Here’s a pumpkin-spiced TCPA musing for the afternoon coffee break: I’m not sure why Defendants continue to bring motions to dismiss ATDS allegations in federal district courts in California but let me just say—it ain’t working.

In Bodie v. Lyft, Inc., Case No.: 3:16-cv-02558-L-NLS 2019 U.S. Dist. LEXIS 172998 (S.D. Cal.  Oct. 4, 2019) the Defendant moved to dismiss the complaint arguing that the ATDS allegations are conclusory and that the allegations demonstrated human intervention was needed to make the texts at issue. Following Marks the district court had little trouble denying the motion. In the Bodie court’s view the SAC “clearly” alleges that an ATDS was used in this case. In the Court’s view, the SAC alleges that the text platform at issue allows a user to “automatically send text messages to [a] stored list of cellular telephone numbers.” That plus allegations that the platform was actually used to send “notifications en masse to a stored list of cellular telephone numbers without the need of individuals to dial the numbers” was sufficient to state a claim.

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The takeaway here is that unless you have a complaint containing highly specific allegations regarding how a piece of equipment works that plainly demonstrates the dialer does not call “automatically” there is little incentive to bring a 12(b)(6) challenging ATDS allegations within the Marks footprint. Allegations that the system is “automatically” dialing from a list of stored numbers are probably going to pass muster at the pleadings stage.

That said, the Marks formulation does remain vague as to the meaning of the word “automatic” so there is room for defense victories yet—and perhaps some will come at the pleadings stage where the complaint is richly adorned with allegations demonstrating human intervention—but they will most likely come at the Rule 56 stage. Pick and choose your shots folks.

Now back to work.

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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.

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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It’s no secret that artificial intelligence (AI) is flattening specific challenges across different industries and types of operations, from preserving the world’s honeybee populations to improving customer service. The same way collections firms transitioned from analog to digital over the last 20 years, building a fully artificially-intelligent enterprise with machine learning is the next wave of mass tech adoption. But where do you start?

There are many AI and machine learning products available to ARM firms, but most are narrow in focus, for instance, offering conversational AI, call monitoring and other real-time guidance for agents. While these solutions can boost revenue a bit in the short-term, a foundational approach to automation is a smarter investment and long-term game-changer. 

Can you explain machine learning in the context of the collections process? 

Yes. First, we should clarify the difference and relationship between AI and machine learning. The simplest metaphor is a garden, where machine learning models are the individual plants, and the healthy, thriving collection of plants is “AI.” The plants (Machine Learning models) are cross-pollinated with information that is exchanged between them and constantly evolves. The data that’s fed to these models are like rain and nutrients for the machine learning models to grow and get smarter, and they all originate from algorithms that are like seeds for the whole enterprise.  

A simplified collections process looks like this:

1. Receive accounts placed with your company or purchase a portfolio
2. Scrub the accounts for certain information (bankruptcies, deceased contact, phone append, etc.)
3. Enrich the accounts with outside data
4. Score the accounts to build your collection strategy
5. Segment the accounts
6. Allocate the accounts
7. Attempt collection
8. Collect payment

The steps above are essentially your operational algorithm. To achieve a level of automation for this process, you can implement machine learning models across the different steps of your collection process and connect them via an API framework — sort of like the connective tissue between muscles in your body (sorry to mix metaphors here) — so they can pass information back and forth to each other and intelligently power the different software used to store information and contact consumers.

Okay, but where do I start?

The first step to this ideal AI-powered outcome is to apply the historical data you have to train the machine learning models incrementally, so it’s not too much of an initial time sink, and you can realize gains in the short term. For example, you can use your CRM data to build a scoring model, payment model, risk model, workflow model, etc. Another approach would be to use your telephone, email, letter, and text data to predict the optimal times to contact consumers or the most effective messaging to power a chatbot, text, or email campaign.

It’s important to note that this data must include an “outcome,” so the algorithm can learn which accounts do and do not pay, pick up the phone, open an email, etc. If your data isn’t tied to outcomes, this may be the first step you need to take. Also important to note is that results will be much better if your historical data has been enriched with some external data so you can continually improve going forward.  

I’ve already taken the first steps – what’s next?

Now that you’ve got your desired Machine Learning models and have started to see increased revenue, how do you automate and realize reduced costs?

Let’s keep it simple with three different models:

1.     Propensity-to-pay model
2.     Preferred method of communication model (making sure you have the necessary consent)
3.     Time-to-contact model

You may not have too much control over how and when accounts are placed with you, but if they are transferred digitally, you can create an automated process for moving the accounts into your machine learning pipeline. 

With accounts in your pipeline, you can trigger the data formatting and enrichment process that has been automated via API internally or by leveraging a vendor. Once that process is complete, the system can push the accounts into the different models, scoring them, deciding how to contact the consumer (if that’s an option), predicting the time to contact them and suggesting the most effective messaging.

At this point, you’re fully equipped with machine learning and already have a huge competitive edge, but you can take it even further by going from machine learning to becoming a fully AI-powered enterprise. For instance, connecting your CRM or outbound communications system to your various machine learning models is what makes your enterprise “intelligent.” Before your system makes a call, sends an email, or delivers a text message, it should ask your model what to do.

Building your way to becoming an artificially-intelligent enterprise may not be as quick or easy as a plug-and-play Band-Aid for a narrow line of front-office operations, but you’ll find the outsized payoff of a foundational approach (which can include leveraging AI to help your firm decide which accounts to purchase, service or sell in the first place) is worth the effort. 

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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:

Discovery in TCPA suits is a major driver of cost and frustration for TCPA Defendants. Even Plaintiffs in individual suits will often serve overly broad and abusive discovery demands seeking, inter alia, all records of previous TCPA complaints, lawsuits, or settlements. The Plaintiff will claim this information is relevant to prove “willfulness,” yet no TCPA willfulness formulation turns on whether a Defendant has violated the TCPA in the past and/or whether the Defendant willfully violated the statute as to someone else.

While this battle often plays itself out in the discovery phase, the final incarnation of the fight—of course—occurs at trial; i.e. will the Court admit evidence of past purported violations of the TCPA as evidence that the Defendant violated the TCPA as to a specific Plaintiff. Well in  Johnson v. Capital One Servs., Case No. 18-cv-62058-BLOOM/Valle, 2019 U.S. Dist. LEXIS 178160 (S.D. Fl. Oct. 15, 2019) the court held directly that such evidence would not be admissible because it simply was not relevant to the case.

The analysis here is short and sweet: “ Capital One seeks to preclude Plaintiff from presenting evidence of other litigation or settlements involving Capital One. The Court agrees that any information or evidence pertaining to other litigation and settlements is irrelevant, and the lack of probative value of any such evidence is substantially outweighed by the danger of unfair prejudice. The Motion as to this issue is granted.”

Nice, no?

And the Defendant goes further and asks the Court to find that no evidence of any communication with anyone else is relevant to the case at all—good thinking guys—and the Court also agreed: “The Court agrees with Capital One that any introduction of evidence relating to Capital One’s communications with individuals other than Plaintiff, or communications to any number not ending in 2114, is irrelevant. The Motion as to this issue is granted.” One phone number at issue. One Plaintiff case. No other calls matter. Perfecto.

The Defendant also made a few arguments that were…more exotic. For instance, the Defendant asked to exclude a handwritten call log as hearsay, and evidence of Plaintiff’s experience hearing clicks and pauses when she received a call as irrelevant. Those requests were summarily denied.

We’ll keep an eye on this trial. However it turns out, this pre-trial ruling should prove quite helpful for TCPA defendants seeking to avoid the unnecessary production of information related to claims or complaints by third parties in individual TCPA suits.

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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. 

On Friday, the U.S. Supreme Court agreed to hear a case that questions whether the Consumer Financial Protection Bureau’s (CFPB) structure is constitutional. In Seila v. CFPB, the nation’s highest court will specifically review whether the single-director structure and the President’s removal authority of the director violate the separation of powers. Just like a double rainbow, everyone is asking what it means. 

A little background

The case stems from the CFPB’s investigation of Seila Law LLC, a debt resolution law firm. Seila Law objected to the CFPB’s civil investigation demand (CID) for information and documents about the firm, arguing that the CFPB was unconstitutionally structured. The CFPB petitioned a federal court for enforcement of the CID. The court found no issue with the CFPB’s structure. Seila Law appealed the matter to the Ninth Circuit, which affirmed the district court’s decision. Seila Law is now seeking the Supreme Court’s decision on the matter, arguing that “This case, which cleanly presents the question whether the CFPB is constitutional, is an ideal vehicle for the Court’s review.”

The CFPB caused waves when it took the position that its structure is unconstitutional in its brief on the petition for writ of certiorari—in other words, the petition for the Supreme Court to accept the case. Director Kathleen Kraninger underwent tough questioning for this reversal in the CFPB’s position at the House Financial Services Committee’s semi-annual review of the agency last week. At the hearing, Rep. Carolyn Maloney (D-NY) brought up the fact that just months prior to the Seila brief, the CFPB defended its structure in a different court case, and yet now the CPFB flipped its position. Rep. Maloney then criticized Kraninger for second-guessing Congress, which specifically created the CFPB as an independent agency.

What, exactly, will the Supreme Court review?

The Supreme Court’s order on Friday gives some insight into what, exactly, the court will review. There are two similar but slightly different questions presented in the petitions for writ of certiorari:

1. Whether the vesting of substantial executive authority in the CFPB as an independent agency with a single director violates the separation of powers; and
2. Whether 12 U.S.C. § 5491(c)(3)—prohibiting the President from removing the director except for cause—violates the separation of powers.

The Supreme Court requested that the parties brief not only the questions presented, but also what effect a finding of a violation would have on Dodd-Frank by asking:

If the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of powers, can 12 U.S.C. § 5491(c)(3) be severed from the Dodd-Frank Act? 

What is the practical impact?

Reading the tea leaves from the order—which, admittedly, is not an exact art—it appears the Supreme Court is considering striking the “for cause” removal clause of Dodd-Frank. On the surface, this seems like it might not have much practical impact since the directorship changed right around the time of the last inauguration. However, there are some deeper implications to consider.

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It was no secret that President Trump and Former Director Richard Cordray were not fans of each other. If the President had the authority to remove the director at will, Cordray might have been ousted at the time of the inauguration. This leaves a question about any enforcement, supervisory, and rulemaking actions undertaken during the gap months between the inauguration and Cordray’s resignation in November 2017.

What if the Supreme Court goes further and finds that the single-director structure is unconstitutional? This would put all of the CFPB’s activity since its inception into jeopardy. If the director determines the Bureau’s priorities and activities and the director did not have the constitutional authority to do so on his or her own, what happens to all of the consent orders, settlements, and regulations that came out under that director’s leadership?

Court are already taking action—or rather, putting a stay to their cases—while awaiting the Supreme Court’s decision on the matter. In the CFPB’s lawsuit against Forster & Garbus, for example, the judge put the case on hold for six months in order to wait and see what the Supreme Court will do.

This could put a lot of things in flux for the debt collection industry, including the long-awaited proposed rules. One thing is for sure: all eyes are on Seila.

As I previously reported, a court within the Ninth Circuit’s footprint recently issued a ruling dismissing a TCPA claim without referencing Marks. This is not as surprising as it may sound because–as the updated TCPAWorld.com ATDS scorecard shows– the trend nationwide now is plainly to follow the statutory definition and not Marks. 

The “score” is now 19-4. That’s how many district court opinions have applied the statutory definition and Marks respectively since the date Marks was handed down. And notice that the last time a court outside of the Ninth Circuit applied Marks was back in mid-August before we published our last scorecard.

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Since then six new decisions have been handed down following the statutory approach (again, compared to zero following Marks outside of the Ninth Circuit) and one of those rulings included a rejection of a magistrate judge’s order following the 2003 and 2008 predictive dialer rulings.

Nonetheless, things are not as rosy as they may appear for Defendants. The blockbuster ruling in Morgan—concluding that Five9’s manual process may constitute the use of an ATDS–highlights the vagueness of the word “system” and sets a trap for any caller relying on a manual process that integrates with an ATDS. Moreover, a number of recent cases have placed renewed emphasis on the “capacity” of a system to serve as an ATDS– proving that all that is old is new again in TCPAWorld.

We’ll keep an eye on developments.

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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. 

NORTHBROOK, Ill. — The Bureaus, Inc., a compliance and technology-driven master servicer for accounts receivable portfolios and longtime champion for children’s health and well-being, today announced its sponsorship of Giving Rocks 2019, a special benefit concert to help raise awareness and funds for pediatric cancer research. The concert benefits the Giving Rocks Foundation and takes place on October 11, 2019, from 7-10:30 pm at Evanston Rocks in Evanston, IL. Featuring a lineup of musical talent, the event also features homemade Italian food and drinks and both live and silent auctions through which the Giving Rocks Foundation will raise money towards awareness and research for Langerhan’s Cell Histiocytosis (LCH) and other underfunded pediatric cancers. 

The Giving Rocks Foundation

The Giving Rocks Foundation is a 501(c)3 nonprofit organization that was started in 2007 by ten-year-old Sydney Martin after she was diagnosed with Langerhan’s Cell Histiocytosis (LCH), a potentially fatal blood disease lacking sufficient funding and research. At age 8, Syd began collecting rocks from the shores of Lake Michigan and making unique rock necklaces which she sold to raise money for pediatric medical research. After Syd won her battle against LCH, she vowed to continue her fight for a cure and turned her passion project into a successful nonprofit organization, the Giving Rocks Foundation. To this day, Syd’s rock necklaces are the lifeline of the organization with 100% of the proceeds going towards LCH research. Syd and the Giving Rocks Foundation believes that every rock can lead to a cure.

“We are proud to support the Giving Rocks Foundation and help in their mission to increase awareness, funding, and medical research that will lead to a cure of LCH and eliminate all pediatric cancer,” says Michael Slotky, CEO of The Bureaus, Inc. “We hope that our sponsorship of Giving Rocks 2019 inspires others to join the fight against pediatric cancer and support the brave children and their families who are battling cancer around the world. Only 4% of the billions of dollars spent on cancer research and treatment is directed towards pediatric cancer. The Giving Rocks Foundation is providing critically needed support that not only helps to fund research, it also provides hope for giving children another day, and eventually, a life without cancer.”

To learn more about and to support the Giving Rocks Foundation, visit givingrocksfoundation.org. For more information on the Giving Rocks 2019 benefit concert and to purchase tickets, donate, and view auction items, please visit the Giving Rocks 2019 event site. 

About The Bureaus, Inc. 

The Bureaus, Inc. is a master servicer for accounts receivable portfolios and a Certified Professional Receivables Company. Using cutting edge technology, internally developed proprietary tools, and the vast expertise of its management team, The Bureaus, Inc. combines technological strategies with data mining capabilities to identify opportunities not usually found by other asset management firms. Founded in 1928, The Bureaus, Inc. is committed to supporting our local community through thoughtful and purposeful charitable donations and sponsorships. The Company is located in Northbrook, Illinois.

Tensions flew high yesterday when Director Kathleen Kraninger appeared before the House Financial Services Committee for its semi-annual review of the Consumer Financial Protection Bureau (CFPB). Aside from an extended squabble about whether or not a committee member called Director Kraninger “completely worthless,” the 3.5-hour hearing contained the usual partisan talking points.

However, there were three main topics discussed at the hearing that should be of interest to those in the ARM industry.

Constitutionality of the CFPB’s Structure

A hot topic covered at the hearing was the issue of whether the single-director structure of the CFPB and its removal for cause element are constitutional. The timing was serendipitous—the Seila petition for writ of certiorari on this very issue is scheduled to be reviewed by the U.S. Supreme Court tomorrow. Director Kraninger came under attack by left-leaning committee members and received support from the right-leaning members for the position she and the CFPB took in their brief in the Seila case. The brief argued that the CFPB’s structure is unconstitutional. 

In her opening statement, the Committee’s Chairwoman Maxine Waters (D-CA) stated that Kraninger forced the CFPB to abandon the long-standing defense of its structure. Rep. Carolyn Maloney (D-NY) brought up the fact that just months prior to the Seila brief, the CFPB defended its structure in a different court case, and yet now the CPFB flipped its position. Rep. Maloney then criticized Kraninger for second-guessing Congress, which specifically created the CFPB as an independent agency.

Kraninger responded to this criticism by stating she reviewed the issue at-length and had many discussions about it with the Department of Justice and internally at the CFPB. Ultimately, she found that the removal for cause provision needed review and that the ultimate decision will be and should be up to the U.S. Supreme Court. 

Kraninger’s position was not without support. Rep. Patrick McHenry (R-NC) discussed in his opening statement how the CFPB needs structural changes that would put the interests of consumers first rather than whatever political party is in charge. Rep. McHenry equated the director position as it currently stands to an “unaccountable dictatorship.” Rep. Andy Barr (R-KY) referenced that the entire Fifth Circuit, which reviewed a similar issue en banc, agreed with Kraninger’s position.

Rep. Bill Huizenga (R-MI) reminded his colleagues on the other side of the fence that they were warned when they first created the CFPB that at some point the political tide will turn and they would not be happy with the structure created.

Settlements and Consumer Restitution

Another hot topic at the hearing had to do with what the left-leaning committee members categorized as a lack of redress for consumers in the CFPB’s settlements. The focus was primarily on the CFPB’s settlement with Enova International, Inc. In the Enova settlement, the company was to pay a $3.5M civil penalty but no restitution to consumers. 

Just minutes before the start of the hearing, Chairwoman Waters released a report of an investigation the majority staff of the Committee ran on the CFPB’s settlements. Due to the timing of the report’s release, it appeared that Kraninger did not have an opportunity to review it prior to questioning. 

Chairwoman Waters referenced that 3 of the first 5 settlements under Kraninger’s leadership did not provide for restitution to consumers. Waters likewise brought up the report, which she stated found that political appointees at the Bureau—specifically, Eric Blankenstein—overruled the recommendations of career non-partisan staff employees on restitution in settlements. 

Kraninger’s position was that every case is reviewed on its facts and specific circumstances, including the Enova matter. The settlements were the result of negotiations, which CFPB staff are engaged in. The settlements also take into account a consumer cost-benefit analysis, including the cost and time requirements to bring the case to trial. Kraninger stated that reasonable people don’t always agree, so it is reasonable to assume that not everyone would agree with the negotiations.

Kraninger also referenced that of the 19 settlements reached since her tenure started, many contained restitution for consumers. If a company did not have the ability to redress consumer harm, the CFPB would levy a $1 civil penalty so that it can seek redress to harmed consumers through its funding structure, such as in the Corbett matter.  

Specifically related to Enova, Kraninger mentioned that the concept of disgorgement went into play—the consumers effected did actually owe the debts in question, so the funds taken by the company were owed by the consumer.

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Electronic Communications in Debt Collection

As expected, the CFPB’s Notice of Proposed Rulemaking for debt collection came up. A common complaint from the left-leaning Committee members was the issue of allegedly “unlimited” text messages and emails that the proposed rule permits. 

Rep. Alayna Pressley (D-MA) questioned Kraninger about the specific issue of consent. Rep. Pressley asked whether debt collectors would need to receive consent from consumers before sending text messages, which the consumer would have to pay for.

Kraninger responded that under the proposal, debt collectors can send text messages to consumers who previously used text messages as a form of communication with the creditor in relation to the same account. In other words, the consumer needed to have consented to and actually used text messages with the creditor in order for the debt collector to begin texting.

Editor’s Note: This likely means in a situation where the debt collector did not directly receive consent from the consumer, which the NPRM would allow as an alternate consent method.

When Rep. Pressley brought up the cost of text messages for consumers without unlimited plans, Kraninger stated that consumers without unlimited plans or the ability to pay for the text messages would likely not give permission to creditors to contact them via text message, making the issue moot. 

Of note, none of the Committee members nor Kraninger brought up the fact that “unlimited” is a misnomer in this context—the FDCPA itself contains a natural limit to the number of communications of any medium that a debt collector may engage in through the prohibition against the intent to harass or annoy the consumer. 

Conclusion

In short, nothing groundbreaking occurred at this hearing on the substantial issues. There was some jabbing and bickering between the Committee members that was interesting. 

At one point, Rep. Maloney (D-NY) seemingly referred to Kraninger or the Bureau as “completely worthless,” which led to a lot of back-and-forth about the intent of the statement, which the representative eventually clarified, saying it was not directed personally to Kraninger. 

There was also some back-and-forth about the forthcomingness of Kraninger and the CFPB’s first director, Richard Cordray, at these hearings. Some Committee members accused Kraninger of evading answers; others—like Rep. Huizenga—noted that when Cordray sat for these hearings, he stonewalled answered as well.

Editor’s Note: This article is published on insideARM with permission from the author.

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It’s been four weeks since the comment period closed on the CFPB’s proposed debt collection rule—just enough time to look back with some perspective on the comments submitted and assess how the CFPB may move forward.  

The Bureau received over 12,000 comments on its proposed Regulation F, which would be the first rule implementing the Fair Debt Collection Practices Act since its original passage in 1977. In case you missed them, here are the highlights from comments submitted by some of the most influential participants in the industry and government.  

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State Attorneys General 

Attorneys General representing 28 states declared in their comment that “the CFPB elevates the interests of the debt collection industry over consumers.”  At bottom they believe the proposed rule doesn’t go far enough in imposing regulations designed to protect consumers. Notably, the AGs argued that CFPB should have used its authority under the Dodd-Frank Act to extend the regulation to the collection activities of first-party creditors. The AGs concede that such a move would be limited to regulation of allegedly unfair, deceptive, or abusive practices (UDAAP). And while they cited legislation in the House of Representatives this year that would have expanded the definition of “debt collector” under the FDCPA to include first-party creditors, that bill did not make it past committee consideration.  

The group of mostly Democratic Party AGs also claim that the proposed rule will result in “more phone calls” because the call limit provision applies per debt, not per debtor. They expressed further concern that the rule “places no meaningful restriction” on electronic communications and warned of “a barrage of emails and texts” and social media contacts with debtors.  

Finally, with respect to the time-barred debt provision, the AGs asked the Bureau to adopt a strict liability standard for any collection effort relating to time-barred debt (instead of imposing liability only where the collector “knew or should have known” the debt was time-barred, as provided in the proposed rule).  

Federal Trade Commission

If there was ever any question about the extent to which federal agencies coordinate their rulemaking (and enforcement) activities, the FTC seems determined to put the issue to rest. They coordinate closely. In its comment, the FTC “supports” the CFPB’s proposed rule—literally 23 times throughout its comment—and “opposes” nothing. The FTC’s comment is primarily an exercise in jurisdictional maintenance—reminding readers of the FTC’s historical role in enforcing the FDCPA and its continued status as co-enforcer of the FDCPA (with the CFPB).  

ACA International

On behalf of its debt collection industry members, ACA International submitted a forceful, 154-page comment touching on nearly every aspect of the proposed rule. ACA applauded the CFPB for its effort to bring uniformity and consistency to the FDCPA, particularly with respect to electronic communications, limited content voicemails, and the model validation notice.  

And yet ACA did not hold back in expressing concern over many aspects of the proposed rule. Among other things, it argued that: (i) the call caps, time and place restrictions, and other provisions regulating communications with consumers may hinder the ability of debt collectors to reach customers for the purpose of settling accounts, thereby risking an increase in litigation; (ii) the requirement to itemize information about the debt in the initial communication with a consumer will be burdensome, highly costly, and will increase the likelihood of litigation; and (iii) the Bureau’s proposal to impose liability on debt collectors when they “should know” (e.g., about the consumer’s preferred contact times, whether an email address is a work email, or whether the consumer paid someone else) breaks with well-settled debt collection standards and discourages open communication with consumers.  

Small Business Administration—Office of Advocacy

The SBA’s Office of Advocacy expressed concern in its comment about deficiencies in the CFPB’s compliance with the Regulatory Flexibility Act (RFA). Under the RFA, agencies like the CFPB must either certify that a proposed rule will not have a meaningful effect on small businesses or perform a regulatory flexibility analysis demonstrating the impact of the proposed rule on small entities. While the CFPB did perform a flexibility analysis, the Office of Advocacy argues that it failed to provide sufficient information to back up its conclusions. In particular, the Office of Advocacy noted that the SBREFA panel identified costs associated with implementing certain aspects of the rule could be between $35,000 and $200,000 per agency. Those findings should have been included in the CFPB’s proposed rule.  

The Office of Advocacy also urged the Bureau to limit its rule to provisions under the FDCPA. As drafted the proposed rule leverages the Bureau’s FDCPA and UDAAP authority. The UDAAP provisions should be stricken, the Office of Advocacy argues, because the SBREFA panel did not consider the UDAAP provisions and because those provisions create “uncertainty and legal risk for first party creditors.”  

Consumer Relations Consortium

As previously covered on InsideARM, the Consumer Relations Consortium (CRC) filed a comment to the proposed rule on behalf of its members (creditors, debt collectors, and others in the collection industry). Like ACA International’s comment, the CRC presents a far-reaching response to every facet of the proposed rule. The CRC stresses, among other things, that (i) the use of safe harbor language and other clear expectations should benefit both consumers and businesses; (ii) consumer choice should drive the methods of communication between consumers and debt collectors; and (iii) the Bureau should more clearly articulate which rules apply in the context of collecting financial versus non-financial debt.  

Conclusion

The CFPB plainly has its work cut out for it as it sifts through these (and the other 12,000-plus) comments and attempts to modify the proposed rule into a final rule that is fair and palatable to the wide variety of people and businesses affected.  Here, the Bureau’s past performance is probably a poor predictor of when the final rule will be issued. While previous major final rules took over a year to issue after the close of the comment period, the ultimate timing here likely will be influenced by the complexity of the rule, the number of staff dedicated to the rulemaking process, and possibly political or other considerations. 

DALLAS, Texas — Malone Frost Martin PLLC is proud to announce that industry veteran Porter Heath Morgan IV has joined our staff as partner.  

Heath is a third-generation collection attorney with over 15 years of in-house counsel experience for several larger companies in the collection industry.  Additionally, he has more than 20 years of experience in collections, having held various leadership roles in legal, compliance, government affairs, lobbying, operations, sales, marketing and client relations.  In his new role at Malone Frost Martin, PLLC, Morgan will be working with Mike Frost to provide virtual compliance and general counsel services to the collections industry.

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“We have seen a significant increase in growth and demand in our compliance and general counsel services practice area in the past year, and we are thrilled to add an industry veteran such as Heath to our team,” said Robbie Malone, partner.  “Heath’s experience and background working in the healthcare and financial services sectors general counsel and compliance services is a great addition to our firm.  

“I am pleased to join the firm in offering virtual compliance and general counsel services to the industry,” said Morgan.  “I have enjoyed the ability to work with and serve multiple companies and industry leaders in my professional career, and I am excited to expand in that role and join the firm’s mission to provide the best litigation, compliance, and general counsel support services to the industry.”  

Morgan received his J.D. from University of Oklahoma College of Law and his B.A. in Cinema and B.B.A. in Marketing from Southern Methodist University. Morgan has a passion for industry education and has presented at numerous conferences and events on topics including emerging technology in collection communications, regulations in healthcare collections, and preventative strategies for collectors.  Morgan also has a long history of service and leadership in the industry and currently serves on the ACA Members Attorney Program Committee, and the CCBA Board of Directors. He has also previously served on the ACA Legal Fund Committee, ACA Legislative Committee, and ACA International Council of Delegates, and was the CCBA Vice President from 2011 to 2013. In 2015, Morgan received the MDHBA President’s Award for service to the industry.  Morgan will base his practice from the firm’s new Denver office. 

About Malone Frost Martin PLLC

Malone Frost Martin PLLC is a full-service creditors’ rights law firm specializing in and focused on the ARM industry. The firm has offices in Dallas, TX; Chicago, IL; St. Louis, MO, Cedar Falls, IA, and Denver, CO. Malone Frost Martin PLLC provides services in all 50 states.

COLUMBIA, S.C. — RSi is proud to announce the hiring of LaDonna Bohling as Chief Compliance Officer. LaDonna will be responsible for all compliance-related activities at RSi and will work closely with clients and vendors to continue to make compliance programs and strategies a key differentiator for RSi.

Mrs. Bohling comes to RSi after 22 years CCI (Contract Callers August, GA) where she held various positions including Chief Compliance Officer. LaDonna is extremely active in ACA with numerous achievements including Fellow, Scholar, CCCO and IFCCE designations; the Fred Kirschner Instructor Achievement Award, Charles F. Lindermann Certified Instructor Award, Kurt Swersky Award, and Warren Siem Award. She’s also personally conducted over 30 seminars through ACA.

“We are extremely excited to have LaDonna join our team. Her knowledge, enthusiasm, and commitment are obvious and will fit extremely well with our leadership group,” said Brent Rollins, CEO of RSi.

Bohling assumed her position on October 7, 2019.

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About Receivable Solutions:

Receivable Solutions is a national provider of revenue cycle management (“RCM”) services to hospitals and health systems. Through its client-focused culture, RSi delivers accounts receivable management and revenue cycle outsourcing services to accelerate provider cash flow, improve operating efficiencies and enhance profitability

without sacrificing patient experience. The Company’s solutions span the full RCM continuum, providing both point solutions to address specific client challenges and full end-to-end RCM outsourcing. RSi was founded in 1999 and is headquartered in Columbia, South Carolina.