As I wrote in a recent article about Kathy Kraninger’s Senate hearing to discuss her nomination to lead the Bureau of Consumer Financial Protection (BCFP or Bureau), she didn’t really say much. That isn’t stopping Senator Elizabeth Warren (D-MA) from trying to get Kraninger to go on the record about a range of topics, including debt collection.

First, of note is that Senator Warren’s office released a July 2018 report entitled Record of Failure; Kathy Kraninger’s Disastrous Tenure at the Office of Managementand Budget. You can read it here. The report concludes,

Ms. Kraninger has no relevant experience in banking, finance, or consumer protection. The entire case for her nomination rests on her purported management abilities. Yet a close look at her record shows consistent mismanagement, often with devastating results for poor and vulnerable people. Her record does not justify a massive promotion to lead the federal agency charged with protecting consumers.

Now, back to the hearing

During the nearly three-hour hearing on July 19, Democrats were head-scratchingly frustrated by Kraninger’s refusal to answer direct questions. They were determined to link Kraninger to the Trump Administration’s extremely unpopular immigrant child-separation policy and the less than stellar response to the Puerto Rico hurricane disaster – proving that she does not have the character or empathy needed to run an agency charged with protecting consumers. Senator after senator tried to nail down answers on her personal positions but she just wouldn’t budge.

And… to the post-hearing follow up

Following the hearing several Democratic Senators, led by Elizabeth Warren, submitted three sets of questions for the record — approximately 10 pages in total. 

One set alone covered debt collection generally, and federal student loan servicer and debt collectors specifically. The following are among the questions asked of Kraninger:

• Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act establishes the CFPB to administer and interpret Dodd-Frank’s prohibition on unfair, deceptive and abusive acts or practices. The Act instructs the Bureau to supervise non-banks that are large participants of a market for consumer financial products or services, which includes federal student loan servicers and debt collectors. If confirmed, do you plan to have the CFPB continue to supervise federal student loan servicers and debt collectors?
• The U.S. Department of Education does not have the statutory authority to enforce the Dodd-Frank Act’s prohibition on unfair, deceptive and abusive acts or practices. Do you believe CFPB has the statutory authority to enforce the Dodd-Frank Act’s prohibition on unfair, deceptive and abusive acts or practices if the violations are committed by federal student loan servicers, debt collectors, or other Department of Education contractors?
• In 2017, the U.S. Department of Education revoked two memoranda of understanding between the Department and the CFPB. These information-sharing agreements covered the sharing of confidential information related to the Bureau’s oversight of certain Education Department contractors. Do you agree with Secretary DeVos’ decision to revoke information-sharing from the CFPB?
• Will you insist that the U.S. Department of Education maintain a memorandum of understanding between its own ombudsman and the student loan ombudsman at the Consumer Financial Protection Bureau, as required by 12 U.S. Code § 5535 “to ensure coordination in providing assistance to and serving borrowers seeking to resolve complaints related to their private education or Federal student loans” (emphasis added by Sen. Warren)?
• If confirmed, how do you plan to collaborate with the Education Department to resolve student complaints related to federal student loans?
• If confirmed, how do you plan to work with state attorneys general given the numerous issues of deception and predatory actions of federal student loan servicers…[in the context of the March 12, 2018 Department of Education interpretation of the Higher Ed Act that preempts state regulation of federal student loan servicers]?
• Would be appropriate – if confirmed – to express a preference to career enforcement attorneys for a particular outcome in any of the Bureau’s ongoing litigation?

In another set of questions the Senators sought clarity on the nominee’s testimony that “regulation by enforcement…is not appropriate, and something we would not engage in.” They asked whether Kraninger would continue to use the Bureau’s authority to enforce Unfair, Deceptive, Abusive Acts and Practices.

They also asked whether she thought it appropriate that “OMB Director Mulvaney has deviated from the typical practice for independent financial regulators and added more than ten political appointees to the CFPB in senior roles?”… and whether she would commit to removing those appointees.

Finally, the Senators asked whether Kraninger – if confirmed – would commit to keeping the consumer complaint database public.

insideARM Perspective

My gut tells me that Senator Warren and her colleagues will not receive the responses they are seeking. Or any responses. One thing to remember is that when the tables were turned, former Director Cordray was also accused of stonewalling Congress and providing shallow responses to questions. So, it seems that this is the way these things go. Say as little as possible for the record, so you can’t be held to your word.

Democrats claim that the current Bureau leadership regime is political. It may be. But it’s hard to keep a straight face and suggest that this was not the case under Director Cordray, even without a set of political appointees at the helm. Cordray was political. And he had the final word on pretty much everything that came out of the agency. So, I’m not sure there’s much difference.

HUNT VALLEY, Md. — Technology company Beguided, Inc. today announced that the United States Patent and Trademark Office has granted US Patent No. 10,002,347. [Beguided co-owns this patent with one of its partners whom specialize in Collections Software technology, Interprose Corporation.]

This is the second patent issued to Beguided under this ground breaking technology which enable customers to resolve a bill via multiple channels quickly and without human intervention.

The patent issuance adds to Beguided’ s existing patent estate and broadens its claim coverage in the field of internet-facilitated account management using an avatar or virtual spokesperson.

Commenting on the development, Kevin Gillespie, CEO of Beguided said, “The PTO’s decision today to issue Beguided another patent on its avatar-facilitated payment portal and account management technologies reinforces the uniqueness of our approach. Our avatar-facilitated customer portals are a clear departure from typical payment or chatbot experiences online. Beguided’ s AVAPAY™ payment portal and Concierge™ customer service offerings provide a face, name and identity to online experiences that are typically impersonal and less interactive.” We are now even more protected from competitor copying via the issuance of this patent. For us this step is the first of many towards a more interactive web experience as newer technologies like Artificial Intelligence and Virtual Reality become ubiquitous features of our digital life.

Inventor, and Beguided Board Chairman Thomas F. Gillespie Jr. commented, “We are extremely pleased to announce this patent issuance today. This application broadens our claim scope to cover more web-based consumer-facing platforms. Our claims now cover interactions with consumers that are verbal as well as written and are not limited to devices. I am also pleased that this application was prosecuted under the new tougher standards for patentable subject matter after the Supreme Court’s Alice decision. The PTO’s findings regarding our application will be deferred to by federal courts as presumptively valid in every court in America from now on.”

About Beguided Inc. 

Beguided is an IT solutions company focused on solving business problems with proprietary and externally integrated AI-driven solutions. Beguided’s AVAPAY intelligent payment portal provides a positive payment experience online and keeps consumers up to date, negotiates their payment arrangements and resolves any questions they may have in the process. Beguided’ s Concierge platform is an intelligent platform for Customer Service, Marketing/Sales, and Human Resources question resolution management. Beguided’s platforms integrate easily with client host systems and enable quick resolution of consumer questions and issues without human intervention. For more information about Beguided, you can go to: http://www.beguided.com

For further information or queries please contact – http://www.beguided.com/beguided-appointment

In another blow to TCPA Plaintiffs hoping to make use of the FCC’s 2003 and 2008 Predictive Dialer rulings after ACA Int’l, a federal district court in the Northern District of Illinois held last week that those rulings were categorically set aside. The decision in Pinkus v. Sirius Xm Radio, 16 C 10858, 2018 U.S. Dist. LEXIS 125043 (N.D. Ill. July 26, 2018) represents the latest entry in a growing list of cases finding that the TCPA no longer covers dialers that call from lists, but only those that randomly or sequentially generate numbers to be called. And Pinkus is different in that the Court clearly and thoroughly analyzes all pertinent issues and reaches a stark conclusion–TCPA complaints alleging the use of a predictive dialer do not survive the pleadings stage.

Indeed, the conclusion in Pinkus on the crucial issue of whether the predictive dialer rulings survived ACA Int’l could not be more clear:

ACA International invalidated not only the 2015 Declaratory Ruling’s interpretation of the statutory term ATDS, but also the 2008 Declaratory Ruling’s and 2003 Order’s interpretation of that term

Pinkus at *10

And rather remarkably the Court reached that conclusion after acknowledging that it was in the minority position on the issue:

most district courts considering the question have held that ACA International vacated only the 2015 Declaratory Ruling-and therefore that courts remain bound by the FCC’s rulings in the 2003 Order and 2008 Declaratory Ruling that a predictive dialer need not have the capacity to “generate random or sequential numbers to be dialed to qualify as an ATDS.

Pinkus at *15-16

As I wrote just a few weeks back, from a numerical perspective the “rulings survive” camp do have the advantage, but the better-reasoned cases stack up in favor of a finding that ACA Int’l did away with those previous orders. Pinkus agrees.

Noting that the Court “respectfully disagree[d]” with contrary rulings, because:

ACA International’s concern that the FCC in the 2015 Declaratory Ruling “fail[ed] to satisfy the requirement of reasoned decisionmaking” due to the agency’s “lack of clarity about which functions qualify a device as an autodialer” thus applies with equal force to the 2003 Order. That same concern applies as well to the 2008 Declaratory Ruling, which simply “affirm[ed]” the understanding of ATDS articulated in the 2003 Order.

Pinkus at *18.

Boom goes the dynamite. Pinkus recognizes, therefore, that the D.C. Circuit Court of Appeal’s reasoning applies not just to the Omnibus ruling but necessarily to all other ATDS formulations undertaken by the Commission that rest on the same flawed and rejected analysis. 2003 and 2008 are just as faulty. So 2003 and 2008 are just as overruled.

In the Court’s more eloquent parlance:

It necessarily follows that ACA International invalidates not only the 2015 Declaratory Ruling’s understanding that all predictive dialers qualify as ATDSs, but also the 2003 Order and 2008 Declaratory Ruling to the extent they express the same understanding.

Id. 

Although no further justification is needed, the Court goes on to provide further justification. After noting the famous language of ACA, Int’l wherein the Circuit Court of Appeal “disagreed” with the FCC’s argument that it lacked jurisdiction to reconsider the 2003 and 2008 orders, the Court articulated the only reasonable conclusion to be drawn from that assessment:

In rejecting the FCC’s threshold argument that this issue was off limits because it had been resolved in the 2003 Order and 2008 Declaratory Ruling, the D.C. Circuit necessarily determined that the 2015 Declaratory Ruling was inextricably intertwined with the 2003 Order and the 2008 Declaratory Ruling insofar as they, too, addressed the capacities a predictive dialer must have to qualify as an ATDS.

Pinkus at *20-21

Game. Set. Match.

Yet somehow the ruling gets even better. Next the Court addresses whether predictive dialers meet the statutory definition of an ATDS. It concludes–resoundingly–that the answer is “no.”

To get there, the Court specifically rejects the Plaintiff’s “all-dialers-that-call-from-a-list-are-an-ATDS-because-the-statute-mentions-the-capacity-to-store-numbers argument” noting that such a reading of the statute is inconsistent with its plain language.  Pinkus also supplies a brilliant grammar lesson to explain why the TCPA’s definition of ATDS necessarily requires the use of a random or sequential number generator to be utilized, even when numbers are being “stored” or dialed from a list.  It concludes:

Because the phrase “using a random or sequential number generator” refers to the kinds of “telephone numbers to be called” that an ATDS must have the capacity to store or produce, it follows that that phrase is best understood to describe the process by which those numbers are generated in the first place.

Having identified random or sequential number generation as the “defining characteristic” of an ATDS the Court goes on to dismiss the Complaint–alleging predictive dialer usage–because the functionality to dial numbers from a list is simply insufficient to state a claim under the TCPA.

All in all, Pinkus is a lengthy and well-reasoned decision that is sure to find plenty of followers in a rudderless TCPAland searching for direction on the issue. And–not surprisingly–this case was brought to you by the same guy that delivered the big win in ACA Int’l to begin with–our guest and friend Shay Dvoretzky. Counsel, you just won the TCPA case! Again. Congrats and great work.

UPDATE: Since I have been asked a few times, this opinion was by the Hon. Gary Feinerman.

Plaintiff’s counsel was Yitzchak Zelman of Marcus & Zelman, Llc

—

Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

On May 7, 2018 a jury in the case of CFPB v. Weltman, Weinberg & Reis (WWR) reached a mixed verdict, but the judge decided to issue his own decision. Today he ruled in favor of WWR, and assessed costs to the plaintiff — the CFPB.

You can read the Opinion here.

Background

In April 2017 the CFPB filed suit against WWR, alleging that the firm deceived consumers with misleading calls and letters. A fundamental issue in the case is the fact that there is no formal definition of “meaningful review” of lawsuit documentation – 30 seconds? 5 minutes? 2 hours? The issue went to trial on April 30, 2018 and concluded a week later with the mixed jury verdict. U.S. District Court Judge Donald Nugent said he would take the verdict under advisement and write his own decision. He gave the CFPB until June 15 to submit arguments to the court, and then two additional weeks for WWR to have the last word. insideARM published this article by Shannon Miller of Maurice Wutscher, which is a summary of the WWR “last word.”

The Judge’s Decision

Among the Judge’s findings that contributed to his decision:

• The demand letters sent by WWR accurately describe the identity and legal description of the entity sending the letter. As such, it cannot be fairly described as false or misleading simply for correctly identifying Weltman as a law firm, and as the signatory.
• The demand letter is sent on Weltman’s letterhead, and accurately conveys the fact that Weltman is a law firm that has been retained to collect the putative debt. The letter does not state that an attorney has reviewed the particular circumstances of the account, does not mention any potential legal action, and is not signed by an attorney.
• A series of procedures is followed by WWR – involving attorneys – prior to sending demand letters, including obtaining information from creditor clients about consumer accounts, drafting client contracts, checking clients’ reputation, discussing the specifics of each portfolio, evaluating client policies and procedures, obtaining warranties as to the validity of the debts, sampling documentation, and scrubbing the data to identify consumers who should not receive collection letters.
• WWR has a robust formal compliance program in place, developed and approved by attorneys, shareholders and the Board, and the firm conduts routine audits.
• Attorneys draft demand letter templates and work together with non-attorney staff on a daily basis as they conduct their work.
• There has never been a finding in any jurisdiction that WWR letters or any other statements contain falsehoods or misrepresentations.
• Despite requiring similar indications and disclosures of attorney invilvement in the debt collection letters used on behalf of the State of Ohio, Richard Cordray, when he became head of the CFPB, authorized this lawsuit against WWR for truthfully identifying themselves as a law firm.
• Plaintiff offered no evidence to show that any consumer was harmed by — or that any consumer prioritized payments based on — WWR’s practice of identifying itself as a law firm.

As a result of these findings and others, Judge Nugent determined that the CFPB failed to prove its case.

WWR Statement

The company published this statement following the decision:

Weltman, Weinberg & Reis Co., LPA (Weltman), is pleased to announce that the firm has prevailed in the lawsuit brought against it by the Consumer Financial Protection Bureau (CFPB). Judge Donald C. Nugent, presiding over the case in the U.S. District Court for the Northern District of Ohio, issued an Opinion – finding on Weltman’s behalf – and confirming that the CFPB’s lawsuit lacked merit. The Court emphasized its finding “that lawyers were meaningfully involved disproves the Plaintiff’s sole theory of liability, and precludes recovery under the Complaint.”

“The Judge’s Opinion thoroughly vindicates Weltman’s processes and is a complete rejection of the CFPB’s unfounded allegations,” said Weltman Managing Partner Scott S. Weltman. “The Judge stressed that the CFPB ‘offered no evidence to show that any consumer was harmed by Weltman’s practice of identifying itself as a law firm in its demand letters,’ that ‘Weltman’s demand letters were truthful on their face,’ and that ‘Weltman attorneys were meaningfully and substantially involved in the debt collection process both before and after the issuance of the demand letters.'”

Continued Mr. Weltman, “Today’s Court Opinion is an affirmation of the confidence our law firm has maintained throughout the past three-and-a-half years in our operations and our employees. We would like to thank our valued clients for the their unwavering support, and we look forward to continuing to provide the same quality representation that has been a hallmark of our creditors’ rights firm for the past 88 years.”

The CFPB sued Weltman in April 2017 after the firm refused to be strong-armed into a Consent Order. This followed a Civil Investigative Demand (CID) process initiated by the CFPB in September 2014. Weltman engaged Jones Day to defend the lawsuit, which included a four-day trial in May 2018, and maintained that, as a law firm, it is legally allowed, under federal and state law, to provide collection and legal services, and that the Firm is being truthful with consumers and factually accurate when it uses its name and company letterhead for proper debt collection activity.

“We are grateful to Jim Wooley, Tracy Stratford, Ryan Doringo and the rest of our legal team at Jones Day for their hard work and tireless advocacy for our position. We are equally thankful for the outpouring of support from our colleagues in the collection and legal communities,” said Mr. Weltman.

Weltman, Weinberg & Reis Co., LPA has not been the subject of any other formal government actions or disciplinary reviews. The CFPB has had other recent losses at the federal trial court level, including Consumer Financial Protection Bureau v. Borders & Borders, PLC in July 2017, Consumer Financial Protection Bureau v. Universal Debt Solutions, LLC, et al. in August 2017, and the January 2018 rejection of the CFPB’s requests for both restitution and an injunction in Consumer Financial Protection Bureau v. CashCall. Additionally, as recently as June 2018, a federal judge deemed the CFPB’s structure unconstitutional, disqualifying it as a plaintiff in litigation against a New Jersey law firm (Consumer Financial Protection Bureau v. RD Legal Funding, LLC et al).

insideARM Perspective

This is possibly the end of a CFPB chapter, in which the Bureau filed law suits against collection law firms, most concluding with consent orders which were criticized for being treated as rulemaking without the due administrative process.

The WWR case was the third filed by the CFPB under former Director Richard Cordray against debt collection law firms.

In June of 2014 the CFPB filed suit against the Georgia law firm of Frederick J. Hanna & Associates. That case was ultimately settled with a consent order announced in December of 2015. insideARM subsequently published an article by Joann Needleman that discussed the significance of the Hanna order and predicted continued oversight by the CFPB over the practice of law in the collection arena.

On April 26, 2016 the CFPB announced it had filed a consent order with the New Jersey debt collection law firm, Pressler & Pressler LLP. Pressler & Pressler issued its own press release about the order.

Both Pressler & Pressler and WWR insisted they had not violated any laws, and that they have been truthful with consumers.

These cases proceeded against the backdrop of the advancing Practice of Law Technical Clarification Act of 2018 (formerly of 2017). H.R. 5082 would amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of debt collector. Earlier this year the House Financial Services Committee completed markup of the bill and approved it to move on. insideARM wrote about the Act on March 19, 2018, just before it moved out of Committee. The legislation is still pending.

SARASOTA, Fla. — National Creditors Bar Association is the only national bar association that is dedicated to serving attorneys engaged in the practice of creditors rights law. NCBA fosters and advances professional practices and ethical conduct. NCBA members are licensed attorneys who comply with all laws, regulations and rules of professional conduct required of creditors rights attorneys.

We are pleased with the July 25, 2018, U.S. District Court, Northern District of Ohio’s ruling in Consumer Financial Protection Bureau v. Weltman, Weinberg & Reis (WWR; a member of the NCBA). In a well thought out and drafted opinion, the Court concluded that the Bureau failed to prove, by a preponderance of the evidence, its claims and awarded judgment in WWR’s favor. This is the first meaningful attorney involvement case that the Bureau has tried on the merits and the outcome vindicates the efforts by all NCBA members to ensure that their practices comply with their professional obligations. In addition to confirming that WWR engaged in meaningful attorney involvement, the Court also rejected the Bureau’s allegations of any other wrongdoing. “This decision validates what the NCBA and its members have been advocating to the CFPB since its inception – that attorneys need to be held to the standards set forth by the State Supreme Court’s in which they practice not a governmental agency” commented Yale R. Levy, President of National Creditors Bar Association.

NCBA members not only zealously fulfill their professional responsibility to their clients, but assist their clients in working with consumers to provide solutions to legitimately incurred debts. For centuries, attorneys have been regulated primarily by the state supreme courts that license them, not federal agencies. As “officers of the court,” attorneys are subject to strict ethical rules and face disciplinary action for any misconduct, including potential suspension or disbarment. This decision confirms that attorneys who practice in the area of creditors rights law are actively and meaningfully involved in all stages of the process. The Bureau’s suggestion that the WWR was not meaningfully involved in its recovery activities was found by the Court to be inaccurate. 

About National Creditors Bar Association 

National Creditors Bar Association is a nationwide bar association of over 550 creditors rights law firms and in‐house counsel of creditors. National Creditors Bar Association members are committed to being professional, responsible and ethical in their practice of creditors rights law. More at www.creditorsbar.org

Cavalry Portfolio Services is defending two nearly-identical putative TCPA class actions in California, and recently obtained a stay in one of those cases, pending a forthcoming ruling on ATDS functionality in the other.

In Krejci v. Cavalry Portfolio Servs., No. 3:16-cv-0211-JAH-WVG, 2018 U.S. Dist. LEXIS 122904 (S.D. Cal. July 17, 2018), Cavalry moved for a stay of the action until the court in the related case of Horton v. Calvary Portfolio Services, LLC, 13-cv-0307-JAH (WVG) (S.D. Cal.) rules on the parties’ cross-motions for summary judgment concerning whether the Aspect dialing system used by Cavalry “is an ATDS within the meaning of the TCPA.”  Krejci, supra at *5.

Judge John A. Houston of the Southern District of California granted Cavalry’s motion, finding a stay was appropriate for three reasons: (1) Plaintiff had failed to demonstrate any potential harm that would result from a limited stay; (2) Cavalry’s burden in having to litigate the same issue over again; and (3) “a determination as to whether or not Cavalry’s Aspect system qualifies as an ATDS,” in Horton would have a “substantial impact” on the Krejci case.

This was a prudent exercise of discretion by Judge Houston, and his ruling illustrates the importance of every unpublished District Court decision on key issues like ATDS functionality.  As we’ve covered on the Ramble in past episodes, every one of these lower court decisions has the potential to cause significant ripples throughout TCPAland.  And that’s part of what makes this place special.

Oral argument on the Horton cross-summary judgment motions is scheduled for August 13, 2018.  We wait on the edge of our seats to provide you with our reporting and analysis on this next upcoming episode in the ATDS functionality saga.

—

Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

Yesterday the House of Representatives Financial Services Committee held a hearing to markup H.R. 3626 (among several other Bills), the “Bank Service Company Examination Coordination Act of 2017.” Sponsored by Rep. Roger Williams (R-TX) and five others (two Democrats, three Republicans), the Bill would amend the Bank Service Company Act in ways intended to reduce the burden on both regulators and those they examine. The Bill was passed out of committee by a vote of 56-0.

The Bank Service Company Act (12 U.S. Code § 1867) concerns regulation and examination of bank service companies. It states,

“the depository institution shall notify each such agency of the existence of the service relationship within 30 days after the making of such service contract or the performance of the service, whichever occurs first.”

As defined in the Act, these services include “check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions performed for a depository institution.”

As outsourcing has increased and technology has evolved, management and coordination of third party exams has become unmanageable. 

A spokesperson for the Conference of State Bank Supervisors (CSBS), which strongly supports the Bill, told insideARM that states have encountered roadblocks when trying to coordinate efforts with federal agencies – even when the federal agencies want to do so. In the end, she said, “federal agency lawyers say the Bank Service Company Act doesn’t talk about states, so it’s not even clear we can share the information.” And so ends the coordination.

H.R. 3626 would remedy this by making information obtained during a service provider exam available to all federal and state agencies, and would, “to the fullest extent possible, coordinate and avoid duplication of examination activities, reporting requirements, and requests for information.”

insideARM Perspective

Okay, three things.

One, I had to do some digging to understand whether the Bank Service Company Act applies to debt collection agencies. It seems that it doesn’t, unless the collection agency is owned by the bank. Although, I’m not 100% sure about that. I got in touch with the FDIC to confirm. They sent me this definition, saying it was responsive to my question. The first sentence is quite straight forward. The part in bold italics is… not so straightforward to me. So far the FDIC has not responded to my follow up.

A bank service corporation is defined in the Bank Service Corporation Act (BSC Act) as a corporation, whose capital stock is all owned by one or more insured banks, organized to perform “authorized services.” The BSC Act limits the investment of a bank in a bank service corporation and specifies prior regulatory approval requirements. Authorized services are defined to include services such as: check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar function performed for a bank. In addition, a bank service corporation may perform any services permitted by FR regulation for a bank holding company under Section 4(c) (8) of the BHC Act.

Due to the nature of services performed by these corporations, the importance of analyzing their financial condition is obvious. In addition to authority to examine affiliates the BSC Act provides that for any bank regularly examined by a Federal supervisory agency or any subsidiary or affiliate of such bank subject to examination by that agency, which causes to be performed by contract or otherwise, any bank services for itself, whether on or off premises, such performance shall be subject to regulation and examination by such agency to the same extent as if the services were being performed by the bank itself on its own premises. The bank is also required to notify the appropriate agency of the existence of such a service relationship within 30 days after the making of the service contract or the performance of the service, whichever comes first. (emphasis added)

Two, the Bill has only been voted out of committee; it’s a long way from becoming law.

Three, whether or not the Bill relates directly to debt collectors, it could serve as an interesting legislative/regulatory model. Collection agencies and technology providers in the ARM space have had to become accustomed to a never ending stream of auditors requiring time and attention from key resources to produce the same information over and over again… except, just a little bit differently each time. If state and federal regulators, and even – gasp – clients could coordinate examination efforts, this could be a game-changer. 

The CSBS Vision 2020 statement says,

“Through Vision 2020, state regulators will transform the licensing process, harmonize supervision, engage fintech companies, assist state banking departments, make it easier for banks to provide services to non-banks, and make supervision more efficient for third parties.”

These are terrific goals for any industry facing a complex web of rules and regulations. So, the initiative is worth watching.

Earlier this week ACA International announced that its Council of Delegates elected three association members to the Board of Directors. Joining the board for three-year terms are Daniel Desatnick, Anita Manghisi and David Williams. Desatnick, IFCCE, is president of Allen Daniel Associates Inc. in Waltham, Mass.; Manghisi, IFCCE, is president of Independent Recovery Resources Inc. in Patchogue, N.Y.; and Williams is president of Williams and Fudge Inc. in Rock Hill, S.C.

Several current members were re-elected to serve another term: Rick Perr, attorney at Fineman, Krekstein and Harris P.C. in Philadelphia, and Tina Hanson, IFCCE, executive vice president and chief strategy officer, State Collection Service Inc. in Madison, Wis.

At a meeting of the new Board this week, the group elected Roger Weiss the president-elect and G. Scott Purcell the treasurer. President-Elect Jack Brown III will take the reins this week from current President Rick Perr.

Jay Edelson is a scary fella. He goes by the nickname of “the Boogeyman,” and I’m pretty sure that’s only because John Wick can’t sleep at night knowing Jay might be after him. He also happens to run Edelson PC — a “powerhouse” class action law firm and a true leader in privacy and high-tech related class actions.

In addition to remaining a frequent TCPA class action threat, Jay was one of the original founding fathers of TCPAland, responsible for the Satterfield decision that really touched off the explosive growth of TCPA suits across the country.

Jay sat down with the Czar via the Womble Bond Dickinson FIREline to discuss his personal path from a lawyer that was fired from a boutique just 4 years out of law school, to the founder of one of the country’s most powerful class action names. In the revealing interview Jay also espouses strong and unlikely opinions about the TCPA and class action lawyers practicing in this space.

For instance, Jay once lobbied Congress to limit the statutory damages available in TCPA class actions:

“I thought that the statute had to be reigned in a little bit. I thought that the idea of the statutory damages was fairly aggressive… my suggestion was that there should be a limit- a cap-when it comes to class actions.”

-Jay Edelson, on the Womble Bond Dickinson Ramble  (July 12, 2018 Record Date)

Interesting, no?

Nonetheless, the Czar and the Boogeyman certainly did not see eye to eye on everything. After accusing the Czar of running his podcast like a Republican Congressman conducting an investigatory panel *cough* Jay unleashed on student loan lenders:

“[Student loan companies] steal billions and billions of dollars from students throughout the country.”

-Jay Edelson, on the Womble Bond Dickinson Ramble  (July 12, 2018 Record Date)

Tell us how you really feel Jay.

And on the topic of brutal honesty:

“[TCPA class action objectors] fil[e] objections, in my view, just to extort class counsel… [and] class counsel has been incentivized to go along with it because they don’t believe the settlements are good… Its the class counsel’s fault–when they give someone a check for $500,000.00 that means these guys are going to object to everything.”

-Jay Edelson, on the Womble Bond Dickinson Ramble  (July 12, 2018 Record Date)

He also said that “virtually all” TCPA class action settlements that he hasn’t been personally involved in are “horrible.”

That’ll leave a mark.

Jay was obviously a great guest with intriguing insights and controversial viewpoints aplenty.

Listen to the interview – found here — to learn:

Why did Jay chide TCPA plaintiff’s lawyers for treating TCPA class action settlements as if they were a “game”?

Why is Jay on record stating that TCPA litigation is boring?

Why does Jay believe that ACA Int’l is actually bad for business?

How does Jay approach TCPA class settlements and how does that approach differ from other TCPA Plaintiff’s attorneys?

What are Jay’s thoughts on Spokeo–it was his case after all–and its impact on TCPAland?

What did the Czar say that genuinely hurt Jay’s feelings?

Does Jay and his colleagues really play two hours of volleyball a day on a custom-built court located in their Chicago-penthouse office?

Who designed Edelson PC’s ridiculously cool website and how can you find the bio for the firm’s polar bear mascot?

Finally, listen to hear the Czar and the Boogeyman talk trash over their much-hyped volleyball faceoff to take place in Chicago this year.

Although the interview is contentious at times, there’s no doubt that Jay is a fan of tcpaland.com:

“I’ve been listening to your podcasts. Love what you guys are doing…. [You’re] just fun to listen to.”

-Jay Edelson, on the Womble Bond Dickinson Ramble  (July 12, 2018 Record Date)

Thanks Jay! I’m still going to smash you at volleyball though.

—

Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

[article_ad]

KANSAS CITY, Mo. — Hundreds of people throughout the Kansas City metro area headed to their mailboxes last week and found that their past-due notices and reminders for unpaid medical bills had been replaced with letters declaring that their debts had been forgiven. Even more surprising was that a group of local doctors and nurse practitioners, The Midwest Direct Primary Care Alliance (MDPCA), was behind the debt relief.

Pulling from their own coffers, these independent primary care providers donated over $10,000 to buy $1,474,987.25 in unpaid medical bills belonging to area residents who had been sent to collections by hospitals and clinics throughout the region.

The providers then partnered with nonprofit organization RIP Medical Debt to forgive the $1.4 million in debt that had previously been the burden of 784 people. Letters noting the debt relief were sent out to recipients last week; impacted individuals will likely come forward with their stories after hearing of this initiative through press and learning that this isn’t fraud — it’s a gift of debt relief, no strings attached.  

Medical debt affects every community and can destabilize any household.  A June 2018 article in the Kansas City Star brought the local impact of medical debt into sharper focus: in some parts of the metro, up to 30% of households have medical debt in collections. And though these families aren’t yet at the point of bankruptcy, a 2009 research piece found that over 60% of bankruptcies studied were due to medical debt, and that the average balance leading to the bankruptcy was well over $5,000.

“When I worked within the large hospital systems, I couldn’t tell you how much an MRI was. Or what a lab would cost the patient. As doctors, we had been blinded to the cost of care, and — whether we like it or not — we bore some responsibility for patients’ bills,” noted MDPCA member Ryan Neuhofel, DO MPH of Lawrence, Kansas. He continued, “But now it’s our job, as direct primary care providers, to prioritize thinking about healthcare costs in the context of care and prevent debt like this from piling up in the first place.” 

Kylie Vannaman, MD of Overland Park, Kansas and MDPCA Chairperson said, “We take an oath to do no harm, but our profession seems to have forgotten that doing no harm should also include doing no financial harm.  It was natural, then, for all of us independent doctors to work together to provide the gift of debt relief to the region.”

In addition to providing affordable, transparent health care to their patients, the Midwest Direct Primary Care Alliance hopes to erase even more past debt for local people through an ongoing crowdfunding campaign found online at www.midwestdpcalliance.org/medical-debt.

About RIP Medical Debt

RIP Medical Debt locates, buys and forgives medical debt across America, the only industrialized nation on earth with personal medical debt. We work on behalf of individual donors, philanthropists and organizations who provide financial relief for people burdened by unpaid and unpayable medical bills. A special focus is forgiving the medical debt of U.S. veterans and military troops. Learn more at ripmedicaldebt.org.

About the Midwest Direct Primary Care Alliance

The Midwest Direct Primary Care Alliance (midwestdpcalliance.org) aims to promote collegial relationships between Direct Primary Care (DPC) practices in the Kansas City area and surrounding communities, raise awareness of DPC in the community, and promote fair and transparent pricing for ancillary services, such as imaging, labs, specialist consults, specialty procedures, etc, in the best interests of our patients.