This article previously appeared on the Maurice Wutscher Consumer Financial Services Blog and is republished here with permission.

The U.S. Court of Appeals for the Ninth Circuit recently held that calls from a survey company that received the called party’s contact information through an intermediary did not violate the federal Telephone Consumer Protection Action (TCPA) because the called party provided prior express consent.

In so ruling, the Court held that “a party that receives an individual’s phone number indirectly may nevertheless have consent to call that individual,” and it did not matter that the defendant, rather than the entity that actually obtained the called party’s consent, placed the calls.

A copy of the opinion in Fober v. Management and Technology Consultants, LLC is available at:  Link to Opinion.

The plaintiff enrolled in an insurance plan with an insurance provider (“insurer”). Upon enrolling, the plaintiff completed an enrollment form and provided her phone number.  The relevant terms of the enrollment form are as follows:

THE USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION:  I acknowledge and understand that health care providers may disclose health information about me . . . to [insurer] entities . … [Insurer] entities … may disclose this information for purposes of treatment, payment and health plan operations, including but not limited to, utilization management, quality improvement, disease or case management programs.

Thereafter, the insurer assigned the plaintiff to a medical group and selected a doctor from the group to serve as her primary physician.  The group was an affiliated medical group of a provider network the insurer utilized.

The provider network had a contract with the defendant to conduct patient satisfaction surveys and quality-of-care analyses regarding the provider network’s affiliated medical groups.  Another of the provider network’s affiliated medical groups (“manager”) managed the defendant’s operations on behalf of the group.

The plaintiff visited the doctor’s office twice.  During the first visit, the plaintiff completed an intake form and listed her phone number again.  The manager received the plaintiff’s contact information directly from the provider network and passed the information along to the defendant.  The defendant was given the plaintiff’s name, contact information, treating physician’s name, and date of office visit so the defendant could conduct quality assurance survey calls.  The defendant called the plaintiff several times to discuss the quality of her experience with the doctor.

The plaintiff brought suit alleging the defendant violated the TCPA, 47 U.S.C. § 227, by calling her.  The trial court granted the defendant’s motion for summary judgment finding the plaintiff had given “prior express consent” under 47 U.S.C. § 227(b)(1) when she submitted the enrollment form.  The plaintiff appealed.

The issue on appeal was whether the plaintiff gave “prior express consent” to receiving the defendant’s calls.

As you may recall, the TCPA prohibits “any person within the United States” from using an “automatic telephone dialing system or an artificial or prerecorded voice” to call a phone number assigned to a “cellular telephone service.”  47 U.S.C. § 227(b)(1).  However, the statute excepts calls made with a recipient’s “prior express consent.” Id.

The Ninth Circuit noted that, in the Federal Communication Commission’s view, the very act of turning over one’s phone number demonstrates a willingness to be called about certain things, barring instructions to the contrary. Citing In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C. Rcd. 8752, 8769 (1992).

However, the Court explained that merely providing a phone number does not evince a willingness to be called for any reason.  The “transactional context matters in determining the scope of a consumer’s consent to contact.”  Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1045–46 (9th Cir. 2017).  Thus, “to fall within the ‘prior express consent’ exception, a call must relate to the reason why the called party provided his or her phone number in the first place.” Id.

The Ninth Circuit further explained that the “scope of consent must be determined upon the facts of [the] situation [in which the person gave consent].”  In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 F.C.C. Rcd. 7961, 7990 (2015).  Thus, the analysis under the FCC’s rulings turns on whether the called party granted permission to be called regarding a particular topic, not on how the calling party received the number.  Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1123–24 (11th Cir. 2014).

Therefore, the Court held, “a party that receives an individual’s phone number indirectly may nevertheless have consent to call that individual.”

The Ninth Circuit noted that the plaintiff provided her number on the enrollment form and agreed that the provider could disclose her information “for purposes of treatment, payment and health plan operations, including but not limited to, utilization management, quality improvement, disease or case management programs. (Emphasis added.)”  The Court found that this is exactly what happened.  The provider network, albeit through an intermediary (manager), provided the defendant with the plaintiff’s phone number.  The defendant then called the plaintiff for a purpose expressly described on the enrollment form, i.e. to assess the quality of the plaintiff’s healthcare.

The Court found that the plaintiff consented to receive calls meant to improve the quality of her health plan by submitting the enrollment form.  The Court further found that the calls the plaintiff received from the defendant, to assess her satisfaction with the doctor’s services, “were undoubtedly made with the purpose of improving the quality of Plaintiff’s care.”  Thus, the Court held, the calls fell within the scope of the consent the plaintiff gave.

The Ninth Circuit rejected the plaintiff’s argument that her consent only extended to calls concerning the quality of the insurer’s services, not calls concerning the quality of the doctor’s services.  The Court noted that the language in the enrollment form was broad and the plaintiff “authorized calls pertaining to the operation of her health plan and, relatedly, to the quality of her health plan.”  The calls at issue were intended to measure whether the plaintiff’s experience with the doctor assigned through the provider network’s health plan was satisfactory, and therefore, were related to improving the quality of the plaintiff’s health plan generally.

The Court further explained that it did not matter that the defendant, rather than the insurer, placed the phone calls, as the “FCC’s rulings in this area make no distinction between directly providing one’s cell phone number . . . and taking steps to make that number available through other methods, like consenting to disclose that number to other entities for certain purposes.”  Baisden v. Credit Adjustments, Inc., 813 F.3d 338, 346 (6th Cir. 2016).

The Ninth Circuit explained that the plaintiff “took steps” to make her number available to the defendant by authorizing the insurer to disclose her phone number for certain purposes.  Thus, the plaintiff authorized someone other than the insurer to make calls for those purposes.

The Court also rejected the plaintiff’s argument that the calls at issue fall outside the “prior express consent” exception because the defendant did not demonstrate the calls were made on the insurer’s behalf.

The Ninth Circuit explained that the TCPA’s purpose is to curb calls that a person does not expect to receive.  Here, the plaintiff authorized “callers to whom [insurer] disclosed her information to make a particular type of call — one relating to the quality of Plaintiff’s healthcare.” Thus, the Court held that the defendant fell within the group of permissible callers and the calls it placed were in the category of calls the plaintiff agreed to receive.

The Court again cited Baisden v. Credit Adjustments, Inc., 813 F.3d 338, 346 (6th Cir. 2016) as illustrative.  There, as here, the dispositive factor was the scope of contact the plaintiff authorized.

Thus, the Ninth Circuit found the plaintiff granted the insurer broad authority to disclose her information for certain purposes, including quality assurance, and therefore, by completing the enrollment form, the plaintiff gave “prior express consent” to receive the calls at issue from the defendant.

Accordingly, the Ninth Circuit affirmed the ruling of the trial court granting summary judgment in favor of the defendant.

ARLINGTON, Va. — Convoke, a leader in SaaS solutions for the debt collection market, has been named one of Virginia’s Fantastic 50 Companies by the Virginia Chamber of Commerce for the second year in a row. 

Convoke offers a compliance and management hub that enables credit issuers to comply with regulatory and internal requirements and manage and monitor debt collection activities for all third-parties. The company’s continued success in serving the financial services debt collection market over the past four years has made it one of Virginia’s fastest-growing and successful organizations.

“Convoke is proud to be a recipient of this prestigious award again this year,” said David Pauken, CEO at Convoke.  “The Commonwealth of Virginia and Arlington County have done an outstanding job of creating a welcoming environment for small companies to grow their businesses.  We thank the Virginia Chamber of Commerce for giving us this honor yet again, and thank our employees for their hard work in making this company what it is today.”

Over the past year, Convoke has added several updates to its platform to support its clients’ evolving needs and has continued to hire additional employees to support them.

Convoke ranked number 16 among the 50 award recipients. To be eligible for the award, a company must be privately held with headquarters in Virginia, show revenues between $200,000 and $200 million, demonstrate positive revenue growth, and have positive net income in its most recent fiscal year. Companies are judged on four-year revenue history.

About Convoke

Convoke is a leader in SaaS solutions for the debt collection market. It enables credit issuers to comply with regulatory and internal requirements and manage and monitor debt collection activities for all third-parties. Convoke’s online platform is a central, validated and persistent hub that records, organizes and stores information and activities, facilitates, tracks and automates interaction with third parties, and provides powerful auditing, management and reporting tools. Convoke is headquartered in Arlington, VA. For more information on Convoke, please visit www.convokesystems.com.

ROCKVILLE, Md. — At last week’s spring meeting of the Consumer Relations Consortium (CRC) and its Innovation Council, the group recognized three individuals and three firms with ‘Most Valuable Contribution’ awards for 2017. Winners were selected earlier this year by CRC members, based on the value of the contribution provided by executives from member technology firms.

Winners in the individual category included: 

• Boris Grinshpun – Director of Product, LiveVox
• Brian Robertson – CEO, VisiQuate (pictured at right with Stephanie Eidelman, CRC Executive Director)
• Peter Ghiselli – VP, US Emerging Markets, TransUnion

Winners in the company category included:

• Ontario Systems – Primary 2017 contributors included Dan Womack, Director of Product Engineering; Rozanne Andersen, VP & Chief Compliance Officer; and Amy Kennedy, Senior Director of Product Management. (Rozanne Andersen and Dan Womack pictured at right with Stephanie Eidelman)
• LiveVox (primary contributors included Luis Summe, CEO; Boris Grinshpun, Director of Product; and Erik Fowler, EVP Business Operations)
• Noble Systems (primary contributors included Karl Koster, VP Product Management; and Jason Ouimette, VP Product Management)

Dan Womack said, “The Innovation Council provides an environment and structure that fosters collaboration and innovation between large market participants, creditors, technology providers, and compliance experts. It has been wonderful to be able to regularly sit with representatives from each portion of our industry and not only discuss challenges we all face, but more importantly work together on solutions. We walk away from each interaction with tangible items to enlighten and impact our product roadmaps and technologies.”

Rozanne Andersen added, “The Innovation Council is what many consider to be the leading organization for creditors, larger market participants and their service providers. As members of the council, we are honored to have the opportunity to collaborate and support the advancement of the industry’s approach toward compliance, technology and business processes and are humbled that a group of our peers selected our company for this award.”

In 2017, its first year, the Innovation Council addressed three main categories: payments, omni-channel communications, and data analytics. In addition to discussing case studies and new developments, members engaged in structured small group-based discussion around best practices and future direction.

Brian Robertson commented, “The Innovation Council is a great opportunity to network and collaborate with industry peers on the important topics of compliance, consumer value, technology automation and big data analytics. It has been a joy and a pleasure to contribute and to get to know so many high caliber individuals on this great Council. I am honored and humbled to have received this award.”

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To start 2018, the Council conducted a series of in-depth interviews to identify priorities and opportunities for collaborative solutions. Some of the topics explored include substantiation, data standards, big data, and bridging the gap between creditors and collectors in order to help build consumer trust. 

Last week’s session also included an in-depth exploration of other important topics, including SHAKEN (a protocol in development for authenticating calls, in an effort to further highlight the difference between scammers and legal call originators) and practical blockchain applications. 

About CRC’s Innovation Council

The Innovation Council operates in conjunction with the Consumer Relations Consortium (CRC). Formed in 2013, the CRC is a membership group for forward-thinking creditors and larger ARM companies that engages proactively with consumer groups, regulators and other influential thought leaders. The goal is to develop relationships that lead to candid discussion of practical ways to address challenges facing all parties involved in the debt collection process.

Established in 2017, the Innovation Council is a platform for senior technology, strategy, operations, and compliance executives to shape understanding of the big technology issues certain to redefine the ARM industry, and to collaborate on innovative solutions.

The CRC and its Innovation Council are managed by The iA Institute, parent of insideARM.

SAN DIEGO, Calif. — Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today announced it will hold its sixth annual Global Volunteer Day on Saturday, April 28. Activities will take place in 16 locations around the world, including the company’s U.S., India, and Costa Rica locations and, for the first time, its wholly owned subsidiaries, Baycorp, Lucania Gestión and Grove. 

Nearly 500 Encore employees will give their Saturdays to spend a collective 2,500 hours in service to their communities. Most of the volunteers will build homes alongside Habitat for Humanity — an international non-profit that provides affordable housing to low-income families around the world. 

“Enabling people to live better lives through financial well-being is the cornerstone of our business, and we’re proud to carry out that mission alongside Habitat for Humanity,” said Sheryl Wright, Encore’s Senior Vice President of External Affairs. “Through our charitable giving and the incredible volunteerism of our employees, we are proud to support Habitat in providing affordable housing to people all over the world, which we know is a critical piece of economic empowerment.” 

With the inclusion of its wholly owned subsidiaries in Global Volunteer Day, Encore extends its efforts to 16 locations. In the U.S., sites include San Diego, California; Phoenix, Arizona; Troy, Michigan; St. Cloud, Minnesota; Tampa, Florida; Roanoke, Virginia; San Antonio and Houston, Texas; and Hato Rey, Puerto Rico. Global Volunteer Day activities will take place internationally in Madrid, Spain; Auckland, New Zealand; Perth and Parramatta, Australia; Manila, Philippines; Heredia, Costa Rica; and New Delhi, India.

“We’re excited to share this day with our Encore family around the world, and we are proud of their willingness to volunteer their time and talents,” said Wright. “This global effort is an extension of the work we do together every day and will help facilitate positive, long-term change in the communities where we live.” 

Encore held its first Global Volunteer Day in 2013 as part of its Corporate Social Responsibility (CSR) program, which underscores the company’s commitment to supporting its employees and communities through volunteerism, financial donations and strategic non-profit partnerships. To date, Encore has donated more than $1 million around the world to support organizations like Habitat for Humanity that offer a path to dignity and financial self-sufficiency through education, job skills training and affordable housing. To complement these efforts, Encore recently launched a financial literacy program for students, which has already impacted over 1,500 people in high school and community college. 

In addition to the work with Habitat for Humanity this Global Volunteer Day, employees at Encore’s international locations will support charitable organizations around the world that align with the company’s CSR commitments. Employees in New Delhi are providing volunteer hours and financial support for Literacy India and Rainbow Homes, and employees in Heredia, Costa Rica, are supporting Banco de Alimentos Costa Rica. Other volunteers will work with the Gawad Kalinga community in Manila, People Who Care in Perth, and Serve the City in Madrid. 

About Encore Capital Group, Inc.

Encore Capital Group is an international specialty finance company that provides debt recovery solutions for consumers across a broad range of assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions and utility providers. Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. 

Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. It has operations and investments in 16 countries, including its international subsidiaries Cabot Credit Management (Europe), Grove Capital Management (Europe), Lucania Gestión (Europe), Refinancia (Latin America) and Baycorp (Australasia). More information about the company can be found at http://www.encorecapital.com. Information found on the company’s or its subsidiaries’ websites are not incorporated by reference. 

Contact:
Christine Alhambra
Manager, Corporate Social Responsibility and Corporate Communications
Encore Capital Group, Inc.
(858) 380-0193
christine.alhambra@mcmcg.com

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion.

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Where insideARM has published a story on the case, a link is provided.

—————–

Here’s a rundown of just a few of the FDCPA cases in the spotlight in March 2018.

Curt Majors v. Professional Credit Management, Inc.

The issue: Convenience fees

The gist: Curt Majors brought an FDCPA action against a debt collector, alleging that he did not consent to the assessment of credit card convenience fees by a third party processor, even though defendant’s letter had explained this before plaintiff used his credit card to make a payment on a debt. Plaintiff admitted that he was not confused by the letter, and that adequate disclosures had been made. Plaintiff moved to dismiss the complaint without prejudice during summary judgment phase, but the defendant opposed dismissal, seeking sanctions against the plaintiff for filing a frivolous suit. Judge granted the plaintiff’s motion for dismissal, showing yet again that the standard applied to the plaintiff’s bar is low, and possibly dropping.

Rodney Neeley v. Portfolio Recovery Associates, LLC

The issue: Statute of limitations language

The gist: A collection letter sent to plaintiff failed to notify him that any payment would reset the statute of limitations. Court found that failure to provide re-tolling language was both a violation of 1692e & 1692f. Significantly, many jurisdictions take the position that double recovery on the same conduct is not permitted, but this court found the opposite, ruling that the same conduct can lead to recovery on both statutes.

Rivera v. IC Systems, Inc.

The issue: Verbal dispute of debt validity

The gist: The consumer alleged that the debt collector violated 1692e(2)(A) by only providing an invoice to the debt as validation. Plaintiff disputed her debt, but only verbally, in a jurisdiction that requires written validity disputes. The court found that a debt collector can reasonably rely on the representations of their client to determine that a debt is valid. Although a debt collector must abide by fair collection practices, its contractual obligation is to the client, not the consumer. Absent a written notice of a consumer’s dispute per §1692g (b), the debt collector is not obligated to provide validation of the debt to the consumer, nor is it required to cease collection activity. Note that this holding would only apply in jurisdictions that require written disputes.

Mehdi Abdollahzadeh v. Mandarich Law Group, LLP

The issue: Statute of limitations (SOL) bona fide error

The gist: A law firm sent a collection letter to the plaintiff without advising the consumer that the statute of limitations on the debt had expired. The law firm asserted, and was able to demonstrate, a bona fide error defense. The firm stated it was not aware that consumer’s account was outside SOL when they mailed the letter, and that it has documented procedures in place to prevent the attempt to collect an out-of-statute debt, including: 1) a policy to cancel and return any account not in active litigation once its statute of limitations expired, 2) a policy to check dates on each account and review the certification of accurate account information from client before filing suit, and 3) reliance on the nightly scrubbing of accounts by the client’s software to identify out-of-statute debts. Court agreed and found the law firm’s procedures were reasonable.

Derosia v. Credit Corp Solutions, Inc.

The issue: False and misleading licensing statements

The gist: Agency sent a letter which stated it was licensed by the Wisconsin Department of Financial Institutions (DFI) as a sales finance company. Derosia, the plaintiff, alleged this was misleading because the defendant should have been licensed with the Department of Banking as a collection agency. Even if the consumer did an investigation and went to the DFI website, they would learn that the defendant was not licensed as a collection agency and upon learning that, a consumer would be more likely to assume the letter is a scam and ignore it. The court agreed that the statement in letter was false and misleading, and would be a material violation of the FDCPA.

Taylor v. Financial Recovery

The issue: Interest accrual disclosure

The gist: The plaintiff alleged that the collection agency failed to disclose that interest was accruing. The reason, as stated by the defendant, was that interest was no longer accruing. The court noted the Avila decision, which said a disclosure that paying a debt in full using an amount listed in a letter would be misleading only if the amount would not settle the debt due to accruing interest. In this case, the only harm suffered by plaintiff is that if they believed interest was accruing, they might pay the debt sooner rather than later. The court found that as long as the letter was accurate and no interest was being charged, then the letter is not misleading.

For additional insight on this case, see this insideARM article.

Oksana Timoshenko v. Mullooly, Jeffrey, Rooney & Flynn, LLP

The issue: Interest accrual disclosure

The gist: A law firm’s letter used safe harbor language as set forth in Avila to disclose the accrual of interest. Nonetheless, the consumer brought suit on the issue of interest accrual. The court found that the consumer stated no valid claim under the FDCPA and ordered a rule to show cause of why the plaintiff should not be sanctioned.

Konyo v. ARS National Services, Inc.

The issue: 1099C disclosure

The gist: Plaintiff Konyo received a collection letter with settlement options that included the following: “When your final payment is received, we will advise our client so that it may notify any credit reporting agencies to which it reports of the updated status of the account.” The court found this statement could mislead the ‘least sophisticated consumer’ into believing that updates to her credit report would only occur after the final payment on the debt was made. Letter also stated, “IRS requires certain amounts that are discharged as a result of the cancellation of debt to be reported on a Form 1099–C.” The consumer claimed the letter failed to explain the IRS exceptions to the discharge report requirement. The court agreed that the least sophisticated consumer could conclude that the collection agency would be required to report the cancellation of debt in all circumstances.

DULUTH, Ga. — Crown Asset Management, LLC a Georgia-based purchaser of distressed consumer accounts receivable is pleased to announce that Bob Deter is joining Crown Asset as Director of Business Development. Bob brings 30 years of Accounts Receivable Management experience, having served in senior management roles with a credit issuer, a debt purchaser, and a third-party collection firm. Bob’s experience incorporates 17 years with Discover Card, including his role in managing Discover’s former debt sales program. After leaving Discover, he served as an EVP of Acquisitions and Business Development in the debt purchasing sector and then as the VP of Compliance with a third-party collection agency. “I am very excited to get back into the debt purchasing arena. Brian Williams and the Crown Asset Management team have built a strong and well-respected company that is well positioned for continued strategic growth in a rapidly changing marketplace. I look forward to working with them to further build on their already solid foundation,” said Mr. Deter. 

Crown CEO Brian Williams said, “Bob is a respected and proven industry leader in the debt purchase and sales market, and we are excited that he is joining our team.”  Bob’s recent role as a VP of Compliance provides a unique understanding of the risk sellers must evaluate when selecting a debt purchasing partner. Bob knows how to balance compliance with asset sales and purchases and how to build mutually valuable relationships. 

About Crown Asset Management, LLC

Based in Duluth, Georgia, Crown is in its fifteenth year as a debt purchaser and master servicer in the Accounts Receivable Management Industry. Crown has purchased over 400 portfolios including credit card portfolios, automobile debt, consumer loans, judgements and specialty portfolios.

Contact:

Crown Asset Management, LLC 

Bob Deter, Director of Business Development

(614) 583-0979 or bdeter@crownasset.com

Crown Asset Management, LLC                                            

Brian Williams, CEO                                                  

(678) 205-0909 or bwilliams@crownasset.com

Very early in 2018, a New Jersey District Court judge granted defendants’ motion to dismiss claims against them in the case of Winters, et.al. v. Jones, et. al, (Case No 2:16-cv-09020, U.S. District Court, District of New Jersey. insideARM first wrote about it when the case, which dropped many a jaw in the ARM community, was originally filed in December of 2016.

Nutshell re-cap

In case you missed the gist of the case, plaintiff and collection agency owner Winters and his class action co-plaintiffs accused some New Jersey law firms of scheming to solicit clients in order to file bogus class-action lawsuits, with the aim of seeking fast settlements from defendants interested in avoiding the expense and hassle of trial. A copy of the original complaint can be found here.

Judge dismissed RICO case without hearing oral arguments

Fast-forward to January 2018, when insideARM reported in an update that New Jersey District Court Judge John Vazquez dismissed the complaint without oral arguments. Vazquez bluntly wrote that Winters’ First Amended Complaint (FAC) was “riddled with factually unsupported accusations and wholly conclusory language” and “suffers from defective legal theories, both substantively and as pled. Moreover, Plaintiff’s factual allegations are severely lacking in light of the federal pleading requirements.”  

He gave plaintiffs 30 days within which to file a second amended complaint (SAC), adding that “If Plaintiffs believe that Defendants are conducting some nefarious scheme, then Plaintiffs will have to conduct much more due diligence to plausibly plead their claims rather than relying on PACER print-outs, a legal seminar, and other anecdotal information — all of which is benign on the surface (if not common practice)…”

A copy of the judge’s Order can be found here.

A copy of the judge’s Opinion can be found here. The Opinion is not for publication. 

Editor’s Note:  An unpublished opinion is a decision of a court that is not available for future citation as precedent because the court deems the case to have insufficient precedential value. 

Defendants in the case had also requested that the court sanction Winters et. al. for filing suit with what they perceived were such flimsy claims. The judge declined to penalize plaintiffs under Rule 11, although in his Opinion on the matter, he did note that if plaintiffs decided to submit a Second Amended Complaint (SAC) and not prevail, nothing would prevent defendants from re-requesting that the court issue sanctions after a future decision and order.

Both sides appeal to the Third Circuit

As winter (the season) marched on, Winters (the plaintiff) filed an appeal to Vasquez’ decision to dismiss. A copy of Winters’ appeal can be accessed here.

Defendants are also appealing Vasquez’ decision to decline to issue Rule 11 sanctions.

The cross-motions for appeal were originally scheduled for conference in mid-April, but are now on for conference in early June, in the Third Circuit.  We’ll stay on top of the appeals as they unfold.

insideARM perspective

Winters and co-plaintiffs seem almost activist in their determination to keep fighting against perceived frivolous litigation. In part, that sense comes from the original allegations in this case, which were sensational to say the least: Defendants were accused of federal RICO violation, a federal RICO conspiracy, a New Jersey RICO violation, a New Jersey RICO conspiracy, fraud, negligence, legal malpractice, wire fraud, obstruction of justice, witness tampering, and extortion.

If this case does nothing else, it shines a light on a problem congesting the courts; professional plaintiffs with seemingly no injuries, who are betting that collection agencies will opt to offer a quick settlement at a lower cost than a drawn-out regulatory lawsuit–even if baseless.

On the issue of sanctions, it was interesting to see that, where collection agencies as defendants are are almost never granted motions for sanctions against plaintiffs, here the tables were turned, and again the plaintiff sidestepped a motion for sanctions. This is a case many will keep watching. Let’s see what shakes out of the Third Circuit Court of Appeals this summer.

Three dates in May are of interest to collection agencies, payday lenders and debt buyers: May 1, May 15, and May 30. If you’re doing business in these states, check out the calendars below:

Alabama

Arkansas

Florida

Georgia

Idaho

Illinois

Michigan

Nevada

New Mexico

North Dakota

Oklahoma

Texas

You can download PDFs of the calendar here:

May 1 (Alabama, Arkansas, Florida, Oklahoma, Texas)

May 15 (Michigan, New Mexico, North Dakota, Texas)

May 31 (Georgia, Idaho, Illinois)

Each PDF has clickable links, taking you to each state’s website with information about filing.

Last week a group of six U.S. Senators introduced the ROBOCOP Act, to require phone companies to offer their customers free robocall blocking technology. Several of the recommendations could use some fleshing out.

The six Democrats (Richard Blumenthal (D-CT), Edward J. Markey (D-MA), Ron Wyden (D-OR), Charles E. Schumer (D-NY), Tammy Baldwin (D-WI), and Jeff Merkley (D-OR)) named the bill ROBOCOP as a moniker for “Repeated Objectionable Bothering of Consumers on Phones).

The ROBOCOP Act:

• Directs the Federal Communications Commission (FCC) to require telecom companies to verify that caller ID is accurate.
• Provides an exception for consumers with legitimate need for altered caller ID, such as medical offices and domestic violence shelters.
• Directs the FCC to require telecom companies to offer consumers optional free robocall-blocking technology.
• The technology would not block public safety entities and calls that the consumer consents to receive (e.g., school closings).
• Authorizes the FCC to create a nationwide unblocking system that will ensure consumers are in control of the calls and text messages they receive.
• Gives consumers a private right of legal action against telecom companies that violate this statute.
• Requires the FCC, in consultation with the Federal Trade Commission (FTC), to make a public report on whether the new rules have reduced unwanted calls.

This is one of a range of efforts being pursued by Congress and regulators in response to the fact that the National Do Not Call Registry – initially effective – is no longer capable of protecting consumers from overseas scammers who do not hesitate to break the law.

On March 28 insideARM published a recap of a joint policy forum held by the FCC and FTC, titled “Fighting the Scourge of Illegal Robocalls.” The forum featured prepared remarks from leaders of both federal agencies with jurisdiction over robocalls, including newly installed FCC Chief of Consumer and Governmental Affairs Patrick Webre, FCC Chairman Ajit Pai, FTC Acting Chairman Maureen Ohlhausen, and several Commissioners from both agencies. All of them basically said the same thing: Illegal robocalls are awful, we get tons of complaints about them, and this issue is our top priority.

The substance of the Forum included a series of three panels including the regulators on the front lines of enforcement and rulemaking, representatives of the carrier industry and the calling industry, and consumer advocates.

One of the takeaways from that forum was that the FTC has learned that there are “kingpins” who seem to lord over the bulk of the schemes and those kingpins tend to be located in the United States. Denise Beamer, Senior Assistant Attorney General for the Florida Office of the Attorney General, said “[The kingpins] are known, they are sophisticated, and they are connectors…Going after them really is a deterrent.”

On the same day the ROBOCOP bill was introduced, an alleged ‘robocall’ mastermind appeared under subpoena before the Senate Commerce Committee. The Federal Communications Commission (FTC) has accused Adrian Abramovich of making 96 million robocalls during a three-month period in 2016 and has proposed a $120 million fine. He said to the committee, “I am not the kingpin of robocalling that is alleged.” Abramovich claimed his activities constitute legitimate telemarketing. The FCC claims his company appeared to offer deals from legitimate companies like TripAdvisor and Expedia, but then transfer calls to foreign call centers often pushing timeshares. In response to some questions, Abramovich invoked his Fifth Amendment right against self-incrimination.

insideARM Perspective

Something from the proposed ROBOCALL bill that immediately catches my eye is the requirement that the FCC require telecom companies to verify that caller ID is accurate. This is interesting. I am not an expert in this area, but I can say for sure that this is likely no easy task. I get calls all the time from legitimate known people/companies, yet their caller ID often makes no sense. When I ask, “did you know this is how you appear in caller ID?” people are generally surprised and have no idea how to address it. Interestingly, calls that I receive from staff at the Consumer Financial Protection Bureau (CFPB) – or should I now say, Bureau of Consumer Financial Protection – typically display as “Washington, D.C.”

I don’t know whether this has to do with errors in a central database, who purchases that data from the central database, how often the information is updated, settings on internal hardware or software, settings controlled by one or more carriers delivering the call, simple human error, or perhaps all of the above. As with many things in our complex interconnected world, ‘all of the above’ means that no one entity has control, and a solution requires motivation to cooperate.

Other aspects of the bill that I wonder about:

1) The technology would not block public safety entities and calls that the consumer consents to receive (e.g., school closings).

How would the technology know if I had consented to receive a communication? Would there be some kind of database of approved callers, like schools or local governments? What about other consented calls, like debt collection? Debt collection calls may not be ‘wanted’ or accepted in the same way we can all get behind school closings, but in a way, they are even more important, since there are any number of other ways to learn about school closings (website, local news station, etc.). A call from a debt collector may be the last stop before a lawsuit from a creditor, or a negative item on a credit report.

2) Authorizes the FCC to create a nationwide unblocking system that will ensure consumers are in control of the calls and text messages they receive.

Will this be a centralized nationwide system (like the caller ID information, or Do Not Call List)? Will we end up on the same situation we are in today? It will be interesting to see whether something like this could end up on a distributed blockchain.

3) Gives consumers a private right of legal action against telecom companies that violate this statute.

All I can say is, telecom companies – welcome to the world of debt collectors.

The following two pieces appeared in issues of Compliance Weekly, a newsletter focused on compliance and breaking down the complexities of some of the legal cases affecting the industry. Compliance Weekly is produced by The Compliance Professionals Forum. You can sign up for this free newsletter here. 

Credit Counselors Not Protected by FDCPA

Can a collection agency be sued for an FDCPA violation by talking to a credit counselor? No! (But keep reading, it’s not a definitive “no.”)

The deets

A consumer, working with a credit counselor, called a collection agency (I.C. Systems) to discuss the consumer’s credit report. There were items on there that the consumer felt should not be. So, after the plaintiff verified his information with the collector, and gave I.C. Systems permission to talk to his credit counselor, the counselor then asked, “Can the plaintiff dispute this account over the phone with you right now.”

THIS SOUNDS LIKE A TRAP!

I hear you — but it isn’t, at least in this case. I mean, consumers have been known to use credit reporting questions to trap newer collectors into UDAAP violations. In this case, the consumer’s account had already been recalled. I.C. Systems explained this, said that it couldn’t be disputed because it had been recalled, and said it would be removed from the plaintiff’s credit report within 30-60 days.

So, how did the suit come about?

The consumer tried to sue, basing it on “false, deceptive, or misleading representations” during the call.

What was false?

Great question. It has to do with the question about the dispute. The plaintiff really wanted to dispute the item on his credit report. The collection agency said, “You can’t, because first of all the account had already been recalled; and then, also, the account had a zero balance.”

But all this was said to the credit counselor on that call.

And that made a difference?

That made a difference. We can’t be 100% sure — and I am not an attorney — that if the consumer had had this conversation by himself with the collection agency, if the suit could have continued. It’s generally not a great practice for a collector to offer credit reporting advice of any kind, or to answer definitively any question about credit reporting.

It’s also likely, though not a given, that if the consumer and his credit counselor were on the phone together, but it was the consumer who asked those credit reporting questions, that that would have affected the outcome.

However, in this case, the consumer brought on a third party, his credit counselor, who asked the question about the credit reporting — and communications with a third party, especially in a call initiated by the consumer, are not covered by the FDCPA. So, no violation.

Katie Neill writes, “One thing many, if not all, of the alleged baiting calls have in common is that the calls are initiated by someone other than the debt collector. Many of these calls have the consumer on the line to authorize a third party representative to speak with the debt collector, and then the consumer goes silent while the conversation continues. Many of these calls include someone asking, on behalf of the consumer, whether the account can be disputed over the phone or if the dispute needs to be in writing. There is now a strongly worded defense against such tactics.”

You can read the full case here: Sandoval v. I.C. Systems, 17-CV-3755, 2018 WL 1582218 (E.D.N.Y. Mar. 29, 2018)

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New Forum Resource: Power of Attorney Rules by State Chart

A CPF member reached out with the following question:

I am looking for a resource on Power of Attorney. The credit repair companies send the POAs, but they are not notarized. Do you know if there is a resource of POAs and if they need to be notarized?

So, whether or not a Power of Attorney needs to be notarized depends on the state — so there’s no “one answer to rule them all” on this.

What there is, though, is a resource detailing requirements, state-by-state. It’s now available for all CPF members. Click here. (The chart, to be clear, is not legal advice and may not be used as legal advice. It’s just the hard work of my typing fingers and mouse-scrolling. Errors, corrections, etc.: send ’em my way.)

I was curious about the efficacy of collection agencies making it a practice to ask for all PoAs to be notarized in order to be accepted, and Editorial Review Board member (and my best friend, “Rozanne” category) Rozanne Andersen said, “Requiring notarization in documents not otherwise required to be notarized by law may be deemed overly burdensome or an unfair or deceptive practice. I wouldn’t recommend the practice for a third party debt collector in connection with the collection of consumer debt.”