As we wrote a while back, the time is now for courts to defer to the FCC on the definition of ATDS within the TCPA. With a nearly-year-long Public Notice proceeding winding to a close there is no reason for courts to continue to wade into the murky unsettled depths of statutory interpretation. Indeed, as the courts have proven categorically incapable of coming to a consensus on a proper reading of the statute there seems to be little incentive for individual judges to continue to play a game of pin the tail on the donkey with this statute. The proper course, of course, is for Defendants to seek stays of these actions under the primary jurisdiction doctrine and for courts to grant such stays to allow the FCC to act and define ATDS with a little much-needed clarity. This concern is all the greater following the Fourth Circuit Court of Appeals recognition that the TCPA is an unconstitutional restriction on speech that only survives First Amendment review with one of its limbs severed—surely courts should tread extra carefully here to assure statutory clarity and prevent protected speech from being unnecessarily chilled.

One recent decision seems to recognize the need for guidance from above, while yet venturing into the depths below.  In Melvin v. Ocwen Loan Servicing LLC, Case No: 8:18-cv-1911-T-36SPF, 2019 U.S. Dist. LEXIS 74995 (M.D. Fl. May 3, 2019) the Defendant sought a third decision on the issue of whether or not its dialer qualified as an ATDS. Highlighting just how uncertain TCPAWorld is, in two prior decisions the reviewing courts had split on whether or not the equipment was an ATDS—meaning that the same Defendant using the same equipment was found potentially liable in one federal court, and found blameless in another. What a mess.

Well, perhaps hoping to break the tie, the Defendant again sought dismissal of a TCPA case accusing it of using an ATDS. With the case at the pleadings stage, however, the court was confined to accept the pleaded facts as true. After a lengthy recitation of the background on the FCC’s expansion of the ATDS definition in 2003 and 2008, followed by the ambiguous result in ACA Int’l, the Court determined that decisions in the Eleventh Circuit have “generally adopted the position that ACA voided and vacated the 2003 and 2008 FCC Orders’ interpretation of the statutory meaning of an ATDS.” Melvin at * 8. But, following the approach of an earlier decision involving this same defendant, the Court determined that vague allegations regarding encountering a period of silence upon answering a call was sufficient to allege ATDS usage. In the Court’s words: “ Melvin alleged that… he heard silence and a clicking sound once he answered the phones, which may suggest the use of an ATDS.” End of analysis.

The Court also reached the rather non-controversial conclusion that the TCPA applies to debt collection calls. While the statute does not, as a practical matter, apply to the equipment used by most debt collectors—rarely are they randomly or sequentially dialing folks to collect debts—it most assuredly would apply to such calls if a collector stooped so low. Presumably Defendant was driving at a larger point connecting the dialer equipment covered by the statute with the Congressional intent to limit telemarketing calls, but the argument comes off a bit flat in the opinion.

Setting all of that aside, however, the critical piece of the opinion is the seeming reluctance with which the Court addressed these issues. As the Court states: “Ultimately the district courts must grapple with this question [of the definition of ATDS] until they receive further guidance from the FCC, the D.C. Circuit, or their respective circuit courts of appeals.”

You can almost imagine the court issuing a heavy side as it recites those words. And the sentiment is quite appropriate. Why should the district courts be left to grapple with these impossible issues—which are ultimately a matter of policy line-drawing—when the FCC has the issue before it to resolve the matter once and for all (and possibly with a compromise position.)

Ultimately, and perhaps unsurprisingly, the court punts on the critical issue of ATDS functionality deeming mere allegations of hearing a period of silence before calls commenced as sufficient. The Defendant will get another crack at the issue at the summary judgment stage—this time, perhaps, with some additional guidance for the court to consider.

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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.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) hosted a debt collection town hall in Philadelphia to discuss its newly-released Notice of Proposed Rulemaking (NPRM). Director Kathleen Kraninger and a handful of senior CFPB representatives were present. Panelists included:

Industry

• Stephanie Eidelman (CEO, the iA Institute & Executive Director, Consumer Relations Consortium)
• Mark Neeb (CEO, ACA International)
• Jan Steiger (Executive Director, RMA International)

Consumer Advocates

• Michael Froehlich (Managing Attorney, Community Legal Services of Philadelphia)
• April Kuehnhoff (Staff Attorney, National Consumer Law Center)
• Patricia Hassen (President & Executive Director, Clarifi)

Director Kraninger delivered opening remarks which provided context for the NPRM and the upcoming discussion between industry and consumer advocates. She noted that debt collection is an important part of any credit ecosystem, and acknowledged how confusing it can be to be contacted by a company you don’t recognize. She added,

“Some of the friction in the market can be attributed to the fact that the governing statute in this market is more than 40 years old. The Fair Debt Collection Practices Act (commonly referred to as the FDCPA) is from 1977. Think about that. That’s the year the first Star Wars movie was released, Jimmy Carter became president, and a small company called Apple was trying to introduce the world to personal, home computers. Back then, when I was just a toddler, phone booths were on almost every corner and the ubiquity of cell phones wasn’t even imaginable. The FDCPA explicitly addressed the use of postcards, collect calls, and telegrams. I don’t know about you, but I’ve literally never received a telegram and wouldn’t even know how to send one. The upshot is that the FDCPA was written largely to address communications between debt collectors and consumers but it hasn’t always been easy to discern how it might apply to technologies today.“ 

Kraninger remained silent during the panel discussion but was attentive and appeared to take copious notes. Research, Markets & Regulations Policy Associate Director Tom Pahl and Associate Director David Silberman moderated. The following is a summary of the major topics discussed.

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Call Caps

The NPRM includes a limit on the number of attempts and communications a debt collector can make. The debt collector may only make 7 attempts to call a consumer per week (7 consecutive days) for each particular debt and, once a telephone conversation occurs, the debt collector may only call the consumer once a week.

Before the panel discussion began, Director Kraninger addressed the misconception in major news headlines reacting to the NPRM. She noted that many predicted a crisis where debt collectors would send unlimited emails and texts, since the provision limiting number of attempts only applies to phone calls. Kraninger pointed out that the provisions against harassment and abuse are still in place, which will put a natural cap on the number of electronic messages sent.

For the most part, the entire panel was lukewarm on the allowed number of call attempts. As Eidelman pointed out, it would be ideal if consumers would respond to the initial letter sent to them so that there would be no need for multiple call attempts, but that is not reality since many consumers ignore communications from debt collectors.

On one hand, industry members are glad for some sort of clarity, but a “one size fits all” approach for the entire debt collection ecosystem is not ideal. Neeb mentioned that consumers behave differently depending on the age and type of debt, and the number of attempts required to reach the consumer varies.

The consumer advocates all suggested that 7 call attempts is too many, especially for consumers who may have multiple debts in collections at the same time. Kuehnhoff recommended a call attempt cap of 3 calls per consumer, rather than per account.

Opt-Out Provisions

In response to the consumer advocates’ argument, the CFPB moderator mentioned that the proposed new rules permit consumers to opt-out of particular communication channels and request a cease in communication all together. Kuehnhoff stated that this is a step in the right direction, but would still be difficult for a consumer who is being contacted by multiple debt collectors or when the debt is transferred to another agency. She also suggested that consumers are sometimes wary of invoking the opt-out right because it may lead to worse consequences.

Limited Content Message

When the discussion turned to the limited content message, the reaction was mixed.

The industry was glad to finally have a Foti fix—referring to a decade-long litigation battle over what is and is not appropriate for a voice message from a debt collector, stemming from the case Foti v. NCO Financial Systems— and that having the ability to leave voice messages will reduce the number of call attempts needed to contact the consumer. Consumer advocates were worried about privacy and that limited content messages can be left with third parties.

Regarding the privacy issue, Eidelman pointed out that the concept of privacy today is very different than what it was when the FDCPA was released in 1977. The new reality is that people are demanding transparency; they want to know who is calling and why. Due to the way the current laws are written, debt collectors are in a modern-day Catch-22 situation. They can’t reveal who they are or the purpose of their call until the consumer confirms their identity; but consumers, who are instructed to be leery of calls from numbers they do not know, are unwilling to provide personal information to a person who will not first disclose where they are calling from and what the call is about.

Form Validation Notice

All sides agreed that a form validation notice, with clear instructions about what must be included, is a positive thing. Unfortunately, once the discussion got into the details, this unity devolved.

Neeb pointed out that the content of letters and phone calls has led to the onslaught of litigation about hyper-technicalities like comma placements, which overall do not help consumers.

Eidelman and Steiger pointed out the benefit of including fewer disclosures in order to make the form easier to understand for consumers. Eidelman stated that the disclosures required in letters today are fairly sophisticated and, when collected together, far exceed the reading level of the least sophisticated consumer (which is who consumer groups and many courts have determined they should be designed for). Including the most important disclosures in the letter and a hyperlink to a trusted source such as the CFPB helps alleviate this issue and creates consistent education and training across the board. Steiger agreed, pointing out that most people who receive a credit card form in the mail usually discard the multi-page, fine print disclosure form without reading it.

Consumer advocates expressed disappointment about the lack of prominent disclosure of consumer rights in the model form, which had been included in the 2016 Outline of Proposed Rules. Consumer advocates also took issue with the hyperlink, stated that not all consumers had easy access to the internet.

Time-Barred Debt

Another divergent topic was that of collecting on time-barred debt. The NPRM proposes a prohibition on filing or threatening to file a lawsuit on debt that is beyond the applicable statute of limitations. One consumer advocate stated that there should be a flat-out prohibition on collecting time-barred debt; Steiger argued that this would have unintended consequences.

Froehlich took issue with the “knew or should have known” standard in the NPRM’s prohibition. He states that this relaxes the current strict-liability law within the Third Circuit and would put the burden of proof on consumers, requiring them to hire attorneys, which many cannot afford.

insideARM Perspective

The public forum was followed by two roundtables with Director Kraninger and senior staff members. First was a session with consumer groups, then one with industry. Attended by 16 representatives from ACA International, the Consumer Relations Consortium, the National Creditors Bar Association, and RMA International, Stephanie Eidelman reported that the industry roundtable was a very productive and interactive discussion that offered an opportunity to provide more in depth feedback.  

(Pictured, from left to right: Jim Beck, MRS BPO; Leslie Bender, BCA Financial; Michael Kraft, The CCS Companies; CFPB Director Kraninger; Stephanie Eidelman, the iA Institute; Ralph Liberio, NCB Management Services.)

(CRC members pictured, from left to right: Michael Meyer, MRS BPO; Michael Kraft, The CCS Companies; Leslie Bender, BCA Financial; Ralph Liberio, NCB Management Services; Stephanie Eidelman, the iA Institute; Bob Obringer, Phillips & Cohen; Jim Beck, MRS BPO. Also in attendance were Andrew Blady, NCB Management Services and Joann Needleman, Clark Hill)

MISSISSAUGA, Ont. and WILMINGTON, Del. — Collectcents Inc., a leading provider of specialized call center services for North American businesses, announced today it has reached an agreement to acquire General Revenue Corporation (GRC) from Navient (Nasdaq: NAVI).

GRC, based in Mason, Ohio, is one of the largest and most successful college and university-focused asset recovery agencies in the industry. Collectcents will continue to operate GRC from its Mason office. As a part of the agreement, approximately 130 GRC employees will join the Collectcents group of companies while continuing to do business under the GRC brand. 

“Adding GRC to the Collectcents group of companies broadens our servicing and geographic capabilities, while strengthening our commitment to delivering compliance-driven, best-in-class customer engagement and receivables management services to our clients,” said Collectcents’ President & CEO Jonathan Finley. “The tenured and highly successful employees of GRC provide us with an experienced team and a recognized leader in the education and government sectors.”

“Collectcents is a world-class organization,” said Jack Frazier, Senior Vice President, Navient. “Together, we will ensure a quick and smooth transition for GRC’s customers and employees.”

The transaction is expected to close on June 30, 2019, subject to certain conditions. Terms of the agreement were not disclosed.

Navient was advised on the transaction by Greenberg Advisors and Collectcents was advised by Corporate Advisory Solutions.

About Collectcents

Collectcents has been providing specialized call center services to North American businesses since 1947. Collectcents Inc. is the holding company for several recognized industry leading brands, including the Credit Bureau of Canada Collections (CBCC), Collection Group of Canada (CGC) and SinglePoint Group International (SPGI).

Collectcents 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.

According to the Bureau of Labor Statistics, the current U.S. unemployment rate is 3.6%, the lowest it has been in at least a decade. This presents a unique issue for the debt collection industry, which historically has a hard time with recruiting and retaining employees. One untapped source of potential employees for the debt collection industry is military spouses.

Editor’s Note: The author, one of iA’s own, is a very proud military spouse whose husband currently serves in the U.S. Marine Corps.

Below is a breakdown of a few reasons why military spouses make for great employees and how to find them.

Great with Change

Something all military spouses get accustomed to while being married to a servicemember is change. In the military, change is constant. There’s always something: moving across the country due to a change in duty station, adjusting to an ever-changing operational schedule of the servicemember’s job, or adjusting to an adjustment in the home when the servicemember leaves for or returns from a deployment. Being able to go with the flow is one of the greatest strengths of military spouses.

This strength is vital for employees within the debt collection industry. In this industry, the requirements for what collectors say on the phone, what is included in letters, and how the company operates are in constant flux due to changes in legal, regulatory, and client requirement. Companies have to refine their processes on a daily basis to keep up. Having a team member who is comfortable pivoting at a moment’s notice is a great asset.

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Desire Employment Longevity

Attrition in the debt collection industry is high. This doesn’t come as a shock to anyone; it’s a tough job. One way to solve for this is to recruit employees who desire longevity and tenure at a company.

Military spouses often have to involuntary leave jobs due to changes in duty station. Many military spouses, especially career-focused professionals, dream about having longevity on their resumes and are willing to stay with the right company for however long the military allows them to.

Some might say that being a military spouse makes the candidate short-lived for employment, but this turns a blind eye to what is truly going on within companies: non-military spouse employees have short tenures as well. In fact, a military spouse that desires longevity will likely work harder to ensure she or he can stay with the company for the duration of the current set of orders, which could very well be longer than a non-military spouse employee’s stay.

If a company is willing to explore telecommuting options for military spouses that have to move away due to military orders, it can increase that longevity even further. Military spouses understand how difficult it is to search for a new job with each move and, if a company shows loyalty to her or him, it will usually be reciprocated.

Where to Find Military Spouse Recruits

If your company has a location near a military base, then you have many avenues for recruiting military spouses. Each branch of the military—and most commands within the branches—have a department or person dedicated to assisting military families. They host job fairs and pass on information about job openings.

Some examples include:

• Military OneSource, a great one-stop-shop that can help guide a company on how to advertise job postings to military spouses.
• The Marine Corps has a Family Member Employment Assistance Program;
• The Air Force has the Airman and Family Readiness Center.
• The Navy has a Fleet and Family Support Program.

There are also independent organizations that are dedicated to finding employment opportunities for veterans and military spouses, such as Hiring Our Heroes. There are groups that work to advocate for the portability of professional licenses for military spouses, such as the Military Spouse JD Network, who often have online job boards where opportunities can be posted. Many similar resources can be found through a quick internet search.

How to Appeal to Military Spouses

Here is a non-exhaustive list of benefits a company can offer military spouses that would help influence her or his decision about joining the company:

• Pre/Post-Deployment family time off. Deployments are very hard on military families. They can range from a few months to well over a year of family separation while the military member serves abroad. Offering military spouses paid time off immediately before a deployment (and immediately after) is a wonderful way to let their family spend some quality time together and readjust to their “new normal.”
• Offer flexible schedules. A lot of military spouses are looking for part-time work to bring in some extra income for their family, but their availability is usually dependent on the military members’ schedules, which is not voluntary and not always consistent. If the military says to be somewhere, the servicemember has to be there. For example, the servicemember may need to go on “duty” on a random day (where they have to be at work for 24 hours straight) or they might be sent away for an exercise that lasts a week or two. Offering flexibility to work around these bumps is of great benefit to military spouses.
• Be Forgiving of Resume Gaps. As previously mentioned, many military spouses must involuntarily leave employment due to changes in duty station. When searching for employment, these resume gaps are a big fear for military spouses. Being forgiving of their “swiss cheese” resumes, especially if the gaps and changes in employment coincide with geographical changes, is important.

Be Cognizant of Labor and Employment Laws

On a final note, it’s important to be aware of the labor and employment laws that govern your business. While you can post job openings on resources dedicated to military spouses, these laws dictate what you can say and ask during the application and interview process. Your Human Resources and Legal deparmtents (or outside legal counsel) are able to help you navigate these waters.

Conclusion

In sum, military spouses present great potential for employeement within companies. Kelly Knepper-Stephens, the Vice President of Legal at TrueAccord and also a military spouse herself, comments:

Seeking to hire military spouses is a great option for employers. In my experience, military spouses are typically dedicated, easily adaptable, committed and fast learners. In the past, companies I have worked with have even permitted military spouse to work remotely when transferred to another duty station—including, me which I have greatly appreciated.

The Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rulemaking (NPRM) for debt collection was released yesterday and contained a lot of detail about validation notice requirements. Parts of the notice are consistent with today’s version, but the NPRM outlines several new requirements and clarifications.

insideARM published an article yesterday with some of the detail. Below is a deeper dive into the validation period, the “tear off” check box section, and the itemization of debt.

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Clearly-Defined Validation Period

The Fair Debt Collection Practices Act (FDCPA) provides consumers with 30 days from receipt of the validation notice to take advantage of the rights outlined in section 1692g of the FDCPA. This might seem like a simple concept at first blush, especially where electronic communications are concerned, but the issue becomes complex when taking the mail system into account. Without mail tracking, which is cost-prohibitive in the context of debt collection due to the quantity of letters sent, debt collectors must make an educated guess as to when the consumer actually received the letter.

The Bureau answers this question by clearly laying out the validation period. The consumer still has 30 days from the date of receipt to take advantage of his or her right, but now “a debt collector may assume that a consumer receives the validation information on any date that is at least five days (excluding legal public holidays, Saturdays, and Sundays) after the debt collector provides it.” See NPRM § 1006.34(b)(5).

Of benefit to both the consumer and the debt collector, the validation notice will need to clearly state the date that the validation period ends (see NPRM § 1006.34(c)(3)) so there is no confused about when the consumer must exercise his or her validation rights.

Check Box Tear-Off or Equivalent

The proposed rule will require that the validation notice contains what has frequently been referred to as a “tear-off” or “coupon” section which a list of check box options for actions the consumer may take. This section will need to be segregated from other sections of the letter and contain a specifically-defined list of available actions, such as options for disputing the debt and requesting original creditor information. See NPRM § 1006.34(c)(4). Model Form 3–B, which the Bureau considers compliant, models the section as follows:

If the validation notice is sent electronically, these prompts may be displayed as electronically fillable fields and include hyperlinks to the debt collector’s website. See 1006.34(d)(4).

Itemization of Debt

The NPRM requires that the validation notice letter includes an itemization of debt. This itemization seems to be fashioned after New York’s requirements, requiring the debt collector to outline the amount of the debt as of the “itemization date” (more on that in a minute) and the current amount of the debt “in a tabular format reflecting interest, fees, payments, and credits since the itemization date.” See NPRM § 1006.34(c)(2)(viii)-(ix). Model Form 3–B shows the format as follows:

When the initial outline of the proposed rules came out in 2016, there was some issue with clearly defining a date for such itemization, since different types of debts use different terminology and have different processes for determining the amount of debt. For example, a charge-off date might better apply to credit card debt, but date of services received might be a better date for healthcare accounts. Even within the credit card realm, sometimes debt collectors are assigned post-default but pre-charge-off accounts, in which case there would not yet be a charge-off date.

The Bureau addressed this concern by providing the debt collector some flexibility so that it can select whichever date is most appropriate for its specific situation. Section 1006.34(b)(3) provides debt collectors with flexibility by defining the itemization date as any of the following:

• Last statement date,
• Charge-off date,
• Last payment date, or
• Date of the transaction that gave rise to the debt.

As we dig deeper into the NPRM, we will have more to follow.

It’s important to note is that these are not yet official rules; they are proposals, and open to comment for approximately 90 days (that clock will start ticking once the NPRM is published in the Federal Register, which is expected in the coming days). A final rule is expected in the months following the close of this comment period.

LISLE, Ill. — Provana, a leading provider of innovative technology solutions and business process outsourcing for the Receivables Management industry is proud to announce the addition of industry veteran Doffie Howard to their management team. With the addition of Mr. Howard, Provana will further enhance their call center outsourcing and technology solutions to meet the evolving needs of creditors, debt buyers, and collection agencies.

“We are very excited to have Doffie Howard joining our team”, said Provana co-founder and CEO Sandeep Bhargava. “Doffie has directly experienced working with our software products and services in an Agency environment, and is a very valuable addition to our team.  The depth of his industry experience will provide a perspective to further strengthen our suite of solutions”

Doffie Howard has been an industry thought leader since 1991, with a strong focus on the intersection of call center performance and technology. His unique perspective provides insights into how our products and services are viewed by our clients and their teams. With assistance from Mr. Howard, the Provana team will continue to refine their existing services and innovate solutions to other problems faced by their clients in the receivables management space.

In his new role, Doffie Howard is responsible for the growth of Provana’s local, near-shore and India based call center operations. Since 2012 Provana has been providing creditors, debt buyers, collection agencies and law firms with software products and outsourcing solutions that drive profits for their client partners.

“Provana is a unique company in the receivables management industry. They have become well-known for their powerful software products, but they also provide high-quality services including outsourced call centers, client services and other back-office support functions”, commented Vice President, Doffie Howard. “I look forward to working with my industry colleagues to introduce them to the full-suite of Provana services, as well as working with them to refine the service offerings.”

While working in his previous role as Chief Operating Officer at Contract Callers Inc (CCI), Doffie was responsible for building and refining call center operations. During his time at CCI he implemented many of the Provana tools and services including the IDAP reporting tool, iConnect247 mobile app, IPACS compliance software and utilized outsourced call center agents.

“Although we are losing Doffie as an internal resource, we are very excited to have him working with Provana in his new capacity”, said Contract Callers Inc, CEO, Tim Wertz. “Provana provides some essential tools and services to our business, and Doffie’s experience with our company will help him to provide the highest quality products and services for the receivables management industry.”

About Provana

Provana is an innovative technology and outsourced business services firm focused on the collection lifecycle. Combining cutting-edge technology platforms and a large global workforce, Provana is the perfect partner to help creditors, debt buyers, collection agencies, collection law firms and other receivables management firms with improving performance with a close eye on compliance.

SAN ISIDRO, Dominican Republis — ERC, a global BPO and Collections company, celebrated the official opening of their new 52,500 square-foot facility in the Dominican Republic. ERC executives and new employees held a ribbon-cutting ceremony at the site to mark the historic occasion.

Photo: ERC‘s President and CEO, Marty Sarim; Vice President, Jose Gonzalez; and Co-Founder and COB, Kirk Moquin, celebrate the opening of ERC‘s new facility.

“This is another exciting day for our company. Many thought we would never open a second facility here,” said Marty Sarim, ERC’s President and CEO. But when the opportunity presented itself, ERC once again bet on the team.

“In my experience in life and business, you got to believe. And when you work with people you believe in, amazing things can happen,” said Kirk Moquin, ERC’s Co-Founder and COB.

The state-of-the-art facility is located only a few miles from their current campus and resides in San Isidro Free Trade Park, Santo Domingo’s thriving industrial park. Established in 1986, the area has grown to become one of the most modernized and successful free zones in the Caribbean, and is home to 34 multinational companies.

The new employees are excited to join the ERC family and take advantage of the countless amenities available in San Isidro Free Trade Park. Some of the perks include a barber shop and beauty salon, an on-site hospital and cafeteria, 24/7 private security, access to public transportation, and private study rooms for students. ERC employees will even have access to daycare services inside the facility.

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ERC is confident that their new location is the perfect place for employees to succeed and grow with the company. “We want to always do right by our employees and make sure they have everything they need to be successful. This new facility accomplishes that,” added Sarim.

About ERC

ERC is an agile, technology-driven company that provides business process outsourcing (BPO) and account recovery services for Fortune 500 companies. ERC leverages the latest innovations in technology while providing extraordinary workforce resources to deliver unparalleled end-to-end customer experience solutions, making ERC a top performer for its clients. With offices spanning four continents and the best talent in the business, ERC is dedicated to changing the BPO landscape through its continued investment in artificial intelligence and data analysis, and its commitment to creating a highly trained, empowered workforce.

The Consumer Financial Protection Bureau (CFPB or Bureau) released its Notice of Proposed Rulemaking (NPRM) for debt collection. The NPRM, a 538 page document, provides a 90 day comment period.

Below are some highlights after a first pass-through of the proposed rules. In the coming days and weeks, insideARM will publish more in-depth articles about the NPRM and its likely impact on the debt collection industry.

Email and Text Messages

The NPRM provides that the bona fide error defense will apply to a debt collector’s communication with a consumer via email or text message if it maintains reasonable procedures that include certain steps. For example, a debt collector may communicate with the consumer using an email or text using:

• The email or telephone number was used by the consumer to communicate with the debt collector for purposes other than opting out of electronic communications.
• The non-work email or phone number, if the creditor or debt collector provided notice to the consumer at least 30 days prior to the first communication that the debt collector might use such email or phone number for electronic communications. This notice must include an opt out provision.
• The non-work email or phone number obtained from the creditor or a prior debt collector the creditor or prior debt collector recently used to send communications to the consumer.
• The NPRM provides specific guidance defining a work email.

Electronic communications must also include an opt-out notice that does not require a fee to opt-out.

The NRPM also contains a safe harbor for emails and text messages that reveal the debt collector’s name or other information indicating the communication relates to debt collection if the other requirements for email and text messaging are followed.

The NPRM specifically allows a debt collector to send validation notices and other required disclosures electronically, so long as it does so “in a manner that is reasonably expected to provide actual notice and in a form that the consumer may keep and later access.” A future article will feature a deeper dive into these requirements.

Call Caps: Lucky Number 7

The NPRM proposes a cap on the amount of calls a debt collector can make to a consumer regarding a specific debt. The number of attempts to reach the consumer (where no discussion is had) is limited to seven times within a consecutive seven day period. If the debt collector holds a telephone conversation with the consumer, the debt collector must wait a consecutive seven day period before contacting the consumer again. Call-backs requested by the consumer are exempt from the call limits.

Of note, these call caps are for each specific debt. If the debt collector is servicing more than one debt, it is important to have a system in place that tracks the call attempts and successful calls for each debt.

Validation Notices

The NPRM provides extensive discussion of the requirements for the validation notice. Page 491 of the NRPM contains a model validation notice form. In addition to current requirements, the NPRM would require the validation notice to include:

• The date that the debt collector considers the end of the consumer’s protected 30-day validation period.
• If the account is for a credit card debt, the merchant brand, if any, associated with the debt, to the extent that it is available to the debt collector.
• The name of the creditor to whom the debt is owed and, if different, the name of the creditor at the “itemization date” (which is defined as either the date of last statement, charge-off date, the last payment date, or the transaction date).
• A New-York like itemization of the debt that reflects the interest, fees, payments, and credits since the itemization date.
• A link to the CFPB website for consumer protections in debt collection.
• A tear off with specific consumer responses, such as disputing the debt (and why).

Prohibition of Suits and Threats of Suit on Time-Barred Debt

The NRPM contains a brief section on time-barred debts. All it states is that debt collectors are prohibited from bringing suit or threatening legal action on time-barred debts. Noticeably, there is no mention of a time-barred debt disclosure, which is the subject of the CFPB’s current survey.

insideARM Perspective

There is a lot to unravel in these rules, and the coming days will provide a clearer picture to the industry. At first blush, the call attempt limit seems alleviated by the provision of a limited content message and the ability to communicate with consumers using email and text messages. However, the requirements for electronic communications will need a deeper dive to understand their true impact. One thing not referenced is how the Telephone Consumer Protection Act (TCPA) will impact the ability to use text messages for debt collection. The answers to many questions such as these will be revealed in due time, and a great place to start the inquiries is at the CFPB’s town hall discussion tomorrow.

Finally, it’s important to note is that these are not yet official rules; they are proposals, and open to comment for the next 90 days (that clock will start ticking once the NPRM is published in the Federal Register, which is expected in the coming days). A final rule is expected in the months following the close of this comment period.

As we reported a few weeks back, the Baron and I are working hard to break the logjam and assist the Federal Communications Commission (“FCC”) to reach a ruling on the TCPA Public Notice proceeding following the ACA Int’l.

Last week we met the Chief and staff of the FCC’s Consumer and Governmental Affairs Bureau—the folks responsible for putting pen to paper on the TCPA Omnibus II— and walked through how the compromise proposal would work, brick by brick.

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As to a compromise formulation for automated telephone dialing system, we explained that a definition for “automatic” dialing was needed. Although both the Ninth Circuit’s Marks case, and the FCC’s own rulings from 2003 focusing on “human intervention,” have looked at the idea of “automatic” dialing, neither ruling gave a definition for the term.  The compromise ATDS proposal would interpret the phrase ATDS to include dialers that randomly or sequentially generate numbers and dial them OR any system that dials automatically from a list without human intervention in that the system, as used, fails to achieve an abandonment rate of 3% or less of answered calls.

As stated in the ex parte filing, “[t]his alternate formulation establishes a definition of what it means to dial ‘automatically.’ It would assure that legitimate businesses can continue to use advanced and accurate technology to efficiently contact consumers, but require those businesses to assure enough man-power to field the calls it launches. It assures a positive consumer experience in that it reduces the number of abandoned calls consumers experience. It also harmonizes with existing telemarketing requirements regarding abandoned calls. See 47 C.F.R. § 64.1200(a)(7).”

In terms of nuts and bolts, the proposal would place the burden on the caller to demonstrate it maintained the abandonment rate over the average of any 30 day period during which a challenged call was made. If a dialer is not operated within these limits than calls placed during that 30 day period are presumptively made using an ATDS—although that presumption might be rebutted by other acceptable evidence that the dialer did not function automatically and without human intervention. That is to say, the 3% abandonment rate affords a clear, but non-exclusive, methodology by which a caller can demonstrate it is not dialing “automatically” for purposes of the statute.

A revocation compromise is also potentially in the works. The ex parte calls upon the FCC to incentivize businesses to maintain easy-to-use consumer contact preference portals where precise preferences can be tracked by callers and kept updated by consumers. Where a business offers such a portal the contact preferences would afford definitive proof of consent for calls to specific phone numbers for designated purposes. Where a business offers such a portal and a consumer fails to use it—such as by stating “do not call” during an outbound phone call—that effort still might be effective to revoke consent but will not override the previously-designated contact preferences except for the narrow purpose about which the call was originally placed. In other words, if the consumer had previously designated a cell phone number as consented to—as demonstrated by an entry in the easy-to-use preference portal—then any subsequent oral “do not call” request will only operate very narrowly to, for instance, stop calls regarding a specific payment deficiency or telemarketing effort. It would not be operate to force callers to cease calls using regulated technology to any given number for any other purpose. As the ex parte states: “In particular, where a business has provided such a portal, and a consumer yet states solely “stop calling”, or words to that effect, in response to an outbound phone call received from that business, that language should be treated solely as a narrow revocation of consent to be called solely on that number and solely for the purpose for which the call was placed.”

The compromise revocation proposal is critical because—as TCPAWorld followers know—consumer lawyers often create lawsuits by asking consumers to use vague language to revoke consent or file suits based upon statements made years ago, which the consumer decides post hac were meant to be broader than they were interpreted by an agent at the time. It should also provide a stout and swift defense instances where convenient or errant memories lead to errant suit.

Most importantly, however, such a rule would empower consumers by giving them a clear channel to communicate their contact preferences to responsible businesses, assuring that consumers receive the information they expect and desire via the channel that best suits the consumer. Callers using these portals will know whether they are permitted, for instance, to call a cellular number for some purposes and not others, or for certain accounts/products/services and not others. And both parties will have the satisfaction of having a clear understanding of what the other expects regarding the right and ability to contact the consumer for those designated purposes.  As the ex parte states: “[b]y thus narrowly construing revocation efforts made through channels that do not assure a clear “meeting of the minds” between the parties, the Commission can incentivize business to create consumer-friendly contact preference portals, cut down on frivolous and concocted lawsuits by Plaintiffs who “make what they will” of vague phrases in after-the-fact lawsuits, and better empower consumers to control how legitimate American businesses contact them—helping to restore confidence to consumers that they can trust calls from legitimate businesses reaching out to the consumer via authorized channels.”

Under the proposal, the burden of proving an “express and clear” revocation remains on the consumer in all instances, but the caller would bear the burden of demonstrating that it offered a conspicuously disclosed and easy-to-use channel to record the consumer’s specific contact preferences. For purposes of interpreting “east-to-use” a website or toll free number would suffice.

Well what do you think TCPAWorld—are we on to something?

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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.  

After a long wait, the Consumer Financial Protection Bureau (CFPB) is set to release its Notice of Proposed Rulemaking (NPRM) for debt collection on or around Wednesday. Here are a few things debt collectors should do to prepare in these final few days to prepare.

1. Watch the Town Hall Discussion

The CFPB is hosting a debt collection town hall discussion on Wednesday at noon Eastern. The event will be live streamed on the CFPB’s website. The discussion will likely focus on the NPRM, so key stakeholders within your business should block off the time to watch the event.

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2. Prepare to Comment

The NPRM’s release will be followed by a public comment period—this is the time for individual companies and the industry as a whole to be heard. Other than what Director Kathleen Kraninger included in her speech (that the rules will address call caps, email, and text), we don’t yet know what the rules will cover so it’s too early to start drafting comments. However, now is the perfect time to prepare a group of team members within your organization designated for this purpose. This team’s job should be to review the NPRM in its entirety and determine the rules’ impact on your organization. Depending on the impact, the team should then make a decision about whether or not to submit a comment and, if the latter is decided, begin drafting it.

While many industry associations and groups will be commenting on the NPRM, it’s important that debt collectors submit their own company’s comments as well. Not only is this your company’s opportunity to have its voice heard, it will also prevent the industry’s comments from being drowned out by those of consumer groups (who are likely motivating their base to comment individually as well).

3. Get Your Compliance and Change Management Systems Ready

The NPRM is not the final rule, so there is no need for a mad dash to make changes just yet. However, depending on the rules’ substance, your company might need to make some significant changes. The best time to get ready for such changes is before they become required.

So how can your company’s change management system or team prepare for this?

• Ensure you have a systemic, documented process for how changes occur at your company.
• Since the rules will likely impact your company across the board, ensure you have stakeholders from all major departments present. For example, since we know call caps are coming, it’s important to have representatives from the operations and IT departments as part of the discussion.
• Have a team dedicated to combing through the NPRM and picking out the actions required so that each change can be itemized and documented. Since the rules have been in-progress for so many years, it’s unlikely that they will change dramatically from what is contained in the NPRM. Having a list of all requirements from the NPRM will make it simple, once the final rules are released, to cross off any deleted requirements and add any new ones. This team could also be a great source of information for the group responsible for your company’s comments as discussed in the section above.

4. Open Dialogue with Creditor Clients

While the NPRM is not the final rule, its release is a great opportunity to open a dialogue with your creditor clients to determine how these rules will impact the business and the creditors’ current requirements. Some creditors are well-informed and are following the debt collection rulemaking process closely, while others may be reyling on their third-party agencies and firms to be the experts. In both situations, clear communication before the rules are finalized is the best approach to avoid confusion and address differences in interpretation.

5. Most Importantly: Don’t Panic

As mentioned several times throughout this article, the NPRM is not the final rule. There is no need to go into overdrive and make massive changes as soon as the NPRM is released. What is needed—and will be of the most benefit—is the submission of well-thought-out, persuasive comments on the NPRM’s requirements and impact. The best way to do this is after a thoughtful, thorough review of the requirements’ impact on your business. The comment period for the NPRM is likely to be somewhere between 30 to 90 days, which leaves enough time to review the proposed rules calmly.