In addressing the National Association of Attorneys General (AG) on Monday in Washington, Federal Communications Commission (FCC) Chairman Ajit Pai first warned attendees to turn off their cellphones for fear of receiving a robocall while he spoke. Then the Chairman sounded a further clarion call for collaborative efforts to combat illegal robocalls, noting that “[s]cammers are…often ahead of the curve technically,” making the effort to thwart them “a complex challenge that will require a comprehensive response.”

Reminding the AGs that “combatting unwanted robocalls” is the FCC’s “top consumer protection priority,” the FCC Chair catalogued the various Commission actions taken consistent with that objective: (a) “authorized carriers to block robocalls from certain spoofed numbers,”(b) commenced “creation of a reassigned numbers database,” (c) demanded that phone carriers “establish a robust call-authentication framework,” (d) “taken aggressive enforcement action,” and (e) working with Congress “to pass much- needed bipartisan, anti-robocall legislation, like the TRACED Act….” (Now at 85 sponsors and counting in the Senate.)

Lastly, he outlined his proposal “to allow phone companies to establish call-blocking services as a default setting for consumers.” No need for a consumer to sign up. Companies adopting this approach would use “analytics to determine which calls to block….” However, the companies would have to give consumers an opt-out option if they did not want these services. Finally, carriers would be allowed to offer consumers “the option of using their own contact list as a ‘white list’” and block all calls that come from folks not on that list.

Before concluding, the Chairman did add that the “proposals make very clear that emergency and other vital calls cannot be blocked…” Exactly what will be on that Critical Calls List would be debated in the Third Notice Of Proposed Rulemaking component of the proposals. For starters, such lists “would include at least the outbound numbers of 911 call centers (i.e., PSAPs) and government emergency outbound numbers…” whose numbers are authenticated.

But what about “other calls…important to consumers?”, such as “calls from schools, doctors, local governments,… alarm companies, …fraud and weather alerts,…calls from recall centers, hospitals, and flight alerts.” The proposal asks, “[s]hould we expand the scope of the Critical Calls List to include any or all of these categories (or any others)” and should the List’s protections be limited “to only those calls from which the Caller ID is authenticated?”

Assuming the Commission adopts the proposal on June 6, there is your invitation to weigh in on what are calls that “consumers value” that should be subject to “protections for critical calls.” Do not miss the chance.

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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.

ARLINGTON, Va. — Convoke, a leader in SaaS solutions for the debt collection market, today announced the most recent software update to its debt collections compliance and management hub.  Each year, Convoke develops and releases several updates to its platform to support its clients’ evolving needs.  This release includes updates which support state-specific regulatory compliance requirements, along with other enhancements to features and functionality which help Convoke’s customers to optimize recoveries while realizing material cost savings.

State Compliance Document Support

In today’s dynamic regulatory environment, certain states have enacted their own consumer protection laws and regulations to augment the current federal requirements.  These new laws include, among other provisions, state-specific document delivery requirements to consumers by credit issuers.  Convoke’s latest release includes numerous changes to meet this and other critical compliance needs stemming from expanding state requirements.

“As a result of recent changes at the federal level, we’ve seen states begin to assert themselves in order to promote their views on fair consumer treatment.  Convoke is proud to be able to meet our customers’ need to comply with new state regulations as they are enacted,” said David Pauken, CEO at Convoke.

New document support includes the addition of the Right to Cure Notice media type.  Multiple states now require that credit issuers provide this document to the consumer.  Convoke also supports state-specific sales affidavit requirements which are used by credit issuers in the recovery process.

About Convoke

Convoke is a leader in SaaS solutions for the debt collection market.  It enables credit issuers to comply with regulatory and internal requirements and manage and monitor debt collection activities for all third-parties, while maximizing recoveries and realizing material cost savings.  Convoke’s online platform is a central, validated and persistent hub that records, organizes and stores information and activities, facilitates, tracks and automates interaction with third parties, and provides powerful auditing, management and reporting tools.  Convoke is headquartered in Arlington, VA.  For more information on Convoke, please visit www.convokesystems.com.  

TORONTO, Ontario — SinglePoint Group International Inc. (“SinglePoint”), a leading provider of specialized call center services for North American businesses, announced today that it has acquired PR Exchange Group of Companies Inc. (“PR Exchange”).

PR Exchange is a premiere Sales and Marketing support company. As an expert in revenue acceleration solutions in the B2B environment, PR Exchange provides Data Collection, Demand/Lead Generation, Lead Nurturing/Scoring, Professional Appointment Setting and Event Promotion/Registration services.  PR Exchange assists high growth organizations with complex sales cycles by filling their sales pipelines with high-quality opportunities and engagements to increase sales and revenue.  

As a part of the agreement, the PR Exchange team will operate from SinglePoint’s state of the art call centre in Toronto, Ontario while continuing to do business under the PR Exchange brand.  

“PR Exchange is a very well managed company with a high performing tenured staff that fits nicely into our culture.  Through this acquisition, we strengthen our suite of solutions and expand our capabilities for our current clients and the market at large,” said Tim Rankin, COO of SinglePoint.  

Angela Kabir, PR Exchange’s founder and CEO commented that “we strongly believe this move will bring about only positive changes for everyone. The PR Exchange brand is made stronger as part of the SinglePoint group of companies and even more competitive in our market; in addition, SinglePoint’s extensive resources will allow us to provide our unique services on a broader scale. This is a very exciting event for both companies, for our employees and for our clients. Our greatest asset has always been our people, and by joining forces with SinglePoint, we have truly enhanced that asset.  We are looking forward to this next chapter in PR Exchange’s story.”

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About SinglePoint

SinglePoint helps clients manage their entire customer journey from new customer acquisition to customer service/tech support, retention and pre and post charge off collections from five sites in North America and two nearshore sites.  With over 800 employees, we serve the needs of our clients across multiple industries including financial services, utilities, telecommunications, health care, education, and the public sector. Learn more at www.singlepointgi.com.

POUGHKEEPSKIE, N.Y. — As part of its broad expansion program to provide full national coverage for its clients, ICR is pleased to announce the appointment of Ms. Brenda Sisk to head up its new West Coast regional office.

As Regional Sales Manager for the West Coast, Brenda Sisk brings over thirty years of debt recovery experience. Her invaluable industry background and knowledge – with twenty-seven years spent in the higher education market – comprises skills and knowledge gained while serving on both sides of the collection process: initially, as a college credit manager, then as bursar/director, and subsequently as third-party collector and as a Regional Account Executive managing sales for a leading education-focused collection agency.

In addition to her thorough understanding and substantial involvement helping higher education clients manage their accounts and borrowers, Brenda also has served several appointments as a board/committee member for several state and regional higher education organizations.  Brenda works directly with college and university bursars and finance offices to deliver comprehensive collection programs.

Brenda states that she “elected to join the ICR team because of its well-earned reputation and established workplace culture.” Part of her personal work philosophy is to treat each client, as she would like to be treated, specifically as individuals and “not like just another number.”

Brenda can be reached by phone at (845) 218-4250, or via email at Brenda.Sisk@icrcollect.com.

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About ICR

ICR is a BPO (Business Process Outsourcing Company) organization specializing in customer service and recovery solutions. ICR has 26 years of experience and proven track record of servicing and providing customized solutions to organizations in a large number of markets, including State and Federal student loan segments, a multitude of Educational institutions and the healthcare industry. ICR is a premier servicer that prides itself on maintaining the highest levels of data security, regulatory compliance and professionalism offered in our industry; all this while ensuring that every individual contacted receives courteous, prompt and unsurpassed ethical treatment in every conversation. Our independent surveys confirm this unequaled commitment to total customer satisfaction. ICR was founded in New York in 1990. It currently operates out three separate locations in NY, GA and TX.

For more information about our services, please contact sales@icrcollect.com or visit our website at www.icrcollect.com.

The Consumer Financial Protection Bureau (CFPB) officially published the Notice of Proposed Rulemaking (NPRM) for debt collection in the Federal Register on Tuesday, May 21, triggering the countdown to the comment due date. Mark your calendars, because the comments are due on August 19, 2019.

As the industry reviews the rules and decides how to comment, the CFPB’s Senior Counsel Kristin McPartland graciously provided some guidance for comments at ACA International’s Washington Insights Fly-In Conference held last week. Below are the five takeaways from Ms. McPartland.

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1. Pay Attention to the Preamble

While it may be tempting to skip over the first 446 pages and go straight to the actual proposed rules, reviewing the preamble is a crucial step. Working through the preamble will help companies and industry groups identify important topics and structure their comments accordingly.

The CFPB intentionally raised questions it wants to be answered in the comments and these are both located and fleshed out in the preamble. While comments are not limited to solely the preamble questions, it is important to address them since these are the issues that the CFPB deems important.

2. Alternatives to Safe Harbors

The NPRM contains many safe harbor provisions.  These are the CFPB’s attempt to clarify what practices and procedures suffice for a debt collector to comply with the FDCPA and specific sections of the proposed rules. For an industry that experiences significant numbers of lawsuits over allegations of technical wording issues, such clarity is welcome. For example, the NPRM contains safe harbor provisions for a model validation notice form, electronic delivery of validation notices, and meaningful attorney involvement in debt collection litigation.

If a proposed safe harbor provision is insufficient or if a section of the proposed rules should contain a safe harbor provision not already listed, it is important to note this in comments. However, it is just as mportant to provide solutions to any gaps or insufficiencies in the form of alternatives or proposed new safe harbors. For example, if the safe harbor validation notice form is not workable for a specific type of debt—like healthcare—commenters should submit a sample of changes that would fix the deficiency.

3. Different Type of Debt, Different Impact

The CFPB is aware that a one-size-fits-all approach may be difficult to implement for different types of debts. The details of collecting student loan debt and healthcare debt, for example, are vastly different. The CFPB recommends providing factual information about these differences in comments.

4. Implementation and Enforcement Timelines

Debt collectors might be able to implement some of the proposed rules quickly; others might take more time. The comments should include notes about the time required to implement the proposal as a whole as well as the individual sections or issues. If it would take longer to implement certain sections than others, should there be different enforcement deadlines for certain issues? That is a question worth answering in the comments. Ms. McParland emphasized that the NPRM reflects the Bureau’s thoughts on a host of issues, but cautioned that until the rules are published in final form, they do not have the force of law.

5. Consumer Privacy

Consumer privacy is the next frontier in many industries, including financial services and debt collection. Certain states, such as California and Washington, have either already enacted or are preparing to enact new consumer privacy laws. With this trend, it is no surprise that the CFPB is interested in how its rules impact these new laws. To the extent appropriate, comments should include how the proposed rules would impact the issue of privacy.

insideARM Perspective

There is a lot of work ahead to prepare thorough comments to the NPRM. Hopefully, these guidelines make the process a little more focused and digestible. As the saying goes, how do you eat an elephant? One bite at a time. Also worthy of noting is that the CFPB has since published a table of contents for the NPRM.

The ever-changing dynamics of the collections environment are making it increasingly difficult for organizations and agencies to contact their customers. Government regulations, robocalls, call blocking, spam-mislabeling, lack of consumer trust in answering calls, and inaccurate phone data have radically accelerated the drop in right-party contact rates and operational efficiencies. 

Government Regulations

On May 7, 2019 the Consumer Financial Protection Bureau (CFPB) issued its long-awaited Notice of Proposed Rulemaking to implement the Fair Debt Collection Practice Act (FDCPA). The proposed rulemaking addresses many aspects of communicating with consumers, including limiting call attempts and telephone conversations from debt collectors to no more than seven attempts by telephone within a consecutive seven-day period to reach a consumer about a specific debt. Once a telephone conversation between the debt collector and consumer takes place, the debt collector must wait at least a week before calling the consumer again. ^[1]

With the potential for these proposed rules to take effect next year, now is the time for collections operations teams to thoroughly evaluate their outbound dialing processes to understand the impact that these rulings may have on their business processes. Collections organizations can perform an operational analysis measuring efficiencies to understand the quality of the customer data and to know how many attempts/days it currently takes for a right-party contact across the different customers account profiles.

A recent report found that there were 4.9 billion robocalls and 2.25 billion scam robocalls in April 2019 alone. Given this dramatic uptick, the Federal Communications Commission (FCC) recently proposed granting telecom carriers to roll out anti-robocall tools by default, as opposed to waiting for consumers to enable those technology features on their phones.^[2]  Companies will need better identification and registration of their phone numbers to mitigate the risk of blocked or spam-mislabeled calls to their customers; ideally this is done by managing and assigning caller names to all owned phone numbers to ensure consistency across multi-operators and mobile apps.

Additionally, TCPA is still a major concern for companies making outbound calls, as they strive to avoid costly penalties and class action lawsuits. TCPA regulations prohibit using auto-dialers and pre-recorded messaging, including SMS messages, when calling or messaging wireless devices without the consent of the called party. With the velocity of consumer contact data changing continuously, companies need to ensure their CRM records are accurate and up-to-date before dialing a number.

The Impact of Call Blocking and Spam Mislabeling

A recent impact study on call-blocking and labeling technologies within the accounts receivable industry, performed by the Association of Credit and Collections Professionals (ACA International), found that the “misclassification of legitimate calls as a scam and the blocking of such calls is a serious issue that threatens the fundamental ability of debt collectors to communicate with consumers to share important account information.” The survey results indicated that 78% of the respondents experienced call-blocking and 74% had their calls mislabeled. 62% of the survey respondents reported seeing a decrease in right-party contacts.^[3] How can an organization contact their customers if the calls are blocked or not trusted enough to be answered?

The Velocity of Contact Data Changes

Consumer contact information is constantly changing. Approximately 12% of wireless phones are reassigned or ported annually.^[4] Unless a company has changes in consumer phone data pushed to their CRM in near real-time, the inaccuracies mount incredibly quickly. How can an organization connect with their customers if the phone information is incorrect or incomplete?

Phone Data Intelligence Revolutionizing Customer Contact Rates

Phone data intelligence is revolutionizing the way organizations can effectively reach their customers. The combination of accurate, insightful, authoritative, and predictive data enables organizations to mitigate call blocking and spam mislabeling, reduce the number of calls made, minimize the number of bad dials, determine the right number to contact, and understand the best time to contact the consumer. All of these data points enable outbound dialers to dramatically increase right party contacts and improve operational effectiveness.

The revolutionary value of phone data enables organizations to use the collective power of various phone attributes for better decision-making. The best approach for optimizing outbound dialing involves managing an organization’s CRM phone data as follows:

Accurate: Keep your CRM database current with a sophisticated identity solution that relies on authoritative data sources and pushes any changes in consumer records to the database in near real-time.

Insightful: Use authoritative identity sources to append contact information, such as email addresses, additional phones numbers and phone type to provide added contact points and key insights on compliance risk.

Authoritative: Prevent inadvertent call blocking and spam-mislabeling by ensuring that the phone numbers used for outbound calling are included in an authoritative list of registered business numbers.

Predictive: Work with a phone intelligence vendor to analyze and prioritize the various numbers within each account according to phone number quality and contactability scores. Reprioritize the numbers based on which ones are most likely to be answered and which ones should not be called. Use predictive phone behavior insights to gain an understanding when consumers are most likely to answer their phones, both by time of day and day of week to eliminate wasted call attempts.

How Neustar Transforms Outbound Dialing

Neustar offers a holistic approach for strategic outbound dialing by providing the unique phone data intelligence and device behavior insights needed to enable collections organization to reach their consumers more efficiently and effectively while minimizing compliance risk. Due to its close relationship to phone carriers—managing over 90% of U.S. caller ID—Neustar also enables companies to manage and assign caller names to all owned phone numbers and ensure consistency across multi-operators and mobile apps while preventing inaccurate call blocking or mislabeling.

Neustar’s unique richness and depth of verification data, supported by over 200 authoritative data sources, have made it the leader in responsible identity resolution. These services include verifying identity offline and online data: name, address, landline, mobile phone, email, and more. Neustar clients find value in understanding the intersection of these data points; for example, is a mobile phone associated with a specific consumer? What is the best time to call and best number to use to actually reach the consumer? Connecting the most precise and authoritative consumer identity data available helps companies prioritize outbound calling strategies, mitigate compliance risk, and communicate efficiently to their consumers.

Neustar clients show an average of 33% lift in right-party contact rates when implementing Outbound Dialing Solutions. By working with collections organizations to analyze their CRM data files, Neustar is able to determine the contactability of each record and assign scores to each account, improving their dialing strategies. Neustar can also use predictive phone intelligence insights to generate the best time of day and day of week to contact each customer, additionally appending working phone numbers for accounts that are currently non-contactable.

To learn more about Neustar Outbound Dialing Solutions, visit www.risk.neustar.

^{1. CFPB Press Release: Consumer Financial Protection Bureau Proposes Regulations to Implement the Fair Debt Collection Practices Act}

^{2. The Washington Post Article: The FCC wants to make it easier for AT&T, Verizon and other carriers to block robocalls by default}

^{3. ACA Study: The Impact of Call-blocking and Labeling Technologies on the Accounts Receivable Industry}

^{4. Neustar Phone Data Analysis}

The Northern District of Illinois was one of the first courts after ACA International to hold that a telephonic system must have a random or sequential number generator to be an ATDS. The court recently doubled down on that position, holding that “[p]redictive dialers include a wide variety of devices, some of which do not qualify as an ATDS under the TCPA because they lack the capacity to randomly or sequentially generate numbers to dial.” Zeidel v. Nat’l Gas & Elec., LLC, 18-cv-06792, 2019 U.S. Dist. LEXIS 83988 (N.D. Ill. May 17, 2019).

That holding is significant, and 100% correct. Multiple courts have weighed in on whether a “predictive dialer” is an ATDS. The truth is that it depends. At its core, the phrase “predictive dialer” really just describes a system that uses advanced algorithms that control the timing and pacing of thousands of calls automatically. As the Zeidel court held, a system that has those capabilities and a random or sequential number generator is an ATDS, while a system that has those capabilities but does not have a random or sequential number generator is not an ATDS.

So whether a system is a predictive doesn’t tell you whether it’s an ATDS. What about the dialer in Zeidel?

The court ultimately held that the plaintiff alleged sufficient facts to survive a motion to dismiss. Rather than simply reciting the definition of an ATDS or attaching loaded labels, the plaintiff alleged that the content of the telemarketing calls appeared generic and impersonal, and that the outbound numbers were “spoofed.” The court held, as have others, that these factual allegations were sufficient to allege plausibly that the calls were made with a random or sequential number generator.

Zeidel thus qualifies as a good loss. The motion to dismiss was denied, but the defendant established early in the case that the plaintiff needs to prove that its system has a random or sequential number generator to prevail.

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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 of last week, the Consumer Financial Protection Bureau (CFPB) announced that it filed a lawsuit against Forster & Garbus, LLP, a collection law firm. The CFPB alleges that the firm misrepresents to consumers that attorneys are meaningfully involved in its communications and lawsuits.

The CFPB’s complaint alleges that the firm doesn’t do enough to verify account-level documentation when it proceeds to litigation on debt owed to its debt buyer clients. According to the complaint, the firm receives data needed to fill out its communications electronically from its creditor clients and, unless the consumer disputes the debt, does not otherwise verify the information or review supporting documentation. The firm relies on non-attorney staff and automated processes to prepare accounts for a suit and one of the firm’s partners reviews the information in the firm’s system to confirm the account is appropriate for a lawsuit. One issue alluded to in the complaint is the volume of litigation filed—more than 99,000 between 2014 and 2016—and that the firm’s partner generally approves more than 90% of the accounts. Those accounts that passed were signed by between one and five associate attorneys specifically tasked to reviewing and signing the complaints.

The suit seems to pay close attention to the alleged failure to review documentation, specifically when determining whether accounts related to purchased debt are suitable for legal process. One example is the review of warranties and disclaimers relating to debt sales to ensure that the debt is valid. According to the complaint, the firm only possessed original or supporting account documentation on a minority of its accounts.

Per the complaint, “Forster & Garbus is generally not sufficiently familiar with its clients’ contracts and practices to reasonably rely on the limited summary information that its clients provide.”

Foster & Garbus, through their counsel Joann Needleman of Clark Hill PLC, released a statement on the issue. According to the statement, the CFPB misstated the testimony of the firm’s attorneys taken during the course of the CFPB’s investigation. The firm also states that it has robust and sophisticated policies and procedures to ensure compliance with the many laws and regulations governing the industry, as well as the current legal interpretations of meaningful attorney involvement.

The statement notes how this suit goes against the CFPB’s recent direction of stopping regulation by enforcement. Director Kathleen Kraninger herself has stated on multiple occasions that the CFPB will lay down clear rules of the road for the industry, yet that does not seem to be the case here: “meaningful attorney involvement” is a doctrine that is far from clear.

Most notably, the term “meaningful attorney involvement” is not mentioned anywhere in the FDCPA but is specifically called out in the CFPB’s recent NPRM, which was meant to provide those clear rules of the road. The NPRM specifically requests comments on whether its meaningful attorney involvement provision is sufficiently clear for the industry, which indicates that there are questions and differing interpretations. This suit was filed one week after the NPRM was released, which means clarity has not yet been provided.

insideARM Perspective

If all of this sounds familiar, that’s because it is. Just last year, Weltman, Weinberg & Reis (WWR)—another collection law firm—won a lawsuit filed by the CFPB, where both the jury and the judge found that the firm had sufficient meaningful attorney involvement in its procedures. Scott Weltman of WWR testified before the House Financial Services Committee earlier this year about his firm’s experience with the CFPB suit. During that same hearing, Director Kraninger indicated that enforcement actions should be used on the bad actors who have no intention of complying with laws and regulations, not on the companies that are putting forward a good faith effort to comply. 

Seeing as the Bureau felt the need to provide clarity for, and seek comments about, meaningful attorney involvement in its NPRM, it seems a bit odd that it would file a lawsuit on the issue considering its loss against WWR and Director Kraninger’s indication that regulation by enforcement is no longer the name of the game.

Something worth mentioning is that there seems to be a difference in interpretation of the term “regulation by enforcement,” as was highlighted in the same Congressional hearing referenced above. The consumer side seems to think the phrase “ending regulation by enforcement” means ending enforcement actions altogether, while the industry side uses the phrase to identify enforcement actions in situations where there is no clear guidance for compliance on a certain activity and the regulator targets the lawful practices of a single company to establish retroactive rules through consent orders.

Last week, the Seventh Circuit Court of Appeals issued an opinion where it affirmed a district court’s decision to cut plaintiff’s attorneys fees to $10,875 from the originally requested $187,410. The decision in question is Paz v. Portfolio Recovery Assocs., LLC, No.  17-3259 (7^th Cir. May 15, 2019).

The factual and procedural background of this case revolves around two Fair Debt Collection Practices (FDCPA) lawsuits against Portfolio Recovery Associates, LLC (PRA).

The First FDCPA Suit

PRA purchased and attempted to collect on plaintiff-appellant’s defaulted credit card account. Plaintiff filed an FDCPA lawsuit against PRA, alleging that PRA failed to credit report his account as disputed. PRA promptly issued an Offer of Judgment (OOJ) pursuant to Federal Rule of Civil Procedure 68.  

Editor’s Note: A Rule 68 Offer of Judgment is a litigation tool that caps a plaintiff’s fee recovery at the time the offer was made if the plaintiff refuses the OOJ and fails to obtain a judgment that is better than what was offered. The policy is to not allow plaintiff or his counsel to unreasonably continue litigation for the sole purpose of drumming up legal fees if plaintiff would have fared better accepting a settlement offer earlier in the litigation rather than from succeeding at trial.

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Plaintiff accepted the Rule 68 OOJ, which excluded an admission of fault. This resulted in a judgment entered against defendant and resolved the suit.

The Second FDCPA Suit

After this, defendant continued to credit report the account without marking it as disputed, so plaintiff sued again. Like with the prior suit, defendant again issued a Rule 68 OOJ for $3,501 plus attorney fees, disclaiming any admission of fault. Plaintiff never responded.

Prior to trial, defendant issued a regular offer to settle the matter for $25,000 plus fees, which plaintiff rejected. Plaintiff succeeded at trial, but since he was unable to show actual damages, he only recovered $1,000 in statutory damages.

When attorney fees came up, plaintiff requested $187,410 to cover all defense fees through trial. The district court, however, slashed this amount to just over $10,000. According to the district court, plaintiff rejected reasonable offers to settle and, since he recovered less in damages than the Rule 68 OOJ offered, the court only allowed him to recover attorney fees up until the Rule 68 OOJ was presented.

Seventh Circuit Decision

The Seventh Circuit affirmed the district court’s decision and found that the court did not abuse its discretion. In its decision, the Seventh Circuit held the plaintiff and his counsel to task on two points.

First, plaintiff attempted to argue that he did not fully understand what a Rule 68 OOJ meant and that the terms were so ambiguous, specifically as to attorney fees, that the offer was rendered worthless and rejecting it was reasonable. The court disagreed, finding:

Paz’s position inheres with an air of unreality. He suggests he had little idea what the offer meant, yet his counsel—in this case and others—had previously accepted offers with identical terms and, in doing so, managed to negotiate and receive a reasonable amount to cover legal fees. All Paz’s counsel had to do was request a fee award that would cover the time necessary to finalize the settlement. This would not have been difficult given the relative simplicity of the claims. By no means was this a scenario where a defendant conveyed an incomprehensible offer or acted in bad faith by setting a trap to preclude a plaintiff from recovering a reasonable amount in attorneys’ fees as part of a settlement.

Second, plaintiff attempted to argue that he received a better result through trial—despite recovering a lower damages amount—because the Rule 68 OOJ specifically disclaimed defendant’s liability. A judgment on the merits for the maximum statutory damages is “much better,” according to plaintiff. The court again disagreed, finding:

Settlement offers regularly disclaim liability, and PRA’s having done so here was in no way out of the ordinary. What Paz overlooks is that his acceptance of the offer, by operation of Rule 68, would have resulted in a judgment being entered against PRA. The moment such a judgment hit the district court’s docket, the prior disclaimer of liability would have been a dead letter. Furthermore, by the very terms of PRA’s offer, the ensuing judgment would have been for $3,501 plus reasonable attorneys’ fees and costs. Paz’s counsel had to know—from his prior experience in this case alone—that PRA’s disclaimer of liability in its Rule 68 offer would not preclude an award of attorneys’ fees.

The Seventh Circuit sums up this situation poignantly:

The time associated with the $187,410 in attorneys’ fees did not reflect the sort of reasonable attorney work that is often inevitable as part of traveling a diligent litigation course. To the contrary, the vast majority of the fees Paz sought to recover were for time spent pursuing an unsuccessful and ill-advised effort to win a much bigger payoff than was even remotely possible in the circumstances giving rise to his claims. This observation is precisely what led the district court to conclude that $10,875 was a reasonable fee award. Paz and his counsel cannot now force PRA to pay the legal expenses for their failure, so the reduced fee award in this case was appropriate and far from an abuse of discretion.

insideARM Perspective

With the litigation dilemma faced by the ARM industry, it is important for debt collectors to utilize any tool that is available to minimize defense costs. The Rule 68 OOJ is a tool that should be considered whenever an FDCPA suit is filed. Unless a debt collector wants to pursue the case on the merits to result in a positive judgment on the merits for the industry, the OOJ can help cap the plaintiffs’ bar’s efforts to drum up attorney fees.

A Rule 68 OOJ and the FDCPA do not address a defendant recovering its own defense fees, but a situation like the above—where the plaintiff fights through trial after rejecting an OOJ that covers at least the statutory damages—will likely not happen frequently. Plaintiffs’ counsel earn revenue by recovering attorney fees; if they have no reason to believe they will recover more than the statutory damages, then they risk wasting their time by continuing to fight a case in which their fees will be capped.

SYRACUSE, N.Y. — Jarrod Turner was hired as a Collections Manager at Capital Collection Management (CCM), a third-party collections agency and debt buyer that empowers consumers and businesses to repay their debts in a professional, ethical, and empathetic manner. 

In his role, he supervises all levels of CCM employees, oversees company-wide training, manages collections software development, company policies and procedures, as well as all clients and collections within the company.

An ACA-certified collections specialist with nearly a decade of industry experience, Turner was previously with ConServe, an accounts receivable management company, where he served in management roles on consumer, commercial, and government contracts.

Turner has in-depth knowledge of industry compliance and ethics, including FDCPA, TCPA, UDAAP, and FCRA regulations. Turner earned a bachelor’s degree in Management from Keuka College and an associate’s degree in Business Administration from Finger Lakes Community College, and holds numerous certifications through Dale Carnegie.

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About Capital Collection Management

Capital Collection Management is a third-party collections agency and debt buyer that empowers consumers and businesses to repay their debts in a professional, ethical, and empathetic manner. CCM strictly adheres to compliance standards with federal and state laws, and is powered by state-of-the-art technology and data analytics that help ensure the best return on collections. Exceptional customer service is a cornerstone of CCM’s business, and its ACA-certified collectors protect its customers’ brands by collecting in a respectful manner to deliver the highest rate of return.