ARLINGTON, Va. — Convoke, a leader in SaaS solutions for the debt collection market, today announced the most recent software update to its debt collections compliance and management hub. Each year, Convoke develops and releases several updates to its platform to support its clients’ evolving needs.  With this release, Convoke is pleased to introduce the Debt Settlement Directory, as well as other enhancements which include the addition of Data Group elements related to COVID-19.

Debt Settlement Directory

With the introduction of the Debt Settlement Directory, Convoke is now able to provide broader support for credit issuer efforts to quickly reach settlement agreements with consumers, satisfying both credit issuer and consumer needs.  The Debt Settlement Directory allows debt settlement companies to load their entire population of accounts, thereby making them immediately available for review and action by participating issuers.  Three new Data Groups have been added to further support this process, along with nine new reports.

“Convoke is pleased with the efficiencies that we have created for our participating customers through the Debt Settlement Directory introduced in this release,” said David Pauken, CEO of Convoke.  “This new directory will further simplify credit issuer efforts to reach a quick settlement with the consumer in cases where the consumer is working with a debt settlement agency.  The Convoke team has continued to improve the platform for our customers during the COVID-19 pandemic in anticipation of the resumption of full recovery operations in the coming months.”

Other Enhancements

In addition to the Debt Settlement Directory, Convoke has introduced a variety of other changes to meet credit issuer needs in an ever-changing environment.  Many of Convoke’s previously existing Data Groups now support an indication of consumer hardship related to COVID-19 in response to the recent pandemic.  Other new features and functionality provide additional efficiencies and reporting capabilities for mortgage accounts, consumer complaints, and other components of the collections and compliance process. 

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About Convoke

Convoke is a leader in SaaS solutions for the debt collection market.  It enables credit issuers to manage third party debt collections, providing unsurpassed visibility into collection actions.  Convoke’s online platform is a central, validated and persistent hub that records, organizes and stores information and activities, facilitates, tracks and automates interaction with third parties, and provides powerful auditing, management and reporting tools.  Convoke is headquartered in Arlington, VA.  For more information on Convoke, please visit www.convokesystems.com.

This afternoon, Judge Richard G. Stearns granted ACA International’s request for a temporary restraining order (TRO) against Massachusetts Attorney General Maura Healey’s (AG) emergency rules that prohibits debt collectors from making outbound telephone calls and bringing legal enforcement actions against consumers. The order can be read here.

Judge Stearns heard oral arguments on the matter on Friday, May 1. A summary of the oral arguments can be found here. While the decision was a little bit delayed—it was expected to be issued yesterday—it’s easy to see why. The judge’s order is 29 pages long. 

Quick Refresher on Temporary Restraining Orders

The decision on a temporary restraining order is not a full and final decision on the merits—temporary restraining orders seek to preserve the status quo and prevent irreparable harm while the court considers the full merits of the case. The case, unless dismissed, would still go on until the judge makes a final decision. 

If the court grants the temporary restraining order in this case, then it would put a pause on the AG’s emergency rule banning outbound collection calls. The temporary restraining order only determines whether or not the court needs to order a party to take or stop taking a certain action to preserve the status quo until it can reach a full decision on the merits. 

In this case, the certain action the TRO would prohibit is the AG’s ban on outbound collection calls and ban on legal enforcement of debt during the pandemic.

ACA Has Shown a Likelihood of Success on the Merits for the First Amendment Claim

First, the judge clarified that at issue here were First Amendment rights for commercial speech, which has a lower scrutiny test than other forms of speech. Regardless, ACA has met its burden and the TRO was granted.

Government Interests in Blocking the Speech

The AG proposed several allegedly substantial government interest: shielding consumers from aggressive debt collectors during the pandemic, protecting residential tranquility while citizens are largely at home, and vouching for citizens’ financial wellbeing during a pandemic. The judge found that all but one met the bar required for the interest to be “substantial.”

The court states regarding the first interest (shielding consumers from debt collectors):

[T]he Attorney General offers no empirical support for the proposition that consumers are more susceptible to undue influence exerted by debt collectors during a pandemic than would ordinarily be the case.

Of the third interest :

The third of the asserted state interests, vouchsafing the financial wellbeing of Massachusetts residents, seems to have little to do with the prohibition of only one form of communication facilitating collection of payment on a debt, that is, a telephone call.

The court did find that the second interest—promoting domestic tranquility—was sufficient to pass muster in the constitutional test. 

The Restriction Does Not Materially Advance the Domestic Tranquility Interest

Once a sufficient government interest is stated, the AG must be able to show that the restriction materially advances it. In this case, the court found that the AG’s restriction did not do so. The court states:

The best that can be said for the Regulation is that it decreases incrementally the number of times that a phone might ring in a debtor’s home with a wanted or unwanted call from one species of debt collector – although in this day and age of cell phones and caller ID the option of simply not answering the phone or placing it in silent mode is a viable alternative for consumers. I say incrementally because the prior supplanted regulation had already imposed a limit of two calls per week by debt collectors. 

And further:

If what the Attorney General meant to accomplish by way of the Regulation was a strict liability ban on all deceptive and misleading debt collection calls, the Regulation is redundant as that is already the law, both state and federally.

. . .

While I laud the Attorney General’s desire to protect citizens of Massachusetts during a time of financial and emotional stress created by the Covid-19 pandemic, I do not believe that the Regulation adds anything to their protections that the existing comprehensive scheme of law and regulation already affords to debtors, other than an unconstitutional ban on one form of communication.

Since the restriction fails to materially advance the interest of domestic tranquility, the restriction very well might be unconstitutional. For this reason, ACA has shown its likelihood of success on the merits. 

Irreparable Harm

The other requirement for a TRO is that the moving party must show that they will suffer irreparable harm if one is not entered. The judge was satisfied with the written testimony of select ACA members that shows they will likely end up in bankruptcy if the AG’s restrictions are allowed to be in place during the pendency of this lawsuit.

Make sure your customers don’t wind up with credit report problems during the pandemic and you remain compliant with credit bureau reporting protections. Use these top 7 operational tips and best practices from Bridgeforce for credit reporting and disputes handling under the CARES Act and recent CDIA guidance.

1. Define “use cases” for each accommodation plan about exactly how you are furnishing account data and create a step-by-step logic document that addresses each affected field in the Metro 2® file.
2. Proactively communicate with borrowers and advise clearly on how credit bureau reporting will be impacted, including the time lag between the start of the accommodation and when the borrower’s credit bureau file will be updated.  Communicating this clearly up front could ultimately decrease disputes, especially now that consumers are able to check their credit reports weekly through April 2021.
3. Establish strong controls and testing to validate the accuracy of your furnishing data both pre-transmission and post-transmission.  Automated testing of your Metro 2® files with a tool such as the Data Quality Scanner® Solution will enable comprehensive and rapid review of both production and test Metro 2® files.  
4. Validate how your data was interpreted and posted to consumer credit reporting files accessing tools from the National CRAs to examine your posted trade lines.
5. Determine how accounts should be reported after the accommodation period by repeating Step 1 and be prepared to continue Steps 3 and 4 to validate accuracy of updated furnishing.
6. Consider how to receive direct disputes via digital channels and provide status updates within the same channels to drive down call volume and help consumers feel more informed and in control.
7. In anticipation of increased dispute volumes from consumers frequently checking their credit reports, implement analytics that can help you aggregate the duplicates to work as a case and drive up efficiency.

Michelle and Amy Perkins will discuss these steps in detail, and provide some real-world examples, in their webinar on May 27th at 3pm ET to help you manage credit reporting and disputes handling in compliance with the CARES Act. Register Here.

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To register for upcoming Leading Strategically webinars, and to watch on-demand replays of some you may have missed, make sure you visit our Leading Strategically page to get the latest in strategic and innovative thinking.

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

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The U.S. Court of Appeals for the Fifth Circuit recently reversed a trial court’s order sanctioning a consumer’s counsel for failure to promptly settle a lawsuit, but affirmed the trial court’s order denying a motion to recuse because the trial court was not biased against the consumer.

A copy of the decision is available at:  Link to Opinion.

History of the Case

In January 2016, a consumer disputed a debt by sending a facsimile to a debt collector. Despite this alleged fax transmission, the debt collector continued to report the debt to a consumer reporting agency without noting that the consumer disputed the debt. 

In June 2016, the consumer sued the debt collector for allegedly violating the federal Fair Debt Collection Practices Act (FDCPA) and the Texas Debt Collection Act. The consumer alleged that the debt collector violated these statutes by communicating “credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.” 15 U.S.C. § 1692e(8); §§ 392.202(a), 392.301(a)(3).

In a September 2016 order, the trial court required the parties to exchange settlement offers by Oct. 19, 2016. In compliance with this order, the debt collector offered to settle for $1,101, plus reasonable attorneys’ fees and costs. The consumer’s lawyer never responded to the debt collector’s offer and did not issue a written settlement demand. Subsequently, at his deposition, the consumer testified that the offer would “make him whole and conclude the case.”

The parties filed cross-motions for summary judgment.  The trial court granted the debt collector’s motion under the Texas Debt Collection Act because the borrower had no competent evidence to establish the required actual damage element of this claim, but denied the parties’ cross-motions on the FDCPA claim finding that a triable issue of material fact existed over whether the consumer’s January 2016 fax “actually disputed the debt.”

After this, the parties settled the case. The debt collector agreed to pay the consumer $1,000 and to forgive the debt.  The parties agreed to allow the trial court to resolve the dispute over attorneys’ fees and costs.

Fight for Attorney Fees and the Sanctions Order

The consumer moved for attorneys’ fees and costs totaling. $14,731.80.  The debt collector moved to sanction the consumer’s lawyers (the “Attorney-Appellants”) under 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3), and sought attorneys’ fees and costs totaling $13,950.38. 

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Before ruling, the trial court wrote to the disciplinary committee for the U.S. District Court for the Western District of Texas accusing the Attorney-Appellants of participating in “a scheme to force settlements from debt collectors by abusing the FDCPA.” In support of this alleged ethical violation, the trial court provided a list of FDCPA cases in which the consumer’s attorneys had participated.

In April 2018, the trial court ruled on the cross motions for fees and costs. The trial court denied the consumer’s motion for attorneys’ fees and costs. Moreover, the trial court sanctioned the Attorney-Appellants under 15 U.S.C. § 1692k(a)(3) and Federal Rule of Civil Procedure 11(c), and ordered them to pay the debt collector’s attorneys’ fees and costs.

In so ruling the trial court found that the Attorney-Appellants “acted in bad faith when they: (1) failed to comply with the September 2016 settlement-offer order; (2) continued to litigate the case even after receiving an offer that would make [the consumer] whole; and (3) drafted the January 2016 debt letter in a manner that would cause the debt collector not to realize that the debt was disputed, so that counsel could engage in a “scheme” to “force settlements from debt collectors by abusing the FDCPA.”

After the sanctions order, the consumer filed a motion to recuse the trial court judge under 28 U.S.C. §§ 144 and 455, which was assigned to a different judge. In May 2018, the new judge issued an order denying the motion to recuse because there was no evidence that the trial court judge possessed any extrajudicial knowledge and the “rulings did not show sufficient antagonism for a reasonable person to harbor doubts about the judge’s impartiality.”

This appeal by the consumer and his lawyers followed.

Appeal to Fifth Circuit

The Fifth Circuit began by noting that a trial court may not award attorneys’ fees under Rule 11 sua sponte.  Ordinarily, this alone ordinarily would warrant reversal.  However, the consumer and his attorneys waived this argument requiring the Fifth Circuit to examine the merits of the trial court’s sanctions orders.

As you may recall, Rule 11 requires that “[e]very pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney’s name.” FED. R. CIV. P. 11(a). The Rule 11(a) required signature “certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,” the filing is not sanctionable under Rule 11(b). Thus, Rule 11’s plan text makes it clear that it only applies “where a person files a paper.”  Rule 11 does not apply to “abusive tactics in litigation in respects other than the signing of papers.” This is why a trial court deciding a Rule 11 motion evaluates an attorney’s conduct when they file “a pleading, motion, or other paper.”

The trial court provided three justifications for sanctioning the Attorney-Appellants under Rule 11: (1) they did not “make or respond to a settlement offer,” contrary to the scheduling order; (2) they continued litigating after the consumer testified at his deposition that the debt collector’s offer would have made him whole, and (3) the January 2016 letter disputing the debt “was part of a fraudulent scheme to abuse the FDCPA.” 

The Fifth Circuit found all three reasons meritless because none of them were “tied to a filing,” as required.

Initially, the failure to discuss settlement concerns an attorney’s litigation tactics, not “a filing subject to Rule 11.” The Fifth Circuit emphasized that it and its sister circuits “have held that courts do not have the power to compel parties to make settlement offers, and that the failure to make an offer is not sanctionable.” See Dawson v. United States, 68 F.3d 886, 897 (5th Cir. 1995) (collecting cases from other circuits).

The Fifth Circuit observed that contrary to its holding in Dawson, it has become a common practice in the “Western District of Texas for judges to require parties to exchange settlement offers.” The Fifth Circuit addressed this by reiterating that “if a party is forced to make a settlement offer because of the threat of sanctions, and the offer is accepted, a settlement has been achieved through coercion.”

The Fifth Circuit made it clear that it will not tolerate this result, holding that the trial court erred when it sanctioned the Attorney-Appellants because the consumer did not engage in settlement discussions.  The trial court “lacked the power” to order the consumer “to make a settlement offer.” 

The Fifth Circuit next reviewed the trial court’s justification for sanctioning the Attorney-Appellants for continuing to litigate after receiving a settlement offer. The Fifth Circuit concluded that “the decision to reject a settlement offer is not a court filing subject to Rule 11(b). Thus, this rationale did not support sanctioning the Attorney-Appellants.

The Fifth Circuit also examined the trial court’s final reason for sanctioning the Attorney-Appellants under Rule 11 that the debt dispute letter was intentionally vague and sent in bad faith to create FDCPA liability. The letter itself was “not a filing or other paper subject to Rule 11,” but the consumer attached it to his complaint bringing it within the scope of conduct that Rule 11 was intended to govern. 

Nevertheless, the Fifth Circuit found that there is no evidence that the consumer acted in “bad faith” when he filed his complaint.  As such, it was reversible error for the trial court to “ignore the language of the letter and instead infer subjective bad faith based on its view of the attorneys’ intent.”

Additionally, Rule 11 does not include the phrase “bad faith” and the trial court did not specify which part of Rule 11 the Attorney-Appellants supposedly violated.  The trial court might have considered that the letter did not did not “have evidentiary support” under Rule 11(b)(3), but it found that a material fact dispute “exist[ed] on whether Plaintiff actually disputed the Debt” so the “lack of evidentiary foundation cannot be the problem here.” Moreover, a “claim that survives summary judgment” is not frivolous. See FED. R. CIV. P. 11(b)(2).  Thus, the Fifth Circuit reversed the sanction award against the Attorney-Appellants.

The Fifth Circuit next examined the trial court’s fee award to the debt collector under 15 U.S.C. § 1692k(a)(3), which allows a court to “award to the defendant attorney’s fees” “[o]n a finding . . . that an action under this section was brought in bad faith and for the purpose of harassment.” As the Fifth Circuit already rejected the trial court’s bad faith finding, it also reversed this award.

The Fifth Circuit also reversed this fee award because the trial court improperly ordered the Attorney-Appellants to pay it when section “(a)(3) does not stretch that far.”  Courts must strictly construe statutes awarding attorneys’ fees given the long-standing American Rule “against awarding costs and fees to the prevailing party.” Specifically, the Fifth Circuit held, courts must read statutes that depart from the American Rule “with a presumption favoring the retention of long established and familiar legal principles.”  With these principles in mind, “when a statute awards fees to one party, but does not identify from whom they may be collected,” the Fifth Circuit declined to allow “recovery from the other party’s counsel.”

Section 1692k(a)(3) permits a court to “award to the defendant attorney’s fees,” but it “is silent as to whether a plaintiff’s attorney may be ordered to pay them.” This section does not explicitly authorize the court to sanction lawyers and require them to pay a fee award in derogation of the common law prohibition against this practice. 

Although the Fifth Circuit reversed the sanction award against the Attorney-Appellants, it was not ready to order the debt collector to pay the consumer’s fees and costs.  Such an order would require the consumer to prove that his action to enforce FDCPA liability was successful. 15 U.S.C. § 1692k(a)(3).  The Fifth Circuit has not yet “decided whether a private settlement renders the action “successful” under § 1692k(a)(3)” and the trial court did not consider this issue.  Thus, the Fifth Circuit remanded this issue to the trial court to decide whether the consumer may recover attorneys’ fees under the FDCPA.

Finally, the Fifth Circuit analyzed the consumer’s claim that the trial court erroneously denied his recusal motion under 28 U.S.C. §§ 144 and 455. Recusal is required under these sections when the court “has a personal bias” against a party, 28 U.S.C. §§ 144, 455(b)(1), if the court’s “impartiality might reasonably be questioned,” id. § 455(a), or if the court has “personal knowledge of disputed evidentiary facts concerning the proceeding,” id. § 455(b)(1). The key here is that the bias must be against a “party,” not their counsel. Bias against a non-party attorney alone does not require disqualification.

Another ground for disqualification would be if the court’s views are “extrajudicial.” A court’s views are not extrajudicial when the court formed its opinion “on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings.” Here the trial court’s supposed bias was not derived from extrajudicial knowledge because the court presided over this case and three of the other cases referenced in the sanctions order.

Further, the other cases cited in the sanctions order came from a record created by the ECF system for the Western District of Texas which listed other cases involving the Attorney-Appellants. Given that the Attorney-Appellants asked the trial court in their fee petition to look at these cases to justify their experience and claimed billing rate they “have only themselves to blame,” and if they do not like what the trial court found it does not give them grounds to claim bias.

Finally, when a court applies section 455(a), a court must determine “whether a reasonable and objective person, knowing all of the facts, would harbor doubts concerning the judge’s impartiality.”  Here the trial court did not have any extrajudicial knowledge about the consumer or his counsel so the consumer had the burden to demonstrate that the trial court “displayed a deep-seated favoritism or antagonism that would make fair judgment impossible.”

The Fifth Circuit found that trial court’s anger was directed at the Attorney-Appellants based on their conduct, not at the consumer. This ire did not rise to the level of “a continuing and personal nature,” sufficient to require recusal.

The Fifth Circuit also found that there was no evidence that the trial court harbored “a deep-seated antagonism” against the consumer “that would make fair judgment impossible.” Rather, the trial court was concerned that the Attorney-Appellants did not properly inform the consumer about the settlement offer.  Thus, the Fifth Circuit affirmed the trial court’s denial of the motion to recuse.

Therefore, the Fifth Circuit reversed the trial court order sanctioning the Attorney-Appellants and remanded for further proceedings consistent with its opinion.

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Looking for brief summaries of all industry-related court decisions? The iA Case Law Tracker does that in less time than it takes to pour your morning cup of coffee.

Like many states before it, Minnesota decided to follow the trend of prohibiting the garnishment of stimulus checks sent to its residents under the CARES Act. Minnesota’s governor issued an executive order on May 4 which, like Connecticut, classifies stimulus checks as need-based government assistance, which essentially makes such funds exempt from all claims by creditors. The only exceptions are for domestic support such as child support and spousal maintenance.

Going even further, the executive order seems to put a halt on all new garnishments:

Beginning immediately, the provisions in Minnesota Statutes 2019, Chapters 571, which permit service of a garnishment summons on a consumer debtor or consumer garnishee, are suspended. . .

Beginning immediately, the provisions in Minnesota Statutes 2019, Chapters 571, which permit service of a garnishment summons on a consumer debtor or consumer garnishee, are suspended.

Beginning immediately, the provisions of Minnesota Statutes 2019, section 550.011, which permits a judgment creditor to obtain information about a consumer debtor’s assets, liabilities, and personal earnings, are suspended.

The order allows for civil penalties of up to $25,000 for violations.

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Editor’s Note: For all pandemic-related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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On Friday, the court held oral arguments in the ACA International lawsuit against Massachusetts Attorney General Maura Healey (AG) challenging the AG’s ban on outbound telephone calls during the COVID-19 emergency and for 90 days thereafter. The hearing on Friday was in regard to a temporary restraining order requested by ACA. If granted, the temporary restraining order would put the AG’s outbound call ban on hold until the court can decide the issue on the merits. The court is expected to make a decision on the temporary restraining order tomorrow (Tuesday). 

In sum, the court was most interested in hearing about the First Amendment issue regarding whether the AG’s actions were an unconstitutional ban on commercial speech. There was some discussion on whether the AG exceeded her authority to issue such a rule, but that discussion was dwarfed by the constitutional question. 

ACA focused its argument on how the AG’s emergency rule went too far by banning all outbound collection calls. The content-based speech ban—since it targets only collection calls and no other category—deprives debt collectors of their commercial speech rights without the necessary elements needed to make the ban. ACA’s argument also pointed out that the purpose of the emergency rule—to ensure consumers aren’t harassed or coerced by debt collectors—is already in place with existing laws against such conduct that don’t flat out prohibit debt collection calls. ACA’s counsel referenced all of the functions of calls placed by debt collectors, other than collection of money, that the ban prohibits, such as setting up forbearances, payment plans, or notating hardships. There was also a discussion about how consumers already have a very easy way to stop collection calls from happening—they just have to tell the collector to stop calling. 

The AG’s counsel focused its argument on how this restriction is only temporary and therefore companies should be able to ride it out. (The judge mentioned in the opening part of the hearing that the briefs on the issues included written testimony from debt collectors that discussed the impact this restriction will have.) The AG also argued that right now, consumers are facing a loss of employment and financial distress—they should not also be subject to phone calls from collectors that coerce them to make payments. The AG referenced that it only blocks one avenue of communication—outbound telephone calls—and debt collectors can still use text messages and email. (Editor’s Note: This comment didn’t sit particularly well with me, considering even the CFPB noticed—under both Kraninger’s and Cordray’s leadership—that currently there are no clear rules of the road for debt collectors regarding electronic communications.)

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insideARM Perspective

A quick Civil Procedure 101 lesson for all the non-legal folks out there who might be wondering what the heck it all means. In deciding whether to grant a restraining order, the judge looks at several factors including the moving party’s likelihood of success on the merits and balancing hardships of both parties. In other words, what kind of hardship would each party suffer if he grants the order to the other party? 

The decision on the temporary restraining order is not a full and final decision on the merits—temporary restraining orders seek to preserve the status quo and prevent irreparable harm while the court considers the full merits of the case. The case, unless dismissed, would still go on until the judge makes a final decision. 

If the court grants the temporary restraining order in this case, then it would put a pause on the AG’s emergency rule banning outbound collection calls. However, just because the court grants the temporary restraining order, it doesn’t necessarily mean that a permanent restraining order will be the end result of the case. Likewise, if the court denies the request a temporary restraining order, it does not necessarily mean that it will also decline to enact permanent restraining order. The temporary restraining order only determines whether or not the court needs to order a party to take or stop taking a certain action to preserve the status quo until it can reach a full decision on the merits. 

Overall, the judge didn’t show his cards regarding which side he was leaning toward. He did reference in his opening that even a temporary prohibited restriction on the First Amendment is wrong. Other than that he had an even disposition throughout the arguments and didn’t ask too many questions, which makes it difficult to read. He asked for supplementary briefs to be filed today, and he is expected to make a decision on the temporary restraining order tomorrow, so at least we don’t have to wait long. 

GRAND RAPIDS, Mich. – The organizers of Collector.Live! were honored last week to present a $20,661 donation to the charitable organization Direct Relief as a result of funds raised from the debt collection industry following Collector.Live! 2020: Home Edition, which took place April 21.

The event, hosted by Harry Strausser, brought together 21 of the collection industry’s top speakers, trainers and thinkers, plus a special fireside chat with the CFPB’s John McNamara, to discuss the many ways the world of collection activity has changed in the age of the COVID-19 virus.

Contributions were solicited for sponsorships and directly from the hundreds of viewers who tuned in for the 7+ hour livestream on April 21^st. One hundred percent of raised contributions were forwarded on to the charity.

“We are overwhelmed at the response from across the credit and collection industry,” said Jack Gordon, the CEO of WebRecon and one of the organizers of Collector.Live! Home Edition. “It is a testament to the tremendous generosity and altruism of the professionals who call this industry home.”

Direct Relief works in the U.S. and internationally to equip doctors and nurses with life-saving medical resources to care for the world’s most vulnerable people. This contribution was specifically earmarked to help provide PPE and other essential resources to frontline caregivers in coronavirus hotspots.

The speakers included Ken Peck from RGS, Irene Hoheusle from ARSI, Nicole Strickler from Messer Strickler, John Bedard from Bedard Law Group, Dennis Barton from the Barton Law Group, Leadership Communication Coach Sylvia Larrass, Greg Ruffino from Williams & Fudge, Kelli Krueger from ACA International, Michael Klutho from Bassford Remele, Elizabeth Conklin from State Collection Service, Ron Brown from ConSec Investigations, Manuel Newburger from Barron & Newburger, Kelly Knepper-Stephens and Tim Collins from TrueAccord, LaDonna Bohling from Receivable Solutions, Roger Weiss from CACi, Garret Angelo from JJ Marshall, David Kaminski from Carlson Messer, Leslie Bender from BCA Financial Services, Gordon Beck from Valor Intelligent Processing, Mary Shores from Midstate Collection Solutions, and John McNamara from the Consumer Financial Protection Bureau.

Sponsors included Payment Savvy, Applied Innovation, VoApps, Inc., ACA International, the Association of Credit and Collection Professionals, Receivables Management Association International, Arbeit, Bedard Law Group, PDCflow, InterProse, TCN, Guru DNA Technology Consulting, Debt$Net-The Computer Manager, Inc., WebRecon LLC, FDCPA Certifications LLC, AccountsRecovery.net, Tag Process Service, Inc., insideARM, and PaymentVision.

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[Editor’s note: insideARM was proud to participate in this event as a sponsor, together with many associations and other representatives of the ARM industry who came together to contribute!] 

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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I invented this argument years ago—I promise, I did—but it was made popular by the second circuit in Reyes v. Lincoln Financial Services: a consent provision contained in a written consumer contract cannot be unilaterally revoked anymore than any other term in a binding contract. So although TCPA consent can be revoked in most contexts, it cannot be revoked where it is provided by contract.

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The Eleventh Circuit has twice recognized that consent can be revoked in the absence of a contract but on Friday it clarified—as predicted—that contractual consent cannot be unilaterally revoked, following Reyes. The case is: Medley v. Dish Network, LLC, No. 18-13841 (11th Cir. May 1, 2020).

The holding: “common law contract principles do not allow unilateral revocation of consent when given as consideration in a bargained-for agreement.”

Boom.

This follows huge rulings out of the Eleventh Circuit narrowing TCPA claims by refusing to adopt a broad reading of ATDS and on Article III Standing. The TCPA cash cow is now officially hamburger in the Sunshine State folks.

More analysis to come.

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Trying to keep up with the status of TCPA consent? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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In an effort to increase protections for residents of the City of Los Angeles—in addition to the city mayor’s already-enacted moratorium on evictions and rent freezes—the Lost Angeles City Council is urging the mayor to put a halt on debt collection altogether during the pandemic. The proposal, introduced by Councilwoman Monica Rodriguez, issued the motion, which states:

[T]he Mayor be requested to amend his “Safer at Home” emergency order to specifically declare collection agencies and credit agencies as “non-essential” businesses during the emergency, and further to impose a moratorium during this time on all debt collection efforts.

The motion has a date stamp of April 7, 2020. The mayor has not yet decided on this proposal. An important note is that if the mayor acts on this measure, it would impact only the city of Los Angeles, not the wider county.

insideARM Perspective

A Los Angeles Times article on this proposal mentions the conundrum faced with the governor’s actions to ban garnishments and seizures on CARES Act stimulus checks—it’s difficult for banks to determine what funds in a consumer’s account are from stimulus checks, and which are not. 

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If banks can’t tell the difference, argue consumer advocates quoted in the article, then there should be a ban on collections altogether. The article also quotes members of the industry who portray the important role that debt collectors play in a time like this. The article quotes the California Association of Collectors, who agreed to a temporary ban on new bank account levies and to stop collection activity if a consumer mentions their finances were impacted by the pandemic.

The LA Times article is a good read, please take a few minutes to give it a glance.

One claim that we’ve seen a lot of in the Eastern District of New York by a specific “frequent filer” plaintiffs’ counsel firm is that the format of a validation letter overshadows the consumer’s validation rights. These claims usually state that the validation notice is in the same font size and color as the rest of the body of the letter and is in running text, and therefore not emphasized. Luckily for the industry, these claims are falling flat in the courts.

The most recent decision to reject this claim was by Judge Ross in Hochhauser v. Grossman & Karaszewski, No. 19-cv-2468 (E.D.N.Y. Apr. 28, 2020). In this case, the collection law firm sent a letter to the consumer on the firm’s letterhead. The body of the letter gave a quick introduction in the first paragraph, and then the second paragraph contained nothing but the validation notice required by the FDCPA.

The decision itself addressed this issue beautifully, so we’ll just quote it for you:

With respect to the issue of whether the validation notice is overshadowed, the letter in this case is virtually identical to the letters I considered in two recent cases. I reject this claim again, for the same reasons that I did in those two cases.

Specifically, there is no affirmative misdirection in the collection letter here. The validation notice appears in the second paragraph of the body of the letter. Further down the front page, the letter states “IMPORTANT INFORMATION CONTINUED ON THE REVERSE SIDE[.]” A series of other legally mandated notices appear on the reverse side of the letter. None of the disclosures on the reverse side in any way contradict the enumerated validation rights.

This letter actually emphasizes that the information on the front of the letter is important, and that the important information is continued on the reverse side of the letter. A consumer might neglect to look at the reverse side of a letter. A reminder to look at the reverse side does not suggest that the consumer should ignore the front page of the letter.

(Internal citations omitted.)

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The court likewise rejected the argument that the letter being on law firm letterhead somehow overshadows the validation notice as it would allegedly discourage the consumer from exercising her validation rights. The court made note that it previously rejected this claim as well, and will do the same again. The court stated that the letter in this case does not even make reference to a lawsuit, whereas the case where it previously rejected the same claim did. The court found that the use of a law firm’s letterhead does not overshadow.

insideARM Perspective

Here’s the kicker, guys. You know how the judge basically said he rejected these exact claims already in prior cases? Each of those prior cases had the same plaintiffs’ counsel of record. This is great information to know if you get sued in E.D.N.Y. by these attorneys, especially if you drew Judge Ross in the case. If they don’t withdraw/dismiss these claims, then it might be a great time to consider filing a Rule 11 sanctions motion. This is the kind of recon you can do in just a few minutes with the iA Case Law Tracker. The CLT can pay for itself for a full year if it helps you get just one or two cases dismissed or settlements negotiated down with this type of info. 

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Want to do some recon on your claims to give you negotiating power when dealing with “frequent filer” plaintiffs’ firms? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.