ROCHESTER, N.Y. — Employees of Continental Service Group, Inc., d/b/a ConServe, recently spent the morning at the Ruben A. Cirillo Gananda High School participating in their College and Career Readiness Day to promote financial wellness. The half-day workshop was created to provide the school’s junior and senior year students with some fundamental advice to help them plan for their futures. For the ConServe team, it was the perfect opportunity to help educate their community’s youth with information that will empower them to succeed now and after high school.

Audra Marang, the Work Based Learning Coordinator at the Gananda High School, had the following to say about ConServe’s support: “We are excited to have ConServe participate in our College and Career Day to advance our students’ knowledge in financial wellness. Our goal is to educate all students for success and partnering with businesses in our community helps our high school students gain real-life insight to better prepare for their future endeavors.”

“ConServe endorses the concept of educating and empowering people to take control of their financial destiny – we believe in Fostering Financial Freedom®” added Pamela Murphy, VP Ethics & Compliance Officer at ConServe and a workshop presenter. “At ConServe, financial wellness is an important topic – especially among the younger generations. As part of our commitment to good corporate citizenship, we support this effort with our Clients, their consumers and our community whenever possible.” She continues “by helping to instill the concepts of financial wellness in the young adults of our communities while they are still in school, we are investing in their future and providing them with the tools they will need to achieve their long-term goals.”

College and Career Readiness Day 2018 – Pam, Tim and Gananda HS students

 

About ConServe

ConServe is a top-performing award-winning provider of accounts receivable management services specializing in customized recovery solutions for our Clients. Anchored with ethics and compliance, and steadfast in our pursuit of excellence, we are a consumer-centric organization that operates as an extension of our Client’s valued brand. For over 30 years, we have partnered with our Clients to give them peace of mind while simultaneously helping them achieve their goals. Ethics. Technology. Performance.

I’ve been talking a lot recently about the incredibly awkward experience at the beginning of a communication between collectors and consumers caused by the need for both parties to first verify who they are speaking with before they can share any information. In the last several weeks I have been to conferences exploring blockchain and identity management technology, and thinking about how these could apply to the collection process.

In my continuing video series about finding better ways for collectors and consumers to communicate, I’ve covered the topic of “self sovereign identity” (SSI) and a re-imagined debt collection call opening. SSI is a digital identity that people control. Think of a digital wallet, only for information that proves who you are rather than accounts used for payment.

Watch my latest video (it’s just about 3 & 1/2 minutes long) to hear more about this.

 

 

For my earlier video installments, see the following:

CEO of insideARM Shares Opportunities and Agenda for 2018

Creditors Should Build Trust in Collections by Saying ‘Goodbye’

Collectors Need a Better Way to Confirm they are Speaking with the Right Person

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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.

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

Pierre v. Midland Credit Management, Inc.

The issue: Revival warning on out-of-statute debt

The gist:  A collection letter contained a statute of limitations disclosure explaining that the debt was too old to collect via suit, but did not explicitly include any warning that payment could revive the debt and restart the applicable statute of limitations. The Court found the letter to be false and deceptive, in violation of 15 U.S.C. § 1692e(10). Applying the least sophisticated consumer standard, the Court found that the letter was misleading because it did not include any warning that a partial payment on the debt could have revived the statute of limitations and obligation on the debt. Following Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017), summary judgment was entered in favor of consumer.

Jasmine Chatman, individually and on behalf of all others similarly situated v. Alltran Education, Inc.

The issue: Interest disclosure requirements

The gist: The Northern District of Illinois struck down the idea that the safe harbor language provided in Miller somehow creates new disclosure requirements for debt collectors. The court in Chatman found that including a balance due at the time of the letter and a simple statement saying interest is accruing, directing the consumer to the original loan agreement for the accrual rate, is sufficient to put the consumer on notice of the amount owed.

For additional insight, read this insideARM article.

Tony Nguyen v. LVNV Funding, LLC, et al.

The issue: Collateral estoppel doctrine

The gist: On advice, consumer failed to respond to a state court action and default judgment was entered. Consumer then filed an FDCPA action against debt collector, alleging that statute of limitations had lapsed by the time suit was filed. Federal court found that Nguyen had three opportunities to raise his statute of limitations concern with the California courts, and chose not to. The Fair Debt Collection Practices Act doesn’t function to provide litigants with a second chance to try out new arguments in federal court after failing to raise them in state court.

Tatis v. Allied Interstate, LLC

The issue: Use of word “settlement”

The gist: Plaintiff had a ten-year-old debt owed to Bally Total Fitness, which Allied sought to collect by sending a letter offering to settle the obligation. The 3rd Circuit ultimately found that the use of the term “settlement” in the letter could mislead the ‘least sophisticated consumer’ into thinking that the debt collector could legally enforce a time-barred debt. In its ruling, the Court made a point to say that settlement offers and attempts to obtain voluntary repayments of stale debts do not necessarily constitute deceptive or misleading practices, nor is the use of the word “settlement” misleading as a matter of federal law. The Court also did not impose any specific mandates on the language debt collectors must use, such as requiring them to explicitly disclose that the statute of limitations has run out. The Court did hold that letters, when read in their entirety, must not deceive or mislead the least-sophisticated consumer into believing that s/he has a legal obligation to pay a time-barred debt.

James Hagy, III, et al v. Demers & Adams, et al

The issue: Existence of Injury

The gist: The Sixth Circuit reversed a summary judgment ruling in favor of consumers on their claims for violation of federal and Ohio state law that letters sent by a law firm did not cause them to suffer an injury and that the district court lacked jurisdiction over the case. The Court found that a bare procedural violation alone is not sufficient to create an injury where clearly none was present.

For additional insight, read this insideARM article.

Daniel White v. Universal Fidelity, LP, Link Revenue Resources, LLC, and Jewish Hospital & St. Mary’s Healthcare, Inc. d/b/a Jewish Hospital Shelbyville

The issue: State statute

The gist: A wife received medical treatment and a collection agency sought recovery from her husband due to the “necessaries doctrine.” The husband claims that the debt collector’s collection attempts were false, deceptive, misleading, unfair, or unconscionable because the Kentucky statute is unconstitutional. To date, no court has found the Kentucky statute unconstitutional. The Court found that the consumer’s claims did not form the basis of of a valid FDCPA claim.

Patricia Murphy v. Stupar, Schuster & Bartell, SC

The issue: Reaffirmation agreement

The gist: After a consumer’s bankruptcy discharge, a law firm filed a state court action to collect on debt that was subject to a reaffirmation agreement. The consumer alleged that the reaffirmation agreement did not comply with all aspects of §524 of bankruptcy code, so the law firm violated 1692e(a)(2) and did not have a legal basis to pursue the debt. The Court found that the consumer has a valid FDCPA claim.

White v. Professional Claims Bureau, Inc.

The issue: Collateral estoppel

The gist: Plaintiff alleges that when a debt collector failed to explicitly identify the current creditor in its demand letter, it violated 1692g. Because identical letters were at issue in two prior cases against same debt collector, the court found that debt collector was collaterally estopped from re-litigating those issues. This decision expands the limits of collateral estoppel and could limit the defenses debt collectors have in FDCPA cases if identical fact patterns are present.

 

In a decision released today, the 2^nd Circuit upheld the district court’s opinion in Taylor v. Financial Recovery Services (FRS). In Taylor, the district court found that not including an interest disclosure was not a violation of the FDCPA. The 2^nd Circuit agreed with the district court, finding that the concerns addressed in Avila were not present in the Taylor case.

Read today’s decision here.

The court referenced that in Avila, the consumer could be misled into thinking that he paid the account in full by paying the balance listed on the letter when this was not in fact so because interest would have accrued on the balance between the date of the letter and the date the payment is processed. The 2^nd Circuit found that this was not a concern in the instant case because had the consumer paid the balance on FRS’s letter, then the account would have indeed been paid in full.

Most notably, the 2^nd Circuit found that the only impact a disclosure stating that interest is not accruing on the account would have is letting the consumer know that they can delay their payment without any impact. The court stated:

“It is hard to see how or where the FDCPA imposes a duty on debt collectors to encourage consumers to delay repayment of their debts. And requiring debt collectors to draw attention to the fact that a previously dynamic debt is now static might even create a perverse incentive for them to continue accruing interest or fees on debts when they might not otherwise do so. Construing the FDCPA in light of its consumer protection purpose, we hold that a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning of Section 1692e.”

The 2^nd Circuit reprimanded Taylor for bringing new arguments on appeal that were not addressed in district court, specifically their argument that interest was still currently accruing even if it was not being collected.

The 2^nd Circuit also dismissed the consumer’s argument that even if interest were not accruing now, the creditor can at some point in the future turn it back on. The court found that this, even if a possibility, is so far in the future that it would have no impact on the notice sent by FRS. The court found that since no interest or fees were being charged, then the notice was not misleading because the consumer could pay the balance on the notice and satisfy the account.

Analysis

In the original insideARM article about the case in May 2017, the insideARM Perspective offered this comment from John Rossman, Attorney with Moss & Barnett:

“These cases are being filed en masse in New York – similar to the wave of lawsuits on the envelope issue after the Douglass case a few years ago – and Taylor is the first definitive decision on the issue.  The decision follows a common sense approach and reading of the Avila decision.  The Plaintiffs appealed the ruling in Taylor to the Second Circuit Court of Appeals and we expect that the appellate court will affirm this ruling while we anticipate all of the other pending cases on this issue will likely be stayed.” 

This is a very positive result that may stem the tide referenced by Mr. Rossman.

insideARM has previously written about other cases involving the FRS and the statement regarding tax consequences. See the article on the Remington case here and the Everett case here. Click here to listen to a podcast on the topic from Moss & Barnett.  

MUNCIE, Ind. – Ontario Systems, a leading provider of revenue recovery software to the healthcare revenue cycle management (RCM), accounts receivable management (ARM) and government (GOV) markets, announced today it has named Mike Meyer, Roger Carney and Steve Scibetta as Vice Presidents. Meyer was also named General Manager of the company’s Outsource Group business unit, and Scibetta was also named General Manager of the company’s Healthcare business unit.

The moves accompany a major reorganization of Ontario Systems associates into focused business units. Recognizing the unique needs of each market it serves, the company’s new organization reflects a continuing commitment to its clients and their evolution.

“More closely aligning our teams to the markets we serve, and promoting these three Ontario Systems veterans, places our decision-making much closer to our clients,” says Jason Harrington, Ontario Systems President. “We expect this to improve our speed and agility as an organization, and enhance our communication with customers. This corporate evolution will in turn enable us to raise our service levels even higher, and accelerate product development in concert with complex and evolving revenue needs in healthcare, ARM and government.”

Each newly-named Vice President brings deep industry and product knowledge to the Ontario Systems Executive Leadership Team:

• Mike Meyer, Vice President and General Manager has spent 28 years in the ARM and Federal Government markets, specializing in large, complex business applications and implementations. He has previously served Ontario Systems as a regional sales manager and senior director, using his technical acumen to apply solutions to client operations.
• Steve Scibetta, Vice President and General Manager has spent 23 years at Ontario Systems with a focus on the RCM industry, specializing in the delivery of market-leading solutions to providers and those that serve them. He leverages nearly 30 years in customer service, product management, software development, and product marketing expertise in service of our RCM clients.
• Roger Carney, Vice President, Operations spent more than 15 years as an executive leader in the BPO segment of the ARM market before joining Ontario Systems in 2014. His experience growing on- and off-shore multi-location call center operations for some of the largest brands in the industry is an asset to the teams he serves.

Ontario Systems was named a Best Place to Work by the Indiana Chamber of Commerce in 2018 – for the fourth year in a row –  while continuing to provide market-leading technology that supports revenue recovery for hundreds of clients..

“We made changes to address how our business is evolving, and we entered 2018 with tremendous momentum,” concludes Ron Fauquher, Ontario Systems CEO. “Mike, Roger and Steve have shown an extraordinary ability to align resources in exciting ways that drive innovation and growth. I am excited about the many advantages these new leaders will bring our customers, as revenue cycle management, ARM and government receivables continue to evolve.”

About Ontario Systems

Ontario Systems is a leading provider of revenue recovery software and solutions to the revenue cycle management (RCM), accounts receivable management (ARM), and government markets. Established in 1980 and headquartered in Muncie, Ind., Ontario Systems also has a location in Vancouver, Wash., and employees in 27 states. Ontario Systems offers a full portfolio of software, services and business process expertise, including product brands like Artiva RM™, Artiva HCx™, Contact Savvy®, and RevQ®. Ontario Systems customers include 5 of the 15 largest hospital networks who actively manage over $40 billion in receivables collectively, as well as 8 of the 10 largest ARM companies and more than a hundred state and municipal governments in the U.S. 

To learn more about how Ontario Systems can help power up your receivables, visit OntarioSystems.com, or email mailto:info@ontariosystems.com.

TOLEDO, Ohio – United Collection Bureau, Inc. (UCB) announces Raymond Dziubla as its new Executive Vice President of Early-Out Operations Healthcare Division.

Mr. Dziubla started his healthcare receivables management career in 1994. Since then he has successfully managed all aspects of the revenue cycle at a senior level in both a provider and vendor environment. Mr. Dziubla brings a focus of effective healthcare receivables management leadership which includes financial counseling, Financial Assistance and Medicaid eligibility advocacy, insurance discovery and adjudication, early out self-pay processing, and other value added extended business office operations. As UCB’s Executive Vice-President of Early-Out Operations, Mr. Dziubla is responsible for all aspects of our best in class active AR management programs serving healthcare providers. Mr. Dziubla holds a BA degree in Business Management and Technology from Saint Joseph College.

“I’ve always believed there was a better way to manage self-pay receivables through enhanced technology and compassionate employees who are patient centric.” Comments Ray, “After more than 25 years of healthcare leadership experience in both vendor and provider settings, I believe UCB brings that “best in class” early out program to the healthcare marketplace. I am excited to be a part of their team.”

“Ray significantly impacts our entire organization. Specifically, he will be on hand to help clients and prospects focus on their core business as UCB handles their revenue cycle services from end to end,” states Sam Rickard, Owner and Chairman of UCB. “Having someone of Ray’s experience level gives our client’s significant confidence in working with us on a daily basis.”

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About UCB

In 58 years, UCB has grown into a successful, knowledgeable health care receivables management agency that operates with our founding principles of a professionally operated family-owned company serving clients across the nation. UCB provides healthcare organizations with customized, flexible options for managing their revenue cycle including extended business office and patient debt. We have the resources and technology to productively and skillfully assist you with your collection initiatives. Each of our locations is staffed with personnel dedicated to the health care industry in operations, client services, technology and compliance. We are proud of our loyal clients and always strive to maintain a mutually beneficial relationship. For more information about UCB, visit www.ucbinc.com.

Today’s focus on insideARM is about robocalls. This post is about what I learned from last Friday’s FCC-FTC Joint Policy Forum on Fighting the Scourge of Illegal Robocalls. Be sure to read this other article published today, by Karl Koster, who shares his opinion about the fact that carriers should be notifying callers if their calls are being blocked, and how they should do it.

The Policy Forum featured prepared remarks from the 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.

These are my key questions/takeaways:

There are robocall kingpins

Although many illegal robocalls are originated outside of the United States – and enforcement against these actors is challenging — 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.”

Illegal robocalling scams are simply too profitable

Kevin Rupy, Vice President of Law and Policy for USTelecom (an association of major carriers), noted that robocall scams occur because they are so profitable. The technology has become so cheap and easy to establish, and of course scammers have no cost of compliance. If we could increase the cost of making the calls, the scams would be less profitable, and the incentives would be reduced. Rupy also said that collaboration and information sharing is essential. USTelecom hosts an industry traceback group which cooperates to trace illegal calls back to their source. This, he says, can help to “take out calls at the root versus swatting flies one call at a time.”

Why can’t we collect all of the fines?

Regulators have successfully sued illegal robocallers and have imposed material fines – but only about ten percent of those fines have been collected. If the schemes are so lucrative, why can we only successfully collect such a small amount of the fines? This seems to me a big loophole in the idea of deterrence. (By the way, I’ve noted this issue in many FTC announcements about enforcement actions and fines – not just in the area of robocalls. An announcement will say something like, we’ve imposed a fine of $10 million, $1.1 million has been paid, and the rest is set aside based on the attestation that the criminal has no money…. What?)

Panelist Ed Bartholme, Executive Director of Call for Action and Chair of the FCC’s Consumer Advisor Committee noted there should be a criminal element – and a threat of jail time — for these illegal activities.

Legitimate businesses need to know if their calls are being blocked

Legitimate businesses need to know whether their calls are being blocked or labeled. Panelist Michele Shuster, General Counsel for the Professional Association for Customer Engagement, suggests that the intercept code could be used for this purpose (the subject of the above mentioned Karl Koster article). And she reminded listeners that legitimate callers need a reasonable avenue for remediation of errors. Right now it’s a big open-ended hole, where call originators would need to work individually with half a dozen carriers, and potentially dozens of application providers, which all have a different process (or no process) for handling these issues.

Regulators welcome innovation

When asked what industry can do to help regulators solve this problem, FTC’s Lois Greisman, Associate Director of the Division of Marketing Practices (she has primary responsibility for enforcement of the telemarketing rules), said “Innovate. Do what you do best.” She is very encouraged by the proliferation of available solutions, and to the advancement of the discussion from a time only recently when blocking calls was illegal, to today’s discussion of unintended consequences.

Collaboration is essential

All panelists repeated the mantra that all stakeholders must work together to solve this problem. And indeed, this is happening on many fronts — though call originators would likely say not fast enough.

Spoofing is a root cause of the problem

Sherwin Siy, Special Counsel in the FCC’s Wireline Competition Bureau, said spoofing must be addressed. Mark Stone, Deputy Chief of the Consumer and Governmental Affairs Bureau at the FCC agreed and added that caller ID authentication is needed. …Which brings us to SHAKEN/STIR (a subject of one of my recent videos).

Jim McEachern, Senior Technology Consultant from the Alliance for Telecommunications Industry Solutions, a primary architect of the SHAKEN/STIR protocols, explained that SHAKEN will allow an originating service provider (carrier) to attest to what they know – in other words, that a calling number is owned by the originator. This information will be cryptographically signed and verified so it can’t be altered in transit. While this alone is not a complete solution to illegal robocalls, it will provide objective and reliable information to application providers, which they can combine with other intelligence about the number, in order to decide to block or label the call.

Jim McEachern will be visiting with the Consumer Relations Consortium and Innovation Council at its upcoming meeting on April 25-26 to further explain this technology.

By now, most debt collectors know about carriers’ efforts to label or block illegal “robocalls.”   The FCC provided carriers the green light to block such calls in the FCC’s July 2015 TCPA Order. There is little debate now that illegal calls can be segregated for blocking. Indeed, doing so reduces the number of illegal calls that would otherwise be completed. Likewise, there is no debate that the algorithms employed to identify such calls are not perfect, and occasionally mistakes will be made by classifying legitimate calls as illegal robocalls.

Various industry-related efforts are underway addressing mitigation procedures when such mistakes are made. Specifically, what procedures can a caller invoke when their calls are mistakenly identified and blocked by the terminating carrier as an illegal robocall? Although it seems fundamental, the first step in addressing a mistake is for the call originator to know when a particular call is being blocked.

Carriers provide various treatments when a call is blocked as an alleged illegal robocall; one common treatment is to provide busy treatment. Hence, many debt collectors have seen an increase in their busy rate or a corresponding drop in their connect rates over the last year. However, providing this type of “fake” busy treatment does not provide an accurate indication to the caller that their call is being blocked. Frequently, it can’t be ascertained for sure whether the called party is actually busy, and this leaves the caller to potentially reattempt the call again, at a later time. If the call encounters busy again, has the call been blocked? A “fake busy” indication only serves to create confusion and uncertainty.

Without accurately knowing whether a particular call is blocked, the caller is unaware whether to pursue mitigation procedures to rectify a mistakenly blocked call. It seem oxymoronic for carriers to provide procedures to correct when a mistakes occur, but not inform the caller when a mistake occurs. At least if the caller was informed the call was blocked, the call originator could investigate why it is being blocked.  Did the subscriber explicitly request this call to be blocked, or did an algorithm make this determination? Perhaps the blocking was caused by a scammer “spoofing” the caller’s number? If we accept the premise that mistakes will occur, then knowing when a call is blocked is the first step for the caller to investigate whether a potential error cause this to occur.

Providing a per-call blocking indication in the form of an intercept (a recorded audio) message should be the minimum that carriers should provide to the caller. The caller is provided with actual notice their call is blocked and can then investigate which carriers are blocking their calling party number and why. This at least allows the caller to rectify what may be a mistake or be informed if their number is being spoofed.

Some carriers do not want to inform call originators when a call is being blocked on the pretext that this will help ‘scammers’ originate illegal robocalls. We know providing a busy indication has not stopped scammers to date. Scammers continue to make calls, and they will simply spoof a different number for each call. Their effectiveness does not turn on whether an explicit intercept blocking message was returned for a particular call. But, providing an intercept message will allow legitimate callers to identify with certainty those calls they believe were erroneously blocked. It will also let the call originator know if someone else is spoofing their number and causing that number to be blocked. 

We should know exactly how our calls are being treated. If carriers do not agree to provide accurate per-call blocking information, the only solution is to petition the FCC to regulate the carriers on this matter.  Certainly, any safe harbor the FCC is considering should be predicated on carriers providing a per-call blocking indication. Let’s stop the “fake busies” now.

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The opinions expressed are solely of the author, and do not necessarily represent those of Noble Systems Corporation.

Editor’s note: Today’s focus on insideARM is about robocalls. Read this other article published today, Robocall Kingpins, and other Takeaways from the FCC-FTC Robocall Policy Forum

 

In Walton v. EOS CCA, 17-CV-3040, 2018 WL 1417495 (7th Cir. 2018), the 7th Circuit clarified the verification and investigation requirements for a collection agency when a consumer disputes a debt. In its March 21, 2018 decision, the court found that EOS’s investigation into the consumer’s dispute was sufficient and granted summary judgment for the agency. 

Read the decision here. 

Factual and Procedural Background 

Walton, the plaintiff in this matter, failed to pay a $268.47 bill on her AT&T account. Her AT&T account number was 119864170. Walton’s failure to pay led AT&T to place her account with EOS for collection. Due to an error in AT&T’s records, the digits of Walton’s account number got mixed up when sent to EOS. As a result, the account number received by EOS for Walton’s account was 864119170. 

Walton disputed the debt three times.  First, she sent a letter to EOS stating that she does not owe money to AT&T. Second, she filed a dispute with the credit reporting agencies where she stated the account did not belong to her. Third, she filed another dispute with the credit reporting agencies disputing the account number on her credit report. 

After EOS received the first letter, it verified the records it received from AT&T against Walton’s personal information and concluded that the account did indeed belong to her. Similarly, after receiving the first credit report dispute, EOS again checked its records and confirmed that Walton’s information matches that which EOS received from AT&T. After receiving the second credit report dispute regarding the account number, EOS asked the credit reporting agencies to delete the trade line. 

Walton filed a suit against EOS with two allegations: First, that a violation of the FDCPA occurred when EOS did not verify her information with the creditor; and second, that a violation of the FCRA occurred by EOS failing to reasonably investigate the disputes. 

The district court entered summary judgment in favor of EOS at the recommendation of the magistrate. Walton then appealed. 

The Decision 

The 7th Circuit found that EOS did, indeed, properly verify the debt. The court adopted the view of other Circuits stating that a debt collector need only confirm the amount being demanded is what the creditor is claiming is owed. The court elaborated that the verification requirement “serves as a check on the debt collection agency, not the creditor.” Requiring a debt collector to investigate the validity of the amount owed would be “burdensome and significantly beyond the [FDCPA’s] purpose.”  

Applying this to Walton’s case, the court found that EOS’s verification was sufficient in that EOS checked and confirmed that Walton’s personal identifying information (name, address, and social security number) matched the records it received from AT&T. Based on this, EOS reasonably verified Walton’s ownership of the account. 

Likewise, the court found that such a check was reasonable for the reasonable investigation required by the FCRA.  Walton’s first credit report dispute was bare of details and only stated that the debt did not belong to her. Based on this bare dispute, EOS again checked Walton’s information against the records received from AT&T and found that they matched, thus finding that the account belonged to Walton. This is sufficient, according to the court. 

Upon receiving the second dispute regarding the account number, EOS asked the credit reporting agencies to delete the account from Walton’s credit reports, which is exactly what Walton requested. 

Analysis 

Even though the decision did not provide much elaboration, its finding that the verification requirement applies to checking the debt collector’s records – and not verifying that the creditor’s records are correct – the 7^th Circuit implied that debt collectors may rely on the information provided by creditors for the purposes of verifying a debt, at least in the context of ownership of an account. 

Many times, debt collection agencies are at the mercy of the information provided by the creditors. Using the above case as an example, EOS had no way of knowing that the account number was incorrect based on the information it received from AT&T. Nor did Walton’s first two disputes put EOS on notice that the account number was incorrect, even though that is what Walton was attempting to say in the first place. 

With this decision, the 7^th Circuit provided collection agencies with a shield and puts a certain clarification standard on consumers when they dispute accounts. In effect, the decision put into writing that debt collectors are not mind readers. If the consumer sends a generic dispute that can be resolved with a quick investigation, then that is sufficient. A debt collector need not delve into a deeper investigation if the language of the consumer’s dispute did not indicate a need.

This article was co-authored by Joann Needleman and Timothy Lee, of Clark Hill. It originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

At a recent gathering of states attorneys general, Mick Mulvaney, Acting Director of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) indicated his preference that they take the lead on the enforcement of consumer protection laws along with state regulators. According to Acting Director Mulvaney, “States know best how to protect their own consumers”. This approach marks a stark contrast from the previous regime at the CFPB. Historically, under the CFPB’s previous director, Richard Cordray, states often took a back seat to the CFPB on enforcement actions. This aggressive enforcement policy was often criticized as many believed this authority was used solely to set new industry standards independent of the rulemaking process. Mulvaney is determined to change the narrative. However, such a shift in the CFPB’s enforcement philosophy should not be interpreted as a loosening of the proverbial “oversight belt”. Rather, the “oversight belt” is still tight and will continue to get tighter; as now, it is being worn by a new, more politically charged and unpredictable source: states and cities.

States—and cities thanks to a recent Supreme Court decision—are already taking Acting Director Mulvaney’s deferment to task, suggesting enforcement of consumer protection laws will soon become a priority among their state attorneys general and regulators as well as city and municipal officials. Several states and the District of Columbia have either filed suit alleging or begun investigating potential discriminatory lending practices by some of the nation’s largest financial institutions. In Pennsylvania, the Pennsylvania Treasurer and Bureau of Consumer Protection of the Pennsylvania Attorney General’s Office have announced separate investigations of major financial institutions for alleged discriminatory practices in mortgage lending that were unveiled by a recent report released by the Center for Investigative Reporting. A copy of the report can be found here. Other states, including Iowa and Washington, have taken similar action based on the same report. The states are not alone in this growing fight.

The Center for Investigative Reporting found evidence of discriminatory practices in mortgage lending in sixty-one metro areas, arming these cities —and the states encompassing them—with factual allegations sufficient to file suit against mortgage lenders of all sizes across the country. The City of Philadelphia recently filed suit again Wells Fargo,  the largest mortgage lender in the United States, accusing them of  discriminatory mortgage lending practices. Cities instituting enforcement actions for violations of consumer protection laws are a recent phenomenon. Less than a year ago, in Bank of America v. City of Miami, the Supreme Court ruled that a city may file suit against lenders under the Fair Housing Act (the “Act”). The city of Miami alleged that Bank of American engaged in  discriminatory lending practices based on a the theory that the city is an “aggrieved person” under the Act,  showing a direct link between the discriminatory lending practices and asserted injuries to the city (i.e., a decline in property tax revenue as a result of increased foreclosures). In the City of Philadelphia v. Wells Fargo, N.A., the city of Philadelphia is asserting the same allegations and claiming it is an aggrieved person under the Act. The City of Philadelphia is seeking to recover economic damages for lost tax revenue and noneconomic damages stemming from the alleged discriminatory lending practices. Wells Fargo, like Bank of America, vehemently denies these allegations, asserting that its goal has always been to promote fair housing and integrated communities.

It is also no coincidence that the The National Consumer Law Center (NCLC), the largest consumer advocacy association in the county, just recently published its updated report, Consumer Protection in the States, a 50-State Evaluation of Unfair and Deceptive Practices Laws.  The report can be found here. The report evaluates the strength of each state’s unfair and deceptive practices (UDAP) statute, and documents how significant gaps or weaknesses in almost all states undermine the promise of UDAP protections for consumers. This will be the playbook for many states, including their attorneys general and regulators, in terms of enforcement, regulation and advocacy. The NCLC is certainly viewing Mulvaney’s statements in real time.

In light of these recent developments, all financial institutions, no matter what the size, whether depository or non-depository, should not abandon current compliance programs. Rather it may be time for a review and audit of those programs to ensure that specific requirements of fair lending law, as well as all state consumer protection laws including UDAP are appropriately addressed.

Clark Hill’s Financial Services Regulatory & Compliance Practice Group is a national leader in the field of financial services law. Our exceptional team of lawyers and government and regulatory advisors has extensive experience in — and an in-depth understanding of — the laws and regulations governing financial products and services. We can assist you in developing and implementing compliance programs, as well as defending consumer litigation and regulatory enforcement actions.