Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

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Yesterday ARM industry trade associations Receivables Management Association International, ACA International, and the New York State Collectors Association, along with the National Creditors Bar Association and the New York State Bar Association submitted a joint letter to the New York City Department of Consumer and Worker Protection (formerly the Department of Consumer Affairs) requesting a 60-day extension to the effective date of its new language preference rules. 

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This is not the first request by industry. Earlier this month, in response to a similar request, the agency agreed to suspend enforcement of the rules for 60 days but did not extend the June 27 effective date.

The rules require collection agencies to record the “language preference” of consumers and the number of consumers engaged by the collection agency in a language other than English. Debt collectors are also required to request and record a consumer’s “language preference” and make other disclosures in the course of collection activities.

Prior to the effective date, the rules received no written comments and no testimony was given during an April public hearing. In their previous letter, the same associations noted the comment period occurred during the height of the COVID-19 crisis in New York and little notice was provided. The agency did not notify its licensees of the proposed rules, although it had sent communications to them concerning other matters during the same period.

“As is evident from our conversation on June 17, 2020, as well as from the included requests for clarification, there is still substantial clarification needed on the Preferred Language Rule to make it workable for our industry and to avoid unintended consequences that are detrimental to consumers,” yesterday’s industry letter notes. 

There are many problems with the rules beginning with the lack of any definitions for their most critical terms. But the most glaring failure of the rules is the ambiguity concerning what is a “language preference.” Public entities that are required by law to develop Language Access Programs use guidance such as that issued by the U.S. Department of Justice (DOJ) (67 FR 41455) which asks the agency, among other things, to consider the number or proportion of limited English proficiency (LEP) persons being serviced.

According to the U.S. Department of Health and Human Services, LEP persons are those for whom English is not their primary language and “have difficulty communicating effectively in English.” But what the rules focus on is a person’s preference, even if they can effectively (or even fluently) converse in English. In fact, English could be the person’s primary language, but under these rules that fact is not considered.

ON-DEMAND WEBINAR NOW AVAILABLE

I will discuss the new rules with Marina Banje, Senior Compliance Counsel of Cavalry Portfolio Services, LLC, and my partner Eric Rosenkoetter during a webinar now available on demand. With just a few days to go before the rules become effective, we will explore implementation of the disclosure and reporting requirements and share our thoughts on how the agency might be viewing the many ambiguous requirements the new rules impose. Click here to register.

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

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The United States Court of Appeals for the Ninth Circuit has declined a chance to revisit its 2018 decision in Marks v. Crunch San Diego, LLC that an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (TCPA) includes a device that “stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.”

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The opportunity came in an appeal by Portfolio Recovery Associates, LLC in challenging a District Court ruling, applying Marks, that the company had employed an ATDS in debt collection efforts. Back in February of this year, Portfolio sought an initial hearing of its appeal before the entire court sitting en banc. Portfolio asked the Ninth Circuit to resolve “an unambiguous and growing” conflict among Federal appellate decisions, with Portfolio reportedly describing the Ninth Circuit as an “ever-more-isolated outlier” on the ATDS issue. Of course, since February the Ninth Circuit’s Marks reading of the TCPA was joined by the Second Circuit in Duran v. La Boom Disco (https://tcpaworld.com/2020/04/07/la-boom-goes-the-dynamite-second-circuit-holds-tcpas-atds-definition-includes-devices-that-can-call-from-lists-and-not-just-random-fire-dialers/).

The Court’s denial of an en banc hearing came in a terse two-sentence order, indicating that no judge had supported such an en banc proceeding. Perhaps the lack of interest was encouraged by the fact that Marks was no longer an “outlier,” but now had Duran’s company. With the Ninth and Second Circuits facing off against the Seventh and Eleventh Circuits where does the ATDS path lead next?

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Want to track TCPA trends?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

Recent media reports have warned about increasing federal student loan defaults and called upon Washington to extend the current suspension of payments. In a piece for CNBC, Annie Nova quotes Mark Kantrowitz, a higher education expert, as saying “The payment pause and interest waiver should be extended because the disruption is ongoing and the recovery will be sluggish.”

While experts claim that more delinquencies and defaults are coming the irony is that Congress has already taken action to prevent this without throwing in the towel on the entire $1.4 Trillion in outstanding loans. Decades of bipartisan efforts have produced programs for Federal student loan borrowers that are ideally suited to meet the current circumstances. What is needed now is additional education to explain how to take advantage of these programs.  

A bit of history

In 1994, Congress and then-President Bill Clinton introduced the first income-driven repayment plan called Income-Contingent Repayment (ICR).  The ICR plan allowed borrowers to repay their federal student loans with a monthly payment amount which took into consideration both the borrower’s income level and their family size. If the loans were not paid in full within a specified period (20 or 25 years), the remaining balance was forgiven. Thus, a zero dollar payment could actually enable the borrower to remain in “good standing.”

Congress continued to improve and expand the program under both President George W. Bush and President Barack Obama .

In 2007 the process was updated and made more borrower-friendly by capping the payment amount to 15 percent of discretionary income and provided for loan forgiveness after 25 years.

In 2010 the program was further improved and was called Pay As You Earn (PAYE). This program limited monthly payment amounts to 10 percent of discretionary income and provided for forgiveness after only 20 years.  In 2015 the plan went through further improvements  and called Revised Pay As You Earn (REPAYE).

This all reflects  a long term, bipartisan effort to provide student loan borrowers with the tools and resources to address the very times we are experiencing today. Income-driven repayment is already available to provide relief to the millions who have been so deeply impacted by the Covid-19 pandemic.

These unique plans can allow for reduced payment amounts, many in the amount of $0.00 per month, for up to a year.  Congress even had the foresight to ensure that if you have a $0.00 repayment plan, that those payments would continue to count toward Public Service Loan Forgiveness. Congress and past Presidents have provided student loan borrowers with the options necessary to avoid the painful consequences of delinquency and default.

Back to today

The CARES Act signed by President Trump on March 25, 2020 did a few important things related to defaulted loans:

• It set the interest rate on all outstanding loans at 0% for March 13-September 30, 2020.
• It automatically put all loans (defaulted and not defaulted) into forbearance for March 13-September 30, 2020.
• It eliminated all administrative wage garnishments on defaulted loans for March 13-September 30 (if garnishment did occur, FSA says the money will be returned).
• It provided that, if a borrower was enrolled in a rehabilitation plan prior to March 13, 2020, the payments that would have been due between March 13-September 30 but are automatically in forbearance, will count towards the nine payments required to rehabilitate. For instance: 
• If a borrower enrolled in February and made payments on February 10 and March 10, the $0 payments for April – September will count towards rehabilitation.
• If a borrower enrolls in June, the paperwork would be gathered but the borrower would make $0 payments for June-September. So she would owe only five payments after that vs. a total of nine payments to rehabilitate the loan and get out of default.

• It provided that, if a borrower was enrolled in an Income-Driven Repayment Plan (IDR), $0 payments during the forbearance period would apply towards the requirement for forgiveness.

The CARES Act also prohibited Private Collection Agencies from sending collection letters or making outbound collection calls to defaulted federal student loan borrowers, which means PCAs may not reach out to borrowers to inform them of these programs and opportunities.  The only way a borrower could learn about them is if they happen to read the FAQs on the Federal Student Aid website.

insideARM is told that FSA has made one exception. PCAs may send ONE letter and make ONE phone call to the subset of borrowers who had expressed interest in one of these programs and had made at least one payment since January but had not yet completed their documentation. Without completed documentation, the $0 payments during forbearance will not count. One estimate suggests that there are approximately 150,000 borrowers in this category.

One letter and one phone call rarely prove to be enough to make contact with a borrower. Complicating the matter is that if the collector reaches a voicemail recording rather than a person but the recording doesn’t specifically state the borrower’s name, because of privacy requirements, many PCAs will not leave a message.

This seems to deprive thousands of borrowers of taking advantage of an incredible opportunity to either rehabilitate their loan or get credit towards forgiveness for $0. The Government got this one right ahead of time. Now is the time to put those plans to good use. Let collectors contact borrowers. I’m not talking about garnishment. I’m not talking about demanding payment. I’m talking about education and assistance with paperwork that could offer great relief to struggling consumers.

This issue only becomes more exaggerated if the provisions of the CARES Act are extended.

OMAHA, Neb. — EarlyOut Services (EOS) and General Service Bureau (GSB), two companies that specialize in   managing healthcare receivables, have launched a new brand identity, logo system and website, which better reflects their Mission and provides them a stronger voice in today’s evolving healthcare revenue cycle industry.  

“We are excited about our new brand and strategic vision, which reinforces our mission and core values – Enhancing the Financial Well Being of Others® through being honest, treating others with dignity and respect, and striving for continuous improvement. With a client-driven strategy that focuses on patient satisfaction, we believe our new brand provides us a stronger position in a competitive marketplace,” said Therese Yakel, CEO of Operations and Co-Owner.  

The brand identity includes a new logo system that works jointly and independently for each entity. The logos reinforce the two companies’ emphasis on healthcare with a subtle medical   cross, created by diagonal shapes that give the logos movement and imply evolution and innovation. The new tagline, “Healthcare Receivables Specialists,” immediately identifies the companies’ sole purpose and dedication to the healthcare industry.  

“The new website, www.eosgsb.com, provides a complete overview of the two companies’ joint offerings, as well as what each company can provide independently. Our career pages were also enhanced. We want the best and brightest to know that our companies provide a fun and dynamic work environment with a real purpose,” said Yakel.  

About

Built on a foundation of honesty, integrity and empathy, EOS + GSB have been industry leaders in Extended Business Office / Early Out Services and Bad Debt Recovery for healthcare organizations nationwide since 1990 and 1947, respectively.

DULUTH, Ga. — Crown Asset Management, LLC announced today that it has hired Shawn P. Bradley as Director of Finance. Mr. Bradley was previously a Senior Director of Business Development for Ovation Partners, an Austin, TX based private credit fund. Prior to Ovation, Mr. Bradley spent nine years at CIBC Bank USA, as a Managing Director in the Specialty Finance Group, where he helped grow the loan portfolio to over $1 billion. He has extensive experience in distressed debt lending and capital markets. He holds both a BBA and MBA from Saint Xavier University where he also played intercollegiate football.

Crown Asset Management is a leading accounts receivable management company headquartered in Duluth, Georgia. Brian K. Williams, Chief Executive Officer, stated: “We have known and worked with Shawn for almost five years and have been continually impressed with his skill and ability, as well as his broad knowledge of distressed consumer receivables. He is talented, a team player, and will be a valuable addition to the Crown team.” Mr. Williams founded Crown in 2004. Mr. Bradley stated: “Having known Brian and the Crown team for a number of years, I am

xcited about the opportunity of joining such a dynamic, high growth company with a talented management team that maintains the highest levels of integrity. I see a multitude of opportunities for well capitalized companies in the ARM industry, and I look forward to helping Crown leverage these opportunities through its next phase of successful growth.”  Mr. Bradley will officially join Crown in July and will be based at the company headquarters just outside Atlanta, GA.

About Crown Asset Management

Crown Asset Management, LLC has purchased over 500 portfolios since 2004 including credit card portfolios, automobile debt, consumer loans, judgments and specialty portfolios. For further information, see www.crownasset.com.

This video is part of the iA Think Differently series. Written by or recorded with members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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Today I’m talking with Brian McManamon, president and CEO of TECH LOCK and vice president of RevSpring. TECH LOCK is a data security company that helps clients be more secure by employing and implementing a turnkey, end-to-end managed security and compliance solution. One of the things they’ve been focused on is using machine learning to isolate those few security events that really matter and need to be addressed immediately. This has been no simple task in the past, given the mountain of operating data produced by most agencies.

[Editor’s note: If you are interested in topics like strategy, testing and scenario planning, you should not miss insideARM’s next conference, iA Strategy & Tech – a completely virtual event – July 21-23. It’s a masterclass in collections strategy.] 

Transcript

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2020 members include:

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The Consumer Financial Protection Bureau published a notice in the Federal Register announcing that it is launching a pilot Advisory Opinion (AO) Program. With this program, the CFPB would provide advisory opinions in areas of regulatory uncertainty. The CFPB created the pilot in response to feedback it received through its Request for Information  Regarding Bureau Guidance and Implementation Support—part of the series of RFIs released by the CFPB in early 2018 when Mick Mulvaney temporarily took over the directorship of the agency.

The goal of the pilot program is:

[T]o provide guidance with interpretive content that is: Focused on regulatory uncertainty identified by requestors; reliable for the requestor and all similarly situated parties as the Bureau’s authoritative interpretation of the law; and publicly released for the awareness of all affected persons. 

Requests can be submitted via email to advisoryopinion@cfpb.gov with some information to help the CFPB. Most notably, pilot program requests cannot be annonymous—requests submitted must idenitfy the requestor, and the CFPB is not allowing requests from trade associations or law firms on behalf of unnamed entities.

Advisory opinions that are birthed from this process “will be applicable to the requestor and to similarly situationed parties to the extent that their situations conform to the Bureau’s summary of material facts in the AO.”

To determine whether an AO is appropriate, the CFPB will weigh certain factors, such as:

• The issue in question has been noted during prior CFPB examinations as one that could benefit from regulatory clarity;
• The issue is of substantive importance or impact, or whose clarification would provide significant benefit; 
• The issue relates to ambiguity that has not already been addressed by the CFPB through an interpretive rule or other authoritative sources. 

Issues that factor against the appropriateness of an AO include:

• That the issue is subject to an ongoing investigation or enforcement action;
• That the issue is subject to ongoing rulemaking;
• The issue is better-suited for the notice-and-comment process;
• The issue could be addressed through a compliance aid; 
• there is clear precedent already available to the public on the issue.

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insideARM Perspective

At first blush, this seems like a positive step for the industry, which has been mired in decades of outdated, unclear rules of the road—and the ensuing endless litigation from such deficiencies. However, since debt collection is already the subject of an extensive, ongoing rulemaking process—both with the NPRM (Notice of Proposed Rulemaking), which is due out later this year, and the SNPRM (Supplemental Notice of Proposed Rulemaking) for time-barred debt—it sounds like debt collection questions will be on-hold for the pilot program. Or, at least, questions that are already addressed in the proposed rules. With that said, we don’t yet know what the final rules will look like, so the pilot program might come in handy once we have those rules in hand.

The Washington State Collection Agency Board held an emergency rulemaking meeting last week where it decided to do away with branch office licensing requirements for collection agency employees working from home during the COVID-19 pandemic. As an emergency rule, it will remain active for 120 days, and can be extended for another 120 days “if the board is actively engaging in rulemaking.”

According to the agenda for the meeting (which includes the text of the rule as amended):

The purpose of the rule change is to offer licensees and their staff the ability to take precautions deemed necessary to avoid the risk of exposure to communicable illnesses and support the return of commerce in all business sectors. This rule change will provide remote working options to employees of Collection Agencies.

The proposed emergency rule comes with several requirements for the remote workforce of a collection agency. The rules include:

1. Keeping records of which employees are working remotely.
2. Remote employees must comply with all applicable laws and regulations.
3. Written IT security policies must be in place. They must outline “security protocols in place safeguarding the company and consumer data.”
4. Physical records may not be stored at remote work location.
5. Requirement of IT security policies that allow access to the company’s systems for the remote employees through a VPN or some other system that includes frequent password changes, multi-factor authentication, data encryings, and/or lockout implementation.
6. All calls made and received by remote employees must be recorded and monitored. Recordings must be maintained and made available for inspection upon request.
7. Neither the remote employee nor the company can conduct activity that implies the remote employee’s location is a licensed branch. E.g., advertising or having business cards that list the unlicensed address.

Audio of the meeting (27 minutes long) is available here. The discussion begins at around the 6-minute mark. One member of the board presented opposition to the emergency rule. He mentioned that the board has not had a chance to consider the long-term consequences of the rule, such as:

• There is no location restriction for where the employee can be location, which raises concerns of hiring call center employees from outside the United States.
• The proposed rule doesn’t go far enough in regards to protecting consumer privacy. Specifically, it contemplates that collectors would be using their home computers to access collection agency systems.
• The rule should think through ideas for monitoring remote employees before enacting the emergency rules.
• The Washington State Collection Agnecies Act was passed by the legislature, and he is not sure if the board has the authority to amend it.

Another member presented a different view. He mentioned that remote work like this is permitted in many other jurisdictions, and Washington State is behind the curve. He also mentioned that debt collectors are one of the primary sources of information for consumers about their accounts, so consumers would be losing an important resource if collection agencies cannot function during the COVID-19 pandemic.

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insideARM Perspective

What to do with branch licensing requirements for residences of remote employees has been a hot topic lately in states that have such requirements. The pandemic—and the ensuing stay-at-home orders that dropped one after the other in March and April—forced many agencies to move their agents to remote work. Some of the concerns raised are already put in place, at least at the larger agencies. For example, most large agencies purchased and sent their agents home with company equiment to prevent them from working on personal equipment. 

One big concern raised for the industry about branch office licensing of remote workers’ reisdences is safety. Unless there is certainty that the agents’ addresses will remain confidential (including safe from public access requests), it could put them at risk of harm. I think many lawmakers and regulators would be astounded at the types of threats that collectors receive from consumers. 

Washington now joins other states, like Connecticut, in waiving—at least temporarily—branch office licensing requirements. Other states, like Illinois, continue to require at least the addresses of their agents to be sent in.

Connecticut has yet again extended its no-action policy regarding debt collectors working from home. Back in March, the Banking Commissioner first issued its policy, which relaxed the branch office licensing requirement for debt collectors who are working remotely due to the COVID-19 pandemic. The policy was extended twice already, this is the third extension. The no-action policy is now in place through August 31, 2020.

On a related note, read this about Washington’s emergency rule.

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This video is part of the iA Think Differently series. Written by or recorded with members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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Today I’m talking with Ed Bills, Chief Operating Officer of PDC Flow, an API-driven technology platform that facilitates electronic payments, signatures, and document delivery.  Their focus is to push transactions to be completed by the consumer versus an agent taking information over the phone and typing it into the system. The idea is to create the most convenient experience possible for consumers and to remove as much risk as possible of errors or privacy violations from clients. This issue has been brought front and center by the need to have agents working from home for the last several months, and the desire to have agents at home in the future.

[Editor’s note: If you are interested in topics like strategy, testing and scenario planning, you should not miss insideARM’s next conference, iA Strategy & Tech – a completely virtual event – July 21-23. It’s a masterclass in collections strategy.] 

Transcript

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2020 members include:

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