BUFFALO, N.Y. — Arbeit Software, a leading contact software provider for call centers, small businesses and debt collection agencies, today announced a strategic collaboration with Numeracle™, Inc. the pioneer of robocall blocking and labeling visibility and control in the calling ecosystem, to provide Numeracle’s Number Registration and Trusted Entity™ Certification solutions to Arbeit’s existing and future customers.

Through this new partnership with Numeracle, Arbeit continues to demonstrate its commitment to de-stigmatizing the debt collection industry by empowering responsible agencies to call consumers in a transparent way.

Arbeit’s existing and future customers will now have the ability to register the phone numbers they use to communicate with consumers across the carrier and app ecosystem as well as certify their calling party trust. Numeracle’s registration and certification services as provided by Arbeit will also include access to monthly health check and risk rating reports, which provide the ability to see how calls are being labeled and to add, edit, revise or swap out numbers if needed.

“Arbeit’s mission to enhance the productivity and compliance of its clients while improving customer engagement metrics makes the company a natural fit for a strategic partnership with Numeracle,” said Rebekah Johnson, Founder & CEO, Numeracle. “By taking the initiative to extend Numeracle’s visibility and control in the call blocking and labeling ecosystem to its customer base, Arbeit is enabling its clients to effectively adapt to the changes in call delivery best practices with actionable measures to improve right party contacts and maintain positive brand reputation.”   

“The increased contact rate our clients are going to see from this is going to be nuts,” said Alex Villafranca, CEO and co-founder of Arbeit Software. “Just ask yourself, if a call rang your cell phone right now, your screen lit up red and said “SCAM LIKELY” would you pick it up? If you did, would you take that caller seriously? The answer’s a big fat “NO!”. This is a game changer for agencies and we’re excited to be among the first contact solution providers in the collections industry to start offering this service to its clients.”

The addition of call blocking and labeling solutions to Arbeit’s existing offering aims to empower responsible businesses to reach consumers in a transparent way, and in turn, create “a new calling ecosystem.”

About Arbeit Software:

Arbeit Software is a leading contact solutions provider for call centers, debt collection agencies and small businesses. The suite of software was concepted by former debt collection agency owners and is built to be efficient, easy to use and powerful.  In addition to a broadcast dialer, Arbeit offers a first of its kind, TCPA compliant manual dialing solution that removed the 3 second pause from the beginning of calls and allows agencies to make up to 250 manual calls per hour, per agent. Their business phone system is a perfect fit for small businesses who value cost efficiency and reliability. To see a demo or get a quote, visit www.arbeitsoftware.com.

About Numeracle, Inc.:

Numeracle is working with major carriers, device manufacturers, app developers and industry leaders to deliver a path to visibility and control into the new calling ecosystem. Through the company’s technology vision and industry leadership, Numeracle is laying the foundation for returning trust and transparency to customer communications. To learn more about Numeracle’s call blocking and labeling solutions for call originators and call centers, visit www.numeracle.com.

Credit repair organizations (CROs) have been flooding debt collectors with questionable mass disputes for a while now. One CRO—Lexington Law and its related entities (collectively, Lexington Law)—have caught the attention of the Consumer Financial Protection Bureau (CFPB or Bureau). On Thursday, the CFPB announced that it filed a lawsuit against Lexington Law for violations of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act.

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According to the 48-page complaint, Lexington Law relied on a marketing affiliate network that “used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service.” The Bureau focused on Lexington Law’s referral fees, stating that the organizations failed to observe the mandatory waiting period required by federal law. As summarized in the complaint, “fees can only be collected after a certain period has elapsed and it has been demonstrated that the promised results have been achieved.”

The complaint seeks an injunction against Lexington Law and its affiliates, the rescission or reformation of consumer contracts, refunds to consumers of monies paid, disgorgement for unjust enrichment, and payment of damages.

Lexington Law’s Lead Generation Program

The complaint provides a glimpse into how Lexington Law generates its large customer volume. Allegedly, the company uses a network of affiliates to generate its “massive quantities of leads.” The affiliates use telemarketing campaigns to market certain financial products (rent-to-own housing, mortgage, auto loans, or personal loans) and, when they get a consumer on the phone, they live-transfer the consumer to Lexington Law. This is called a “hotswap.”

The complaint states:

The Hotswap Partners also pitch Lexington Law’s and CreditRepair.com’s credit repair services, typically after telling the consumer that he or she has been denied a particular credit product or service, offering the consumer unfavorable terms on a loan, or telling the consumer that he or she will be eligible for the product or service, or for better terms on the product, if they first enroll in the credit repair service.

Some of the scripts that Lexington Law provided its hotswap affiliates include a statement that Lexington Law’s services “can just make the whole process of getting this loan funded easier,” and that “[Y]ou just need to get a few things taken care of with your credit in order to get qualified for a loan…that is exactly what Lexington specializes in.”

Editor’s Note: In April, a federal court compelled Lexington Law to produce its client communications related to lead generation for its mass credit dispute letters in a lawsuit filed by Ad Astra Recovery Services, Inc.

Misrepresentations by Hotswap Affiliates

The issue with Lexington Law’s lead generation program is that its hotswap affiliates gained their leads through misrepresentation, such as offering “illusory products or services” that the company did not actually offer and advertising “fake real estate ads, fake rent-to-own housing opportunities, fake relationships with lenders, false credit guarantees, and false and unsubstantiated statements about past consumer outcomes.”

One of Lexington Law’s largest lead generation affiliates would tell consumers on the phone that “their credit score was the only thing keeping them from their desired product.” This would follow with a lead-in to Lexington Law’s service to help increase the consumer’s eligibility for a product that did not exist.

According to the complaint, Lexington Law had knowledge that such misrepresentations were occurring and allowed the practices to continue.

insideARM Perspective

For quite some time, collection agencies and creditors have raised flags about practices of certain CROs that seemed to be harmful to consumers. Until now, regulators had not taken action.

With this complaint, the tides have turned. Some may be disappointed that the CFPB did not go further and target Lexington Law’s mass credit disputes; however, what the Bureau targeted could in fact help to alleviate that issue. Without its massive (and, according to the Bureau’s complaint, deceptive) lead generation program, Lexington’s source for these mass credit report disputes would not exist at its current scale.

There is also a question of whether Lexington Law’s business model can survive if the court sides with the Bureau on this matter. In addition to the high dollar value of the relief requested by the Bureau, the allegations themselves would require a big change in the way Lexington Law receives payment from consumers—specifically, following a waiting period and demonstrating that the company did what it promised.

It’s too early to tell what effect this lawsuit will have on the ARM industry, but one thing is for certain: all eyes are on this one.

Editor’s Note: This article was written by Jonathan Kenney, Jason E. Manning and David N. Anthony and was originally published on the Troutman Sanders LLP Consumer Financial Services Law Monitor. It is republished here with permission. 

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In a move that some consumer advocates worry will erode the notoriously stringent requirements of the California Consumer Privacy Act, the California state legislature’s Privacy and Consumer Protection Committee held a hearing this week where it advanced five different bills that amend and potentially weaken the statute. The bills advanced include the following:

• Assembly Bill 25 that would change the definition of a “consumer” within the CCPA to exclude individuals whose information was collected during the course of applying for a job.
• Assembly Bill 846 that would allow companies to continue offering incentive and loyalty programs to consumers.
• Assembly Bill 873 that would amend the definitions of “personal information” and “deidentified” information. Under this bill, the definition of “deidentified” would be consistent with the three-part test used by the Federal Trade Commission.
• Assembly Bill 981 that would exempt insurance companies from having to comply with the CCPA.
• Assembly Bill 1564 that would allow companies to make a toll-free telephone number, email address, or website available to consumers who want to submit requests under the CCPA. Currently the statute only allows a toll-free number.

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Troutman Sanders will continue to monitor important developments involving changes to the California Consumer Privacy Act and will provide further updates as they are available.

ProPublica, a Pulitzer Prize-winning online investigative journalism organization, and WNYC, an NPR member station, are teaming up to investigate the complaints system of the Consumer Financial Protection Bureau.

The project, called “Trump, Inc,” seeks to understand “whether the CFPB is still enforcing federal consumer financial laws and holding companies accountable.”

As ProPublica explained, “Since the start of the Trump administration, there has been a slowdown in enforcement actions and efforts to roll back regulations. It has also gone through three different leaders.” This is where the argument comes in: Has regime change stolen the teeth out of the once much more active agency?

To answer this thesis question, ProPublica and WNYC are hoping to speak with those who have interacted with the Bureau, in any capacity. “Maybe you filed a complaint with the bureau against a debt collection or credit card company. Or maybe you work for a company that’s being investigated by the agency.” They’re also interested in interviewing former employees of the Bureau, and even current ones, who may be brave enough to speak to reporters.

insideARM Perspective

Even though the request seeks comments from all sides of the aisle, the slant of the investigation is easy to see. Both players in this investigative exercise have reputations as liberal bastions. The assumption is that the Bureau has lost a lot of its oomph, and the question for ProPublica and WNYC is: was that a conscious effort by the new leadership — former acting director Mick Mulvaney and current director Kathy Kraninger — in order to make the bureau more pro-business than it is pro-consumer.

It’s an argument that will likely exist as long as the Bureau and consumers do, and, barring some earth-shattering scandal, it is likely that there won’t be much new the investigative team will find.

It’s been a while since my last update on the Department of Education’s (ED) NextGen solicitation. In January I reported that ED had released a three-part “re-do” of its original solicitation for technology and services to establish its new NextGen student loan servicing environment. Since then, the three parts have been tweaked and postponed several times. Earlier this week, on Tuesday April 30^th, ED announced that the latest due date (May 8th) for proposals under the “Optimal Processing Solution” (aka part three) will be changed to a future date, to be determined.

This third part of the NextGen environment is currently where the “permanent” post-default collection services reside; ED has said that the small private debt collection agencies (PCAs) on a prior contract will be providing post-default collections in the interim. What remains unclear is how private debt collection firms (PCAs) will be able to compete for this future contract, as it seems they can only do so as prime contractors if they can provide all of the services required in the RFP. This leaves PCAs to scramble for teaming partners, and to risk revealing their “secret sauce” to companies that may be competitors in the future.

Some background

If you need the full monty primer on how the old unrestricted PCA contract intersects with this new NextGen contract, start here. The following is a brief background on NextGen itself.

In August 2017 ED announced a “Next Generation Processing and Servicing” plan (NextGen) that would put all federal student loan servicers on a common technology platform with a single database in order to drastically improve customer support.

By February 2018, ED issued a Solicitation for Phase I of the NextGen project, including a diagram (you can see it in this story) showing that default servicing and recovery (including PCAs) are in the overall vision, but not part of the current solicitation. As a result, most PCAs did not bid on the contract (unless they were in a position to offer the pre-default services).

At the end of September 2018, ED announced it had completed Phase I, and had chosen a set of vendors who are eligible to participate in Phase II – which clearly spelled out requirements for post-default servicing and collection activities. In short, ED changed the scope mid-stream. PCAs cried foul (as did some of the Phase I winners) and filed lawsuits in the Court of Federal Claims (COFC).

The claims are explained in this story. In the end, the Court sided with the plaintiffs and urged ED to pursue corrective action. He gave the Department until December 14th.

And, on December 14, 2018, ED cancelled the procurement for three components of the original RFP (including those that cover business process operations and post-default collections), revoking the Phase I awards and saying it would issue a new solicitation by January 15, 2019, allowing for a “full and open competition.”

As ordered, on January 15 ED issued a new solicitation in the form of three RFPs:

RFP R00005 – Enhanced Servicing Solution (with proposals due February 25, 2019)

RFP R00008 – Business Process Operations Solution (proposal due date TBD, but bidders were required to complete a Past Performance Reference Questionnaire by March 1, 2019)

RFP R00007 – Optimal Processing Solution (with Questionnaire due by March 1 and proposals due March 25, 2019)

Updates begin…and continue

R00005 – Since January, ED announced a number of updates to the Enhanced Servicing Solution RFP, including moving the due date to March 27^th, and refining the requirements for post default collection activities. On March 26^th, ED posted responses to bidder questions but did not change the due date…except that the currently listed response date is (was) April 2, 2019.

R00008 – On February 20^th ED announced that the proposal due date would be posted after an award is made for R00005.

R00007 – The Optimal Processing Solution RFP has also been updated. On February 25^th, the March 1 due date for the Questionnaire was postponed. On March 15^th the March 25^th due date for proposals was postponed. On March 27^th, an amendment to the RFP was posted along with multiple attachments, including ED’s responses to various bidder questions. On April 30^th the latest due date of May 8^th was “postponed and will be changed to a future date, to be determined via a forthcoming amendment to the solicitation.”

Meanwhile, the pressure mounts

The pressure on ED Secretary Betsy DeVos to fix student loan servicing and collections is mounting from many sides.

On March 21, 2019 the White House issued an executive order about increasing transparency around the cost of an education at any given school, a student’s likelihood of being able to pay back loans required to get the education, and what happens when they can’t.

Also on March 21, 2019 The Washington Post published an article entitled, “Staffing shortage at Education Department’s loan default units frustrates struggling borrowers”.

On March 25, 2019, in response to the Washington Post article, U.S. Congresswoman Lauren Underwood issued a press release pressuring the Secretary to respond appropriately to borrowers in default.

And, under the heading of, “Nobody ever got fired for hiring IBM,” The Wall Street Journal reported yesterday that ED has hired management consulting firm McKinsey & Co. to study the portfolio, and to evaluate options for selling some or all of the accounts in default.

At the end of the Journal article, the authors speculate that the McKinsey study could have an additional motive – to gather fodder for efforts to pressure schools to take on some of the responsibility for out of control tuition and to pay off their graduates’ unpaid debts. I say, YES.

Yesterday, Washington’s governor signed H.B. 1531 into law, amending the state’s current requirements for collection of medical debts. The new requirements become effective in mid-July (90 days after it was passed in the state Senate on April 15).

Below is a breakdown of the new requirements.

1. New Disclosures in Initial Letters and Requirements to Cease Collection Activities

The amended law requires that the first written notice related to a medical debt discloses the consumer’s right to request the original (or redacted) account number, the date of last payment, and an itemized statement free of charge. If the consumer submits a request, collection efforts must cease until the requested information is provided. The amendment includes a breakdown the requirements of an itemized statement, including a notice whether or not the patient was eligible for charity care or other reductions and the total amount of such benefits.

If the debt was a hospital debt, then the first written notice must inform the consumer whether or not he or she is eligible for charity care from the hospital and the contact information for the hospital. If the debt collector receives notice of the patient’s application for charity care, it must cease collection activity during the pendency of the application and any appeal of the final determination.

2. Credit Reporting Medical Accounts

The amendment requires a 180-day waiting period after the original obligation was received or assigned to the debt collector prior to reporting any adverse information to consumer credit reporting agencies.

3. No Warrants for Arrest on Judgment Debtors for Medical Debt

The amended law prohibits a plaintiff from seeking a warrant for arrest on a judgment debtor related to a medical debt “unless the act or failure to act constitutes a crime under state law.”

4. Pre-Judgment Interest for Medical Debt

The amended law caps pre-judgment interest for medical debt at 9%.

insideARM Perspective

Collecting medical debt is a unique process in the industry and requires a different approach than other debts due to its nature. A close reading of the bill and the specific sections it amends is a must for anyone collecting medical debt in Washington. For example, an important thing to note is the difference in disclosure requirements regarding charity care depending on whether or not the account is for a hospital debt. With the law becoming effective in a few short months, now is the time to review these requirements with your counsel and start preparing these changes.

GENESEO, N.Y. – Coast Professional, Inc. (Coast) presented a total of $31,560 to four different charities across the company’s office locations in the month of April. These charities include Operation Build Up, WNY Heroes, the Big Whit 77 foundation, and Ronald McDonald House Charities of Western New York.  These donations are a result of the company’s dress down for charity program in which employees donate $20 or more for the option to wear jeans and business casual attire for the month. The donations include the employee contributions and the company match of up to $500 per office per month. The employees vote bimonthly for the charity that will receive the donations raised through the program for the upcoming period.

Operation Build Up received a donation of $16,000 from the employees of Coast’s Geneseo, NY office. Operation Build Up was selected for the months of January and February as a result of the impact that this organization has on the community’s local veterans. The proceeds from the donation will benefit Operation Build Up and their mission to have a positive effect on the veteran homelessness and suicide rates by surprising veterans with the basic survival items necessary for a civilian lifestyle. Operation Build Up completes missions to surprise veterans in need with donations that include vehicles and furniture based on the veteran’s current situation. The organization has completed more than 140 missions since its inception in 2016.

The Big Whit 77 Foundation received a donation of $6,000 from the employees of Coast’s West Monroe, LA office. The Big Whit 77 Foundation was selected to be the recipient of the charity dress down program for the months of September and October 2018. The Big Whit 77 Foundation serves to impact the lives of youth and families in local communities. The foundation has programs such as Whit’s Warriors, a program which offers financial assistance to high school students in Ouachita and Lincoln Parishes; Open Arms, a program which offers financial assistance to families in the process of adoption; and the Wish List, an event that partners University of Louisiana at Monroe and Louisiana Tech University athletes with local families for fellowship and fun during the Christmas season.

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WNYHeroes received a donation of $2,260 from the employees of Coast’s Elma, NY office. WNYHeroes was selected to be the recipient of the charity dress down program for the months of October and December 2018 as a result of the impact that this organization has on the community’s local veterans. The mission of WNYHeroes is to provide veterans, members of the armed services, and the widows and children of deceased veterans with access to essential services, financial assistance, and resources that support their lives and sustain their dignity.

The Ronald McDonald House Charities of Western New York, Inc. received a donation of $7,300 from the employees of Coast’s Elma, NY office. The Ronald McDonald House was selected to be the recipient of the charity dress down program for the months of January, February, and March as a result of the impact the organization has on families in the local community. The Ronald McDonald House Charities of Western New York (RMHC of WNY) keeps families with sick/injured children together and near the care and resources they need. RMHC of WNY is a local chapter of Ronald McDonald House Charities (RMHC), a not-for-profit organization, which finds and supports programs that directly improve the health and well-being of children.  RMHC of WNY is operated by a local volunteer board of directors.

“We are proud to provide these donations to organizations of this caliber,” stated Jonathan Prince, Chief Operating Officer. “Our goal is to create positive change in the communities we reside in and these donations play an integral role in accomplishing this objective. On behalf of the amazing employees of Coast, we’re honored to recognize these outstanding charities.”

About Coast Professional, Inc.

Coast Professional, Inc. is an accounts receivable management company, dedicated to the respectful and ethical collection of higher education and government debt. Coast provides professional collection services to over 200 campus based colleges, universities, and government clients. Coast is a five time honoree on the Inc. 5000 list for American’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2016, was recognized for the third consecutive year as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. Since 1976, Coast has worked closely with clients to increase recoveries by assisting consumers in resolving their financial obligations. Coast’s success is exemplified by exceptional recoveries, superior service, and dedication to the highest levels of compliance. More information about Coast can be found at www.coastprofessional.com.

As most debt collectors know, sending any collection notice into Delaware, New Jersey or Pennsylvania (the States with Federal Courts in the Third Circuit) will likely result in an FDCPA class action lawsuit against the debt collector. Typically these lawsuits assert that the validation language used in the collection letter does not require the consumer to communicate disputes in writing only allegedly in violation of the FDCPA. While several appeals on this issue are pending and consolidated before the Third Circuit Court of Appeals, a decision from the Third Circuit in 2017 may provide guidance on how it will rule in favor of the debt collectors. 

In the most recent episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin are joined by their colleague, attorney Aylix Jensen, to discuss the Third Circuit validation issues, including the Jewsevskyj case, compliance with the new California privacy law (the CCPA) and credit reporting accounts in bankruptcy.

Listen to the podcast here.

The release of the Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rulemaking (NRPM) for debt collection is imminent; could it be happening next week? Many are speculating that the Bureau’s forthcoming Town Hall meeting in Philadelphia on May 8 will coincide with the NPRM’s release.

The timeline makes sense, considering that on April 18, the Bureau’s Director Kathleen Kraninger announced that the NPRM’s release will be “in the coming week.” In that same announcement, Kraninger mentioned that the NRPM will contain provisions for call caps and the use of email and text messages when communicating with consumers.

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The Town Hall meeting, which will be available for live stream on the CFPB’s website at 12:00 PM EDT, will feature “remarks from Director Kraninger as well as comments from community groups, industry representatives, and members of the public.”

insideARM Perspective

It’s been a long road since the Bureau first announced its intention to create debt collection rules back in 2013, so it is comforting to finally see the light at the end of the tunnel. However, the end of the tunnel is not yet here and there is still work to do.

If the NPRM is indeed released on May 8, there will be a public opportunity to comment (typically 30-60 days, but it could be 180 days or more depending on the complexity of the rulemaking, according to a Federal Register’s guide on the rulemaking process). Debt collectors should take this opportunity seriously and submit their well-thought out comments, both through industry associations and as individual businesses. It’s probably safe to assume that consumer groups are rallying to submit many comments; it is important that the industry’s perspective is also heard.

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 to Data Groups, complaints, debt settlement functionality, as well as audio file support.

Data Groups Expansion for Legal Collections

The latest software release introduces nine new Data Groups that provide a window into additional collection actions performed by third party attorneys as part of the legal recovery process. New Data Groups include information about legal escalations, litigation milestones, discovery requests, counter claims, appeals, liens, levies, litigation appearances, and litigation motions. These Data Groups add to the already-unprecedented view into collections data that is offered by this feature.

“Convoke is excited about the Data Groups enhancements that we are offering to credit issuers as part of this release,” said David Pauken, CEO at Convoke. “The increased visibility that we’re providing into the legal collections process will improve customer care, collections, and aid in regulatory compliance in an increasingly complex industry.”

Consumer Complaints

In response to the market’s increasing desire to protect consumers against unfair treatment, Convoke has continued to expand its complaints feature, which helps credit issuers comply with regulatory requirements and improves the customer collection experience. This has led to an increase in adoption of this feature by Convoke’s customers. This release includes enhancements to issuer exports and additional reporting options.

Debt Settlement Enhancements

Convoke has created new work queues to better support its debt settlement functionality.  This allows for more efficient assignment, tracking, and reporting for the debt settlement workflow in Convoke. Consumer accounts in the debt settlement process are able to move to various queues, allowing for seamless cooperation between a credit issuer and a settlement agency throughout the settlement process.

Audio

Convoke has further developed its audio functionality, which gives credit issuers and third-party collectors the ability to upload audio files on to Convoke at the account level. The user is able to report on, download, and listen to audio files on Convoke, further strengthening credit issuer oversight of third-party telephone calls with consumers.

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.