Companies attempting to navigate the waters of consent revocation in the Telephone Consumer Protection Act (TCPA) context received some relief in Reyes v. Lincoln Automotive Fin. Servs., 861 F.3d 51 (2d Cir. 2017). In Reyes, as previously published by insideARM, the Second Circuit found that contractual consent to be contacted using an automatic telephone dialing system (ATDS) cannot be unilaterally revoked.

The Northern District of Alabama recently agreed with and adopted the Reyes reasoning in its decision in Few v. Receivables Performance Mgmt., No. 1:17-cv-02038 (N.D. Ala. Aug. 8, 2018).

Factual and Procedural Background

In this case, Plaintiff entered into a contract with DISH for television and internet services. In this contract, Plaintiff consented that DISH “and/or any debt collection agency and/or debt collection attorney hired by DISH” to contact her at her phone number ending in 0268 using an automated or predictive dialer to recover any unpaid bills.

DISH placed Plaintiff’s account with Receivables Performance Management (Receivables) to collect on Plaintiff’s alleged debt. After answering a call from Receivables, Plaintiff stated she did not want them calling her anymore. Despite this request, Receivables continued to call Plainitff.

Plaintiff filed a suit against Receivables alleging violations of the TCPA by continuing to call her after she revoked consent. Receivables filed and amended a motion for summary judgment arguing that contractual consent cannot be unilaterally revoked.

The Decision

In a relatively short decision, the court granted Receivable’s amended summary judgment motion.

The court found that the common law concept of consent applies to this situation. The court noted that common law consent can be unilaterally revoked, but not where there is a contractual restristriction that says otherwise. While the court left this sentence standing on its own, most contracts like the one in question contain a clause that states the terms of the contract may only be amended in a writing signed by both parties.

Since the Eleventh Circuit, under whose umbrella this court sits, has not ruled on this issue, the court turned to the Second Circuit’s Reyes decision. Using Reyes, the court found that “Ms. Few gave prior express consent to Receivables to make the calls and, because she offered that consent as part of a bargained-for exchange and not merely gratuitously, she was unable to unilaterally revoke that consent. Receivable’s phone calls to Ms. Few, therefore, did not violate the TCPA.”

insideARM Perspective

Many statutes govern communications in our industry. This decision focuses only on the TCPA. Reyes was a pivotal case in the in the context of TCPA consent. While Reyes is only binding on courts within the Second Circuit, it appears that its reasoning is now taking root in other parts of the country. A decision like this helps reinforce the TCPA’s original purpose: to protect against unsolicited telemarketers, not companies with whom the consumer already has a business relationship. 

As part of its August 9^th quarterly earnings announcement, Performant Financial Corporation (Nasdaq: PFMT) revealed it had recently signed an agreement to acquire Premiere Credit of North America (Premiere Credit).

The following are some of the highlights for the second quarter of 2018:

• Total revenues of $31.3 million, compared to revenues of $35.9 million in the prior year period, down 12.8%
• Net loss of $3.6 million, or $(0.07) per diluted share, compared to a net loss of $2.4 million, or $(0.05) per diluted share, in the prior year period
• Student lending revenues in the second quarter were $17.5 million, a decrease of $10.0 million, or 36.4% from revenues of $27.5 million in the prior year period. Reduced revenues from Great Lakes Higher Education Guaranty Corporation accounted for 75% of this decrease year over year, with revenues of $7.6 million in the second quarter of 2018, compared to $15.2 million in the prior year period. 
• Healthcare revenues in the second quarter were $6.1 million, up from $2.1 million in the prior year period. Combined Medicare MSP and audit recovery revenues were $3.5 million in the second quarter, an increase of $3.4 million from the prior year period. Commercial healthcare clients contributed revenues of $2.6 million, an increase of $0.6 million or 30.0% from the prior year period.
• Other revenues in the second quarter were $7.7 million, up from $6.4 million in the prior year period.

The Company also announced that it has signed an agreement to acquire Premiere Credit, a leading provider of recovery services to government, student loan and commercial clients with approximately 330 employees located primarily in Indianapolis and Nashville.  Premiere is an affiliate of ECMC Group, a Guaranty Agency with one of the largest student loan portfolios and a longstanding client of Performant.

Performant announced that it will issue one million shares of its common stock at the closing and will be obligated to issue additional shares of common stock based on revenues associated with the Premiere business over the next five years (estimated to total approximately one million additional shares based on full achievement of revenue targets). 

At closing, Performant and ECMC will enter into a long-term agreement to be ECMC’s primary student loan recovery vendor. Performant will also enter into amendments to its existing credit agreement with ECMC, including an extension of the maturity date by one year to August 2021 and a $10 million increase in Performant’s additional borrowing capacity under this facility.

insideARM Perspective

insideARM spoke with Performant CEO Lisa Im for additional perspective on the Premiere deal, and where she sees opportunity for the company. In the wake of the cancellation by the Department of Education (ED) of the company’s unrestricted private student loan contract (ED cancelled the entire solicitation, not just Performant’s contract), Im reports that this deal gives her firm a longer runway to grow the business in a broader way.

She expects to pursue significant growth on the healthcare side of the business. They already do significant business as a contractor for Centers for Medicare & Medicaid Services (CMS), and in claims auditing. Premiere brings a platform in healthcare collections (which they’ve been building in the wake of the ED contract debacle), which Im expects to use as a base for expansion.

Premiere also has a platform in financial services. Im said that this vertical had been in their technology development plan, but now that they’ve acquired one, this will help them advance more quickly beyond their predominantly healthcare and government client base.

Premiere had been on the 2009 unrestricted ED contract, and received an award in December 2016 when the Department finally announced winners for a new five year contract. That started a wave of litigation by the non-winners, which ultimately led to a re-bid, and a new award in January 2018 to just two companies, Performant and Windham Professionals. This led to a new round of litigation, with seemingly no end in sight. Those two awards were recently cancelled by ED, along with the entire Solicitation.

While Premiere had been primarily a federal student loan collector, it seems they’ve pivoted and developed new capabilities since their 2016 ED contract never materialized. Im noted that they do also have a few valuable state and municipal contracts, which she expects to build upon.

A recent study weighed popular phone carriers against each other in how accurately each carrier detects robocalls and spoofed calls.

In the robocall context, the study looked at how often the carrier identified a number that is “problematic” in order to determine accuracy. Of the major carriers, the study found that Verizon’s “Enhanced Caller Name ID” lead the pack by detecting problematic numbers 93.6% of the time, followed T-Mobile’s “SCAM ID in Combination with Name ID” at 90.1% detection and AT&T Wireless’s “Call Protect” with 86.9% detection.

On the call spoofing category, Verizon far outweighed the other carriers on detection. According to the study, Verizon detected spoofed calls 98% of the time, followed by T-Mobile at 64% and AT&T Wireless at 60%.

insideARM Perspective

Those of us in the industry wear two hats. On one hand, we are consumers who want a solution to the volumes of robocalls we receive on our personal phones. On the other, we are members of legitimate businesses that get caught in the crossfire of the robocall blocking technology even though our businesses fall outside the scope of the problem.

Spoofed calls remain an issue the industry is on the lookout for, so it is encouraging to see that carriers are becoming better at detecting them. However, the robocall portion of this study shows the difficulty faced with this issue. The definition of “problematic” number is vague and casts an overbroad net that sweeps and incorrectly labels legitimate business calls as possible scams. 

This is a nuanced challenge that will continue for some time and insideARM will continue to montior it.

With rapidly-shifting technology, regulations, and demographics, the collections industry is facing a wide range of challenges. In today’s highly-mobile society, debtors are more difficult to locate than ever before. Although there is a surplus of information available on individual debtors, it can be nearly impossible to effectively sort through it all.

Thomson Reuters recently surveyed its collections clients to discover the most pressing debt collection challenges currently confronting them. The top four reflect their mutual frustrations with finding good, reliable information on debtors.

From lacking current contact information of debtors to identifying the correct debtor, you can’t afford to have bad data. Identifying the challenges facing organizations involved in skip tracing is an important first step to improving the data collection process. Just as important, however, is finding the right solutions, and Thomson Reuters CLEAR for Skip Tracing was designed to address each of those challenges and help collections professionals increase their efficiency and accuracy.

Find out the Top 4 Ways Thomson Reuter’s CLEAR Solves Your Biggest Skip Tracing Challenges

ROSEVILLE, Minn. — Center Point Legal Solutions, LLC is delighted to announce Kacey Rask has joined its growing team as Vice President of Sales & Marketing.  In this new position, Kacey will oversee the company’s marketing strategy and new business development of CPLS’ non-performing judgment collections, asset services and legal recovery solutions.

“We are elated to have the opportunity to team with a proven industry leader of Kacey’s caliber,” said President Aaron Rose. “Her extensive legal network experience within the ARM industry offers CenterPoint further opportunities to provide our industry with unparalleled legal solutions.”

Prior to joining CenterPoint, Kacey Rask has held many leadership roles in her eight (8) year career with The National List of Attorneys, the nation’s premier attorney referral source for creditors rights, collection, bankruptcy and subrogation law firms worldwide.  She began her career, and appreciation for compliance and legal solutions, working with clients in collaboration of building and managing their legal networks.  Specifically, she focused on firm oversight and compliance documentation and awareness as she assisted in the development of NL’s attorney compliance program. Her efforts ensured transparency and proper documenting practices between client and attorney.  Kacey most recently served NL as Vice President of Business Development where she found a passion for educating the industry on the many legal recovery options available.  During her time in the industry, she has assisted in the growth of the Professional Women’s Network, PWCI (both at NARCA and CLLA), and looks to continue its growth and extension into additional associations.  Kacey graduated from The University of Mary with her BA in Business Management and went on to achieve her MBA.

“I am very excited about the new chapter I’m starting with the CenterPoint team.  I have had the pleasure of working with CenterPoint over the years and am overjoyed to now be a part of its continued growth and evolution.  There’s been a progressive shift in the industry over the last two years as it relates to legal service options.  I see positive changes in the future and an even greater need for the innovativeness and compliance focused dormant judgment, litigation and asset location services CenterPoint offers”. – Kacey Rask

About CenterPoint Legal Solutions

CenterPoint Legal Solutions (CPLS) is dedicated to providing strategic services and solutions on non-performing credit intensive assets by uniting legal process and collection expertise. CPLS offers unique solutions across the various stages of debt aging and targets under-served market segments.  CPLS maximizes recovery results by providing innovative and consistently effective national legal collection solutions to creditors and debt buyers while treating consumers in an ethical manner.

NEWTON, Mass. — Goldberg & Oriel is pleased to announce the expansion of its practice into two additional states, Vermont and New Hampshire, bringing the firm’s vast collection expertise to a total of three states.

Goldberg & Oriel offers its valued clients over fifty years of combined experience in successfully collecting monies owed. Previously assisting national clients with the collection of both commercial and consumer debts in Massachusetts, the firm has now grown its practice to include collection in Vermont and New Hampshire. Attorneys David Goldberg and Chesley Oriel have been highly successful in their years of practice, as they believe that an aggressive approach to collection, from the initial demand letter stages through post-judgment collection efforts, is key to getting their clients paid as much and as soon as possible. Our lawyers are knowledgeable about the laws surrounding the debt collection industry, highly skilled in litigation and post-judgment strategy, and effectively persuasive during settlement negotiations.

If you have a debt that needs to be collected in Massachusetts, Vermont, or New Hampshire, contact Goldberg & Oriel for a free and confidential consultation. For more information on the firm’s practice areas, attorneys, and how we can further assist your needs, please visit: www.golawoffices.com.

Goldberg & Oriel
199 Wells Avenue, Suite 209
Newton, MA 02459
Email: Office@golawoffices.com
Phone: 617-969-1111
Fax: 617-969-1116

This article previously appeared on the Ontario Systems Blog and is republished here with permission (and with additional information from insideARM at the bottom).

As consumers continue to move away from paper and spend more time sending documents and payments electronically, ARM companies need to step up and keep compliant with the regulations that protect convenience. We’ve covered electronic payments at length – now it’s time to master E-Sign. But what about digital communication?

The Electronic Signatures in Global and National Commerce Act (E-Sign) provides parties with the ability to substitute electronic records for paper and use electronic signatures in place of wet signatures to sign electronic records. It is also the law Congress passed to make clear digital documents and digital signatures have the same force and effect as paper and pen.

But E-Sign also contains an often-overlooked section that addresses when and how one may substitute the digital delivery of a legally required consumer disclosure in place of traditional delivery methods, such as hand delivery, certified mail, or the U.S. postal service. Creditors, governmental bodies, healthcare providers, and third-party debt collectors alike need to embrace the consumer disclosure requirements of E-Sign if they want to save on postage expenses and satisfy the growing needs of consumers to manage their business using electronic communication methods. To learn more about the Bureau of Consumer Financial Protection’s position on E-Sign and how it impacts third-party debt collectors, read the decision Lavallee v. Med 1. 

Editor’s Note: insideARM previously published an article about the Lavallee decision.

In short, subparagraph c) of the E-Sign Act provides: if a statute, regulation, or other rule of law requires information relating to a transaction or transactions to be provided or made available to a consumer in writing, then the use of an electronic record may be substituted for its paper counterpart if the consumer is first provided with a clear and conspicuous notice informing him or her of the following:

• The consumer’s right to receive the information in paper form at any time upon request;
• Whether the consumer’s consent to receive electronic records applies to one or more transactions; The consumer’s right to withdraw consent at any time;
• A description of the procedures the consumer may follow to withdraw consent and the consequences of withdrawing consent such as the imposition of fees or the termination of the relationship;
• Process the consumer may use to update their contact information;
• Explanation of the hardware/software requirements for accessing and retaining records
• Process to obtain paper disclosures even after consent to receive electronic records has been given
• The consumer’s need to consent electronically, or electronically confirm consent, in a manner that reasonably demonstrates their ability to receive or access the information electronically

I have seen paragraph c) E-Sign disclosures presented in as many as three pages filled with legalese or succinctly presented in a pop up box on a debt collection website. But the length and complexity of the consent disclosure information is far less important than your need to simply address each point in your disclosure method and to provide this information to the consumer before they consent to receive their legal disclosures and documents electronically.

If you are contemplating the use of text messaging or email to provide consumers with legally required disclosures, such as the FDCPA’s validation notice or postdated payment notice or Reg E’s authorization for preauthorized electronic funds transfers,  or any other document or disclosure legally required to be provided in writing advise your team to embrace E-Sign and use it to your advantage. It may save you the cost of many hundreds of thousands first-class mail stamps.

To date there has been very little litigation over the impact of E-Sign on written disclosure requirements related to debt collection. The Lavallee case is one of the first. To bring closure to this issue, members of the industry have opened a dialogue with the BCFP to determine when E -Sign may apply and whether an exemption from E-Sign would benefit consumer and debt collector alike.

insideARM Perspective

There are many reasons why debt collectors look to electronic methods of communication with consumers. First and foremost, it is the preferred method of communication by many consumers, especially younger generations like millennials. Additionally, to counter-balance the increase in the cost of compliance due to the ever-changing laws and regulations that govern the industry, debt collectors are looking at other cost-saving methods. While a single stamp may not cost that much, the volume of letters that debt collectors are required by law or regulation to send makes the cost of mailing letters significant. The ability to use modern methods of communication can alleviate that cost burden.

insideARM previously published articles about Colorado’s bi-annual Colorado Fair Debt Collection Practices Act (CFDCPA) report  and its planning of a meeting about debt collection rules. On July 30, 2018, this meeting occured, but not much substance was provided by the state regulators. 

Industry sources at the meeting shared that it was run by Jan Zavislan, the Interim Administrator, who made it clear that his role was temporary and that the new Attorney General (AG) once elected will be able to appoint a new Administrator.

According to sources, the meeting was primarily a “listening session” with no official prepared statement. Instead, Zavislan sought comments and statements of those present. Some highlights of industry representative comments include:

• Voicing concern about the idea of requiring licensing of process servers in Colorado. One representative noted that process servers already have to comply with the policies and procedures of the company that retained them. Another representative noted that requiring the licensing of process servers will ultimately pass further costs onto consumers.
• Suggestions that Colorado move over to NMLS for licensing, following the direction taken by many other states. This would be a win-win as it would allow consumers to easily look up a debt collector’s license and it would make the licensing process smoother for companies.
• Advocating for modernizing the CFDCPA to allow for newer methods of communication.
• Stating the need for more communication between the AG’s office and the industry. One representative noted that there has not been an advisory opinion since 2006. Despite the lack of guidance from the AG’s office on how to comply with the laws, industry companies are being penalized with arbitrary enforcement actions.
• Pointing out the gaps in the complaint process, including no communication when a complaint is closed, no filtering of complaints that have nothing to do with the practices of the collection agency or firm, and the need for better handling of duplicate complaints.

Zavislan responded to some of these comments. Regarding licensing and arbitrary enforcement actions, he stated that the focus is on unlicensed companies that have a history of unlicensed activity. There was no substantive response when an industry representative asked about the possibility that the company may not have known it needed to be licensed. Regarding consumer complaints, Zavislan noted that the office added a compliance administrator role that will work on better filtering complaints before they are sent to companies.  

Zavislan also referenced that any potential new rules would be delayed until there is a new administrator.

insideARM Perspective  

While there was limited information shared by the Interim Administrator, this meeting allowed industry representatives to voice their concerns regarding the regulatory environment in Colorado. The trend seems to revolve around the desire to streamline processes such as licensing and complaints and to improve communication between the AG’s office and industry companies. As noted by one industry representative, the true beneficiary of addressing these concerns is the consumer. With the uncertainty of what a newly-elected AG will do, it remains to be seen what will come of the comments made at this meeting.

The legal doctrine of res judicata precludes a plaintiff from relitigating an identical claim based on the same set of facts against the same defendant when the first claim was already decided on the merits. In the context of the Fair Debt Collection Practices Act (FDCPA), a question recently arose in the Northern District of Illinois: whether res judicata applies to a second lawsuit filed by the same plaintiff against the same agency under a similar set of facts if the two suits involved two separate accounts placed with the agency.

According to the court in Horia v. Nationwide Credit and Collection, Inc., No. 17-cv-08355 (Jul. 31, 2018 N.D. Ill.), this particular situation triggers res judicata and qualifies as claim splitting by consumers.

Factual and Procedural Background

Plaintiff’s two separate accounts owed to two separate hospitals were placed with Nationwide Credit and Collection, Inc. (Nationwide) for collection. For both accounts:

• Plaintiff retained Community Lawyers Group;
• Community Lawyers Group sent a dispute letter on the same day to Nationwide;
• After the letters were sent, Plaintiff obtained his credit report and found that both accounts were not marked as disputed by Nationwide.

Community Lawyers Group filed a lawsuit on behalf of Plaintiff stating that failure to mark the account as disputed on his credit report violated the FDCPA, but this suit was filed regarding only one of the two accounts. The parties settled this matter and it was dismissed with prejudice.

Following this, Community Lawyers Group filed a second identical lawsuit on behalf of Plaintiff, except this lawsuit was based solely on the second account.

Nationwide brought a motion to dismiss this second lawsuit under the res judicata doctrine.

The Decision

The court agreed with Nationwide that, in the context of the FDCPA, the second suit was barred by res judicata.

Res judicata was created to promote judicial economy and prevent the parties and the court from having to spend time deciding the same issues over and over again. The doctrine has three requirements: the parties must be the same, the causes of action must be the same, and there must be a judgment on the merits of the first claim.

In this situation, the court found that all three elements were met. Both suits were filed by Plaintiff against Nationwide alleging identical claims that arose from essentially the same set of facts. A dismissal with prejudice is considered a decision on the merits. Due to this, the court found that the second suit’s claims should have been alleged in the initial suit and that the second suit should be dismissed accordingly.

The court noted that the FDCPA’s cap on damages does not allow Plaintiff to get a second FDCPA award for the claim for the same set of facts. The FDCPA caps individual damages at $1,000 “regardless of whether the debt collector committed just one violation or multiple violations.” In this situation, the court found that even though the two claims arose out of two separate accounts, the facts of the two cases are so substantially similar — identical dispute letters sent by Community Lawyers Group on the same day to Nationwide, who did not mark both accounts as disputed on the consumer’s credit report — they should have been brought under the first suit. If both claims were brought under the first suit, Plaintiff would only be entitled to only $1,000 even if this issue arose on two separate, unique accounts.

Based on the above, the court granted the motion to dismiss.

insideARM Perspective

It is no secret that FDCPA litigation is a volume business. While applying only to this narrow set of facts, the Northern District of Illinois provides further support to the damages cap shield provided by the FDCPA. The volume litigation nature of the FDCPA may never change, but it is comforting to see even consumer-friendly jurisdictions such as this one reinforce the protective perimeter in some way.

A new poll released by Americans for Financial Reform and the Center for Responsible Lending suggests that voters are concerned about the current direction of the Bureau of Consumer Financial Protection (BCFP) and want more regulation of Wall Street. The poll questioned 1,000 likely voters by telephone. The poll also sought to categorize the results by the respondents’ political affiliation to determine how the results stack up by political party.

According to the publicly released key polling highlights, a majority of Americans — ranging anywhere between 72% and 81% depending on the question — are at least somewhat, if not very, concerned about the BCFP’s current direction. Some of the highlighted concerns include:

• “Ending public access to the database of complaints filed against banks and other financial firms.”
• “Changing the mission of the [BCFP] to cutting regulation rather than protecting consumers.”

The highlights also show a strong favor among votes for the BCFP’s mission and strong enforcement of financial laws and regulations.

insideARM Perspective

While the poll is informative about the public’s view, a closer look at the questions asked makes the results a little less surprising. The most polarized answers in the poll came from leading questions such as:

• “Q5. Should Wall Street financial companies be held accountable with tougher rules and enforcement for the practices that caused the financial crisis in 2008, or have their practices changed enough that they don’t need further regulation?”
• “Q9. Now, on a different topic. The current total amount of outstanding student loan debt in the U.S. is one point four trillion dollars.  Do you agree or disagree that the amount of student loan debt represents a crisis, or aren’t you sure?”

All three questions geared toward debt collection had polarized responses as well. These questions asked the respondents to rank the following from “very concerning” to “not at all concerning”:

• “[Q19a] Relying on bad or incomplete information, some debt collectors target the wrong people or try to collect on debts that have already been paid.”
• Results: 73% selected “very concerning,” 18% selected “somewhat concerning.”
• “[Q19b] Debt collectors sue a million consumers each year even when they do not have the evidence to prove their case in court.”
• Results: 72% selected “very concerning,” 18% selected “somewhat concerning.”
• “[Q19c] Debt collectors are seeking government approval to make pre-recorded, automated calls to cell phones for collection purposes without approval of the person being called.”
• Results: 70% selected “very concerning,” 19% selected “somewhat concerning.”

What this poll does not show is that the legitimate debt collectors are concerned about the very same issues. Additionally, these polling questions overlook the complexities of debt collection. For example, debt collectors rely on the information provided to them by creditors — what if that information is not current because the consumer never notified the creditor of an address or telephone change?  Another example of complexity is the issue of passing TCPA consent between creditor and debt collector. 

Viewed in a vacuum, these poll results paint a grim picture. In reality, however, these results are not the full picture.