Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

Newly introduced legislation in Texas, House Bill 996, addresses when a debt buyer can initiate legal action or arbitration to collect a consumer debt and requires specific notices with respect to out-of-statute debt.

“Debt buyer” is defined as “a person who purchases or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt, regardless of whether the person collects the consumer debt, hires a third party to collect the consumer debt, or hires an attorney to pursue collection litigation in connection with the consumer debt. The term does not include:

• a person who acquires a charged-off debt incidental to the purchase of a portfolio that predominantly consists of consumer debt that has not been charged off; or
• a check services company that acquires the right to collect on a paper or electronic negotiable instrument, including an Automated Clearing House (ACH) authorization to debit an account that has not been processed.”

The legislation provides that a debt buyer cannot commence legal action or initiate arbitration “later than the earlier of:

• the fourth anniversary of the date of the consumer’s last activity on the consumer debt; or
• the expiration date of any otherwise applicable statute of limitations.”

Unlike several other states that require one of two notices for collecting out-of-statute debt, determined only by age of the debt, the Texas debt buyer legislation provides an additional option to account for debt buyers that do not credit report.

First, if the credit reporting period has not expired and the debt buyer does credit report:

THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW.

Second, if the credit reporting period has not expired but the debt buyer does not credit report:

THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS REQUIRED BY LAW.

Third, if the credit reporting period has expired:

THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS REQUIRED BY LAW.

The notice would need to be “in at least 12-point type that is boldfaced, capitalized, or underlined or otherwise conspicuously set out from the surrounding written material.”

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WILMINGTON, Del. — Phillips & Cohen Associates, Ltd., the international deceased account management specialist, servicing creditors in the US, Canada, UK, Ireland, Australia, Spain and New Zealand, reaffirms its commitment to the importance of data and information analysis with the appointment of Dani Shi as Senior Vice President of Global Data Systems & Analytics.    

In this newly created position, Ms. Shi will lead PCA’s growing analytics, MIS and platform management teams in all markets served by the company.

“We are thrilled Dani has joined our executive leadership team as we take another step forward in the use of analytics to drive our global strategies and innovations.  With her considerable experience and education, she is ideally situated to lead our data-driven, strategic vision,” said Howard Enders, President and CLO.

Ms. Shi possesses extensive experience in process, strategic and quantitative analytics in the collections space for multiple large-scale financial institutions, most recently serving as SVP – Risk Analytics for Citi.  She earned a Bachelor (Honours), Economics and International Studies from La Salle University and a Masters, Economics from Temple University.

About Phillips & Cohen Associates, Ltd.

Phillips & Cohen Associates, Ltd. is a specialty receivable management company providing customized services to creditors in a variety of unique market segments.  Phillips & Cohen Associates, Ltd is domestically headquartered in Wilmington, DE, with additional offices in Colorado and Florida as well as international offices in the UK, Canada, Australia and Spain.  For more information about Phillips & Cohen Associates visit www.phillips-cohen.com.

PCA provides Equal Employment Opportunity for all individuals regardless of race, color, religion, gender, age, national origin, disability, marital status, sexual orientation, veteran status, genetic information and any other basis protected by federal, state or local laws.

BOCA RATON, Fla. — RSource Healthcare announces the promotion of Lane Baker to the position of Chief Development Officer. RSource CEO, Larry Reid, made the announcement on Wednesday and said; “We are very pleased to announce the promotion of Lane Baker to the position of Chief Development Officer. Lane has been with RSource almost 7 years, and most recently in the position of Executive Vice President of Client Development. Lane’s efforts as a member of our executive team have greatly contributed to our company’s growth, client satisfaction, and client development. In Lane’s new position, he will play a lead role with client development, corporate strategies, strategic partnerships and integration of RSource’s services within hospital systems nationwide.”

About RSource

RSource Healthcare provides increased revenue along with financial-enhancing improvements in connection with a healthcare system’s revenue cycle. Solutions include denial recovery and prevention for Coordination of Benefits and other issues requiring patient involvement, Clinical Denials, and MVA and Workers Compensation programs.  All RSource programs are designed to maximize netback, enhance patient satisfaction, and provide actionable knowledge feedback to a healthcare system to improve front-end processes.  For more information visit RSource’s website at www.rsource.com.

CHANDLER, Ariz. — LucentPay, a full-service payment processor leading the way with the industry’s most compliant fee-enabled solution, announces its No-Cost-to-Biller™ solution is now integrated with Latitude by Genesys (“Latitude”). The integration enables Latitude customers to automatically direct fees to LucentPay instead of routing them through the collection agency. Genesys® (genesys.com) is the global leader in omnichannel customer experience and contact center solutions that power 25 billion of the world’s best customer experiences each year.

Rob Kennedy, Co-Founder and CEO of LucentPay said, “We are extremely pleased our No-Cost-to-Biller software solution is now fully integrated with Latitude so clients can access to the most compliant fee model available. LucentPay’s No-Cost-to-Biller software solution is compliant with Card Brand rules, FDCPA, CFPB and state laws.”

“Genesys has a rich history of collaborating with industry leaders to extend the value of our solutions” said Ian Winder, Product Line Manager and Business Owner of Latitude by Genesys. “We are pleased to work with LucentPay, an industry leading payment processor, to offer our customers their No-Cost-to-Biller software solution through our Latitude by Genesys accounts receivable suite.”

About LucentPay

LucentPay (lucentpay.com) is a full-service payment processor revolutionizing merchant services by providing best-in-breed payment solutions. The leaders in integrated fee-enabled processing and creators of the No-Cost-to-Biller™ solution which focuses on eliminating processing costs in a compliant manner. We’re excited to simplify payments through our full suite of solutions, PCI Level 1 technology, next day funding, software, education, and community. LucentPay also offers competitive pricing for standard payment processing through a number of great banking relationships to mitigate risk, next-day funding, and comprehensive payment acceptance (Visa, MC, Discover, AMEX, HSA/ Flex Cards, etc.).

Editor’s Note: This article was written by Lauren Valenzuela, Compliance Counsel at Performant Financial Corp., and June Coleman, Of Counsel at Carlson & Messer LLP. It is published on insideARM with permission from the authors. 

On February 5th, the California Attorney General’s (“AG”) Office held its fifth public forum in Sacramento to collect feedback about the California Consumer Privacy Protection Act (“CCPA”). Under the CCPA, the AG is responsible for developing regulations to support the CCPA. The Sacramento forum was well attended and active – people from coast to coast participated.

Even if you are a business outside of California that collects personal information for any California residents, you should pay attention to this law.  In case anyone reading this article needs an orientation to the CCPA, essentially it gives California residents unprecedented rights over their personal information:

1. The right to know what personal information is being collected about them.
2. The right to access the personal information collected about them and request it be deleted, although there are exceptions to the right to delete.
3. The right to know whether their personal information is sold or disclosed and to whom.
4. The right to opt-out of the sale of their personal information.
5. The right to have equal service and pricing even if they exercise their rights under the CCPA.

Although people at the forum expressed support for the CCPA and recognized the value of what it is trying to achieve, many people voiced concerns surrounding its current design and asked the AG to provide guidance on many of its provisions. Here are highlights of some issues raised at the forum.

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Expansive Definition of “Personal Information”

The CCPA’s definition of “personal information” is broad. It includes data which identifies, relates to, describes, or is capable of being associated/linked with not only a consumer, but also a household. Many people expressed concerns over the definition’s inclusion of “household.” For example, in theory a roommate or an estranged spouse could request “personal information” related to the household they are (or were) part of, thereby gaining access to information for everyone in the household for the 12-month period preceding the request. A person requesting personal information related to a household could conceivably result in a breach of the other people’s privacy who are in the household; not to mention, how do you authenticate the identity of a person in a household who is not the primary person on an account? People also highlighted safety concerns about disclosing information about a household.  Many commentators asked the AG to provide clarification, and perhaps rein in, how to approach households within the definition of personal information.

Commentators also asked the AG to rein in the definition’s inclusion of employment-related and education information included in the definition of “personal information.” For example, could an employee request that an employer delete any part of their employment records – can an employee found in violation of a company’s anti-harassment policy request their employer to delete that information about them? Can a student request that a school delete their bad grades? Under the CCPA’s current unregulated design, these things are conceivable. Under the CCPA, it is not hard to imagine a consumer requesting that a debt collection agency delete their personal information. Luckily the CCPA does provide nine exceptions to consumers’ right to request deletion of their personal information, and we believe that debt collection agencies and law firms would most likely fall into one or more of those exceptions.  However, it would be helpful for the AG to tease out those exceptions so that a myriad of industries know how they apply (or don’t apply) and consumers will know when their request falls within an exception.

Safe Harbor if a Company Provides Information to a Fraudster 

If a consumer’s identity is stolen, how does a business protect that consumer from a fraudster who has enough information to “verify” the consumer’s identity, potentially giving a fraudster the ability to gather more information on their victim? Given the expansive definition of “personal information,” a fraudster could in theory gain access to an enormous amount of consumer personal information by using the CCPA. One public commentor asked the AG to provide a safe-harbor to businesses that respond to a verified consumer request when that request was made by a fraudster.

Scope of Exceptions

The CCPA does not apply to certain types of personal information. For example, protected health information collected and governed under the Health Insurance Portability and Accountability Act (“HIPAA”) and personal information collected, processed or sold pursuant to the Gramm-Leach-Bliley Act (“GLBA”) is not subject to the CCPA. At first glance this is a relief to many; however, upon closer examination, there is ambiguity around whether these exceptions would cover, for example, a financial institution selling a debt portfolio.  The personal information contained in that portfolio is subject to GLBA, but the overall transaction may not be. If the GLBA exception does not extend to this kind of transaction, the CCPA requires that the consumers in that portfolio be given notice and the opportunity to opt-out of the sale. Accordingly, it would be beneficial for the AG to provide clarification of the scope of the CCPA’s exceptions.

Timeline for Compliance

The CCPA is regarded as the first law in the U.S. to adopt privacy rights like those provided in the European Union’s General Data Protection Regulation (“GDPR”). The EU had two full years to gear up for compliance with the GDPR, and compliance was arguably a light lift since it was built upon an existing privacy directive in the EU. By comparison, the CCPA was signed into law in June 28, 2018, was amended on September 23, 2018, became effective January 1, 2019, and is operative January 1, 2020. Comments swirled around the short time period that companies have to prepare for compliance and how this creates a heavy lift (and cost) for small and mid-size businesses. Many businesses need to modify how they collect, record, retain, and retrieve consumer data in order to comply with the CCPA. One commentator proposed that each aspect of the rule be given a different implementation date/timeline in order to make integrating compliance with the CCPA manageable for businesses.

CCPA Interfacing with Existing Privacy Laws

Commentators from various industries explained how there are existing laws and regulations governing consumer privacy and the sale of consumer information.  Many commentators want guidance and clarification on how existing privacy laws will interface with the CCPA. For example, education information is included in the definition of personal information under the CCPA. However, many education records and related personal information is already governed by the Family Educational Rights and Privacy Act (FERPA). How will the CCPA and FERPA interface?

Conslusion

In summary, commentators asked the AG to provide clear and practical guidance on how they balance their responsibility to protect consumer information and privacy with consumers’ CCPA rights.

The AG is hosting two more public forums.  The next one is in Fresno on February 13, 2019, and the last one is in Stanford on March 5, 2019. The AG is collecting written comments from the public until March 8, 2019. The AG’s staff encouraged the public to visit its website for news and updates related to CCPA. They also reminded the forum that once the AG publishes proposed rules (which the AG Office anticipates doing in the Fall of 2019), the public will have an opportunity to provide comments on those rules. The AG will then review the comments and revise the rules as necessary to address relevant comments, before issuing the AG’s regulations.

CCPA poses many questions for the ARM industry: will this impact how we collect and store data, especially data found during skip-tracing?  How will the industry be able to comply with the obligation to provide information to wrong-party contacts and third parties? How will the industry be able to honor requests to delete information about wrong party contacts and third parties, especially when the exceptions might not include people who are not debtors.  How does this impact how we furnish data to credit reporting agencies, especially when providing information to credit reporting agencies might be considered the “sale” of information? How will this impact how we exchange data with our vendors? How do the privacy rights given to consumers under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (and their state law counterparts) interface with the CCPA?  How will this impact debt buying? Everyone should continue to watch how the CCPA develops (and participate in its development!) The CCPA is ushering in a new privacy regime in California since many federal and state legislators are looking at the CCPA as a model and pioneer in this new regime, to potentially enact identical or similar legislation in other states or even federally.

On February 8, a proposed class settlement received final approval for a case alleging Telephone Consumer Protection Act (TCPA) violations against Navient Solutions, LLC. The settlement awards $2.5 million to the class. The court’s approval of the class settlement awards $833,333 in attorneys’ fees and $24,379.83 in costs and expenses.

The class action lawsuit against Navient was filed in October 2017 alleging that Navient used an Automatic Telephone Dialing System (ATDS) to place calls requesting location information to third parties’ cell phones without consent. According to the complaint, the representative plaintiff’s brother had a student loan account that was placed with Navient for collection. The plaintiff was listed as a reference on her brother’s student loan application without her knowledge or consent. The plaintiff never had an agreement with nor provided consent to Navient to call her cell phone. The complaint also alleges that these third parties continued to be called even when they requested no more calls.

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The settlement agreement states that Navient “vigorously denies all claims asserted in the Action and denies all allegations of wrongdoing and liability and, in particular, that the calls at issue were made using an ATDS.”

In a new ruling released on Friday a magistrate judge in Texas has recommended allowing a fraud claim to proceed against a repeat TCPA Plaintiff who allegedly knew a third-party had provided his phone number and opted-in to a text message campaign. See Ricky Franklin v. Upland Software, Inc., Case No. 1-18-cv-00236, 2019 WL 433650 (W.D. Tx Feb. 1, 2019).  In Franklin, rather than opt out of the messages, the Plaintiff sat still and allowed the messages to continue. He then sent a demand letter to the Defendant in which he, apparently, misrepresented these facts and then filed suit.

Given that the Plaintiff was a repeat TCPA player, one could easily see how a court could conclude that he had invited the messages by failing to opt out after learning that a third-party had provided his number. (Wonder how he learned that? Hmmmm.) Indeed, the Court repeatedly noted that Plaintiff was “intimately familiar” with the statute. So this scenario seems to fit neatly within the rule of my old victory in Stoops v. Wells Fargo where it was first held that a TCPA plaintiff cannot welcome and invite their own harm and then turn around and sure for it.

But the Franklin Defendants went further than seek dismissal for lack of standing—they sued for fraud! Contending that Plaintiff’s superior knowledge of the situation coupled with his intimate familiarity with the TCPA created a duty to disclose, Defendant argued that sitting still and failing to opt out of the messages was actually a form of fraud by non-disclosure. The court agreed: “Upland alleges that it, and more importantly its third-party client, did indeed rely on the failure to disclose and continued to send text messages to the phone number at issue, as Upland took actions pursuant to its contractual obligations… Upland alleges that it was injured as a result of the nondisclosure and had to incur costs associated with what it views as a spurious and setup lawsuit.” So take note TCPAland— if a repeat Plaintiff allows messages to continue in a bid to set up a claim a fraud theory may be viable!

The Franklin magistrate judge also concluded that a direct claim for misrepresentation was possible under the facts alleged because the Plaintiff sent a demand letter to the Defendant misrepresenting that he had no knowledge of how the texter had obtained the number, a fact that was allegedly false.

The Franklin ruling is also spectacular for providers of texting technology more generally. As I reported a few months back, courts have slowly began creeping toward holding platform providers directly liable for texts sent by their users for some reason. But the Franklin ruling pushes back hard against that notion. On the Court’s review of the record: “ The process “to make” a call or send a text requires no involvement from [Defendant], but rather requires [Defendant’s] customer to log onto its platform and set up a mobile messaging campaign from a list of individuals who have opted into a messaging campaign.”  Based on these facts the Court had no problem finding that it was not the Defendant—but the user of the platform—that initiated the call. The Court also found that the Plaintiff’s claims that the Defendant was vicariously liable for the messages to be wholly unsubstantiated.

For good measure the Court blessed the Defendant’s software as outside the scope of the TCPA to begin with because if the high degree of human intervention associated with the text message campaign: “The process [requires a user to]… log onto its platform and set up a mobile messaging campaign from a list of individuals who have opted into a messaging campaign. After setting up the lists, the customer drafts the content of the text message and then selects the date and time the text message is to be sent, and, after reviewing the content of the message and time to be sent, sends or schedules the text to be sent. [Thus]…, the platforms require significant human intervention and sorting on almost all aspects of the text messages and the platforms do not have the capacity to act as an auto dialer.” Wow!

Great day for the Defendant in this one and a good lesson to all of us about thinking creatively and acting aggressively when defending TCPA suits against repeat players.

—

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

Editor’s Note: This article was written by Punit Marwah, Ethan G. Ostroff, and David N. Anthony and was originally published on the Troutman Sanders LLP Consumer Financial Services Law Monitor. It is republished here with permission. 

The United States District Court for the Western District of Texas recently granted summary judgment in favor of a debt collector, holding that letters sent with the same client account number for two different debts incurred with the same underlying creditor was not false, deceptive, or misleading or otherwise in violation of the Fair Debt Collection Practices Act.

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Consumer plaintiff Mary Reynolds incurred debts with the original creditor, Methodist Specialty & Transport Hospital, for two separate hospital visits five months apart in 2017. Medicredit, Inc. sent Reynolds two collection letters relating to the hospital visits. These letters included the same account number generated by Medicredit but pertained to debts from two separate hospital visits, with two separate balances, and different account numbers for the original creditor.

The first letter stated the balance owed as $600 for a hospital visit in March 2017, and the second letter stated a balance of $75, pertaining to a hospital visit in the following August. Reynolds alleged this caused her to believe that the amount of debt had decreased due to her insurance paying off a portion of the debt.

Reynolds filed suit, alleging Medicredit violated the FDCPA by unlawfully confusing her by including the same internal account number on both letters even though the letters pertain to separate debts. Specifically, Reynolds alleged a violation of § 1692e for using any false, deceptive, or misleading representation or means in connection with the collection of any debt, and a violation of § 1692(f) for using unfair or unconscionable means to collect or attempt to collect any debt. Medicredit filed a motion for summary judgment on the basis that no reasonable factfinder could find the correspondences at issue misleading because an unsophisticated consumer would understand that the letters were for separate financial obligations.

In its opinion, which can be found here, the Court held that the ultimate question in the case is whether the unsophisticated or least sophisticated consumer would have been led by the debt collection letter into believing something untrue that would have influenced their decision making.

In granting Medicredit’s motion for summary judgment, the Court noted that the collection letters would deceive or mislead only under a “bizarre or idiosyncratic” reading. The Court reasoned that an unsophisticated consumer, when reading the letters as a whole with some care, would note the differing client account numbers in the letters, the fact that the dates of service differed by more than four months, and the large gap between the two balances of $600 and $75. Finally, the Court held that Medicredit’s inclusion of a self-generated account number, even viewed from an unsophisticated consumer’s perspective, is not unfair or unconscionable, just as it is not false, deceptive, or misleading.

AllianceOne Management Receivables, Inc. (AllianceOne) agreed to settle a class action Fair Credit Reporting Act (FCRA) lawsuit. The lawsuit, filed against AllianceOne and Experian back in 2015, alleges that AllianceOne pulled plaintiff’s credit report in order to collect on plaintiff’s past due parking tickets, which, the complaint argues, is an impermissible purpose. The complaint also alleged that Experian failed to properly investigate plaintiff’s disputes and furnished plaintiff’s credit report to AllianceOne without a permissible purpose. According to PACER, Experian was dismissed from the case back in October 2016. In entering into the class settlement, AllianceOne denies any wrongdoing or that any violation of the FCRA occurred.

On February 7, an unopposed motion to certify the class and grant preliminary approval of the class settlement agreement was filed and is set to be heard on February 22, 2019. The settlement agreement, listed as Exhibit 2 to the unopposed motion, calls for AllianceOne to pay $5,000 to the class representative plaintiff and $2.2 million for the class settlement. The agreement also limits the class counsel’s fee request, not allowing it to exceed $733,333.33.

The history of this litigation includes an two orders (one on a motion to dismiss, one on a motion for summary judgment) where the court disagreed with the interpretation that pulling credit reports for fully adjudicated debts is a permissible purpose.

TREVOSE, Pa. — NCB Management Services, Inc. is a proud supporter of the Employer Support of the Guard and Reserve (ESGR). There are ways to say “thanks for your military service,” and ways to say “thanks for your support.” The ESGR offers a Statement of Support program where employers can sign a pledge to support the military service of their employees. NCB shares the same hope and vision as the ESGR, which is the hope that by creating a culture in which all American employers’ value the military service of their employees.

President & CEO of NCB, Ralph Liberio stated, “on behalf of NCB, I am proud to support the ESGR and their mission. I am proud of our employees Susan Richards and Alan Nisenfeld for being recognized and awarded the ‘Patriot Award on behalf of the Department of Defense and the Secretary of Defense of the United States of America”. Liberio continued, “I am especially proud of Mr. Ollie Days, an NCB employee and active reservist in the United States Navy for his dedicated service to our country as well as his commitment and service to NCB. We wish to express our appreciation to the ESGR, Colonel David Blum (Retired US Airforce) and Mr. Ollie Days for recommending and presenting Ms. Susan Richards and Mr. Alan Nisenfeld to receive this prestigious award.” 

A video of the event can be found here.

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About NCB Management Services, Inc.

NCB Management Services, Inc., established in 1994, is headquartered in the Philadelphia area with satellite offices in Jacksonville, FL and Sioux Falls, SD. NCB is a recognized Accounts Receivable Management (ARM) industry leader as well as a nationally respected debt buyer. The company is partially owned by its employees through an Employee Stock Ownership Plan (ESOP). The NCB ESOP is a company-funded defined contribution retirement plan established in 2014 for the benefit of NCB employees.