Years ago, the financial services industry looked much different than it does today; there were no documentation requirements, it was routine for debt collectors to charge post-charge off interest, chain of title documentation was required in only one or two states and requirements for post-charge off itemization were very limited. Data on the accrual of interest was often stored as a single number and it was hard to tell what payments had been made and what impact that had on accrual of interest.  

With no chain of title requirements, it was also not unheard of for unscrupulous or careless debt buyers or brokers to sell that same account to more than one debt buyer downstream. All these attributes, along with limited due diligence prior to reselling accounts created situations that often led to accounts not receiving proper attention, putting the consumer in a bad position. The OCC started to question the safety and soundness aspects of banks selling any debts to debt buyers who are known to later resell those debts. Due to the lack of structure, issuers and regulators alike started to have data integrity and consumer experience concerns, thereby prohibiting the ability to resell accounts through contract requirements and consent orders.

So here we are in 2019. Enough time has passed to where debt buyers are savvier and more educated on what it means to have a well-functioning compliance management system. In our industry, whether we are talking about purchasing or selling, we are focused on both data integrity and documentation. And with all the evolution in the marketplace, it has created a much more stable, certain environment so that, when and if a debt is disputed that has been resold, the purchase will have documentation, chain of title, and post-charge off itemization.

Our industry associations have also stepped up to support our industry as we all navigate through these complex issues. The Receivables Management Association (RMA) Certification Program is an industry self-regulatory program administered by RMA that is designed to provide enhanced consumer protections through rigorous and uniform industry standards of best practices. Through the program, certified companies are subject to sale restrictions that preserve data integrity. Those restrictions include not selling accounts: without access to Original Account Level Documentation; when a consumer communicates a dispute of validity or accuracy; when an account has been settled or paid; when the account is a result of identity theft or fraud; and to a non-certified company without terms and conditions contained in the sales agreement requiring the purchaser of the accounts to meet or exceed the standards of a Certified Company.

We know about these positive changes in our industry, but we also need to let our regulators know. This is true now more than ever before, with the Consumer Financial Protection Bureau (CFPB) set to issue a Notice of Proposed Rulemaking (NPRM) in March 2019, and a brand new Director, Kathy Kraninger, leading the CFPB. Director Kraninger is now getting up to speed on our industry and we have a prime opportunity to educate and advocate on why a robust resale market is so critical for the continued growth of our industry, as well as the consumers we serve.  We should also be advocating forcefully on why the new CFPB rules cannot be so burdensome that smaller companies without large compliance departments will simply be unable to comply.

With a forthcoming NPRM and a new CFPB Director, this is a critical juncture for our industry and the future of the resale market. Let’s make the most of it.

Note about Doris Hektor:

Doris is the Chief Compliance Officer at Encore Capital Group, and has over two decades experience in banking and financial services, including serving in senior compliance roles at American Express and JP Morgan Chase. She is a frequent presenter in the RMA Chief Compliance Officer (CCO) Forum, and is a candidate on the 2019 ballot for the RMA Board of Directors.

LAS VEGAS, Nev. — Noble Systems Corporation, a global leader in omnichannel contact center technology, today announced that it would display its Omnichannel Contact Center, Workforce Engagement (WEM), Gamification and Analytics solutions from booth #109 at the upcoming Receivables Management Association (RMA) International 2019 Conference, being held February 5 – 7, 2019 at the Aria Resort & Casino in Las Vegas, Nevada.

Noble Systems will be hosting attendees throughout the week, offering a chance to win state-of-the-art BOSE headphones.

• WHO: Noble Systems (BOOTH 109)
• WHEN: February 5 – 7, 2019
• WHERE: RMA  International 2019 Conference, Aria Resort & Casino, Las Vegas, NV

For consumers, collections calls can be intrusive, frustarting and embarrassing. Debt collection contact center agents face stress, angry customers and other emotionally taxing challenges every single day. In addition, they do their jobs knowing that their employer can lose customers forever if they mismanage these delicate engagements.

“Despite perceptions, effective debt collection agents are a company’s unsung heros,” said Chris Hodges, SVP, Noble Systems. “They not only recover lost revenue, but have the unique tempermant to deliver a positive experience for customers in the most unpleasant circumstances.”

Noble Systems’ complete, unified solutions of omnichannel contact center, WEM and analytics are the foundation of an expansive portfolio that enhances collector productivity, saves time and money, increase promises-to-pay, manages compliance, and improves overall collection results.

“Businesses must recognize that these employees work in a hornet’s nest of hostility and provide them with the training, technology and support to do their jobs efficiently, cost-effectively and with a positive attitude,” added Hodges.

Agent attrition is an epidemic in contact centers as agent tenure decreases each year. Noble WEM and Gamification solutions help keep agents motivated and focused. Using game mechanics, Noble Gamification drives desired behaviors, leverages science-based motivational techniques to train, provides ongoing feedback to and rewards collectors for improved business outcomes.

Noble Systems offers powerful technology solutions for the Collection and Debt Recovery industry that help increase right-party contact rates, streamline the communications process, and maintain compliance with advanced list management and dialing strategies. Real-time speech analytics, integrated agent monitoring and interaction recording provide the visibility for quality assurance, and single/dual recording and wireless number dialing solutions are available in a PCI-Ready environment.

About Receivables Management Association

Receivables Management Association is the nonprofit trade association that represents more than 575 companies that purchase performing and nonperforming receivables on the secondary market. The Receivables Management Certification Program and Code of Ethics set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer. Receivables Management Association provides its members with extensive networking, educational, and business development opportunities in asset classes that span numerous industries. The association continually sets the standard in the receivables management industry through its highly effective grassroots advocacy, conferences, committees, task forces, publications, webinars, teleconferences, and breaking news alerts. Founded in 1997 as Debt Buyers Association, Receivables Management Association is headquartered in Sacramento, California. https://rmassociation.org/

About Noble Systems

Noble Systems Corporation is a global leader in the customer communications industry, providing innovative solutions for Contact Center, Workforce Engagement, and Analytics technologies. Tens of thousands of agents at client installations worldwide use Noble platforms to manage millions of customer contacts each day. Noble offers a unified suite of inbound, outbound, and omnichannel contact processing, strategy planning, resource management, and compliance tools for companies of all sizes. Our premise, cloud, and innovative premise/cloud hybrid platforms include ACD, predictive dialing, blended processing, recording and monitoring, IVR, messaging, interaction analytics, workforce management, and gamification. With a portfolio of 175 patents and growing, Noble leads the way in pioneering solutions for the contact center market. For more information, contact Lee Allum at 1.888.8NOBLE8 or visit www.noblesystems.com.

CLAYSBURG, Pa. — Amanda Bost brings 20 years of experience from the collection industry as she steps into the role of Director of Business Development for Collection Services at NPC, Inc.

She will be responsible for driving the direction of NPC’s sales development and relationship building with top-tier debt collection agencies, providing them with the security, compliance, production and reliable delivery they expect from a vendor and business partner.

“In the collection industry, everything is based on compliance every single day,” Amanda says. “Our services can all easily integrate into the collection world. I think what’s so special about NPC is that we have a lot of those extra features that collection agencies don’t even realize they need.”

From NPC’s Larissa Crum, Vice President:

“This is the perfect time to bring Amanda on board as part of our commitment to the collection industry, she brings a wealth of knowledge and experience to NPC. Amanda knows the collection industry and brings the customer perspective on day one. Amanda’s vision, strategy, and track record is exactly what NPC needs to deliver services and product offerings that are most needed in the marketplace today.”

Before joining NPC, Amanda served as Director of Administrative Operations for an accounts receivable management firm based in Ohio. She managed process improvements, corporate expansions, new location openings, human resources, compliance auditing, cost control, internal/external reporting, sales team support, and vendor relationships. Before that she served as a Client Services & Legal Forwarding Manager, and a Client Services Representative.

“Over my last 20 years, I touched every part of the organization and got the full perspective of how a collection agency works,” Amanda says. “I understand their wants and needs, and also understand their frustrations — especially dealing with collection letters. I joined NPC so that I can bring my perspective of the collection industry to a vendor who is passionately committed to creating value for its customers.”

Connect with Amanda:

• Email: amanda.bost@npcweb.com
• Phone: 814.239.8787
• LinkedIn: https://www.linkedin.com/in/amanda-bost/

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About NPC, Inc.

NPC’s Compliant Collection Letter Outsourcing Solutions for the ARM industry (www.npcweb.com/debtcollection) streamline and automate collection letter processes with a single-source solution. We work with premier collection agencies throughout the receivables communication lifecycle, saving them valuable time and money, all while helping them maintain 100% compliance.

Just yesterday, insideARM published an open letter to the Consumer Financial Protection Bureau (CFPB) regarding a legal issue that has percolated over the past year or so in the Eastern District of Pennsylvania and the District of New Jersey. Decisions from these courts are doing two things: (1) finding that a validation notice that tracks the statutory language of the Fair Debt Collection Practices Act (FDCPA) might very well violate the FDCPA, and (2) reading an “in writing” requirement into subsection (a)(3) where none exists.

The Eastern District of Pennsylvania recently released yet another decision on the issue in the case of Henry v. Radius Global Solutions, LLC, No. 18-cv-4945 (E.D. Pa. Jan. 18, 2019). 

Factual and Procedural Background

The facts in this case are similar to all other cases on this issue. There is nothing out of the ordinary in the way the debt was collected. At issue is the validation notice language used by the debt collector in its initial letter to the plaintiff. The letter, using identical language to the requirements listed in section 1692g of the FDCPA, states:

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request of this office in writing within 30 days after receiving this notice this office will provide you with the name and address of the original creditor, if different from the current creditor.

Plaintiff alleges that this notice “ambiguously described how she could dispute this debt” because the first sentence doesn’t notify her how to dispute the debt nor does it describe what happens if the debt is disputed orally. In response, the debt collector filed a motion to dismiss, which the court denied.

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The Court’s Decision

The court begins its decision with a paragraph summarily stating that the Third Circuit reads an “in writing” requirement to disputes made under 1692g (a)(3). In analyzing the Third Circuit’s decision in Graziano v. Harrison, the court mentioned that Graziano does not state that a debt collector must include the words “in writing” for subsection (a)(3) — although doing so does not violate the FDCPA. Instead, Graziano holds that in order for a debtor’s dispute under subsection (a)(3) to be valid, it must be in writing. Despite agreeing with Gratziano that the words “in writing” are not required, the court found that plaintiff sufficiently stated an FDCPA claim because not including “in writing” does not sufficiently describe the consumer’s rights. (Editor’s Note: Doesn’t that in effect make it a requirement?)

The court then went on to discuss the issue of including “if” in the second sentence of the validation notice, which is also included in the statutory language. Despite the court agreeing that the debt collector’s interpretation — that “if” is a condition — may be true, the court found that it could not rule out the possibility that the least sophisticated consumer might consider “if” as an option. If “if” is an option, then the letter can be read as allowing both oral and written requests for verification of debt. The court suggests that substituting “if” with “unless” (“Unless you notify this office in writing within 30 days…”) would be better.

Oddly enough, the court found that 1692g is not vague despite acknowledging that even judges within its own circuit have come to different conclusions on the issue. As a word of caution, the court cites the recent Durnell v. Stoneleigh Recovery Associates, LLC case, referenced in yesterday’s open letter, which states that adding the “in writing” language to subsection (a)(3) might run the debt collector afoul in other jurisdictions that do not read an “in writing” requirement into subsection (a)(3). The court also acknowledges that it disagrees with another late judge in its circuit on the “if” issue. One of the court’s main arguments in finding that the statute is not vague is simply the fact that it has never been questioned for its constitutionality despite being reviewed countless times for other issues.

insideARM Perspective

According to statutory interpretation principles, courts are first supposed to look to the plain meaning of the statute. Only if there is ambiguity or vagueness can the courts expand the scope. Many times in the past, courts throughout the country have found that if Congress explicitly included a certain requirement in some sections of a statute but not in others, then the exclusion was intentional and the requirement should not be read into those sections.

This issue is a perfect example. 

A plain reading of the statute indicates that a consumer has three separate options under section 1692g of the FDCPA:

• To dispute the debt (in any manner) within thirty days or else the debt collector will deem it valid.
• To request verification of the debt, which must be requested in writing within thirty days.
• To request the name and address of the creditor, which must also be requested in writing within 30 days.

The thirty day requirement is very clearly present in all three options, yet the written requirement is not. Congress explicitly included a written requirement for subsections (a)(4) and (a)(5), yet there is no mention of it in subsection (a)(3). By excluding the written requirement from one of the three subsections (and by not doing the same with the thirty day requirement), it can be concluded that Congress did not intend subsection (a)(3) to have a written requirement, thus affording consumers the ability to dispute the validity of debts (without requesting verification) both orally and in writing. 

Instead, these court decisions seem to indicate that these options — or at least the first two — are one and the same, forming a hybrid option where none exists in the statute. As a result, the Third Circuit and its subordinate courts have effectively restricted their consumers’ options for disputing debts,

The silver lining out of all of this is that there is a clear jurisdictional split on the issue, which creates an avenue for U.S. Supreme Court review. A Supreme Court decision would settle the issue once and for all, requiring all courts in the United States to follow its decision. While the path to Supreme Court review is long and not guaranteed, the universal applicability of a Supreme Court decision on this issue would provide much needed clarity for debt collectors who are in good faith trying to comply with the law, especially those who collect in multiple jurisdictions.

ST. GEORGE, Utah — TCN, the leading provider of cloud contact center technology for enterprises, contact centers, BPOs and collection agencies worldwide, announced today its membership in the Consumer Relations Consortium’s (CRC) Innovation Council (an initiative of insideARM and the iA Institute). As a member of the council, TCN, along with a select group of senior technology, strategy, operations and compliance executives, will work to redefine the “big” technology issues impacting the collections industry, as well as share operational insights and best practices with consumer groups and regulators in an effort to implement better processes, procedures and solutions for the industry as a whole.  

“TCN is honored to be given the opportunity to serve on this distinguished council of industry-leading creditors, technology companies and large collection agencies,” said Terrel Bird, CEO and co-founder of TCN. “We are excited to be one of the very few to represent the industry and to be at the forefront of improving technology, processes and relationships for creditors, consumers and servicers alike.”

On a mission to affect reform that is progressive, practical and will enhance the consumer experience for the collection industry, the CRC is led by two steering committees: regulatory and innovation. CRC members meet three times a year to engage in substantive education and feedback sessions to provide updates and guidance on relevant CRC initiatives. Additionally, members participate in working groups throughout the year preparing policy recommendations, formulating collaborative best practices, and conducting outreach to consumer groups, think tanks and other industry stakeholders. Most recently, TCN executives participated in the CRC’s Fall 2018 Meeting to discuss hot topics and regulatory developments in the collections industry, such as effective API integration, artificial intelligence, and robocall blocking and labeling, to name a few.

“We are pleased to include TCN in the CRC’s exclusive 2019 roster of technology leaders,” said Stephanie Eidelman, CEO of the iA Institute and CRC’s Executive Director. “Part of our mission is to facilitate a collaborative discussion about where the collection industry can go – while not getting bogged down in where it can’t go. In order to do this, you need thinkers, intelligent risk takers, and knowledgeable innovators.”

With its advanced, cloud contact center technologies, TCN has served the accounts receivable management (ARM) and collections industry since 1999. TCN’s comprehensive software has been proven to increase revenue and recovery rates with its intelligent predictive dialer solution. Its intuitive solution enables collections agencies to be more personalized, perceptive, proactive and progressive when engaging with its customer base.  

To learn more about TCN’s cloud contact center technology for the collections industry, visit: https://www.tcnp3.com/call-center-solutions/collections-arm/

About TCN

TCN is a leading provider of cloud contact center technology for enterprises, contact centers, BPOs, and collection agencies worldwide. Founded in 1999, TCN combines a deep understanding of the needs of call center users with a highly affordable delivery model, ensuring immediate access to robust contact center technology, such as predictive dialer, IVR, call recording, and business analytics required to optimize operations and adhere to TCPA regulations. Its “always-on” cloud-based delivery model provides customers with immediate access to the latest version of the TCN solution, as well as the ability to quickly and easily scale and adjust to evolving business needs. TCN serves various Fortune 500 companies and enterprises in multiple industries including newspaper, collection, education, healthcare, automotive, political, customer service, and marketing. For more information, visit: http://www.tcn.com/ or follow on Twitter @tcn.

Last week in Compliance Weekly, we looked at the tension between two competing/conflicting Massachusetts regulations:

• 940 CMR 7.00: Debt Collection Regulations, published by the Attorney General’s office
• 209 CMR 18.00: Conduct of the Business of Debt Collectors and Loan Servicers, published by the Division of Banks and Loan Agencies

Both regulations exist at the same time, and they don’t agree with each other. The best illustration of this was highlighted in the conflicting guidance provided to the industry by the regulators in question:

• The Mass. Attorney General believes that the Attorney General’s Debt Collection Regulations, 940 C.M.R. 7.00 et seq., apply to both creditors and third-party debt collectors.
• The Mass. Division of Banks believes that the Attorney General’s Debt Collection Regulations, 940 C.M.R. 7.00 et seq., do not apply to third party debt collectors.

So much for clarity and consistency.

Who is a creditor, and when?

Perhaps the biggest tension between the two documents is that the Attorney General’s office lumps third-party debt collectors and some debt buyers under the umbrella “creditor,” whereas the Division of Banks and Loan Agencies separates the two (I’ve bolded certain passages for emphasis):

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• Attorney General: “Creditor means any person and his or her agents, servants, employees, or attorneys engaged in collecting a debt owed or alleged to be owed to him or her by a debtor and shall also include a buyer of delinquent debt who hires a third party or an attorney to collect such a debt provided, however, that a person shall not be deemed to be engaged in collecting a debt, for the purpose of 940 CMR 7.00, if his or her activities are solely for the purpose of serving legal process on another person in connection with the judicial enforcement of a debt.”
• Division of Banks and Loan Servicers: “Creditor means any person who offers, or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such a debt for another.”

I cannot give you legal advice for a variety of reasons, probably the strongest being that I am not a lawyer no matter how many times I attempt to argue in front of the Supreme Court. But I can offer some suggestions. You should absolutely be in conversation with your own legal counsel about this.

Suggestions

• Familiarize yourself with both sets of rules (linked above).
• When there appears to be conflict between the rules (and I’ll show some examples in a titch), go with the more prohibitive version.

Examples

940 CMR 7.04 Contact with Debtors, sec. (d) v. 209 CMR 18.16 False or Misleading Representations, sec. (16)

An early frustration you may find in familiarizing yourself with the two sets of regulations is that they don’t necessarily overlap cleanly. In this example, we have to look at a section on contact in one, and false or misleading representations in another.

They primarily agree with each other, and require that collectors must identify themselves, either with their given name, or, if an alias, the collector must use the same alias for the duration of their employment with that agency. The main difference: the Division of Banks and Loan Servicers wants a list of employee aliases sent to the Commissioner while the Attorney General has no such requirement.

Suggestion: follow the Division of Banks and Loan Servicers instructions.

940 CMR 7.04 Contact with Debtors, sec. (i) v. 209 CMR 18.14 Communication in Connection with Debt Collection, sec. (1)(e)

Again, both regs primarily agree with each other; if you are going to communicate with a consumer at his or her place of employment, you have to send a “Notice of Important Rights.” The main difference – but it is a difference, and therefore must be accounted for – is in what that Notice of Important Rights looks like.

The Division of Banks and Loan Servicers wants the language to look like this:

NOTICE OF IMPORTANT RIGHTS

You have the right to make a written or oral request that telephone calls regarding your debt not be made to you at your place of employment. Any such oral request will be valid for only ten days unless you provide written confirmation of the request postmarked or delivered within seven days of such request. You may terminate this request by writing to the debt collector.

The Attorney General’s office wants to see the notice in all-caps:

NOTICE OF IMPORTANT RIGHTS

YOU HAVE THE RIGHT TO MAKE A WRITTEN OR ORAL REQUEST THAT TELEPHONE CALLS REGARDING YOUR DEBT NOT BE MADE TO YOU AT YOUR PLACE OF EMPLOYMENT. ANY SUCH ORAL REQUEST WILL BE VALID FOR ONLY TEN DAYS UNLESS YOU PROVIDE WRITTEN CONFIRMATION OF THE REQUEST POSTMARKED OR DELIVERED WITHIN SEVEN DAYS OF SUCH REQUEST. YOU MAY TERMINATE THIS REQUEST BY WRITING TO THE CREDITOR.

The language is almost the same; because the Attorney General classifies debt collectors as creditors, you’ll note that requests in writing are sent to the creditor. The presentation is different.

Suggestion: follow the Attorney General’s formatting, but use “debt collector” rather than “creditor” so as not to confuse the least sophisticated consumer.

940 CMR 7.05 Contact with Persons Residing in the Household of a Debtor, sec. (2) v. 209 CMR 18.14 Communication in Connection with Debt Collection, sec. (4)

This is a significant conflict between the two regulations.

Attorney General: “It shall constitute an unfair or deceptive act or practice for a creditor to imply the fact of a debt, orally or in writing, to persons who reside in the household of a debtor, other than the debtor.”

Division of Banks and Loan Servicers: “For the purpose of 209 CMR 18.14, the term “consumer” includes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.”

The Division of Banks and Loan Servicers allows for communication with spouses; the Attorney General’s office does not. In fact, the word “spouse” does not appear in the Attorney General’s regulations at all with regard to communication and debt collection.

Suggestion: the safest suggestion here is to follow the Attorney General’s regulations, as it is the more prohibitive of the two.

Conclusion

Several industry advocates have been working with Massachusetts on these conflicts; however, they’re still in the early stages of this process, and nothing, yet, has been made clear except that both regulations exist, and both are enforceable.

And even the safest suggestions aren’t fool-proof suggestions. The advice suggested has no guarantees attached to it. Until such time as there’s a reconciliation between Massachusetts’s Attorney General’s office and the Division of Banks and Loan Servicers, Massachusetts remains, in technical terms, a mess.

There seems to be a never-ending supply of letter language Fair Debt Collection Practices Act (FDCPA) cases. Today we’ll drill into an Eastern District of Wisconsin decision that discusses the language used when presenting a payment option to a consumer. In Al v. Van Ru Credit Corp., No. 17-CV-1738 (E.D. Wisc. Jan. 14, 2019), the court took issue with a letter stating thatthe consumer would need to act “promptly” to take advantage of a settlement offer without giving an actual due date.

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Factual and Procedural Background

The facts in this case are relatively straight-forward. Defendant collection agency sent a letter to plaintiff that stated, “The balance you owe as of the date of this letter is $462.31. Presently, we are willing to accept $227.39 to settle your account, provided that you act promptly.” Plaintiff sued defendant alleging that the letter violates the FDCPA and the Wisconsin Consumer Protection Act.

Defendant’s corporate representative testified that the letter is a form template that is sent if defendant deems it appropriate. Defendant would honor the settlement payment at any time until either the account is closed or the creditor changed defendant’s settlement authority. The settlement authority throughout the placement of this account gradually decreased. The letter in question was sent on March 10, 2017 and the creditor recalled the account on March 30, 2017.

Defendant filed a motion for summary judgment on all claims while plaintiff filed a motion for summary judgment seeking to remove the bona fide error defense.

The Decision

The court denied defendant’s motion in part and granted it in part; it also granted plaintiff’s motion.

The court found that the question of whether the letter was deceptive or misleading is best left for a jury. Of the three types of deceptive or misleading categories established by the Seventh Circuit in Janetos v. Fulton Friedman & Gullace, LLP, this letter might fall into the second: it is not misleading on its face, but has the potential to be misleading to the least sophisticated consumer. This, according to the court, falls to a jury to evaluate and thus summary judgment is not appropriate.

The court also took issue with the fact that the letter was unclear as to the terms of payment. Specifically:

The Letter is potentially deceiving as to the most basic element of the parties’ relationship — the terms of payment for the debt, namely the time in which to pay. Indeed, the very purpose of requesting “prompt” payment was to influence Plaintiff’s decision to pay.

The court did grant summary judgment inh favor of defendant regarding the 692f claims. Section 1692f of the FDCPA is a catch-all provision and, according to the court, shouldn’t proceed on the same facts that underlie a more specific violation under a different section.

Finally, the court decided to strike down defendant’s bona fide error defense. The court found that defendant presented no evidence showing that they inadvertently included the language or that there was some printing error. Instead, the court found that defendant was trying to argue a mistake of law, which is not protected under the bona fide error defense.

insideARM Perspective

There you have it, folks. “Promptly” doesn’t cut it, but a due date might have done so according to the tea leaves set out by this decision. Will this open up another litigation can of worms? Probably; most letter cases that attempt to clarify letter requirements do. Alas, this is the burden debt collectors bear with a vague and outdated statute like the FDCPA, which is why many industry members are anxiously awaiting the Consumer Financial Protection Bureau’s new third party debt collection rules due out this spring.

ARLINGTON HEIGHTS, Ill. — Chicago-Commercial Collection Agencies of America has elected its new Board of Directors and has announced the slate of officers of the organization.

Board members include Bruce Godwin of Williams, Babbit and Weisman, Inc., Meg Scotty of Brennan & Clark Ltd., Fred Wasserspring of Lyon Collection Services, Inc., Pete Roth of CST Company, George Bresler of GB Collects LLC, David Herer of ABC-Amega, Inc., and Humberto Matz of Creditors Adjustment Bureau.

Officers are: Bruce Godwin, President; Pete Roth, Vice President; David Herer, Secretary; Fred Wasserspring, Treasurer; and Meg Scotty, Past President.

The Board recently held a successful strategic planning meeting in Orlando, Florida. Along with the Executive Director, the board members developed a plan to be implemented with its membership to bring focus on not only today’s needs but anticipated organizational and industry needs in the future. Central to those efforts is to continue to fulfill the mission of the Association: to elevate the standards and uphold the professionalism in the commercial collection industry for the benefit of protecting the credit granting community.

The alignment with partners such as The Credit Research Foundation (CRF) allows a reach into that community, which is key to communicate the mission of protection. “Being a Platinum Partner and having earned the endorsement of The Credit Research Foundation cultivates an environment of interaction with credit practitioners to exhibit our rigorous certification requirements,” mentioned Annette M. Waggoner, Executive Director.

The Board created key programming and education initiatives which will fulfill another mission of the Association: to assist members in their compliance to regulations, adoption of the latest technologies and efficiency in operations.

“Commercial Collection Agencies of America is the ONLY certifying body in which all agency members are certified,” noted Bruce Godwin, President. “Credit grantors have told us how important this fact is and how it eliminates marketplace confusion,” he added.

About Commerical Collection Agencies of America

Commercial Collection Agencies of America is an organization of commercial collection agencies, creditors’ rights attorneys and law list publishers. The certification program, which is the platinum standard in the industry, is promulgated by an Independent Standards Board, which includes professionals from a cross-section of industries related to credit and collections. For more information or to locate a certified commercial collection agency, please visit, www.commercialcollectionagenciesofamerica.com.

Yesterday the Department of Education (ED) released its re-do of the solicitation for business process services under the ambitious new NextGen student loan servicing environment. As I read this new solicitation, I’m still not sure how Private Collection Agencies (PCAs) can compete.

The original version of the solicitation incorporated a two-phase procurement, where only those chosen during phase one would be able to bid on phase two. But ED changed the scope of work between phase one and phase two, which sparked protests from …just about everyone, claiming they had been unfairly excluded from bidding on a contract they would have been qualified for. Suits were filed in the Court of Federal Claims (COFC). Judge Thomas Wheeler sided with the plaintiffs, and ordered the re-do from ED.

To put the PCA role in full context here, let’s back up a moment. Here is the VERY brief history of how we got where we are:

What began in 2009 as a 5-year contract for 17 large (unrestricted) and five small debt collection companies became a contract in 2014 for 11 small companies and a delay for the large firm awards. Eventually, in December 2016 seven large companies received awards, which launched dozens of protests from those who were left out, followed by a re-do, a whittling down to just two large companies, then more protests, and then… nothing. No large company awards at all. On May 13, 2018 ED cancelled the whole thing, offering this justification:

“The solicitation will be cancelled due to a substantial change in the requirements to perform collection and administrative resolution activities on defaulted Federal student loan debts. In the future, ED plans to significantly enhance its engagement at the 90-day delinquency mark in an effort to help borrowers more effectively manage their Federal student loan debt. ED expects these enhanced outreach efforts to reduce the volume of borrowers that default, improve customer service to delinquent borrowers, and lower overall delinquency levels.”

As you may have guessed, complaints were filed, and everyone went to the COFC. This chapter ended on September 14, 2018, with the Judge permanently enjoining ED from cancelling the solicitation.

(A more detailed recap of the above, which I call the first four chapters of this saga, is here.)

This is where NextGen comes in.

Backing up slightly…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).

As we learned with ED’s cancellation of the unrestricted PCA solicitation, those who win a  NextGen contract will be the ones to implement the “enhanced servicing” strategies that are meant to drastically reduce defaults by preventing them in the first place. (Note the timing — February 2018 was just three months prior to ED’s cancellation of the Solicitation for unrestricted PCAs, claiming their services would be unnecessary.)

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 now clearly spells 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 one winners), and so began what I call chapter five of the PCA quest for a Department of Education student loan contract.

Again, lots of stakeholders went to the COFC, and met with our friend, Judge Thomas Wheeler. The claims are explained in this story. In the end, Judge Wheeler sided with the plaintiffs and urged ED to pursue corrective action that would avoid a repeat of the previous chapters of this saga. He gave the Department until December 14th.

And, on December 14, 2018, ED cancelled the procurement, revoking the Phase I awards and saying it would issue a new solicitation by January 15, 2019, allowing for a “full and open competition.”

Now we’re back to today.

As promised, yesterday ED issued three new RFPs and cancelled previous ones. The three include:

RFP R00005 – Enhanced Servicing Solution – This is the immediate term solution used by ED to justify its cancellation of the unrestricted PCA Solicitation. Proposals are due by February 25, 2019 [Editor’s note: this is corrected. A previous version of the story listed the due date as March 25, 2019]

RFP R00008 – Business Process Operations Solution – After the Enhanced Servicing Solution has been awarded, a timeline will be set for this Solicitation – there is currently no due date, except that bidders must complete a Past Performance Reference Questionnaire by March 1, 2019.

RFP R00007 – Optimal Processing Solution – This is the long-term system solution that carries a two-year implementation period. The due date is March 25, 2019. 

For purposes of this artcile, I’ve chosen to focus on RFP R00008 – Business Process Operations (BPO) solutions (which also references the Enhanced Servicing Solution). The following are some high level details:

• The award will be an indefinite-delivery indefinite-quantity contract.
• The base ordering period will be five years, with one five-year optional extension.
• There will be multiple awards under this Solicitation.
• The scope of services spans the entire lifecycle of student financing — from application for financing, to origination and disbursement, to processing and servicing and pay-off or default.
• All activities will be performed under the Federal Student Aid (FSA) brand.

ED articulates four goals for NextGen servicing:

1. Provide a world-class customer experience. Among other things, this experience includes the ability to receive support through the channel most appropriate to their needs, and should be continuously improved through activities like data analysis and iterative user testing.
2. Create an environment that can efficiently and effectively integrate new and existing capabilities, and also stay in compliance with changing Federal rules, regulations and law.
3. Drive greater operational efficiency by reducing complexity, improving the stability and security of systems, and ensuring effective use of taxpayer dollars.
4. Measure success in part on how well it improves customer outcomes and facilitates compliance with Federal consumer protection standards and Title IV legal requirements. Examples include: decreased percentage of borrowers in delinquency or default, reduction of borrowers in deferment and forbearance, increased repayment rate, and increased digital self-service and correspondence.

The Solicitation sets an ambitious goal:

“In the near term, FSA anticipates the need for multiple loan processing solutions. Long-term, however, FSA’s goal is to move towards the future-state of a single platform operating environment. Most immediately and on a rapid schedule, FSA anticipates migrating, through conversion, nearly 200 million loan accounts from existing servicers to the Enhanced Processing Solution, while minimizing disruptions for customers.” (emphasis added)

Under the title of Solution Objectives, the Solicitation states:

Business Process Operations will support efficient and effective operations across the entire lifecycle of student financing…under FSA’s single brand, by providing the personnel necessary to respond to inbound customer (e.g. student applicants, borrowers, etc.) and partner (e.g. schools) inquiries, execute separately-developed outbound outreach campaigns, and perform back-office processing activities that cannot be automated. These personnel will provide an enhanced level of service, across the full life cycle of student financing, beyond today’s environment and one that is consistent with leading financial services providers…”

Based on broader NextGen goals, ED wants the selected BPO contractors to begin scaling operations in parallel with the start of existing customer accounts migration once the Enhanced Processing Solution is fully operational and ready to start migration (no later than six months after award). (emphasis added)

insideARM Perspective

In no particular order, I’ll raise these questions/observations:

Based on my reading of the Solicitation, it sounds like potential solution providers can only bid on this contract if they are able to service the entire lifecycle of student aid. I’m not sure there is any one organization immediately equipped to do that. How will this affect PCAs? Must they scramble to attach themselves to companies that are equipped to service the front half? Would they bid on the contract anyway, making the case that if they’ve done a good job managing defaults, they could do a good job preventing defaults?

There is a lot that is still undefined. The schedule starting on page 11 of the Solicitation refers to requirements that have yet to be established…yet services must begin a mere six months after award.

I gather ED is requiring the aggressive timeline because the Title IV Additional Servicing (TIVAS) contracts end in April 2019 and they have just one 6-month extension available. Sources tell insideARM that FSA will not be negotiating further extentions on the small PCA contracts, so those will likely end this fall as ED expects to quickly transfer 200 million accounts to the new Enhanced Processing solution.

FSA wants the full life cycle of servicing to occur under its own brand. The Debt Collection Improvement Act of 1996, however, requires Federal agencies to “REFER” debts to private collection agencies. PCA then send letters, make calls, etc. These are just a few of the questions that will need to be addressed if collections are performed on the FSA system under the FSA brand:

• Will the PCA debt collection notices state “FSA has placed your account for collections with FSA?”
• Will FSA pay itself a contingency fee? Federal law requires PCAs to be compensated through contingency fees (collections must be budget neutral). Loan servicing is paid for through Congressional appropriation.
• How will FSA address the “bundling” issue – where PCA work is being bundled with servicing; Office of Management and Budget (OMB) Circular A-129 describes two separate regimes for loan servicing and debt collection.
• Bundling loan servicing and default collection services creates an internal conflict of interest for any awardee because there is a natural incentive to shift work to that service which provides the highest compensation structure.

Meanwhile, remember that last September Judge Wheeler permanently enjoined ED from cancelling the Solicitation for unrestricted (large) PCAs. Will this solicitation appear to satisfy the spirit of that Order?   

Another read is that this Solicitation is seeking responders to develop the system/platform and remains silent on the actual collection agencies; At some later point the winners will pick the PCAs and thus move the procurement and oversight away from ED. This would be an interesting way to address ED’s selection and oversight challenge.

We are coming up to Groundhog Day. What happens if the PCA procurement sees it shadow? Six more years?

EDMONTON, Alberta — Metropolitan Credit Adjusters Ltd. (MetCredit) has purchased Affinity Credit Solutions Inc. in a made-in-Alberta acquisition.

MetCredit President and CEO Brian Summerfelt says the acquisition is about growth and timing. “Debt recovery is a specialized business where clients demand highly customized professional service. Adding Affinity expands our service base, depth and offerings while preserving the independence and strengths of each company.” MetCredit is a national debt collection agency with its head office in Edmonton, where it was founded in 1973.

Summerfelt says that while little will change for employees or clients of either company, the few noticeable differences will be very positive. “We’ll start Affinity on MetCares Program. Affinity staff will get to participate in other MetCredit incentives and team-building programs. “They’re part of the Canada-wide MetCredit family now, and it’s going to make us all better.”

Affinity clients will also benefit, Summerfelt says. “Affinity can now tap in to a very sophisticated and experienced IT and support team.” This is significant because of the industry’s ever-increasing demand for data security and privacy. “Because MetCredit has worked with banks, governments and large telecoms for nearly half a century, we are fully configured with the highest level of IT integrity. So Affinity’s level of sophistication moves up by orders of magnitude.”

Summerfelt adds that while the Canadian economy is experiencing its challenges, the companies have distinct client bases and both are in a growth phase. Businesses in Alberta are in heightened need of accounts receivable help in order to sustain positive cash flow through the economic slowdown. 

Affinity Credit Solutions is an Alberta-focused collection agency and will continue to operate independently of MetCredit. The acquisition of Affinity augments MetCredit’s market share in Alberta, in addition to operations in all Canadian provinces and territories through longstanding branch offices in BC, Ontario, and Québec.

Whereas MetCredit specializes in consumer debt collection services for large-scale organizations and government, Affinity has particular expertise in landlord and tenant debt collection and industry-specific commercial accounts. 

Summerfelt says that although new ownership is always a big change, the Affinity team is excited about the transition. “MetCredit and I are well known and respected throughout the collections industry. Everyone is enthusiastic.” He explains he has worked to achieve a smooth transition and a strong relationship with the previous owner, Ryan Corbett. “I want to thank Ryan, and I have no doubt we’re going to do him very proud.”

For more information, please contact Brian Summerfelt, President & CEO of MetCredit at 780-420-2377 or bsummerfelt@metcredit.com.

About Metropolitan Credit Adjusters

Founded in 1973, MetCredit is a leader in Canadian debt recovery and commercial collection. MetCredit is dedicated to providing professional, reliable service characterized by the highest ethical standards of conduct for over 45 years. MetCredit is proud to maintain the debt recovery industry’s highest success rates, with many large-scale client partnerships dating back several decades. With its one-of-a-kind online account submission tool and other proprietary technologies, MetCredit is regarded as a force for innovation on the Canadian accounts receivable management landscape. MetCredit reports delinquent accounts to Transunion, Equifax and Dun & Bradstreet as well as highly specialized regional credit bureaus in Canada.

About Affinity Credit Solutions

Affinity’s founding partners came together in 1996 with extensive industry experience and a unique philosophy. Consistent growth has allowed Affinity to brand those attributes into a recognized benefit for hundreds of Alberta clients and thousands of their customers. Affinity Credit Solutions has always provided reliable third-party collection services, built on a foundation of integrity, respect & performance.