On February 13, the Second Circuit Court of Appeals affirmed the decision of an Eastern District of New York court and found that the defendant law firm, Mandarich Law Group, LLC (Mandarich), had conducted a meaningful attorney review of the plaintiff debtor’s account prior to mailing her a debt collection letter on the firm’s letterhead. The three-judge panel set forth the decision in a summary order, which does not have precedential effect.

The putative class action arose out of a debt collection letter Mandarich mailed to the plaintiff in March 2019. The plaintiff alleged the letter included language that overshadowed the statutorily-mandated validation notice and falsely represented or implied that an attorney had meaningfully reviewed the letter in violation of multiple provisions of the Fair Debt Collection Practices Act (FDCPA). 

As it relates to the meaningful-attorney-involvement claim, the plaintiff alleged that the use of the firm’s letterhead suggested an attorney was involved in the collection of the debt when in fact no attorney had reviewed the account prior to mailing the letter and the letter did not disclose that no attorney was involved in a review of the account. 

Mandarich moved for summary judgment on all of the plaintiff’s claims, which included the submission of an affidavit from an attorney at the firm that personally reviewed the plaintiff’s account using the firm’s specialized computer platform and in accordance with the firm’s “Attorney Meaningful Involvement Procedure” prior to the mailing of the letter. Through the review process, the attorney concluded that Mandarich’s client owned the plaintiff’s account, that the plaintiff had incurred the debt, that the account did not appear to be the subject of a bankruptcy proceeding, and the debt did not arise out of fraud. The district court granted summary judgment in favor of Mandarich in January 2022 and the plaintiff appealed shortly thereafter.

On appeal, the plaintiff argued that the Mandarich attorney that reviewed her account did not “meaningfully” review it because most of the review was either performed by non-attorneys or was automated. The plaintiff further argued that the entire review process could have taken less than one minute and that the Mandarich attorney did not establish a specific plan to sue in the event the plaintiff failed to pay the debt. The Second Circuit summarily rejected these arguments. 

Following its prior decision in Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292 (2d Cir. 2003), the court noted that it never established a specific minimum period of time that is required to constitute meaningful attorney involvement. Nor has the court established a bright-line test to determine whether an attorney was sufficiently involved in the review of an account. Rather, the Second Circuit has directed courts to weigh various factors, including what information was reviewed, the time spent reviewing the file, and whether any legal judgment was involved in the decision to send the collection letters. Under this criteria, the appellate court agreed with the district court and found that the Mandarich attorney had meaningfully reviewed the plaintiff’s account.

LAKE FOREST, Ill. — Transworld Systems Inc. (TSI), the largest provider of analytics and technology-enabled Accounts Receivable Management (ARM) and Customer Experience/Business Process Outsourcing (CX-BPO) in the United States and Canada, announced today that it has received a Training APEX Award from Training Magazine for the third consecutive year. The Training Apex Award recognizes organizations with the most successful learning and development programs worldwide. 

The TSI Training Program was ranked as the second best training and development program globally, and is the only ARM or CX-BPO company to place among the top 10 for the third consecutive year. This achievement highlights TSI’s steadfast dedication to continuous employee learning and development, its agility and innovation in delivering its training via digital engagement, and its passionate commitment to the current and future success of its people. For over 20 years, Training Magazine has recognized organizations that provide best-in-class employee training and development. 

“TSI is proud and honored to be recognized with the APEX Training Award for the third year in a row.  As a business process outsourcing company, TSI’s  ability to develop and retain talent is a differentiator, and it supports our commitment to delivering the best customer experience possible,” said Joseph Laughlin, Chief Executive Officer.

About Transworld Systems Inc.

TSI is the largest technology-enabled provider of Accounts Receivable Management (ARM) and Customer Experience/Business Process Outsourcing (CX-BPO) solutions in the United States. The Company’s solutions include debt collections, customer relationship management, business process outsourcing, and healthcare revenue cycle management. Additionally, TSI owns UAS, a technology-enabled primary loan servicer for student loans. TSI differentiates itself with its collection analytics, digital collections technology, global scale and an industry-leading Compliance Management System. Its clients include Fortune 100 corporations, financial institutions, hospitals, government agencies, property management and small and medium-sized businesses. To learn more, please visit tsico.com.

MADISON, Wis. — On a recent Saturday morning, with the weather wind chill registering a balmy 7 degrees, 15 members of the State team jumped in a Madison, Wis., lake. The team was once again “Freezin’ for a Reason,” raising money for Special Olympics!

Through the generous donations of our team members, clients, and partners as well as a 100% match from State, our team raised nearly $15,000 to support these exceptional athletes. Team Captain Jake Richards challenged the team that he would jump wearing a tutu if we hit our fundraiser goal. We did – so he did! 

State team member, and first-time jumper, Tierra noted that she was jumping in honor of her mother whose life was focused on working with special needs children and adults until she passed a few months ago. Returning jumper Adrienne shared, “I am Polar Plunging in honor of my husband. He has cerebral palsy, so this cause is close to our hearts.”

The team included Tim Haag, State president and Mike Frost, chief compliance officer. Also jumping were Sales Account Executives Bob Lamaster and Phil Rohs. Even the next generation was included as Phil’s son insisted on joining dad the morning of the jump.

About State

State improves the financial picture for healthcare providers by delivering increased financial results while ensuring a positive patient experience. Rooted in a tradition of ethics, integrity and innovation since 1949, State uses data analytics to drive performance and speech analytics with ongoing training to ensure patient satisfaction. A family-owned company now in its third generation of leadership, State assists healthcare organizations with services spanning the complete revenue cycle including Pre-Service Financial Clearance, Early Out Self-Pay Resolution, Insurance Follow-Up and Bad Debt Collection. To learn more visit: www.statecollectionservice.com.

Whether the US economy is currently in a recession or is rapidly approaching one continues to be a debate for economists. Some speculate that we are already in a recession that will end quickly, and in a soft landing. Others think there are much rougher waters ahead. 

Labor market and consumer spending metrics continue to be strong but there were some alarming trends in credit risk in late 2022:

Increased Delinquencies Across Verticals

With the exception of student loans, where delinquencies have been mostly non-existent because of pandemic-era deferral programs, delinquency numbers are trending up. For credit cards, the uptick is 50% year over year, which seems steep. In fact, the rates are creeping up above the average pre-pandemic rates, but they are “still within the pre-pandemic trendlines,” according to 2nd Order Solutions’ 2022 Q4 Credit Risk Review.

Delinquencies on secured loans, like auto and mortgages, are rising slowly, and continue to be below pre-pandemic levels, however, consumers are contending with higher interest rates especially for auto financing. According to the Credit Risk Review, there were a record number of $1,000+ monthly payments for car loans in Q4 2022. 

It’s also concerning that, even though consumers are not dealing with student loan delinquencies, the population of consumers with student loans is experiencing a “stark increase in delinquencies” across other asset classes. With the student loan deferral program set to end in June 2023, it will be critical to monitor how those consumers pay their other debts, like credit cards and auto loans.

Prepayment Rates are Down

Both auto and personal loan prepayment rates are down significantly. For both verticals, lower income consumers and subprime borrowers are showing the largest decline, with rates below pre-pandemic levels.

This is concerning because, according to the Credit Risk Review, prepayment rates are a bellwether of consumer financial health. Not only are the rates down, but they are dropping rapidly. It’s an indicator that, while consumers can currently make their payments as agreed, that may not last long, and could lead to even more delinquencies.

Consumers are Borrowing More

The skyrocketing rise of home values in the last few years led many consumers to leverage their home equity in order to combat inflation and pay down other outstanding balances. In Q3 2022, there were 317.6K HELOC originations. Compare that to Q3 2021, where there were 210.2K HELOC originations. There was also a record rate of card origination volumes in Q4 2022, although the rates fall in line with pre-pandemic trendlines. Consumers are consistently relying more heavily on borrowing than in the last few years, and the increased rate of borrowing is indicative of financial stress for the average consumer.

You can get the full Risk Review from 2nd Order Solutions Here.

How these trends affect collections & recovery isn’t certain, but one thing is clear. If you’re not preparing now for an increase in charged-off collections, you will be caught off guard in the next 12-24 months. Check out our guide to third-party collections here.

—-

Every Thursday, Collections & Recovery sends out an exclusive email packed with analysis on the newest trends in collections strategy, the shift to digital collections, best practices for vendor management, and deep-dives into regulatory and compliance issues that matter to you. The only way to get it is to subscribe.

CHICAGO, Ill. –Commercial Collection Agencies of America recently announced that the Independent Standards Board, which creates, renews, and amends the Association’s certification program, has added a new requirement to the certification program effective January 1, 2023.  

Agencies certified by the Association were required to adopt a written information security policy as of the beginning of the year.  The Data Security Standard, put forth by the board, comprehensively enumerates eleven (11) areas of compliance and was introduced early in 2022 to allow agency members time to prepare for the adoption and implementation.  

Each agency member meets the certification requirements annually to earn and maintain a Certificate of Accreditation and Compliance.  The program, considered the platinum standard in the industry, is comprised of the most rigorous requirements across a number of planes.  Although most of the certified agencies of CCA of A already had such a policy in place, the independent board recognized the importance codifying the requirement of securing data held within an agency and formalized it in the already unparalleled program offered by CCA of A. 

“The work of the Standards Board is aimed at ensuring that the CCA of A certification program continues to be the platinum standard. The addition of the Data Security Standard requiring adherence to a written information security policy incorporating best practices further enhances the quality certification program upon which the credit community has come to rely,” commented Standards Board Chair, Christine Hayes Hickey.      

A list of certified agencies can be found at: www.commercialcollectionagenciesofamerica.com.

To contact the Commercial Collection Agencies of America, email Executive Director, Annette M. Waggoner at awaggoner@commercialcollectionagenciesofamerica.com 

The California Court of Appeal, Sixth Appellate District, recently affirmed the dismissal of a consumer’s California Rosenthal Fair Debt Collection Practices Act claim based on an alleged violation of the federal Fair Debt Collection Practices Act and the California Fair Debt Buying Practices Act in supposedly failing to properly identify the “charge-off creditor.”

In so ruling, the Sixth District held that: (1) A consumer plaintiff seeking to establish a prima facie violation of the Rosenthal Act premised on a misrepresentation in connection with the collection of a debt must show the alleged violation is material, where the alleged state law violation is premised on enumerated provisions of the FDCPA; and (2) Although the collection action complaint at issue was incorrect and did not “reasonably identify” the charge-off creditor in violation of Cal. Civ. Code 1788.58(a)(6), this error did not constitute a de facto “false representation of” the “character, … or legal status of the debt” under 15 U.S.C. § 1692e(2)(A). In other words, the purported misidentification of the charge-off creditor did not implicate the debt’s “character, amount, or legal status.” 15 U.S.C. § 1692e(2)(A).

A copy of the opinion in Aguilar v. Mandarich Law Grp. is available at:  Link to Opinion.

A consumer incurred debt on a consumer credit account with a consumer lender.  The debt was sold and assigned to a trustee, and was eventually sold to a debt buyer, which sued to collect the charged-off debt. The debt buyer dismissed that action without prejudice following the consumer’s attempt to file a cross-complaint (counterclaim) alleging violations of the Rosenthal Act, premised on incorporated provisions of the FDCPA, and an alleged violation of the California Fair Debt Buying Practices Act (CFDBPA) based on the debt buyer’s apparent misidentification of the charge-off creditor as the consumer lender rather than the trustee.

The consumer sued the debt buyer and its counsel, alleging false or misleading representations in the collection action, in violation of the Rosenthal Act. The defendants filed an anti-SLAPP (strategic lawsuit against public participation) motion under California Code of Civil Procedure section 425.16 to strike the Rosenthal Act claim from the consumer’s complaint.

California Code of Civil Procedure section 425.16, commonly known as the anti-SLAPP statute, provides that a cause of action arising from an act in furtherance of a person’s constitutional right of petition or free speech in connection with a public issue is subject to a special motion to strike, unless the plaintiff establishes a probability of prevailing on the claim. Cal. Code Civ. Proc., § 425.16, subd. (b)(1).

A court evaluates a special motion to strike in two steps. The first examines the nature of the conduct that underlies the plaintiff’s allegations to determine whether it is protected by Code of Civil Procedure section 425.16; the second assesses the merits of the plaintiff’s claim. Barry v. State Bar of California (2017) 2 Cal.5th 318, 321.

The trial court granted the defendants’ anti-SLAPP motion and struck the Rosenthal Act claim. The consumer timely appealed.

On appeal, the consumer argued that he met his prima facie burden and the trial court erred in finding otherwise. He contended that in granting the defendants’ anti-SLAPP motion, the court erred by considering the defendants’ unauthenticated hearsay evidence, improperly weighing that evidence, and making a “materiality” determination based on case law interpreting the federal FDCPA, which he maintained is not a proper consideration under the Rosenthal Act.

Section 1788.17 of the Rosenthal Act provides that “every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of [15 U.S.C. s]ections 1692b to 1692j, inclusive . . . and shall be subject to the remedies in [15 U.S.C. s]ection 1692k . . . .” § 1788.17. The Rosenthal Act, through section 1788.17, thus “incorporates by reference the [federal] FDCPA’s requirements . . . and makes available the FDCPA’s remedies for violations.” Riggs v. Prober & Raphael (9th Cir. 2012) 681 F.3d 1097, 1100.

The FDCPA regulates the conduct of debt collectors by prohibiting “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. It is a violation of the FDCPA to falsely represent “the character, amount, or legal status of any debt,” id., § 1692e(2)(A), or to “use . . . any false representation or deceptive means to collect or attempt to collect any debt.” Id., § 1692e(10). A false or misleading statement is not actionable under the FDCPA unless it is material. Afewerki v. Anaya Law Group (9th Cir. 2017) 868 F.3d 771, 773.

Here, the claimed false statement in contravention of the FDCPA (specifically, sections 1692e(2)(A) and e(10)) and comprising the alleged section 1788.17 violation was based on the collection action complaint’s alleged misidentification of the charge-off creditor, which the consumer contended violated section 1788.58(a)(6) of the CFDBPA.

The consumer contended that the trial court erred in finding that his Rosenthal Act claim lacked minimal merit under the applicable anti-SLAPP standards. He asserted that the failure of the collection action complaint to comply with the charge-off creditor disclosure requirement set forth in the CFDBPA (§ 1788.58 (a)(6)) was “patent” when comparing the collection action complaint with the verified discovery responses from the collection action which supplied the relevant debt assignment information.

The consumer argued that the verified discovery responses and collection action complaint together satisfied his burden to make a prima facie showing of facts to support a judgment in his favor because the section 1788.58 violation “necessarily also constitutes a false statement in an attempt to collect a debt” under the federal FDCPA.

As a preliminary matter, the Sixth District concluded that the consumer did not meet his initial burden to demonstrate that his prima facie showing was enough to win a favorable judgment on his Rosenthal Act claim.

The Sixth District found that the purpose of the CFDBPA, as set forth in the uncodified legislative findings and declarations, is to regulate “the adequacy of documentation required to be maintained by the [debt buying] industry in support of its collection activities and litigation,” Stats. 2013, ch. 64, § 1, subd. (a), and to ensure the “[d]ocumentation used to support the collection of a debt [is] sufficient to prove that the individual who is being asked to pay the debt is in fact the individual associated with the original contract or agreement” Id., § 1, subd. (c).

Given these statutory purposes, the Court concluded that the requirement that the collection complaint allege “[t]he name and an address of the charge-off creditor at the time of charge off … in sufficient form so as to reasonably identify the charge-off creditor,” § 1788.58(a)(6), appears intended to ensure adequate documentation to link the debt buyer’s claim to the charge-off creditor and consumer account of the debtor.

Whether the nature of the relationship between the consumer lender and the trustee was such as might satisfy the “reasonably identify” standard set out in section 1788.58(a)(6) was a factual question that the Sixth Appellate District decided it need not resolve for purposes of this appeal. This is because the Court was not persuaded that the asserted CFDBPA violation supported a Rosenthal Act violation for false or misleading statements in connection with collection of a debt, as stated in the federal FDCPA.

Whether debt collection efforts are false, deceptive, or misleading for purposes of the federal FDCPA requires an objective analysis that “‘takes into account whether the “least sophisticated debtor would likely be misled by a communication.”’” Tourgeman v. Collins Financial Services, Inc. (9th Cir. 2014) 755 F.3d 1109, 1119. This inquiry “does not ask the subjective question of whether an individual plaintiff was actually misled by a communication. Rather, it asks the objective question of whether the hypothetical least sophisticated debtor would likely have been misled.” Afewerki, supra, 868 F.3d at p. 775.

Here, assuming that the consumer established that the consumer lender was not the charge-off creditor at the time of charge off and, as a result, the collection action complaint was incorrect and did not “reasonably identify” the charge-off creditor in violation of section 1788.58(a)(6), the Sixth District determined that there was no support for his contention that this translated into a de facto “false representation of” the “character, . . . or legal status of the debt” under title 15 U.S.C. § 1692e(2)(A). This is because the purported misidentification of the charge-off creditor did not implicate the debt’s “character, amount, or legal status.” 15 U.S.C. § 1692e(2)(A).

In the Sixth District’s view, the consumer did not show how the purported misrepresentation of the charge-off creditor was a material misrepresentation under the standard applicable to alleged FDCPA violations, let alone how it would likely mislead the hypothetical least sophisticated debtor. See Tourgeman, supra, 755 F.3d at p. 1119; Afewerki, supra, 868 F.3d at p. 775. To the contrary, unlike the identity of a consumer’s original creditor, whose “false identification in a dunning letter would be likely to mislead some consumers in a material way,” Tourgeman, supra, 755 F.3d at p. 1121, a hypothetical debtor receiving the debt buyer’s collections complaint would recognize the consumer lender as the creditor that issued and serviced the credit account until nonpayment on the account, charge-off, and sale to the debt buyer bringing the collections suit. The misidentification of the trustee in this instance fell squarely within the category of “mere technical falsehoods that mislead no one.” Donohue v. Quick Collect, Inc. (9th Cir. 2010) 592 F.3d 1027, 1034.

Insofar as section 1788.17 “incorporates the FDCPA, so that a violation of the FDCPA is per se a violation of the Rosenthal Act,” Best v. Ocwen Loan Servicing, LLC (2021) 64 Cal.App.5th 568, 576, the Sixth District concluded that the inverse was also true: a misrepresentation that is immaterial and thus not actionable under the FDCPA fails to support a prima facie violation of section 1788.17.

Furthermore, the Sixth District held that, although a court tasked with an anti-SLAPP motion “does not weigh evidence or resolve conflicting factual claims,” Baral v. Schnitt (2016) 1 Cal.5th 376, 384, where, as here, the relevant representation in connection with the collection of the debt (i.e., the collection action complaint) is not subject to conflicting factual claims and the viability of the claim is evaluated according to an independent, objective standard of review, the court can properly ascertain the plaintiff’s showing at the second step of the anti-SLAPP procedure without weighing the evidence or resolving factual disputes.

Thus, having applied the settled standard for evaluating a false statement or misrepresentation as set forth in the FDCPA, the Sixth District decided that the consumer had not met his burden to demonstrate a prima facie violation of section 1788.17 of the Rosenthal Act. Accordingly, the Court concluded that the trial court did not err in granting the defendants’ anti-SLAPP motion.

ATLANTA, GA — FLOCK Specialty Finance announces a strategic investment in technology and human capital related to data-driven insights and innovation.  “Our investment in an analytical platform is foundational to our commitment to provide best-in-class support to our customers and our investors.  The FLOCK analytics platform enables operational efficiencies, improved insights, and opportunities for data-driven innovation.  To support and implement this vision, we have made two new strategic hires,” Michael Flock, Founder and CEO stated.   

• Jennifer Priestley, Ph.D., Chief Data Officer.  Jennifer will have responsibility for the data platform which supports Flock’s business processes, analytics, and market insights.  She will oversee automation of operational processes as well as data security and cybersecurity protocols.  Her background as a Professor of Statistics and Data Science at Kennesaw State University for almost 20 years and developer of the country’s first Ph.D. program in Data Science has made her uniquely qualified to help FLOCK become a leader in translating data into information to drive value.  Prior to her career in academia, Jennifer held positions with VISA EU in London, MasterCard International, and Accenture.   Jennifer holds a B.S. from Georgia Tech, an MBA from Pennsylvania State University, and a Ph.D. in Decision Sciences from Georgia State University.  

• Will Bowers, Senior Data Scientist.  Will has nearly a decade of experience in data science.  His background and proven success in data engineering, analytics and business intelligence will contribute to the successful development of data-driven solutions for underwriting, portfolio management, and internal FLOCK financial processes. He was the Senior Manager of Performance Data and Analytics with Credigy before coming to FLOCK.  He holds a Bachelor of Arts degree from the University of Georgia.

“These strategic investments in our organization allow us to continue to drive value in the marketplace, bring deeper analytical insights, and enrich our customers’ use of capital.  FLOCK intends to become the nerve center of capital, data, and expertise for the middle market of debt buyers.  Our enhanced investment in human capital and in technology is evidence of our strategy,” Michael Flock added.

Please contact Jennifer at jpriestley@flockfinance.com, for information or questions related to Flock Specialty Finance’s data platform.

The U.S. Supreme Court has granted the certiorari petition filed by the CFPB seeking review of the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB.  In that decision, the Fifth Circuit panel held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution and, as a remedy for the constitutional violation, vacated the CFPB’s payday lending rule (Rule).  The Court was unwilling, however, to expedite the case and hear it this Term as requested by the CFPB and instead will hear the case next Term.

The Court also denied the cross-petition for certiorari filed by Community Financial Services Association (CFSA) asking the Court to review the alternative grounds for vacating the Rule that the Fifth Circuit rejected.  The Court was also unwilling to add the alternative grounds to the CFPB’s petition as antecedent questions.  CFSA had asked the Court to consider the alternative grounds as antecedent questions as an alternative to granting its cross-petition.  A ruling by the Court in favor of CFSA on one of the alternative grounds might have allowed the Court to avoid reaching the constitutional issue.  

[article_ad]

The sole question presented by the CFPB’s petition is:

“Whether the court of appeals erred in holding that the statute providing funding to the Consumer Financial Protection Bureau (CFPB), 12 U.S.C. 5497, violates the Appropriations Clause, U.S. Const. Art. I, § 9, Cl. 7, and in vacating a regulation promulgated at a time when the CFPB was receiving such funding.”

Thus, by denying CFSA’s cross-petition and also rejecting CFSA’s request to consider the alternative grounds as antecedent questions to the CFPB’s petition, the Supreme Court is poised to decide the Appropriations Clause issue.

While the Court’s decision not to hear the case this Term means the Fifth Circuit decision will continue to be a cloud over all CFPB actions and could slow the pace of enforcement activity (particularly in pending cases where defendants can be expected to assert the Appropriations Clause issue as a defense), we do not expect it to impact the CFPB’s ongoing supervisory activity in any material way or deter Director Chopra from continuing to pursue his aggressive regulatory agenda. 

In collections, the biggest challenge is getting in contact with account holders and setting up a payment agreement to resolve outstanding debt, especially with consumers who have a low propensity to pay. But once the agreement is made, it’s smooth sailing. Right?

Not quite. 

The cost involved with processing payments can be significant for agencies, especially when they are not charging a fee, and if a fee was not expressly authorized in the original agreement that created the debt, it’s difficult to imagine how agencies can reduce costs in a compliant manner. 

[article_ad]

So, what can you do? Can you charge a fee to offset this expense? What about compliance? The best question you can ask yourself is, “do we have the right payment processing partner to help show us the way?”

Fortunately, with the right payment processing partner, the modern iteration of the No-Cost-to-Biller fee model allows agencies to save money on processing fees in a manner compliant with the FDCPA, CFPB, Card Brands, state law, etc.

What is a No-Cost-To-Biller fee model, and how can it help my business?

At a high-level, the No-Cost-To-Biller fee model applies the principal transaction amount to the agency, and with consumer consent, a fee may be assessed by the third-party technology platform which enables the convenience of processing the payment. With the right fintech partner, this model can be deployed in several iterations to fit a merchants payment ecosystem, while ensuring compliance with the appropriate regulations. In all cases, the payment processor collects the principal and uses the model to offset costs.

Where there is a restriction (either due to a state regulation or client restriction), no fee is applied, and the merchant is charged the processing fee directly.

Is it compliant?

Yes, with the correct fee model.

There are several key considerations to ensure compliance, but this model is nuanced and every rule cannot be conveyed in one article. Here are several key principles which need to be embedded in any merchant’s payment ecosystem: 

Consumer Consent

Consumer consent is critical. Agencies are responsible for providing consumers with disclosures that contain the necessary items for compliance. With proper disclosures, an agency can then obtain consumers consent to move forward in the process. It’s also important to ensure the agency does not receive revenue from the fee, but only uses it to offset costs. This has been a hot topic lately, but it has always been a rule for any vendor who has expertise in this field. 

Adherence to Regulations

When reviewing individual states’ statutes, one must recognize where a consumer resides at the time of payment, and adhere to individual state statutes. This can get tricky, as you need to keep in mind fee rules set by the Card Brands do not supersede state law. In fact, all of the salient compliance pillars, i.e. the FDCPA, CFPB, Card Brands, State Law, etc. need to be adhered to in every transaction.  All of these items (and more) need to be integrated into your authoritative database so rules are followed programmatically.

There is a lot of nuance involved with employing a No-Cost-To-Biller fee model. The best way for debt collectors to ensure compliance while offsetting costs is to find a payment processor who has done their legal due diligence, is able to provide guidance on the subject and is a true expert in this area. 

To learn more about how to stay compliant with the law, watch our one-hour webinar: Breaking Down the CFPB’s Opinion on Convenience Fees, featuring experts Rick Perr (Co-Managing Partner, Philadelphia, Kaufman Dolowich & Voluck LLP) and Rob Kennedy (Vice President of Sales, North America, Nuvei).