PETALUMA, Calif. — The Cascade365 Family of Companies is excited to announce that Mary Sand has joined the team as Director of Client Services.

Mrs. Sand will lead the continued growth of the Cascade365 Client Services team, further enhancing and building upon Cascade365’s strong tradition of providing its clients with best-in-class support.

Mrs. Sand joins Cascade365 with over 30 years of experience in healthcare receivables management and revenue cycle operations. Prior to joining Cascade365, Mrs. Sand served as Vice President of Operations at RevSolve/USCB. Amongst Mrs. Sand’s many accomplishments at RevSolve/USCB, she was instrumental in creating and managing the Client Services and Onboarding departments.  Mrs. Sand has a strong track record in cultivating and maintaining communication channels with clients, administering project management plans, improving business workflows, increasing departmental productivity and accuracy, and identifying and acting upon client/company synergies. 

“I am thrilled that Mary has joined Cascade365,” said Lee Brockett, Chief Executive Officer of the Cascade365 Family of Companies. “Mary’s experience and leadership will enable Cascade365 to not skip a beat as we increase in client volume and complexity.  Cascade365 is steeped in a strong culture of providing best-in-class pricing/client economics as well as patient/consumer experience.  The ‘third leg of the stool’ is client services, making sure that Cascade365’s clients receive the best services possible. Mary will be instrumental in Cascade’s ongoing success as we continue a trajectory of growth and increased footprint within the healthcare vertical.”

“I am beyond honored to work with the talented team at Cascade365 and look forward to furthering their efforts and strong contribution to healthcare and revenue cycle” said Mrs. Sand.  “Cascade365 is a true leader in the marketplace of healthcare accounts receivable management, which includes debt purchase, master servicing, collections, and specialty finance.  I am excited to support the organization’s endeavors, including growing a best-in-class Client Services team and helping to structure innovative client service practices.”

About The Cascade365 Family of Companies 

Cascade365 is a brand identity representing a family of companies focused on the responsible liquidation of accounts receivable.  Headquartered in the San Francisco Bay area, the Cascade365 Family of Companies are recognized leaders in the accounts receivable management, revenue cycle and specialty finance industries. Cascade365’s suite of products and services include AR Purchase and Finance, Master Servicing, Third Party Collections, and Revenue Cycle Optimization.  The Cascade365 Family of Companies believes in promoting financial accountability while treating patients in a fair, dignified, and lawful manner.  

Montana Gov. Greg Gianforte on May 19 signed into law Senate Bill 384, the Montana Consumer Data Privacy Act, making Montana the ninth state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut, Iowa, Indiana, and Tennessee. The law will take effect Oct. 1, 2024.

Applicability

The law applies to persons that conduct business in Montana or persons that produce products or services that are targeted to residents of Montana and:

• control or process the personal data of not less than 50,000 consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction; or
• control or process the personal data of not less than 25,000 consumers and derive more than 25% of gross revenue from the sale of personal data.

Exemptions

Importantly, the law exempts financial institutions and affiliates, or personal data subject to the Gramm-Leach-Bliley Act. Other exemptions include covered entities or business associates governed by the Health Insurance Portability and Accountability Act, and the use of personal information to the extent the activity is regulated by and authorized under the Fair Credit Reporting Act.

Consumer Rights

Consumers are provided the right to:

• confirm whether a controller is processing the consumer’s personal data and to access the personal data;
• correct inaccuracies in the consumer’s personal data;
• delete personal data about the consumer;
• obtain a copy of the consumer’s personal data previously provided by the consumer;
• opt out of the processing of personal data if the purpose is for targeted advertising, sale of the personal data, or profiling in furtherance of solely automated decisions that produce legal or similarly significant effects concerning the consumer.

Sensitive Data

A controller may not process “sensitive data” without a consumer’s consent.

“Sensitive data” includes:

• data revealing racial or ethnic origin, religious beliefs, a mental or physical health condition or diagnosis, information about a person’s sex life, sexual orientation, or citizenship or immigration status;
• the processing of genetic or biometric data for the purpose of uniquely identifying an individual;
• personal data collected from a known child; or
• precise geolocation data.

Contract Requirements

A contract between a controller and a processor must include certain provisions to:

• ensure that each person processing personal data is subject to a duty of confidentiality with respect to the personal data;
• at the controller’s direction, delete or return all personal data to the controller as requested;
• on the reasonable request of the controller, make available to the controller all information in the processor’s possession necessary to demonstrate the processor’s compliance;
• engage any subcontractor pursuant to a written contract that requires the subcontractor to meet the obligations of the processor with respect to the personal data; and
• allow and cooperate with reasonable assessments by the controller or the controller’s designated assessor.

Data Protection Assessments

A controller must conduct and document a data protection assessment if the processing involves:

• targeted advertising;
• the sale of personal data;
• certain profiling;
• sensitive data.

Enforcement

The Attorney General has the exclusive authority to enforce the law. Prior to taking any action, the Attorney General must provide a controller or processor 60 days to cure the violation. In the absence of a cure, civil penalties not to exceed $7,500 may be sought for each violation. The cure provision expires April 1, 2026.

Maurice Wutscher Impression

The Montana law is very similar to the non-California data privacy laws recently enacted, so it should cause few additional compliance challenges.

For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, click here.

It’s been 46 years since “debt collector” was defined in the federal Fair Debt Collection Practices FDCPA (FDCPA) so why do courts still disagree with its meaning?  One reason may be that the FDCPA was enacted prior to the maturation of the consumer debt buyer industry, leaving the FDCPA’s legislative history void of any discussion regarding whether a buyer of consumer debt is a ‘debt collector.’ Courts have been filling in the gap; however, the lack of consistency in their decisions continues to burden litigants and the court system.

The existence of so-called passive debt buyers has increased exponentially since the passing of the FDCPA.  A passive debt buyer is an entity that purchases debt portfolios of defaulted charged off accounts owed by consumers, and then contracts third party vendors, usually licensed collection agencies or collection attorneys, to attempt to collect the defaulted accounts. These entities are considered ‘passive’ because they do not collect their own debt; the third parties handle all aspects of collecting debts.

Though the debt buyer industry has become prolific, Congress has not, to date, considered whether passive debt buyers should be considered debt collectors within the meaning of the FDCPA.  Courts have tried to answer that question, but their decisions are not uniform, making it difficult for anyone to discern the true meaning of ‘debt collector.’  This article addresses with some of these cases and offers a suggestion how debt buyers should be described by the courts.

The FDCPA is dated. It was approved on September 20, 1977.   It’s purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provided consumers an ability to dispute and otherwise obtain the validation of debt.  However, the FDCPA has two potential definitions of ‘debt collector.’

Debt Collector means [first] “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts (“the Principal Purpose test”), or [second], [one] who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another (“the Regularly Collects test”)…….”

Who qualifies as a debt collector is an issue raised by litigants that courts must address frequently.  As Congress never considered how to describe passive debt buyers under the FDCPA, Courts must attempt to decide whether passive debt buyers are debt collectors under the FDCPA. Recent cases include Campbell v. LVNV Funding, LLC., 2022 WL 96172286 (2022); Young v. Midland Funding,  84 Cal.App.5th 34 (2022); and Endres v. UHG I LLC, 2022 WL 462005 (2022).  Two of these cases support the proposition that a passive debt buyer is a debt collector under the Principal Purpose test.  The issue will continue to be raised until the U.S. Supreme Court settles the controversy over the Principal Purpose test or Congress amends or otherwise clarifies the FDCPA.

In the U.S. Supreme Court case, Henson v. Santander, 137 S. Ct. 1718 LLC,(2017), the court determined whether a party that purchases a consumer debt, and then attempts to collect it, is a debt collector within the meaning of the FDCPA.  The Court interpreted the Regularly Collects test only and declined to analyze the Principal Purpose test.  The Court ruled that when one purchases a debt originated by someone else, thereby owns it after purchase, and then seeks to collect that debt for its own account, the entity does not fall under the Regularly Collects test.  It is, therefore, not a debt collector.  The Court rationalized that because the debt buyer is the current owner of the debt, and is collecting the debt, the current debt owner is collecting its own debt.  Unlike lower courts, the Henson court, with respect to the definition of debt collector, does not distinguish between a company that buys charged off debts and a company that buys debts on which the consumers are still paying.  A debt is a debt. 

Since Henson, few courts have interpreted the Principal Purpose test.  Two courts that have interpreted this test have reached opposite conclusions.  In Barbato v. Greystone Alliance, 916 F.3d 260 (3rd Cir 2019), the Third Circuit side-stepped the plain and unambiguous meaning of the statute.  Rather, this court interpreted the statute and concluded that the Principal Purpose test includes passive debt buyers even though the owners of these assets do nothing to collect the claims other than hire third party debt collectors. 

Even though the U.S. Supreme Court in Henson clearly states that the FDCPA is meant to reach those that directly contact the account debtors, the Barbato Court finds that the same language is farther reaching and meant to include indirect acts, like those of a passive debt buyer hiring a third party debt collector.  The court in Barbato reasons that the FDCPA does not limit the definition of debt collector to the ones that take the direct actions. Rather, it includes any person or entity that uses instrumentalities of interstate commerce, whether direct or indirect. Unfortunately, the U.S. Supreme Court did not take this decision on appeal.

In Dorrian v. LVNV Funding, LLC, 479 Mass. 265 (2018), the Court considered whether the defendant qualified as a debt collector under the FDCPA, the Massachusetts Debt Collections Practices Act (“MDCPA”) and Massachusetts Consumer Protection Act (“MCPA”).  The MDCPA and the FDCPA define a debt collector in the same manner.  In this case, the defendant, a passive debt buyer, did not attempt to collect any of the debts it acquired.  Consequently, it could not be licensed as a debt collector under Massachusetts law.  

The plaintiff claimed that the defendant was a debt collector as defined by the FDCPA, MDCPA, and MCPA.  That by not being licensed as a debt collector, the defendant was in violation of the law. The Dorrian Court dissected the plain language of these statutes and found it “instructive but not conclusive” as to whether a passive debt buyer is a debt collector. Rather, the Court relied on the opinion of the Massachusetts Division of Banks interpretation of the FDCPA which drew a line between passive debt buyers and debt collectors by whether or not they are directly involved in collection activities with consumers. The Court reasoned that the FDCPA is meant to stop the harassing and abusive acts aimed at consumers. Consequently, an entity must take direct actions against a consumer debtor to be defined as a debt collector under the Principal Purpose definition. 

The two courts also disagree on the meaning of the “principal purpose” of a passive debtor buyer. The Barbato Court decided that if a party’s most important aim is the collection of debt, then the party is a debt collector. The Barbato Court reasoned that because the company would cease to exist if it did not have its purchased debt collected, then it is a debt collector. This is an oversimplification of a passive debt buyer’s business. The Dorrian Court reasons that a passive debt buyer’s business is to invest capital in debt, and its profits are derived from the eventual collection of debt. However, the Dorrian Court notes that the passive debt buyer takes no action to collect the debt. The collection of the debt is completely contracted to a third party. The third party undertakes all aspects of the debt collection.

The primary purpose of a company that may buy debt is to gather investment money or other money drawn from lines of credit. Once the company gathers that money, it has to find investment opportunities. After a tranche of debt is purchased, the new owner needs to contract with third parties to collect the debt portfolio. If one was to reasonably apply the principal purpose test, the so called principal purpose of these companies is to raise money to purchase assets that return a dividend to its shareholders.  

The Barbato Court is correct in stating that the passive debt buyer would cease to exist if its agents do not collect debts, but wouldn’t every lending institution fail if it ceased to receive a return on its loans? A bank lends money to businesses and consumers in the hopes of seeing a return on its investment. To do so, it needs to collect promissory notes and realize profits on bank investments. If it fails to do so, the bank too will fail. Would that make the bank a debt collector? Also, to state that a passive debt buyer is a debt collector simply because it chooses to invest in debts would be incorrect. If someone chooses to invest in a retail store, is that investor now in the retail business? If an investor chose to invest in a car company, would he now be a car maker? No, we would not say that unless, the shareholder takes some direct action to build a car or run a retail store. 

The Hensen Court, Dorrian Court, and Barbato Courts agree that Congress intended to end unfair and deceptive practices of debt collectors when communicating with consumers. The Courts also agree that since the passing of the FDCPA, one of the largest changes was the creation of a debt buying market. There is nothing in the legislative history that shows that Congress ever considered debt buyers when it passed the FDCPA. The Barbato Court speculates that treating passive debt buyers as debt collectors furthers Congress’ intent to stop abusive and deceptive debt collections practices. The Dorrian Court disagrees. Without analyzing the Principal Purpose test the U.S. Supreme Court in Henson disagrees as well.

As the Hensen Court states people can reasonably disagree over whether Congress should change the FDCPA to include more parties within the definition of debt collector.  “…it’s hardly unknown for new business models to emerge in response to regulation, and for regulation in turn to address new business models. Constant competition between constable and quarry, regulator and regulated, can come as no surprise in our changing world. But neither should the proper role of the judiciary in that process—to apply, not amend, the work of the People’s representatives.” Henson, 582 U.S. 79, 90, 137 S. Ct. 1718, 1725–26, (2017).

SARASOTA, Fla. — Beam Software, a thought leader and problem solver in the debt purchasing and collection software markets, has addressed the Great Resignation and the return-to-work issue for its collection agency customers by partnering with Resolv Global, an international Call Center as a Service (CCaaS) solution provider.  

Beam Software customers have indicated that one of their most rampant issues is they cannot find and retain collectors. To solve that problem Beam Software and Resolv Global have teamed up to create a pool of call center agents with experience in collections as well as knowledge of how to use the BEAM collection system. Beam customers use the Resolv Global Call Center as a Service solution to contract point callers, skip tracers, and collectors.

“Changes in employment patterns and behaviors sparked during COVID, record low unemployment rates, and collector shortages, continue to affect all collection agencies, not just BEAM users.” said Thomas Mohr, Chief Revenue Officer at Beam. “By referring Resolv Global call center agents as contractors, we can help collection companies save anywhere from 30% to 40% over the cost of hiring a traditional onsite collector.”

Resolv Global is uniquely positioned as an offshore and nearshore CCaaS solution with call centers in South Africa and Columbia.  “South Africa is a leading worldwide destination for call center and BPO solutions based on its neutral English accent, large, educated talent pool, and above average staff retention rates.” said Dr. Louis Siebrits, co-founder of Resolv Global. 

Resolv Global employs champion-challenger strategies between its call centers in Cape Town, Durban, and Johannesburg to promote best-in-class performance for its clients. Resolv Global provides what it calls hot seat allocation to support real-time capacity exchange based on the demand for agents. Dr. Siebrits added “Collection agents are already trained on each client’s specific use of their BEAM platform and have passed our FDCPA compliance certification test so they can hit the ground running and be immediately productive.”

About Beam Software

Beam Software is a subject matter expert on purchased receivables and collections software and prides itself on creatively solving problems for its customers.  Its product development team is a Microsoft Solutions Partner, and its management team has 81 years of combined industry experience.  For more information, visit www.beamsoftware.com or call (866) 620-3445.

About Resolv Global

Resolv Global is a leading Call Center as a Service solution provider with call centers throughout South Africa and Columbia. The company provides agents for point calling, skip tracing, collections, and customer service, all of which can be available 24/7. Resolv offers hands-on management and KPI reporting  to drive effectiveness and ensure profitability for its clients. For more information, call (888) 472-4528 or visit www.resolv.global.

On May 8, petitioner CFPB filed its brief with the U.S. Supreme Court, criticizing the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau, where the appellate court found that the Bureau’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause (covered by InfoBytes here and a firm article here). The 5th Circuit’s decision also vacated the agency’s Payday Lending Rule on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding. 

Earlier this year, the Bureau filed a petition for a writ of certiorari, which the Court granted (covered by InfoBytes here). The Bureau explained in its petition that the 5th Circuit’s decision would negatively impact its “critical work administering and enforcing consumer financial protection laws” and “threatens the validity of all past CFPB actions as well” as the decision vacates a past agency action based on the purported Appropriations Clause violation. 

Community Financial Services Association of America (CFSA) filed a conditional cross-petition, seeking review on other aspects of the 5th Circuit’s decision, including that the 5th Circuit’s decision does not warrant review because the appellate court correctly vacated the Payday Lending Rule, which, according to the respondents, has “multiple legal defects, including but not limited to the Appropriations Clause issue.” (Covered by InfoBytes here.)

In its opening brief, the Bureau expanded on why it believes the 5th Circuit erred in its holding. The Bureau argued that the text of the Appropriations Clause “does not limit Congress’ authority to determine the specificity, duration, and source of its appropriations.” The agency further explained that Congress has chosen similar funding mechanisms for many other financial regulatory agencies, including the FDIC, NCUA, FHFA, and the Farm Credit Administration (and agencies outside of the financial regulatory sector), where they are all funded in part through the collection of fees, assessments, and investments. 

The Bureau emphasized that the 5th Circuit and the CFSA failed “to grapple with the Appropriation Clause’s text, Congress’ historical practice, or [Supreme] Court precedent,” but instead asserted only that the funding mechanism was “unprecedented.” “Congress enacted a statute explicitly authorizing the CFPB to use a specified amount of funds from a specified source for specified purposes,” the Bureau emphasized. “The Appropriations Clause requires nothing more.” The 5th Circuit’s “novel and ill-defined limits on Congress’s appropriations authority contradict the Constitution’s text and congressional practice dating to the Founding.”

The Bureau also addressed the now-vacated Payday Lending Rule. Arguing that even if there were some constitutional flaw in 12 U.S.C. § 5497 (the statute creating the Bureau’s funding mechanism), the 5th Circuit should have looked for some cure to allow the remainder of the funding mechanism to stand independently instead of “adopting an unjustified and profoundly disruptive retrospective remedy” and presuming the funding mechanism created under Section 5497(a)-(c) was entirely invalid. The Bureau also stressed that vacatur of the agency’s past actions was not an appropriate remedy and is inconsistent with historical practice. Adopting a remedial approach, the Bureau warned, would inflict significant disruption by calling into question 12 years of past agency actions.

The Bureau urged the Court to at most grant only “prospective relief preventing the CFPB from enforcing the Payday Lending Rule against [CFSA] or their members until Congress provides the Bureau with funding from another source.” While such an approach could still “upend” the Bureau’s activities, “it would at least avoid the profoundly disruptive effect of unwinding already completed and concededly authorized agency actions like the Payday Lending Rule,” the Bureau wrote, adding that “[v]acatur of the CFPB’s past actions would be inappropriate in light of the significant disruption that such vacatur would produce.”

Tennessee Gov. Bill Lee on May 11 signed into law House Bill 1181, making Tennessee the eighth state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut, Iowa, and Indiana. The law will take effect July 1, 2024.

Privacy Program

Under the new law, controllers and processors must create, maintain, and comply with a written privacy program that reasonably conforms to the National Institute of Standards and Technology (NIST) Privacy Framework entitled “A Tool for Improving Privacy through Enterprise Risk Management Version 1.0,” and update the program as the Framework is revised.   

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Applicability

The Act applies to persons that conduct business in Tennessee or produce products or services that are targeted to residents of Tennessee and that:

1. During a calendar year, control, or process personal information of at least 100,000 consumers; or
2. Control or process personal information of at least 25,000 consumers and derive more than 50% of gross revenue from the sale of personal information.

Exemptions

Importantly, the Act exempts financial institutions and affiliates, or data subject to the Gramm-Leach-Bliley Act. Other exemptions include covered entities or business associates governed by the privacy, security, and breach notification rules issued pursuant to the Health Insurance Portability and Accountability Act, and the use of personal information to the extent the activity is regulated by and authorized under the Fair Credit Reporting Act.

Consumer Rights

Consumers are provided the right to:

1. Confirm whether a controller is processing the consumer’s personal information and to access the personal information;
2. Correct inaccuracies in the consumer’s personal information;
3. Delete personal information provided by or obtained about the consumer;
4. Obtain a copy of the consumer’s personal information that the consumer previously provided to the controller;
5. Request that a controller that sold personal information about the consumer, or disclosed the information for a business purpose, disclose the: (i) Categories of personal information the business sold; (ii) Categories of third parties to which the personal information was sold; (iii) Categories of personal information disclosed for a business purpose;
   
6. Opt out of the sale of personal information.

Sensitive Data

A controller may not process “sensitive data” without a consumer’s consent.

“Sensitive data” includes:

1. Personal information revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, or citizenship or immigration status;
2. The processing of genetic or biometric data for the purpose of uniquely identifying a natural person;
3. The personal information collected from a known child; or
4. Precise geolocation data.

Contract Requirements

A contract between a controller and a processor must clearly set forth instructions for processing data, the nature and purpose of processing, the type of data subject to processing, the duration of processing, the rights and obligations of both parties, and require that the processor:

1. Ensure that each person processing personal information is subject to a duty of confidentiality with respect to the data;
2. At the controller’s direction, delete or return all personal information to the controller as requested at the end of the provision of services, unless retention of the personal information is required by law;
3. Upon the reasonable request of the controller, make available to the controller all information in its possession necessary to demonstrate the processor’s compliance with the obligations in this part;
4. Allow, and cooperate with, reasonable assessments by the controller or the controller’s designated assessor;
5. Engage a subcontractor pursuant to a written contract in accordance that requires the subcontractor to meet the obligations of the processor with respect to the personal information.

Data Protection Assessments

A controller must conduct and document a data protection assessment if the processing involves

1. targeted advertising;
2. the sale of personal information;
3. certain profiling;
4. sensitive data;
5. activities involving personal information that present a heightened risk of harm to consumers.

Enforcement

The Attorney General has the exclusive authority to enforce the Act. Prior to taking any action, the Attorney General must provide a controller or processor 60 days to cure the violation. In the absence of a cure, civil penalties up to $15,000 may be sought for each violation.

Maurice Wutscher Impression

The Tennessee Act is similar to the other non-California data privacy laws recently enacted, though the requirement to have a privacy program based on the NIST Framework is unique.

The Framework was developed by a private-public collaboration that began in 2018, and “is a voluntary tool intended to help organizations identify and manage privacy risk so that they can build innovative products and services while protecting individuals’ privacy.”

For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, click here.

Nearly two years after the Supreme Court’s 2021 decision in Transunion v. Ramirez, courts and litigants continue to grapple with standing issues in Fair Debt Collection Practices Act (FDCPA) cases brought by plaintiffs alleging intangible harms to reputation and privacy interests. Prominent among these post-Ramirez FDCPA cases was Hunstein v. Preferred Collection & Management Services. (11th Cir. 2022), where the plaintiffs alleged a debt collector violated the FDCPA’s prohibition on debt collector communications with third parties, 15 U.S.C. 1692c(b), by disclosing their debts to a third-party letter-vendor who formulated and mailed collection letters. Citing to Ramirez, the Hunstein court differentiated between the limited disclosure to a private party alleged by the plaintiffs and the broad public dissemination actionable at common law. Because the former caused no concrete harm to the plaintiffs’ privacy interests, the Hunstein court dismissed the case for lack of standing.

While Hunstein remains the law of the land in the Eleventh Circuit, other courts have reached the opposite result. A recent opinion out of the Western District of Washington in the case of Jennings v. IQ Data International Inc. illustrates courts’ growing divergence on this issue.

The facts in Jennings were indistinguishable from those in Hunstein. The plaintiff alleged the defendant debt collector used a third-party letter vendor to transmit a collection letter, thereby disclosing plaintiff’s debt obligation to a third party in violation of § 1692c(b). Relying on Ramirez and Hunstein, the defendant moved for judgment on the pleadings, arguing that, despite the alleged purported violation, the plaintiff failed to allege any concrete harm stemming from its limited disclosure and, therefore, lacked Article III standing. The court disagreed. Though the plaintiff alleged no tangible injury stemming from the disclosure — e.g., physical or monetary harm — the court held that the alleged intangible injury to plaintiff’s privacy interest was sufficient for Article III purposes.

The court’s analysis began with a summary of Ramirez, which held that intangible injuries caused by statutory violations may be concrete if they bear a “close relationship” to claims traditionally actionable at common law. Though Ramirez requires a “close relationship,” it did not hold that an asserted intangible injury must be an “exact duplicate” of its common law antecedent. Applying these principles to the plaintiff’s claim, the court found her asserted injury was similar to the common law action for “publicity given to private life,” which imposed liability for a person’s publication of another’s private affairs that would be “highly offensive to a reasonable person” and “not of legitimate concern to the public.” To be actionable at common law, however, an aggrieved plaintiff was required to show publicity — i.e., “disclosure to the public or several people.” While the court acknowledged that the plaintiff’s complaint had not alleged publicity, it nonetheless found “the harm that both the common law tort . . . and § 1692c(b), seek to remedy is the same: it protects people’s privacy.” According to the court, the publication at common law and the defendant’s disclosure to its letter vendor caused the same type of harm, with any difference being simply “a matter of degree.”

In holding that the plaintiff had standing, the court acknowledged the Eleventh Circuit’s opposite holding in Hunstein. The court’s opinion, however, devoted little discussion to the reasoning underpinning that decision — observing instead that “[t]his out of circuit decision is not binding.”

Troutman’s Take:

The Jennings court gave short shrift to Hunstein. Nonetheless, its holding exemplifies courts’ diverging application of Ramirez‘s “close relationship” test to FDCPA claims alleging intangible injuries. With respect to letter-vendor claims specifically, the lack of uniformity on the standing issue will, at least for the time being, continue to pose a particular challenge to collections companies operating across multiple jurisdictions.

The ARM industry is complex, and it’s often difficult to keep up with industry-shaking cases, emerging technologies, and regulatory entities throwing the occasional wrench into the machinery. Despite the challenge, staying on top of the newest cases, laws, and trends is essential to succeeding in the current debt collection landscape.

That’s why we’ve compiled the must-know takeaways from the insideARM Legal Advisory Board’s (LAB) recent webinar “Arm Industry Legal Trends to Know Now” presented by the Consumer Relations Consortium (CRC).  In the April 27, 2023 webinar, LAB members Justin Penn of Hinshaw & Culbertson, Jim Schultz of Sessions, Israel & Shartle, and Jedd Bellman of Orrick, tackled the following topics: 

• Hunstein’s aftermath in state courts  and how it can benefit debt collectors;
• The dos and don’ts of texting, emailing, social media, chatbots, and AI in debt collection; and
• The future of debt collection under a more consumer-friendly Consumer Financial Protection Bureau (CFPB). 

You can watch the full webinar here, but read on for some of the main takeaways

With the caveat that nothing below should be considered legal advice, and you should always consult your own counsel for legal advice, here’s what Justin, Jim, and Jedd had to say:

The Aftermath of the Hunstein Case

In Justin’s view, while the Hunstein case turned the debt collection industry on its head for the better part of a year, the battle is not over, but it has shifted primarily from federal courts to state courts. The good news is FDCPA lawsuits fell 43% in the six months following the final Hunstein decision and state courts are not consumer attorneys’ preferred venue. 

In state court, consumer attorneys have to show up personally, oral arguments are more prevalent, and state court judges are more likely to make their own decision instead of following non-binding cases from other courts. Many consumer attorneys are trying to force debt collectors into arbitration rather than attempt to litigate their cases in state court.

Justin shared some of the successful tactics he’s seen in state court Hunstein cases including:

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• Using oral argument as an opportunity to make common sense arguments that may not translate well to written motions.  For example, asking whether telegraph companies are considered “third-party vendors” to highlight the absurdity of the Hunstein decision.

• Raising practical arguments about the effects of eliminating the use of third-party letter vendors. The cost of doing business for the big collectors is going to go up, and that cost will be passed along to the consumer. Smaller collectors couldn’t possibly survive without leveraging the help of third-party letter vendors.

Texting, Emails, Social Media, and Chatbots

Jim remarked that the use of digital communication and technology in debt collection has revolutionized the industry and created new collection strategies. However, it is essential for debt collectors to be aware of the legal implications of using these channels and recognize that laws and regulations have not yet caught up with this change.

Here are some things to keep in mind if you plan on implementing these strategies:

• To qualify for the Reg F Safe Harbor protection, you must obtain consumer consent for sending them an email or text, even though Reg F doesn’t explicitly require it otherwise.
• Make sure to include opt-out notices in your emails and monitor for bounce-backs to ensure delivery.
• Be aware that some state laws, like those in New York and Washington D.C., limit the ability to email consumers.
• Your text message should have a company name, an opt-out notice, and a debt collector disclosure.
• State monitoring laws may come into play with a chat function on your website if it is keeping a transcript of the conversation.

The CFPB’s Abusive Conduct Guidance & State Issues

Jedd‘s experience in government service for over a decade has given him some insight into the recent changes at the CFPB. The CFPB has increasingly emphasized outcomes over intent and is demanding that companies be accountable while minimizing the responsibilities of the consumer, using “abuse” as a vehicle for implementing these changes. However, the lack of guidelines as to what “abuse” means has led to a significant blur of the line. This lack of clarity may result in individual circumstances determining the outcome of cases.

Here are some things to keep in mind as we watch the CFPB moving forward:

• They see “dark patterns” as a trick by the industry and will look to eliminate those practices.
• The CFPB wants to prevent predetermined outcomes and may even consider a high default rate as evidence of an abusive practice.
• They believe servicers are driving outcomes that benefit them and want to prevent that from happening. 
• Many states are now including “abuse” in their debt collection laws
• CFPB has stated that a debt collector obscuring information and maximizing excessive profits is an “abuse of conduct” which could affect how the industry handles settlement negotiations with consumers.
• They are attempting to throw out the guardrails of “good faith and fair dealings” that comes with a contractual relationship between consumer and collector by moving towards a fiduciary relationship.

Compliance these days is like a game of whack-a-mole and it’s difficult to stay on top of everything. We thank Justin, Jim, and Jedd for sharing their insights with us.  

You can watch the full webinar here

* The Legal Advisory Board’s next “legal trends to know now webinar” will be 5/24 at 2pm EST.  You can check out the topics and presenters as well as register here.

For more info on the Legal Advisory Board click here.

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

About the Consumer Relations Consortium 

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

About the Legal Advisory Board

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

When the CFPB introduced Reg F in late 2020, a lot of attention focused on the change in collector-debtor communication practices. A less discussed, but equally significant change is the increased oversight responsibilities creditors have when outsourcing collections. With the CFPB’s announcement about extending its supervisory authority to non-bank financial institutions, vendor management and auditing is increasingly becoming a priority for originators and lenders. As a result, for collection agencies, robust compliance management and reporting capabilities now represent a competitive advantage when marketing their services to creditors.  

For creditors and collectors alike,  Reg F oversight requirements create a new reality of shared compliance responsibility. In this post we discuss how servicers and creditors can better collaborate by using new tools that provide all parties with critical insights and generate the transparency and trust needed to succeed in a tightening regulatory climate. With the help of these tools, servicers can function as trusted compliance partners for creditors, instead of potential high-risk liabilities. They can also help growing ARM businesses minimize risk when contracting with 3rd parties.  

Easing the Oversight Burden

Reg F transforms the creditor-collection agency relationship equation by requiring close cooperation on compliance issues. But it also raises legitimate concerns about increased workload and financial burdens. For collections agencies, adding staff to extract data and compile reports might be near-impossible in times of declining ARM industry profits. Likewise, for creditors, the new oversight responsibilities also require increased documentation and audits that are resource-intensive.

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Advanced, AI-based compliance management platforms can ease the burden on all parties by automating many processes. In fact, they can transform the burden into benefit by providing insights and reports that are incisive and actionable as well as timely. They can help creditors and agencies develop more trusted relationships with their vendors, automate reporting, reduce risk and compliance management costs, and mitigate reputational and legal threats. 

The most valuable platforms cover the full operational spectrum, from monitoring, archiving and alerting through remediation, reporting and agent coaching. While many servicers have separate archiving, speech analytics, scoring or coaching systems in place, switching to an “all-in-one” solution can reduce risk of critical data being lost in transitions and eliminate manpower-intensive bridging of gaps between systems. They reduce the overhead involved in generating compliance health reports and provide 1st parties with the visibility they need into servicers’ operations and associated risks.  

What to look for in a compliance platform 

When selecting an end-to-end compliance management platform, make sure it comes with these 4 essential capabilities:

Comprehensive reports and audit trails 

New Reg F-mandated oversight responsibilities mean that vendor due diligence and regular audits will  be central elements of creditors’ compliance processes. In case of an external audit, seamless documentation of issue discovery, vendor communication, and remediation activity are a big plus. 

End-to-end compliance management platforms offer comprehensive activity documentation at a single access point. Servicers can easily provide creditors with the data they need, and enable them to track performance and improvements over time. Automated systems allow creditors and servicers alike to be audit-ready at all times, with violation and mitigation logs always current.

100% coverage

Traditional monitoring process sampling covers only a small percentage of interactions. Agencies and creditors may be unaware of misconduct that falls outside of the sample unless (or until) a complaint is filed or a regulator knocks on the door. 

Automated monitoring systems audit 100% of calls, providing a comprehensive picture of legal risks for collectors as well as for creditors. Multi-language capabilities represent an extra “bonus” since they can monitor and transcribe consumer interactions conducted in foreign languages such as Spanish or Chinese, and then automatically translate to English. 

Real-time risk monitoring

Traditional sampling and auditing methods not only fail to cover the entirety of consumer interactions, they also introduce substantial delays and gaps between the moment the violation has occurred and when it is detected and ultimately mitigated. Remediation is most effective when it’s provided immediately following the problematic event. If audit results are received only monthly – or even weekly – intensive monitoring and coaching will be likewise delayed, enabling poor practices to become further entrenched and exposing all parties to risk. By the time post-coaching performance is assessed, several weeks might have passed.

In contrast, AI-based, automated monitoring solutions flag violations as they occur, so that mitigation and agent coaching can be initiated immediately. With information regarding risks available as they emerge, stakeholders can act to protect themselves against costly litigation, potential fines and damage to their brands. Real-time monitoring and reporting can give creditors that “ear” to the ground that is usually not available when using 3rd party services.

Data privacy and security compliance 

Advanced platforms integrate data security and privacy guardrails to ensure full compliance with consumer data protection requirements. Features to look out for include automated PII redaction, out-of-the-box tools for data residency compliance, end-to-end encryption, SOC2, ISO 27001, and PCI compliance.

Looking ahead

Regulations and oversight responsibilities will continue to increase in the coming months and years. Investing in a plan and technology now, not later, will help your organization stay ahead of the curve. 

CINCINNATI, OH – Slovin & Associates, a Cincinnati-based law firm that provides clients with the personal, hands-on accessibility of a small law firm combined with the deep experience of industry veterans, is proud to support dozens of local artists through its new office. 

As Slovin began looking for ways to make its new office more engaging and inspiring, the team turned to local community artists to showcase their work. By displaying local artwork in the workplace, the team not only enhanced the office’s aesthetic appeal with interesting pieces that trigger conversations, inspiration, and positive community discussions but also supported those in the community working hard to make a living. 

“We didn’t want to go to TJ Maxx or Marshalls to buy corporate art to put in the office,” Slovin and Associates Partner Randy Slovin said during a Receivables Roundtable podcast with Receivables Info Founder Adam Parks. “We are going to work with emerging artists and display their work. We’ve acquired about a dozen pieces, and we want to have as many as 30 pieces of local art displayed in this office.” 

Supporting the Community

Slovin and Associates has long valued the impact its organization can make in the community. For decades, its founding partners have made donations to various charities, local hospitals, and other organizations looking to better the global community. Throughout the process of adding artwork to the office, Slovin has met with truly inspiring artists that will continue to make a difference both at the office and in the community. 

Slovin has commissioned additional artwork to fill the office and continues to support other local charities, including the New Life Furniture Bank, as they continue to look for ways to help wherever is needed. 

The New Life Furniture Bank

The New Life Furniture Bank partners with local social service agencies to provide full house furniture to families and individuals overcoming devastating circumstances, so they can start their new life with hope and dignity. At Slovin and Associates, the team realized the value of providing support to not only those afflicted by homelessness but also those who have found permanent housing and cannot afford to provide beds or supplies for their families. 

For Slovin’s 15th anniversary, the company participated in a program called Beds for Sleepy Heads to get kids off the floor and into a bed. Slovin helped purchase several truckloads of beds, nightstands, and lamps for children. The latest American Community Survey estimates that more than 89,000 kids in the Ohio, Indiana, and Kentucky areas are affected by child poverty, with many of them lacking a bed to sleep in. 

“Once they find housing, that’s not the end of it,” Slovin said. “We wanted to help them with something as simple as a bed.” 

Living With Change

Continuing with their support of at-risk children, Slovin and Associates supports their local Cincinnati Children’s Hospital whenever possible. Specifically, there is one program—Living With Change—that partner Randy Slovin holds close to his heart. The Living With Change center at the Cincinnati Children’s Hospital works to bring more resources, more professionals, and, ultimately, better outcomes for transgender youth and their families to the area. 

“That group of people are some of the most at-risk individuals in our society. We support that organization, and they do amazing work through the children’s hospital for education, psychiatrists, and helping the kids adjust at school,” Mr. Slovin said. 

Learn More Online

Slovin and Associates believes that supporting local communities is a vital part of its responsibility as a business. By investing in local charities, artists, and other community initiatives, the business helps to create a more vibrant and connected community. To learn more about what they do and how they help clients, consumers, and their community, visit their website at https://sclpa.com/. 

About Slovin & Associates, Co., LPA

Slovin & Associates, Co., LPAaims to achieve the highest rating for creditor’s rights law firms in Ohio, Kentucky, and Indiana by obtaining expeditious and cost-efficient results in a professional and low-maintenance environment for our clients in the fields of collections, commercial and consumer litigation, bankruptcy, leasing and landlord-tenant law, and Fair Debt consulting.