WILMINGTON, Del. — Katabat, a leading global supplier of debt management software solutions, has launched EasyCollect, a powerful, yet easy to deploy, mobile payment portal for lenders and debt collection agencies. EasyCollect is the industry’s simplest, fastest digital payments solution, allowing lenders and agencies to reach borrowers via integrated email and SMS messaging and creating a hassle-free payment experience that helps increase collections. 

“Our clients were looking for an easy-to-use, secure portal for online digital collections from initial outreach messaging through payment capture,” said Katabat CEO Ray Peloso. “We developed EasyCollect as a stand-alone, digital-first product to help our clients increase collections and recoveries while providing a streamlined customer experience.” 

A digital-first communications approach, like that enabled by EasyCollect, can improve response rates by up to 30% according to a recent McKinsey report. The product allows clients with a payment merchant account to easily set up and begin receiving payments by: 

• Uploading a file of accounts and logo(s);
• Specifying basic details like minimum payment amount, links or content for state and other disclosures;
• Selecting  compliant email templates to use for customer engagement;
• Sending campaign messages and allowing customers to make or schedule payments immediately via a mobile device. 

EasyCollect is PCI-compliant and does not require IT support for deployment. It delivers enterprise-scale functionality with a price point attractive for small to medium-sized debt collection agencies. Introductory pricing ranges from $249 to $499 per month. 

Katabat’s full suite of debt management solutions helps lenders, financial institutions and debt collectors streamline communications and optimize engagement throughout the entire customer lifecycle. By applying machine learning to the debt management and collections process, Katabat’s solutions help improve collections and recovery through a better customer experience, all while reducing costs and compliance risk.  

For more information on EasyCollect or to set up a demo, contact us at info@katabat.com.

About Katabat

With more than a decade of experience delivering debt collection solutions to global banks and debt collection agencies, Katabat combines collections and machine learning expertise to help clients engage with customers and increase collections. Katabat partners with lenders and collectors across multiple industries to stay at the cutting edge of debt management, machine learning, automation, regulatory compliance, and data security. To learn more about our full range of debt management products, contact Katabat at info@katabat.com.

This article is part of an ongoing Think Differently series, launched in October 2019. 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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One of the most common misconceptions about Artificial Intelligence (AI) is that it’s all a black box that runs itself — all you need to do is plug it in, let the machine do its learning, and allow the algorithms to take over. 

Wrong. Just like any new partnership or team member, AI requires an onboarding process to establish familiarity with operations, time to figure out how to do its job well, and regular check-ins with its manager. 

In a recent Forbes article, Joe DeCosmo lays out steps for how fintechs can implement AI into middle and back-office operations first, before they go “all in” and extend it to front office (consumer-facing) ops.

Embrace redundancy and remediation

For instance, “embrace redundancy and remediation.” Every automated process should be tested against a manual process to make sure it’s doing what it’s supposed to do (only quicker and better than the manual model.) AI is no different, and I encourage people to start with one facet of their business, worked with both a machine learning and a manual process concurrently. Not only does this enable you to see immediate results of your AI implementation, it also allows a firm to understand what decisions are being made and the kind of algorithms that are being built.

Monitor everything

“Monitor everything” is another recommendation, which is, of course, a requirement for staying compliant in more ways than one. For instance, an algorithm is developed based on a set of factors that seem to work, but if that algorithm goes unmonitored for an extended period of time, it could also develop a pattern of unwanted or suboptimal practices that may be tougher to explain to regulators than the technology itself. (Although the CFPB has championed AI for cutting down on discriminatory practices, the possibility is still an example of what could happen when a firm adopts a laissez-faire approach to an investment in AI.)

Ensure explain-ability

Ensuring explain-ability must be paramount when exploring machine learning strategies. Having the ability to access and generate reports on your algorithms is a necessity, and you must make sure those reports are transparent and explainable to different stakeholders within an organization, and therefore its regulators. 

While AI is probably the most exciting new tool for fintechs and can easily live up to its hype, it’s not a set-it-and-forget-it kitchen appliance (even a crockpot ultimately needs a human at the helm). If your firm is considering implementing AI into any part of its operations, you’ll find that half-measures rarely produce big results. Even if you’re onboarding AI incrementally, a dedicated CTO, analyst or data scientist within your organization should be charged with managing it: keeping an eye on its activity, communicating tweaks and changes, and maintaining the right controls.

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Gregory Allen is the Founder and CEO of Pairity, an AI platform that offers Machine Learning as a Service to the accounts receivable industry.

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About the iA Innovation Council

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 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. 

Learn more at www.iainnovationcouncil.com

2019 members include:

For years Sergei Lemberg’s name was synonymous with huge volume TCPA filing. He was the filing leader month after month from 2014-2017.

Well after a break for a little over a year, last month WebRecon again recognized Sergei Lemberg as the top TCPA filer in the country. Eager to crow about his return to the top Sergei joins the Unprecedented podcast team this week to talk about how it all started and where he’s headed with his huge volume machine.

More importantly, he represents the Plaintiff in the big Druguid case that is possibly on its way up to the Supreme Court to determine whether the TCPA complies with the First Amendment.

You will not want to miss this big interview in which TCPAWorld’s noted “Picklemaker” tells the Unprecedented podcast team that he is going “all the way” with Druguid –he even tells us how to pronounce it and it is not even close to houw you think.  He also discusses his strategy for bringing these cases, how he got into the TCPA game, and what he thinks might be coming next. You won’t want to miss it.

Before we get to the interview we break down all the biggest news of the week including:

• That big certification denial in  Sandoe v. Boston Sci. Corp., Civil Action No. 18-11826-NMG, 2019 U.S. Dist. LEXIS 183886 (D. Mass. Oct. 23, 2019);
• The impact of the TCPA on the cannabis industry after that big Eaze arbitration win; and
• The permutations of Mr. Trump being sued for TCPA violations related to his re-election campaign.

You can’t miss this one folks! The podcast is available here.

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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.  

The Massachusetts Attorney General’s Office (AG) will announce a $4 million settlement with Portfolio Recovery Associates (PRA) today, according to the Boston Globe. The AG’s investigation into PRA began after it received hundreds of complaints from consumers about the company.

The AG’s office alleges that PRA violated consumer protection laws in its efforts to collect debts. Specifically, the AG alleges that PRA collected debts for which it did not have proper documentation to show that the debt was actually owed, the amount of debt owed, and ignored the statute of limitations for pursuing debt. Additionally, PRA allegedly collected exempt Social Security income from consumers. 

As part of the settlement, according to the Boston Globe article, PRA agreed to:

• Not call consumers more than twice in a seven-day period;
• Stop credit reporting debts that it does not have proper documentation for;
• Stop collecting exempt income from consumers; and
• Ensure it has documentation to show that debts are valid prior to collection efforts.

insideARM reached out to PRA, which provided the following comment:

PRA has fully and voluntarily cooperated with the Attorney General and her office throughout this matter. While we deny that PRA’s practices violate Massachusetts or federal law, we have agreed to these terms in order to resolve this matter, avoiding both further cost and delay associated with legal action. Most importantly, we are pleased that we have reached agreement with the Attorney General regarding enhanced communication and disclosures with our customers.

insideARM also attempted to reach out to the Massachusetts AG’s office for comment but was unable to do so, likely due to the office being closed for Veterans Day. 

The text of the settlement agreement has not been made public at the time of this article’s publication.

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On Friday, four bills were introduced in the House of Representatives by House Financial Services Committee members to amend the Fair Debt Collection Practices Act (FDCPA) in different ways. The four bills include:

• H.R. 5001, introduced by Rep. Lacy Clay, Jr. (D-MO), which would extend the definition of debt collector to those whose principal purpose of which is the enforcement of security interests.
• H.R. 5003, introduced by Rep. Madeline Dean (D-PA), which would provide enhanced protections against debt collector harassment to members of the Armed Forces.
• H.R. 5013, introduced by Rep. Al Lawson (D-FL), which would extend FDCPA protections—currently only available to consumers—to small businesses.
• H.R. 5021, introduced by Rep. Ayanna Pressley (D-MA), which would improve consumer protections relating to debt collection practices. 

Texts of these bills are not yet available. 

insideARM Perspective

This large push to amend the FDCPA by the House Financial Services Committee does not come as a shock, considering the Committee’s recent hearings with the Consumer Financial Protection Bureau’s Director Kathleen Kraninger. A lot of the issues raised in these amendments, such as enhanced protections for members of the Armed Forces and extending protections to small businesses, were highlighted at recent hearings. 

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H.R. 5001, which would extend the definition of debt collector to those enforcing security interests, is likely stemmed from the U.S. Supreme Court’s decision in Obduskey v. McCarthy & Holthus LLP, where the court found that the FDCPA does not extend to law firms performing non-judicial foreclosures. This bill aims to close that gap.

HARRISON, N.Y. — Garnet Capital is proud to announce that, in addition to its many existing certifications, it has earned the Certified Receivables Vendor (CRV) designation for Broker Services from the Receivables Management Association International (RMAI). 

RMAI’s Receivables Management Certification Program (RMCP) offers certifications for debt buying companies, collection agencies, collection law firms, and the vendors that provide services to them. RMCP’s certifications are intentionally designed to cover the full life-cycle of an account receivable to ensure uniform rigorous consumer protection standards follow a consumer account from origination through final disposition.

“Earning the Certified Receivables Vendor designation is a significant achievement,” said RMAI Board President Marian Sangalang. “Garnet has demonstrated its commitment to adhering to rigorous consumer protection and professional standards that not only meet but often exceed state and federal regulatory requirements. Certified businesses such as Garnet set the global standard for the receivables management industry.” 

“Garnet is pleased to have earned this important certification,” said Louis DiPalma, Managing Partner at Garnet Capital.  “This continues Garnet’s commitment to be the industry leader in secure, compliant and well-documented debt sales.”

The CRV broker designation is granted to businesses that comply with rigorous standards concerning compliance, background checks, insurance, data security, vendor management, broker agreements, transactional due diligence, and establishing buyer and seller prerequisites. The expansion of the RMCP to include brokers allows RMAI to provide a “single compliance footprint” to the receivables management industry by touching on every stage of the debt lifecycle.

For more information about RMAI’s Certified Receivables Vendor Program, or to download an application, please visit RMAI’s website at www.rmaintl.org/certification. 

About Garnet

Garnet Capital Advisors, LLC is a fifteen-year-old New York-based financial-services firm specializing in managing loan-portfolio sales for banks, credit unions, finance companies, and other credit grantors.  Garnet has vast experience in the loan-sales industry and has managed the sale of over $100 billion of financial assets in 1000+ client transactions. Garnet Capital provides career-length expertise and intensive, cradle-to-grave advisory services across the full range of asset types and performance categories. 

About RMAI

Receivables Management Association International (RMAI) is a nonprofit trade association that represents more than 500 companies that purchase or support the purchase of performing and nonperforming receivables on the secondary market. The Receivables Management Certification Program and Code of Ethics set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focuses on the protection of the consumer.

More information about Garnet is available at www.garnetcapital.com and RMAI at https://rmaintl.org/. 

MARIETTA, Ga. — Manny Plasencia has joined Sequium Asset Solutions, LLC as the Vice President of Operations for the Financial Services vertical. Manny has more than 20 years of industry experience in operations and a proven track record of superior metric-driven performance in various Financial Services, Customer Experience and BPO verticals. He is an expert in building advanced strategies, and an outstanding team leader who excels in Collections, Customer Service/Engagement, and providing an excellent consumer experience.

His leadership and acumen will be a core driver to Sequium’s continued growth and expansion. He has led operations, sales, compliance, and quality assurance for major service providers such as Intellirisk, United Recovery Systems, Alltran, and Convergent.

“I am very excited about the addition of Manuel Plasencia ‘Manny’ to our team,” says Jose Cadena, Chief Operating Officer at Sequium. Sequim has experienced significant growth in 2019, and the addition of Manny will allow for continuous growth and significant scale in the future. His leadership and experience will be a core driver of Sequium’s continued growth and expansion. His focus will be enhancing Sequium’s strong strategic approach and bolstering our footprint in the Financial Services sector. His visionary leadership and data-driven approach make him a great addition to our executive leadership team and winning culture.”

“I am honored and excited with the opportunity to be an essential part of Sequium through its next phase of growth,” says Manny Plasencia, the new VP of Operations for Financial Services at Sequium. “There are very few entities like Sequium that are not only technologically advanced but also excel in delivering an effortless consumer experience. I look forward to working with the talented Sequium team of recovery and take this company to the next level of excellence.”

About Sequium Asset Solutions, LLC

Headquartered in Marietta GA, Sequium Asset Solutions is the leader in the accounts receivable management industry leveraging sophisticated Business Intelligence, Machine learning, Digital Communications and Human Capital to produce groundbreaking results for its customers. The company is recognized as a leader of innovation within the industry. For more information, please contact Peter Hendricks, Executive Vice President of Sales and Marketing, at 678-228-0003 or email him at peter@sequium.com.

Back in September, insideARM republished a TCPAWorld article about the massive $267 million TCPA verdict entered against a debt collector in California. The plaintiff in that case has now sued the debt collector’s insurance company XL America—through Indian Harbor Insurance Company— for a bad faith failure to settle the case within the policy’s limits. According to the lawsuit, filed in the Northern District of California earlier this week:

The insurance company rejected multiple settlement offers ranging from $60,000 to $825,000, walked out of mediation without making a settlement offer, and refused to negotiate for more than two years.

The complaint continues:

During all of the relevant times herein, there was a great risk of recovery beyond the policy limits and the reasonable manner of disposing of the Lawsuit was to accept each of Plaintiffs’ settlement offers when they were made, and/or to participate in settlement negotiations in good faith rather than refusing to negotiate.

After the judgment was entered in the underlying case, the debt collector filed for bankruptcy. On the eve of the bankruptcy filing, the debt collector executed an agreement with the plaintiffs to assign the cause of action against the insurance company in exchange for plaintiffs not enforcing the judgment. The plaintiff’s acting as the debt collector’s assignees to the judgment, post-judgment interest, and attorney fees, filed the suit against the insurance company in the debt collector’s stead. 

The policy had a coverage limit of $3,000,000 with a $1,000,000 sub-limit for claims arising out of TCPA claims. The insurance company had the right to select defense counsel and had overwhelming authority regarding negotiations and settlements of covered claims. 

insideARM will follow this case as it makes its way through litigation.

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insideARM Perspective

This lawsuit could have big implications for debt collectors. On one end of the spectrum, if TCPA liability against debt collectors continue a trend of incredibly high dollar values—like the nine-figure verdict in this case—insurer might be reluctant to cover them or might significantly increase the cost of insuring such claims.  On the other end, it might encourage insurance companies to quickly resolve covered claims. With that said, there are many good-faith reasons for not engaging in negotiations and rejecting settlement offers. Especially with a statute like the TCPA, which can turn a quick buck for plaintiffs and their counsel in settlements through the practice of mass filings, the buck has to stop somewhere and endless settlements may not be the answer. Regardless of the details, this case will be interesting to watch as it unfolds.

Questions about payment processing fees come up often. What type of processing fees can a consumer be charged? At what point does a debt collector cross into the forbidden territory? A case out of the Northern District of Illinois recently reviewed the question.

In Alleman v. Collection Professionals, Inc., No. 1:17-cv-9294 (N.D. Ill. Oct. 29, 2019), the consumer alleged that a $3.00 service fee assessed by the debt collector’s online payment processor violated the Fair Debt Collection Practices Act (FDCPA) and Illinois consumer protection laws. The consumer entered a service agreement with a medical provider, which ultimately led to the underlying debt in collections.

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The service agreement contained a clause that stated the consumer would “pay the balance on the account plus the late charge fee, all reasonable collection costs, and reasonable attorney fees.” The parties disagree about the contract’s meaning of “reasonable collection costs” and whether the $3.00 online payment service fee fell into the scope. The consumer argues that the service fee was an incidental cost that is not itself related to the debt, which the FDCPA prohibits. 

The court found that the fee is not connected to the debt as it is charged for all online payments regardless of the size of the debt or the payment. Since it was the debt collector—rather than the creditor—that incurs the cost of electronic payments and that cost is passed to the consumer rather than through to the creditor, the court found that it might be problematic. 

However, the court ultimately granted the debt collector’s motion for summary judgment, finding that the service fee fell under the pass-through fee exception to the FDCPA’s definition of “collection,” as stated by the court in Acosta v. Credit Bureau of Napa County, No. 14-cv-8197 (N.D. Ill. 2015). The court synthesized definitions from precedential case law and found that “pass-through convenience fees are charges initiated by a credit card provider from which the collection agency earns no profit itself.” Since that is exactly what occurred here—the online payment processor, not the debt collector, charged and kept the entire service fee. The debt collector did not profit from the service fee. 

The court states:

As explained above, under this reading, there is no genuine issue of material fact about whether CPI’s cost is a pass-through cost, since its convenience fee account always operated at a loss in the relevant period. As a result, the convenience fee is at least a partial pass-through cost, and thus protected from liability under the FDCPA, because CPI did not attempt to collect an incidental cost; instead, CPI merely sought to pass through a cost, not collect an incidental obligation itself. Had Alleman chosen a different method of payment, CPI would not have charged Alleman anything, because BillingTree would not have charged CPI to process her payment. As a result, we grant the Defendant’s motion for summary judgment…

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Want to quickly get a report on how different courts have ruled on payment processing fees? The iA Case Law Tracker can help you keep up and conduct incisive and quick legal research in less time than it takes to pour your morning cup of coffee.

A common ascertainability approach taken by class counsel in TCPA class actions is to subpoena wireless carriers for the subscriber information for phone numbers associated with a Defendant’s outbound call records. While the viability of this approach—particularly in wrong number cases—is the subject of hot debate, the cases keep coming.

In a new decision out yesterday, a Court ordered a Plaintiff to pay $3,000.00 to a wireless carrier for the cost of producing records. In Cook v. Palmer, Reifler & Assocs., Case No. 3:16-cv-673-J-39JRK, 2019 U.S. Dist. LEXIS 190788 (M.D. Fl. Nov. 4, 2019) the Plaintiff issued a subpoena for the records of 2,245 wireless subscribers. The wireless provider—TracFone—originally asked for $25.00 a subscriber, totaling over $56k. After a skirmish with Plaintiff’s counsel over whether their objections were properly asserted and preserved, however, TracFone agreed to accept $3k to make the production. Plaintiff refused to pay the $3k, offering a mere $500.00, and the Court had to resolve the dispute.

Concluding that the $3k was reasonable and that TracFone’s objections had not been waived—although it had not asserted written objections within the 14-day window mandated by rule— the Court ordered Plaintiff to pay TracFone $3,000.00 after the production was made.

It is worth noting that TCPA class actions are purportedly brought to vitiate the privacy rights of class members. Yet, bulk subpoenas to carriers for subscriber and calling information threatens to violate those privacy rights, risks data breaches, and impose large costs and disruption on non-parties to these lawsuits. High-end class counsel will agree to bifurcate class discovery from merits discovery–assuring that consumer records are not produced until after the case is certified– but TCPAWorld is still awash with counsel that will demand production of these records well before they are actually needed. It will be interesting to see if demands for cost-shifting by third-parties–of the sort in Cook–might damper some enthusiasm for these cases.

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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 re