putative class counsel has to figure that sort of thing out for him/herself.

In any event, what should have been a big victory for the Defense appears to be a mere prelude for a potentially inevitable certification. We’ll keep an eye on this.

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 previously appeared on the Ontario Systems Blog and is republished here with permission.

As of July 27, 2020, the Consumer and Governmental Affairs Bureau (CGB) set into motion the established guidelines for operation of the FCC’s Reassigned Numbers Database. This is good news for the ARM industry, as we’re now one step closer to having a crucial tool in hand that can help simplify the process of managing consent under the Telephone Consumer Protection Act (TCPA).

In this post, I’ll discuss the current conundrum surrounding reassigned mobile numbers, a bit of legal history, and the FCC’s response. Then I’ll explain how you can make best use of the database once it’s up and running.

 The Struggle to Manage Consent for Mobile Numbers Under the TCPA

One of the most pressing challenges of complying with the Telephone Consumer Protection Act (TCPA) is managing consent. A condition of placing a call, sending a text, leaving a prerecorded message, or using an artificial voice to communicate with a consumer using their mobile number is that the calling party must have the consent of the called party.

To date, the conundrum for a calling party has been a lack of access to tools or services capable of confirming precisely if the consumer associated with the mobile number at the time of the call, text or message is in fact the same consumer who granted the calling party consent to use their mobile number in such a manner.

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The Legal Question: What Constitutes Proper Consent?

The issue was first addressed in ACA Int’l v. FCC, No. 15-211, 2018 U.S. App. LEXIS 6535 (D.C. Cir. Mar. 16, 2018). In this case, the Second Circuit Court of Appeals wrestled with the question of whether the calling party must have consent to call from the consumer who they actually called or the person who they intended to call. Unfortunately, the Second Circuit failed to reach a conclusion and lobbed the issue back to the Federal Communications Commission (FCC) for further consideration.

In the meantime, calling parties have unsuccessfully used private database searches, workflow waterfalls, pass through consent and best-guess approaches to determine whether the consumer who once granted them consent under the TCPA, is indeed the consumer they are attempting to call, send a text, leave a prerecorded message or communicate with using an artificial voice.

The FCC Response: Give Collection Agencies the Access They Need

Eventually the FCC took action. On December 13, 2018, the Commission released a Second Report and Order on Advanced Methods to Target and Eliminate Unlawful Robocalls.

In the Reassigned Numbers Order, the Commission addressed the problem of unwanted calls to consumers with numbers reassigned from a previous consumer by establishing a single, comprehensive Reassigned Numbers Database. The FCC explained that the Reassigned Numbers Database would contain reassigned number information from each provider that obtains North American Numbering Plan U.S. geographic numbers and toll-free numbers. Once the Reassigned Numbers Database is established, callers will be able to consult the database to determine whether a telephone number has been reassigned from the consumer they intend to reach, thus allowing them to avoid calling consumers with reassigned numbers who may not wish to receive the call.

On June 26, 2020, the Commission published an announcement of OMB approval and compliance dates for the new rules in the Federal Register.[1]

Beginning July 27, 2020, voice service providers must maintain records of the most recent permanent disconnection date for each number, and must age telephone numbers for at least 45 days after disconnection and before reassignment.[2]  Small business voice service providers have an additional six months (i.e., until January 27, 2021), to comply with the record maintenance rule.[3]  The Commission will announce the compliance date for the new rule requiring voice service providers to send information to the Reassigned Numbers Database once the database is established.

Pro Tip: Be Prepared to Take Full Advantage of the Database

While progress has been slow, the FCC’s Reassigned Number Database will soon be operational. For a fee, calling parties will be able to submit numbers to the database for evaluation.

Just as carriers are beginning to maintain records of the most recent permanent disconnection date for each number, you should begin to maintain records of the most recent date your agency either successfully used a mobile number to reach a right party or the date the right party provided consent to use their number as required by the TCPA. You’ll l need to know these trigger dates to make best use of the FCC’s Reassigned Number Database—a welcome resource whose value to compliance-minded collection agencies cannot be overstated.

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[1] Federal Communications Commission, Advanced Methods to Target and Eliminate Unlawful Robocalls, 85 FR 38334 (June 26, 2020).
[2] Compliance with 47 CFR §§ 52.15(f)(1)(ii) and (f)(8), 52.103(d), and 64.1200(l)(1) will be required as of July 27, 2020. Id.
[3] Reassigned Numbers Database Order, 33 FCC Rcd at 12039, para. 43.