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

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On April 27, Senators Elizabeth Warren (D-MA) and Brian Schatz (D-HI) sent letters to the three major credit bureaus requesting information about how they are complying with the new CARES Act requirements to ensure that consumers negatively impacted by the COVID-19 pandemic are not going to be burdened by permanent negative markings on their credit reports. Here are the three letters: Experian, TransUnion, Equifax.

The letters call out the shortcomings of the CARES Act. For example, borrowers may not know who to turn to receive the mortgage relief provided by the CARES Act. Another example includes how the CARES Act provides protections to certain student loan borrowers, but not others. 

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The letter then goes on to discuss the shortcomings of disaster codes. The senators take issue with consumers having to proactively contact their creditors to inform them that they are in a disaster and that a prior CFPB study showed that it was difficult for consumers to get the disaster designation. The disaster code also provides only temporary relief, according to the letter, as once the disaster code is removed, then the negative information will continue being considered in the credit score calculations for consumers.

Based on this information, the senators ask the credit bureaus about their efforts to ensure that consumers are protected in a way that complies with the CARES Act. Questions posed by the senators include what actions the bureaus are taking to make sure that the negative effects of the pandemic don’t leave permanent negative marks on consumers’ credit reports. The letter also specifically asks whether the bureaus will allow consumers to add a COVID-19 related disaster code if their creditors refuse to do so.

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

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Yesterday, Rhode Island’s Attorney General (AG) issued guidance to financial institutions in order to ensure that CARES Act stimulus checks are protected from seizure by creditors and debt collectors. Specifically, the guidance exempts stimulus checks from attachment and execution, but the AG “does not express an opinion on any other exemptions or the status of the CARES Act payments in other contexts.”

The guidance explains:

A broad construction of Rhode Island’s exemption statute advances its purpose, which is to ensure that individuals and families have sufficient income and property to provide for essential needs, such as food and housing. . . This goal dovetails with the purpose of the CARES Act: to provide means-tested assistance to individuals and families impacted by the COVID-19 pandemic.

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The AG’s guidance ends with a stern warning: if any creditor seeks to attach a stimulus check, then the AG may bring a civil action against the creditor in addition to whatever cause of action the consumer chooses to bring. 

Rhode Island joins several other states who have similarly exempted stimulus checks from attachment, wage garnishment, and other legal remedies for unpaid debts. For a list of these states, including all state notices related to COVID-19, check out insideARM’s COVID-19 Impact resources page.

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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As Shakespeare once quipped “[m]isery acquaints a man with strange bedfellows.”

We’re certainly enduring our share of misery right now, so perhaps we shouldn’t be surprised that strange alignments are presenting themselves here in TCPAWorld.

Consider–just yesterday the CFPB wrote a letter to the FCC encouraging it to allow banks and finance companies to make more automated calls to consumers. I mean… wow.

Not only that, but the consumer watchdog organization actually underscored the importance of such messages during the coronavirus pandemic and their effectiveness at spreading important information:

 A limited number of automated calls from financial institutions to their customers alerting them to offers of forbearance; payment deferrals; fee waivers; extension or relaxation of repayment terms; loan modifications; and other programs, relief and resources relating to loans secured by homes or vehicles is an importance avenue to ensuring that consumers know the various options that may be available to them.

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The letter–which can be found here— was sent in an effort to support the ABA’s recent petition to expand the very limited “emergency purposes” exemption that the FCC has recognized to date regarding COVID19-related calls. (Under the FCC’s current rule virtually no one can take advantage of the emergency exemption except for health workers and government officials.)

It’s nice to see a primary regulator like the CFPB coming out in support of allowing banks and finance companies to provide timely information to consumers. Notably, however, the TCPA is just one roadblock to efficient assistance reaching folks in need—both the FCRA and the FDCPA also contain a thicket of ticky-tack requirements that might snare companies looking to provide assistance to consumers.

As we carefully watch CARES2 wander its way through the legislative process we’ll keep a careful eye out for consumer-driven rule-loosening of this sort. More to come.

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

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The New York City Council has taken steps over the last week to protect tenants from evictions and provide leniency in paying back unpaid rent during the COVID-19 emergency. This is just one of several measures introduced in the City Council’s COVID-19 relief package.

The relief package’s landlord/tenant provisions of the proposed relief package provide as follows:

• Barring marshals and sheriffs from collecting debts and performing evictions until April 2021, effectively extending Gov. Cuomo’s statewide 90-day eviction moratorium by almost a year. This would apply to the evictions of both residential and commercial tenants.
• Bar marshals and sheriffs from executing money judgments.
• Protect tenants from harassment by landlords.

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The City Council’s announcement recognizes that this, in effect, will give tenants that fall into this category’s protections “additional time to repay their rent.”

In an effort to help New York City’s small businesses, the City Council’s relief package would also suspend personal liability on commercial leases.

This video is part of the iA Think Differently series. Written by 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 joined by the Executive Chairman of Spring Oaks Capital and one of the founding members of the Consumer Relations Consortium, Marcelo Aita. Marcelo and I literally hit the streets together back in 2012 as we founded the CRC and began introducing ourselves to consumer groups, so he holds a special place in my heart. What’s also interesting is that Marcelo is in the process of founding a brand new debt-buying company, which is a unique position to be in today — that’s the subject of our discussion.

Transcript

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

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On April 24, Minnesota’s Department of Commerce issued new regulatory guidance that extends its former guidance—issued on March 13—allowing debt collectors to temporarily work from home. The March guidance permitted collectors to work from home through April 30. The new guidance extends this allowance ” through any extension of the Stay At Home Order initially issued by Governor Walz on March 25, 2020.”

The new guidance mirrors the four criteria from the original March guidance: 

1. The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
2. The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason.
3. None of the activity will be conducted in person with members of the public from the home location; and
4. The licensee shall, at all times, exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.

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The new guidance makes it clear that the Department of Commerce is temporarily suspending the requirements of only Minn. Stat. § 332.33, subd. 3, and that all other requirements remain in force.

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

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Effective June 11, purchasers of consumer debt will face tougher requirements when initiating debt collection lawsuits in Washington state. A copy of the recently passed law is available here. 

The law applies only to a “legal action,” which is not defined but is used in the context of the filing of a complaint. Also, a legal action must concern a “claim,” which is defined as “any obligation for the payment of money or thing of value arising out of any agreement or contract, express or implied.”  Activities directed at collection of a “claim” that do not include a “legal action” are not impacted. 

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A Very Broad Definition of a “Debt Buyer” Likely to Capture Unsuspecting Lenders and Investors 

A debt buyer is defined here as “a person or entity that is engaged in the business of purchasing delinquent or charged off claims for collection purposes, whether it collects the claims itself or hires a third party for collection or an attorney for litigation in order to collect such claims.” The language is almost verbatim from legislation passed in Colorado in 2017. And, like Colorado, there are no stated exceptions for bank and non-bank lenders and others who may acquire defaulted or charged-off debt incidental to a larger portfolio, as is the case in earlier legislation passed in Oregon in 2017. 

“Legal Action” Requirements for Complaints and Default Judgments 

When filing a complaint or seeking a default judgment in Washington state to collect a claim, debt buyers will be required to satisfy requirements for various documents or information which must either be attached to or provided in the complaint or submitted to a court, in the case of an application for a default judgment. In many ways, the requirements are similar to those in Colorado. 

For example, if the lawsuit alleges a breach of contract, a copy of the terms and conditions in place at the time of the most recent monthly statement recording a purchase transaction, payment, or extension of credit must also be attached. It does not impose a similar requirement for lawsuits alleging “account stated” or other legal claims.

Another requirement concerns claims, “based on a credit card debt for which a signed writing evidencing the original debt does not exist.” In those instances, a debt buyer must attach “the most recent monthly statement recording a purchase transaction, payment, or other extension of credit.” In this context, it is unclear what is meant by “a signed writing evidencing the original debt.” Unless the extension of credit was made simultaneously with the extension of credit, a credit card agreement itself does not create any indebtedness. Besides, the vast majority of credit card agreements are never signed by debtors, rather an application is signed requesting a credit card product. 

More Disclosures 

Debt buyer complaints must also contain six disclosures: 

1. That the action is being brought by, or for the benefit of, a person or entity that is engaged in the business of purchasing delinquent or charged off claims for collection purposes; 
2. The date the claim or obligation was purchased; 
3. The identity of the person or entity from whom or which the claim or obligation was purchased; 
4. That the plaintiff may have purchased this claim or obligation for less than the value stated in the complaint; 
5. If the claim or obligation was at any time sold without any representation or warranty of accuracy, a statement to that effect; and 
6. That the action is being commenced within, and is not barred by, an applicable statute of limitations. 

Covered Purchased “Claims” 

Not all purchased debt will be subject to the new requirements. Since Washington limits the scope to “claims,” the debt must arise from an express or implied contract for the payment of money or “a thing of value.” And, even if the debt would qualify, the new requirements only apply to debt acquired after June 11. 

Editor’s Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.–

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This week, Ontario Systems hosted its third weekly COVID-19 webinar for third-party collectors, “Voices from the Trenches: How Leaders Are Leading During the Crisis.” I had the pleasure of speaking with three agency executives who shared their experiences and perspectives on a variety of operational concerns related to COVID-19.

Joining us on the panel were: 

• Laura Jensen, Chief Acquisitions Officer, Absolute Resolutions Corporation (ARC);
• Tim Haag, President, State Collection Service; and
• David White, Senior Vice President, Performant.

Like all of us, these leaders and their organizations were forced to adapt quickly to COVID-19—not to mention a shifting legal landscape that’s been particularly challenging for the receivables industry.

How have these leaders managed to successfully navigate the COVID-19 crisis? Here are some notable excerpts from our conversation, in the panelists’ own words.

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A Study in Contrasts: 30 Days Ago vs. Today

David White, Performant

Generally speaking, our business was not remote. We were close to 100%  brick and mortar. The clients we partner with didn’t have a desire to maintain remote workers.

So fast forward to the pandemic: we’re 95% remote in our capabilities today. We’re very lucky to have client partners that have moved very quickly with us to migrate our operations to remote capacity. We’re very excited to be where we are today, and I think we’ve adapted pretty well to the situation.

Laura Jensen, ARC

Over the past couple of years, we’ve worked towards having our staff going remote. So our transition was fairly easy. We have about 95% of our staff currently working remote. We have some essential services in our office—payment, posting mail, HR, and some IT support.

We had a mixed experience [with companies we outsource to]. Some of our servicers had intended to offload calling to a remote site in the Philippines, and the Philippines went on lockdown before the U.S. So that pandemic plan didn’t bear out. This has definitely challenged a lot of people’s business continuity plans.

Tim Haag, State Collection Service

We’ve been working with remote staff, both admin and reps, for about four or five years now. So we had some experience—obviously not to where we’re at today, but we had roughly 80 people working remotely prior to COVID-19. Now, I would say 85-90% of our staff [of nearly 500 people] is remote. I’m so proud to say all that’s working well.

When communicating with consumers, the big thing is scripting. We got on that right away, started changing scripting, making less outbound calls, less texting. And I think the main thing is we continue to listen to the consumer and do what’s right to solve problems.

Meeting the Challenge of Managing Remote Workers

David White, Performant

We had individuals on the admin side and management side who were working remote, but to transition our entire staff remotely meant we had to adapt them pretty significantly to meet our clients’ requirements. We’ve got some clients at the government level that have very high expectations for data security.

Think about all the different digital assistants around your house—your Alexa, your Google, your smartwatch, your phone. When we’re working and we’re in range of those types of digital assistants, how do we ensure our customers’ data are not being picked up? How do we not have risk and exposure? We had to adapt policy and procedure wise.

Tim Haag, State Collection Service

We utilize speech analytics. We’re monitoring in a live version, so all the supervisors know exactly what’s taking place on all those calls as they’re happening. We also have the use of Artiva Magnify™, so we can jump in and listen into calls, coach calls, text messages to the representatives, or ultimately take over the call.

Prior to COVID-19, for those who did get a chance to work from home, we expected them to have a 5% improvement in productivity, If they didn’t do that, they were asked to come back into the office until that productivity came back. As time goes on, as people get more comfortable working from home, we hope to see that productivity increase with all the rest of the staff.

Engaging Consumers and Patients Suffering Hardships

Laura Jensen, ARC

We’ve consistently pushed our servicers to honor hardship policies and make sure their hardship policies are adjusted to the extent they need to be for people who are ill or out of work for COVID-19.

David White, Performant

It’s about trying to find the right payment plan for these individuals. That may mean pushing out those payment plans for a period, it may be extensions, it may be reductions in what those payoffs may be. Most of our clients have been very, very willing to work with us as it relates to finding the right solution for consumers.

Tim Haag, State Collection Service

Consumers, when we do reach out to them, are very thankful that we’re offering up solutions right away. “Hey, I see you’re on a payment plan. Do you need to defer this plan for the next 60 days?” They’re kind of surprised, like, “Wait—you’re on my side. You’re here to help. I really appreciate your reaching out.”

Keeping Remote Teams Connected and Energized

Tim Haag, State Collection Service

For a supervisor to communicate with their representatives or the agents, we utilize Microsoft Teams. So now we’re doing team meetings and individual one-on-ones using that platform.

We’ve also been using a gamification system for about two or three years. This helps keep the  excitement piece that exists inside the office, we’re still able to do that, and they can track their stats. So they can still have friendly competition. We’ve been throwing some extra carrots out there, and that’s been a lot of fun.

David White, Performant

We’ve got a very cool intranet that we utilize. The intranet allows us to do a ton of different posts on a daily basis of updates, shout outs to individuals, our CEO posts, articles once a week of feedback, what’s going on in the business, the industry—what we’re doing on all those different types of things.

Also, as part of this intranet, we can do group discussion boards that work very well. So we’ve got email, we’ve got chat, but this group discussion board is for when we have situations that come up that someone’s like, “Okay, is this unique? I’ve talked to this person, this is what was said, how do we handle this?”

Managing Compliance and Client Communications

David White, Performant

Our general counsel manages the process for us. We’ve got a moving document that’s living and breathing based on all the changes coming out of COVID-19, so that document is reviewed on a regular cadence in leadership meetings. Originally, we were meeting daily, but now we’re doing it every other day—a pandemic team call with the key stakeholders within our company.

We’ll cover all the changes that happened in the previous 24 hours. We’ll communicate what direction clients have provided us relating to that. Then we’ll typically provide guidance to our account management team, sales, and business development team about where we stand with this and the changes we’re making. And then we’ll say, “Convey this to the client and let them know what we’re going to be doing on our side, and see if that lines up with their expectations.”

Tim Haag, State Collection Service

You would actually think that [healthcare providers] aren’t worried about the day-to-day collections environment, but now they are, because there’s nobody in hospitals right now, and they’ve cancelled all surgeries. So their revenue is going down. Cash is extremely important to them right now. So we’re getting more of their attention.

We put together right away a COVID-19 response team. We meet every morning . . . for about 30 minutes to talk about communication that we’re going to send to our clients. We actually came up with a new procedure for our compliance change management process. That goes to our general counsel, and from there, he makes the change. When all this settles, we can go back and make sure all those changes were back to normal.

Lessons Learned

Laura Jensen, ARC

The biggest lesson I’ve taken away is management related: show up every day, show up for your staff, show up for your company. For me to do that, it’s getting up and having a positive attitude. It’s getting ready and being present. There’s a lot of chaos, and everybody’s scrambling and nobody knows what to do, but show up. Be present. Be a leader.

My second [lesson] is, always have your best staff. I have the best staff, and I trust my staff implicitly. I think that has been a huge help in getting through this.

Tim Haag, State Collection Service

I think continuing that communication with [employees]—”Hey, guys, it’s going to be alright; we’re going to get through this”—it means a lot. And I have been focused more not on the day-to-day things now, but let’s see what happens after this. So let’s not worry about tomorrow, but let’s start thinking about next month, six months from now, a year from now, and how we can come out on top.

David White, Performant

In a limited time, we’ve had to be remote. Hopefully our clients are understanding that this is an opportunity for the long haul, not just through the COVID-19 situation—that after we get through this, there’s an opportunity for us to adapt our workforce and adapt our offerings. I’m not advocating for 100% remote, but some flex opportunity for us to be effective.

Catch Up on Previous Discussions, and Join Us Next Week

Our past COVID-19 weekly webinars were full of valuable insights and tips related to compliance management and business continuity. You can find detailed summaries with links to the webinar replays in these recent blog posts:

• Navigating the Crisis: What ARM Agencies Must Do to Say on Course and Compliant
• 10 Things You Need to Know About the CARES Act and SBA Loans
• You can also listen to this week’s webinar, “Voices from the Trenches: How Leaders Are Leading During the Crisis,” in its entirety. Click here to download the recording.
• Be sure to register for next week’s COVID-19 crisis management webinar, “Product-Centric Solutions for COVID-19 Challenges.” We’ll explain how the Ontario Systems solutions you currently have in place can help smooth the transition to normal operations as we emerge from this crisis. It’s a critical (and welcome) discussion you won’t want to miss.

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 saga builds! To summarize our previous coverage: Navient has turned the tables and sued a plaintiff firm – The Lohman law firm – for allegedly coaching clients to bilk Navient out of millions of dollars.

The alleged scheme: the Lohman firm had students stop paying their debts to Navient (and pay other entities); and gave a word-for-word script for the students to instruct Navient to cease all phone calls to them. Once students defaulted on their monthly payments, Navient would call about their accounts. The Lohman firm patiently waited for the phone calls from Navient to synthetically rack up TCPA fines past the debt amount, and eventually would sue Navient. 

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The Lohman firm had rained down suits. Last year, Navient smelt foul play and fired back a lawsuit. Now, Navient is going with both barrels at the Lohman firm in Navient Sols., LLC v. Law Offices of Jeffrey Lohman. Navient asked for records of the Lohman firms’ communications with their student loan debtor clientele. The Lohman firm objected and asserted the attorney-client privilege protection. Navient filed a motion to compel for the attorney-client discussions. Navient argued it’s entitled to the usually protected info under the ‘crime exception’ to the attorney-client privilege. Magistrate says, I’ll allow it; the Court agreed.

A crime-fraud exception breaks the attorney-client privilege when communications are made “for the purpose of committing or furthering a crime”. Lohman’s firm argued that only the attorneys are being accused of committing a fraud, so the crime-fraud exception was inapplicable here. The Court ruled: “At bottom, it is clear that discovery of the communications at issue, which concern an allegedly sweeping scheme to defraud one of the country’s largest loan servicers at the expense of student loan debtors… would both serve the public good and advance the search for truth. Accordingly, the crime-fraud exception can apply where, as here, the attorney alone purportedly committed a crime or fraud of which the client was a victim.”

The Court did take off sanctions imposed by the magistrate on the Lohman firm for needlessly increasing litigation costs with supplemental briefings. The court noted a new firm has taken over representing the Lohman firm which has recently been complying with discovery, but warned there will be no hesitation to impose future sanctions for frivolous litigation tactics. Battle won by Navient. Will keep an eye on this unfolding story.

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Want to quickly search for other court decisions where the court calls out plaintiffs’ counsel? 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: 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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Chase Bank has marked its territory in TCPAWorld.com! 

Last year, Chase was sued in New Jersey for alleged auto-dialer violations. Chase answered by asserting an unclean hands defense.  Chase pursued a subpoena on the plaintiff’s law firm – M. Harvey Rephen & Associates – for documents and a deposition.  Harvey Rephen telephoned counsel for Chase to tell him he was out of the country and wouldn’t be able to sit for a deposition.  Chase filed an action in New York to compel the Rephen Firm.  The Court fined the Rephen firm $100 a day for non-compliance, to spike to $500 per day if they continued to not produce documents and their corporate representative.  The Rephen Firm chose to ignore this.  Chase doubled down, fully briefed the issue again and requested the sanctions.  

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“The story continued to unfold,” the court narrated. After Chase filed against the Rephen Firm, the plaintiff in the underlying New Jersey proceeding had testified she moved out of the country, and dismissed her case.  The court terminated the TCPA action, but kept Chase’s outstanding sanctions motions alive.

The New York court held a conference before judgment.  Counsel for the Rephen Firm repeated the same excuse, namely that Harvey Rephen was out of the country, only adding that recently business was slow, and the Rephen firm wouldn’t be able to cough up Chase’s accrued sanctions.  Chase moved on them for $231,441 in attorneys’ fees, as well as $23,400 in sanctions.  Chase additionally applied for a writ, and an order that the Rephen Firm must provide an accounting of assets to satisfy judgment if necessary.

The result: Chase won the $250,000, and the court is ensuring Chase gets relief, keeping an asset seizure if the judgment is not satisfied on the table.  Rock solid victory! 

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Want to be the first to learn about and track trends on industry-impacting issues like this? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.