The U.S. Chamber of Commerce, joined by six other trade groups, filed a lawsuit yesterday in a Texas federal district court against the CFPB challenging the CFPB’s recent update to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of its examination manual to include discrimination.  The other plaintiffs are American Bankers Association, Consumer Bankers Association, Independent Bankers Association of Texas, Longview Chamber of Commerce, Texas Association of Business, and Texas Bankers Association. 

In July 2022, the Chamber, together with American Bankers Association, Consumer Bankers Association, and Independent Community Bankers of America, sent a letter to Director Chopra calling on the CFPB to rescind the update.  The letter was accompanied by a white paper setting forth the legal basis for their position. 

The plaintiffs claim that the manual update should be set aside because it violates the Administrative Procedure Act (APA)  for the following reasons:

• The update exceeds the CFPB’s statutory authority in the Dodd-Frank Act.  The CFPB cannot regulate discrimination under its UDAAP authority because Congress did not give the CFPB authority to enforce anti-discrimination principles except in specific circumstances.  The CFPB’s statutory authorities consistently treat “unfairness” and “discrimination” as distinct concepts.  (To demonstrate the compliance burdens resulting from the update, the plaintiffs allege that the CFPB has provided no guidance for regulated entities on what might constitute unfair discrimination or actionable disparate impacts for purposes of UDAAP. As examples of issues creating confusion, the plaintiffs allege that the CFPB has not identified what are protected classes or characteristics or what activities are not discrimination (such as those identified in the ECOA), and has not explained how regulated entities should conduct the sorts of assessments that the CFPB appears to be contemplating given existing prohibitions  on the collection of customer demographic information.)

• The update is “arbitrary and capricious” because the CFPB’s interpretation of “unfairness” contradicts the historical use and understanding of the term. The plaintiffs allege that the FTC’s unfairness authority does not extend to discrimination and that Congress borrowed the FTC Act’s unfairness definition for purposes of defining the CFPB’s UDAAP authority.  They also allege that the CFPB’s contemplated use of disparate impact liability when pursuing UDAAP claims flouts congressional intent and U.S. Supreme Court authority.

• The update violates the APA’s notice-and-comment requirement because it is a legislative rule that imposes new substantive obligations on regulated entities.

In addition to claiming that the manual update should be set aside due to the alleged APA violations, the plaintiffs allege that the update should be set aside because the CFPB’s funding structure violates the Appropriations Clause of the U.S. Constitution.  (Pursuant to Dodd-Frank, the CFPB receives its funding through requests made by the CFPB Director to the Federal Reserve, subject to a cap equal to 12% of the Federal Reserve’s budget, rather than through the Congressional appropriations process.)  As support for their unconstitutionality claim, the plaintiffs cite the concurring opinion of Judge Edith Jones in the Fifth Circuit’s en banc May 2022 decision in All American Check Cashing in which Judge Jones concluded that the CFPB’s funding mechanism is unconstitutional.  

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Although the en banc Fifth Circuit did not reach the funding argument, a Fifth Circuit panel is expected to consider that issue in the CFSA lawsuit which challenges the payment provisions in the CFPB’s 2017 final payday/auto title/high-rate installment loan rule.  The trade groups have appealed from the district court’s final judgment granting the CFPB’s summary judgment motion and staying the compliance date for the payment provisions.  On May 9, 2022, a Fifth Circuit panel heard oral argument in the CFSA lawsuit. 

The trade groups’ primary argument on appeal continues to be that the 2017 Rule was void ab initio because the CFPA’s unconstitutional removal restriction means that the Bureau did not have the authority to promulgate the 2017 Rule.  However, the trade groups submitted the concurring opinion in All American Check Cashing as supplemental authority to the Fifth Circuit panel hearing their appeal and have argued that the panel should adopt the reasoning of the concurring opinion and invalidate the 2017 Rule.

The unconstitutionality of the CFPB’s funding structure has also been raised by Populus Financial Group, Inc. in the lawsuit filed by the CFPB in July 2022 against Populus in a Texas federal district court.  Populus has filed a motion to dismiss in which it argues that the CFPB’s enforcement action is invalid because the CFPB’s funding structure violates the separation-of-powers principle embodied in the Appropriations Clause of the U.S. Constitution.

LENEXA, Kan.–  One True Holding Company d/b/a/ TrueML, a financial technology software company developing machine learning-driven products that enable intelligent, digital communication including in the debt collection space, today announced it has acquired the debt collection business of Enhanced Recovery Company, LLC (ERC), a leading collections provider. The deal will bring ERC under the TrueML family of companies to accelerate TrueML’s mission of creating a better experience for distressed consumers.

Since its founding in 2013, TrueML’s software has been used to communicate with more than 20 million consumers experiencing collections using a digital-first approach. Acquiring ERC enables TrueML to increase its size, scale and access to industry verticals more rapidly, while accelerating its mission and reaching tens of millions more consumers by augmenting ERC’s services with digital capabilities.

“This acquisition provides exciting opportunities for TrueML to grow significantly while also paving the way for enhanced service offerings down the road,” said Ohad Samet, co-founder and CEO of TrueML. “We envision a world in which no one is locked out of the financial system, and we are growing at a time when best practices for engaging consumers in debt collection are transforming. We are committed to building software that uses machine learning and consumer-centric design to align with consumer communication preferences while delivering results for our clients. The addition of ERC will enable us to expand the scope of our products and services.”

Samet was inspired to start the company after a negative experience he had with an overdue bill, after which he and his brother Nadav set out to create better experiences and more productive outcomes for consumers looking for a path to financial health. To learn more about TrueML, its subsidiaries and their products, visit www.TrueML.co, and follow the company on LinkedIn and Twitter.

About TrueML

TrueML is a software company developing machine learning-driven products that prioritize customer experience and revolutionize the experience of consumers seeking financial health. The mission-driven team of data scientists, financial services industry experts and customer experience fanatics are building technology to serve people in a way that recognizes their unique needs and preferences as human beings and endeavoring toward ensuring nobody gets locked out of the financial system. 

DALLAS, TX — Recently at the Millennium SACCO  2022 Business Breakfast Meeting in Kampala Uganda, Joe Adams, Chief Executive Officer and President of the Hampton Pryor Group, Inc. (HPG) announced the  global expansion of the company by establishing offices in Nairobi, Kenya and Kampala, Uganda. The meeting was attended by H.E. Jessica Alupo, Vice President of Uganda.

“By establishing Hampton Pryor Group International Ltd. and opening offices in these East African Countries (EAC), we are able to offer our current and prospective partners in the United States the opportunities to take advantage of the extremely cost efficient collections, recovery and BPO services across the  continent. Through us, American mortgage servicers, purchasers and collections agencies that currently or are thinking about subcontracting collections or BPO to agencies on the African continent, will be able to determine and ensure compliance with service level and regulatory obligations.”

With 54 countries and a population of over 1 billion people including a flourishing middle class, diversification of industries, and adoption of transformational technologies there is no denying the growth opportunities that abound on the African continent. Companies who want to be a part of and benefit from this massive transformation must act now.  Joe Adams adds, “We are being extremely strategic and measured in our expansion. We will only choose additional office locations on the continent that offer  an  all-around benefit to our clients.”

In addition to adding 3 African financial institutions to their client roster, HPG has  established a strategic partnership with Afronlynx IT Solutions, a top South African IT and software development company that currently has an international client base.

About the Hampton Pryor Group

Founded in 2003, Hampton Pryor Group is a worldwide advisory leader in accounts receivable management operations and compliance. The company offers a wide range of products and services designed to assist mortgage servicers, credit grantors, debt purchasers and collections agencies.

About  Afrolynx IT Solutions

Afrolynx IT Solutions is an independent software development company that was founded in Johannesburg, South Africa in 2009. Our multi-disciplinary team of software engineers, analysts and designers have developed solutions for clients the Financial, Mining and Agriculture industries as well as Government and Non-Profit sectors. We have served businesses operating in Uganda, Zambia, Namibia, Botswana, and South Africa. Services include Bespoke software development, systems integration, database design and implementation, Web and mobile applications, and IT advisory.

In Bacalzo v. Credit Control, LLC, No. 20-16904 (KMW/MJS) (D.N.J. June 7, 2022), the court granted summary judgment in favor of a debt collector who included multiple contact addresses in a debt collection letter.

Defendant Credit Control LLC (Credit Control) sought to collect a credit card debt owed by plaintiff Linda Bacalzo. As part of its efforts, Credit Control sent the plaintiff a letter requesting payment. This letter listed Credit Control’s post office box and a street address, as well as its website, as its contact information.

The plaintiff filed suit under the Fair Debt Collection Practices Act (FDCPA), asserting that because the collection letter contained multiple addresses, the least sophisticated debtor would be confused or misled as to which address to send his/her debt dispute.

The court rejected the plaintiff’s argument that the letter violated FDCPA Section 1692e, finding that “the letter does not use any false representation or deceptive means to collect the debt or obtain information nor is it misleading.” Further, the court noted that the detachable portion of the letter only contains Credit Control’s P. O. Box address, which was highlighted. Accordingly, it held that “it seems reasonable that any consumer, including the least sophisticated debtor, would send correspondence to that address, even absent an express directive to do so.”

In addition to asserting that it was misleading, the plaintiff claimed the letter violated debt validation provisions of FDCPA Section 1692(g). Under this provision, a debt collector must: (1) provide a debt validation notice; and (2) cease all collection efforts if the consumer provides written notice that he/she disputes the debt or requests the original creditor’s name until the debt collector mails either the debt verification or creditor’s name to the consumer. The court rejected the plaintiff’s argument, finding the letter’s inclusion of multiple addresses and its failure to expressly indicate where correspondence should be sent does not overshadow or detract from Credit Control’s validation notice.

POTOMAC, Md. — Women in Consumer Finance (WCF) is thrilled to announce that Livevox is The Inspiration is in Our Stories sponsor for our 5th annual in-person professional development experience to be held December 5-7, 2022, in Palm Springs, California.

WCF provides inspiration, a guiding hand, and a support system women can leverage to recharge their careers and deliver value to their employers. The event is not about compliance, best practices, or even finance. It’s about women, our common professional challenges, and how to create and tell our own career story – no matter where we are on our professional journey. We take a unique approach to building confidence, connection, and careers. There is nothing else like it. 

At the center of that unique approach are two mainstage sessions that we call Our Stories. Each year, these stories are among the most cherished elements of the event. 

“We work really hard to bring a diverse group of women to the stage to share their stories so everyone can find inspiration through a common experience of some kind,” explained Stephanie Eidelman, Women in Consumer Finance CEO and Co-Chair. “Not only have the stories deeply impacted our attendees, but the experience has changed the lives of our storytellers too, because many of them have never been asked to step out of their comfort zone and – literally – take the stage in this way.”

This year’s Storytellers include:

• Tonia Brown, Senior Compliance Advisor at ARM Compliance Business Solutions
• Poorani Jeyasakar, Director at Klaros Group
• Lissette Jorgensen, Chief Operating Officer – The Sustainable Finance Group at Goldman Sachs
• Vanessa Maren. Senior Director, Business Development at Visa
• Tiffany Winfield, Principal Risk Specialist at Capital One

We’d like to thank our The Inspiration is in our Stories sponsor, Livevox, for recognizing what’s truly unique about Women in Consumer Finance and supporting the event as one of our largest sponsors.

“LiveVox is thrilled to support WCF’s important work empowering women in our industry to share their stories,” said Linda Esperance, SVP, People Operations, LiveVox. “WCF has created an important platform with the Women in Consumer Finance conference and is well aligned with our belief that tomorrow’s technology requires a global, diverse workforce, freedom to explore, and support to succeed.”

About Women in Consumer Finance

Women in Consumer Finance is an event and community for women at all levels in the context of a common industry. If you work in any role at a lender, creditor, servicer, law firm, technology or service provider, or regulator, this event is for you. We provide inspiration, a guiding hand, and a support system women can leverage to recharge their careers and deliver value to their employers. WCF is not about compliance, best practices, or even finance. It’s about women, our common professional challenges, and how to tell our own career story – no matter where we are on our professional journey. We take a unique approach to building confidence, connection, and careers. There is nothing else like it. WCF 2022 takes place in person in Palm Springs, California, on December 5-7. www.womeninconsumerfinance.com

About Livevox

LiveVox (Nasdaq: LVOX) is a next-generation contact center platform that powers more than 14 billion omnichannel interactions a year. By seamlessly unifying blended omnichannel communications, CRM, AI, and WEM capabilities, the Company’s technology delivers exceptional agent and customer experiences, while helping to mitigate compliance risk. With 20 years of cloud experience and expertise, LiveVox’s CCaaS 2.0 platform is at the forefront of cloud contact center innovation. The Company has more than 650 global employees and is headquartered in San Francisco, with offices in Atlanta, Columbus, Denver, St. Louis; Medellin, Colombia; and Bangalore, India. To stay up to date with everything LiveVox visit livevox.com.

Trying to keep up with regulations in debt collection can feel overwhelming especially with new cases and federal guidance coming out regularly interpreting the law and states actively amending or creating new laws that impact debt collectors, original creditors, and current creditors.

Here are four common compliance myths and misconceptions for collections debunked (no detective work needed)!

Myth #1: Under Regulation F consumers are not protected from harassment

False! The Fair Debt Collection Practices Act (FDCPA) absolutely prohibits harassment of consumers see 15 USC 1692d. No matter how a debt collector reaches out to a consumer, by phone call, email, SMS, voicemail, even social media—a debt collector cannot harass a consumer through one channel or through a combination of channels. Regulation F made clear that harassment is the totality of the circumstances, “the cumulative effect of all [communications – calls, emails, text messages] may constitute a violation of the harassment provision.”

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Email and cell phone providers offer additional built in protections for their customers to help with rogue actors who fail to abide by the harassment provisions in the FDCPA. These service providers have their own rules and will prevent or block companies who try to harass consumers. In fact, collectors or marketers who use emails to harass will experience a less than 5% chance of their email reaching the consumer’s inbox (“inboxing rate”) essentially barring them from using email to reach consumers. Consumers have the power to not only unsubscribe (as required in Regulation F from these digital channels) but also have the power to mark inbound messages as spam which will impact the inboxing rate essentially barring abusers from the ability to deliver messages at all.

As a result, digital channels offer consumers significantly better protection from unwanted or harassing communications. Digital communications allow consumers to quickly register their preferences by clicking on an unsubscribe link or replying stop to opt out. Digital communications also offer search and archiving options, automatically creating a paper trail of communications between the consumer and the collector. There is no unsubscribe or reply stop option for calls or letters.

Myth #2: Debt collection requirements are only governed by federal laws

False! Individual states and even cities or municipalities have been implementing their own more restrictive laws governing debt collection. For example, New York law requires a debt collector to obtain consent to email a consumer about their debt, a requirement that does not exist in the federal FDCPA or Regulation F. Washington, DC just revamped their debt collection rules with new restrictions on calls, emails, texts and social media including communication caps for each of these methods that take effect on January 1, 2023 when the temporary ban on collections (implemented during the pandemic) end.

In addition to state and local debt collection rules, other regulations can apply as well, even if they aren’t specific to the industry. Some of the most anticipated regulations rolling out state-by-state focus on information security and data privacy, which greatly affect debt collection information security practices despite not being named outright.

Even if debt collection regulations are followed meticulously, businesses can still fail to meet compliance requirements if they don’t perform due diligence on other laws applicable to their operations.

Myth #3: Business must send the initial communication by letter

False! The FDCPA spells out that a debt collector must provide the validation notice in the initial communication or in writing within 5 days of that initial communication see 15 USC 1692g(a). This means that when the full validation notice is provided over the phone in the initial conversation or in the initial communication by email (as confirmed in Regulation F), a debt collector satisfied their obligation. The requirement to send the disclosure in writing is only triggered if the disclosure is not provided in the initial communication.

Fortunately, the CFPB provided a model disclosure notice in Regulation F that can be adopted to send by email and permits the use of hyperlinks. The ability to use hyperlinks in the model debt validation notice allows for consumers to communicate their preferences immediately and more effectively than when using the disclosure by US mail. For example, a consumer can use the dispute flow links in the email to explain why they are disputing the debt while looking at the additional details about the account that are visible in an online portal whereas the check boxes on the model validation letter do not allow for this flow of information and must be mailed back to the debt collector for processing. This is another example of the advantages of digital communications over letters and calls.

Myth #4: Meeting compliance obligations is more difficult for digital debt collection practices

False! As long as you have a solid team of legal compliance advisors and a mature compliance management system, digital communications actually make it easier to comply. Digital is faster (making it easier for consumers to respond or opt-out by just replying to an email or text. Digital provides a written history of communications between the consumer and the collector that can be archived automatically through existing features in email cell phone services. Digital communications are easily controlled by consumer and more tightly managed by providers, with built in mechanisms to discourage and blacklist harassers.

Plus, there are a growing number of federal court cases highlighting best-practices in digital compliance:

• The Northern District of California confirmed that the FDCPA permits providing the validation disclosures in the body of the initial communication by email
• The District of New Mexico held that whether a webpage is confusing to the least sophisticated consumer is evaluated by the totality of all linked pages in the flow
• The Eastern District of Illinois held that a reply to an email notifying the debt collector of attorney representation only applied to the specific account. Read the full case summary and key takeaways in a new write-up by TrueAccord Associate General Counsel Steve Zahn»»

The Future of Collections & Compliance

Compliance can get complex quickly, especially for debt collectors and any lender trying to recover delinquent funds—and that complexity will only continue to grow over time as technology and consumer preferences evolve. How can your business keep up today and tomorrow?

While the debt collection industry spent 2022 focused on Regulation F and the Hunstein cases, consumer attorneys remained diligent in filing a record number of other FDCPA lawsuits against debt collectors again in 2022.  Further, the most effective strategies for defeating these FDCPA cases shifted recently, with motions to dismiss again being considered “the first arrow from the quiver” used by debt collectors to prevail in some of these matters.  

In the latest episode of the Debt Collection Drill video series, Moss & Barnett attorneys Aylix Jensen and Mike Poncin discuss specific techniques and strategies that debt collectors are using to defeat recent FDCPA cases, including the use of motions to dismiss and arbitration clauses.

BLOOMINGTON, Minn. – Absolute Resolutions Corp. (“ARC”), headquartered in Bloomington, MN, announced today that Dennis Guetterman has joined the company as Sr. Vice President of Acquisitions.   

“As a well-known industry veteran with an outstanding reputation in business development and relationship management, we are thrilled to welcome Dennis to the ARC team.” said Laura Jensen, ARC’s Chief Marketing Officer. 

Dennis comes to ARC with over 20 years of experience in the Financial Services Industry having held previous positions at Provana, First Data, Array Services, RNN Group, Inc., and Experian. In his time in the industry, he has held leadership positions in many areas of business operations such as sales, business development, and marketing.  

“ARC is a great company with an amazing team,” said Guetterman, “I couldn’t be more excited for this new chapter in my career.”

In his new role with ARC, Dennis will be working on the acquisitions team to expand ARC’s network with financial services clients in diverse market segments. He will be primarily focused on new relationship development and will be traveling and representing ARC at trade shows and industry events throughout the year.

About Absolute Resolutions Corp.

Absolute Resolutions Corp. is a certified professional receivables company with offices in Bloomington, MN and San Diego, CA. www.absoluteresolutions.com

LOS ANGELES, Calif — Creditors Adjustment Bureau (CAB) recently prevailed in a landmark California appellate court decision. The ruling in Creditors Adjustment Bureau, Inc. v. Ray Imani, 2022 Cal. App. LEXIS 689, establishes case law that provides specific guidelines and assurances for purposes of structuring settlement agreements. The decision stands up against the 2008 California appellate decision in Greentree Financial Group Inc. v. Execute Sports, Inc., (2008) 163 Cal.App.4th 495.

“This published decision is definitive and will provide clarity and relief to creditors entering into these sorts of settlement agreements”, says CAB chief counsel Kenneth J. Freed, Esq.

The debtor, Ray Imani owed $251,200.13 after defaulting on a lease. Under a settlement agreement reached through Creditors Adjustment Bureau, Imani agreed to pay a much lesser sum in 24 monthly installments. If he defaulted, however, he would owe the full amount sought in the complaint including fees, interest, and costs. Imani immediately defaulted on the settlement agreement and judgment was accordingly entered. He sought to set aside the judgment arguing that it constituted a penalty and was void under Greentree and its progeny. In it’s August 9th, 2022, ruling, the Court of Appeals rejected this argument and was persuaded by CAB’s position that the specific language used in its settlement documentation made it distinguishable from Greentree and that court’s finding of an unenforceable penalty.

“It’s all about the way we framed our stipulations for entry of judgment after that terrible Greentree decision,” says Freed.

Justice Kenneth Yegan began his ruling by saying: “Over twenty-five years ago, we stated the unremarkable: ‘The purpose of the law of contracts is to protect the reasonable expectations of the parties…. There is…a price to be paid for breach of contract.” That quote was from his Nov. 20, 1995, opinion in Ben-Zvi v. Edmar Co., (1995) 40 Cal.App.4th 468, 475. He continued, “here, we protect the reasonable expectations of the parties. And there is still a price to be paid for breach of contract.”

Creditors and their counsel can now breathe a lot easier knowing that a properly drafted settlement agreement will be deemed valid and enforceable even if it has a substantial “kicker” in the event of a default.

The CAB v. Imani Order can be found here. 

Contact:

Creditors Adjustment Bureau 4340 Fulton Ave.,

Third Floor Sherman Oaks, CA 91423 

Toll Free: 800-800-4523

Telephone: 818-990-4800