On Monday a federal judge in Illinois denied a request to certify a Fair Debt Collection Practices Act (FDCPA) case against Midland Credit Management, In. (Midland) as a class action. The case is Hernandez v. Midland Credit Management, Inc. (Case No 15-cv-11179, U.S.D.C. Northern District of Illinois, Eastern Division).

A copy of the court’s memorandum and order can be found here. 

Background

On September 30, 2015, Midland served Daniel Hernandez with a summons and a copy of a complaint filed in the Circuit Court of Cook County, Illinois. Six days later, on October 5, 2015, defendant sent him a letter (the October 5 letter), which began: 

“We have been notified that you have been served with a copy of a lawsuit commenced against you on the account referenced above. We are contacting you in an effort to resolve the matter voluntarily. If we are not able to resolve the matter voluntarily, we intend to seek a judgment against you, which may then be enforced in accordance with applicable state law.

 Charges may continue to accrue on this account until the account is satisfied, and we may have incurred additional costs in connection with the lawsuit. Thus, the amount we may be willing to accept in settlement of the lawsuit may be greater than the total present balance. We are not obligated to renew this or any other settlement offer. 

Please contact us today at toll-free (866) 300-8750 to obtain an exact payoff amount or to discuss resolution of your account. Depending on your circumstances, we can provide a reasonable payment plan or other accommodations as appropriate, but we need to hear from you or the lawsuit will proceed.”

On December 11, 2015 plaintiff filed this putative class action lawsuit against Midland. The lawsuit alleged that that the October 5 letter ran afoul of several FDCPA prohibitions, including 15 U.S.C. 1692e, which declares that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 

Plaintiff brought a motion for class certification.  In his motion, plaintiff emphasizes one of his FDCPA theories: under Illinois law, statutory court costs are not available before defendant obtains a judgment, so the October 5 letter falsely and misleadingly implied (or perhaps even more than implied, according to plaintiff) that defendant had a right to collect court costs when it sent the letter. 

Plaintiff asked the court to certify a single class defined as: 

All persons in the State of Illinois to whom, during the one year prior to the filing of Plaintiff’s Complaint and continuing through the resolution of this matter, Defendant sent one or more letters or other communications similarly [sic] in the form of the October 5th Letter in an attempt to collect a non-business debt, which letter was not returned as undeliverable by the Postal Service. 

As noted above, the court denied the motion to certify the class. The motion was heard and decided by the Honorable Joan B. Gottschall, United States District Court Judge. The memorandum and order is a mere 9 pages.

Judge Gottschall wrote (citations omitted): 

To certify a class, this court “must find that each requirement of Rule 23(a) (numerosity, commonality, typicality, and adequacy of representation) is satisfied as well as one subsection of Rule 23(b).” Because he is the party seeking certification, Plaintiff bears the burden to persuade the court by a preponderance of the evidence that his proposed class meets Rule 23’s certification requirements. 

Rule 23 has long been interpreted as implicitly requiring a class to be defined “clearly and based on objective criteria.” Courts sometimes use the shorthand term “ascertainability” to refer to this requirement. 

As written, the class definition includes an amorphous group of people who received communications “similarly in the form of the October 5th Letter,” including, potentially, phone communications. Indeed, as defendant points out, plaintiff adverts to the possibility of false and misleading telephone conversations in his motion for class certification. 

The class definition plaintiff proposes has an additional ascertainability problem: its only time limitation is the conclusion of this litigation.

Rule 23(c)(1) gives the court discretion to alter a class definition, but the court should not shift to itself the plaintiff’s burden to define the class objectively. The court therefore leaves to plaintiff the task, if he wishes, of attempting to redefine the class in an ascertainable fashion. 

Because plaintiff has failed to show that the proposed class’s composition is ascertainable using objective criteria, the court ends its Rule 23 analysis and denies plaintiff’s motion to certify. (Emphasis added by insideARM.) 

insideARM Perspective 

This case may be far from over. It appears that the court has left open the possibility that the plaintiff could suggest an alternative class definition. 

Going back to the letter sent by Midland that is the genesis of this litigation – insideARM is curious as to what purpose the October 5 letter served and why it was sent in the first place. A collection lawsuit was already filed (Judge Gottschall’s memorandum and order indicated that the collection litigation was filed on November 4, 2014 – 11 months prior to the October 5 letter). Clearly the lawsuit had already sent the message to the consumer that Midland would like the account resolved. In retrospect, it seems the letter only created exposure by including language that the plaintiff’s attorneys felt ran afoul of the FDCPA. In this instance, the old expression – “Less is More” might apply.

Alberto Reyes, Jr., the consumer who sued Lincoln Automotive Financial Services for violating the Telephone Consumer Protection Act (TCPA), has asked the full Second Circuit for a rehearing to reconsider his case. Reyes argues that the original three-judge panel decision finding — that consent given in contracts isn’t revocable — conflicts with opposite decisions in other courts of appeal. The case is Reyes, Jr. v. Lincoln Automotive Financial Services, Case No. 15-0560, (Eastern District of New York, June 20, 2016).

A copy of the Petition for Rehearing and Rehearing En Banc can be found here.

insideARM wrote about the original district court decision on July 5, 2016, and then wrote about the Court of Appeals decision on June 23, 2017.

Background 

Both of the prior articles noted above provide a detailed background of the facts and issues presented in the case. The case revolves around consent to be called on a cell phone and the potential revocation of that consent.

As noted in our June 23, 2017 article, the Second Circuit affirmed the original district court judgment in favor of the defendant. The Second Circuit held that (1) Reyes did introduce sufficient evidence from which a jury could conclude that he revoked his consent, but that (2) the TCPA does not permit a consumer to revoke its consent to be called when that consent forms part of a bargained‐for exchange. (Emphasis added by insideARM) 

The Petition for Rehearing 

The Petition filed by Reyes is requesting a rehearing en banc. What does “en banc” mean? The U.S. Courts of Appeals usually assign cases to a “panel” of three or more judges. Panels contain fewer judges than the Court of Appeals as a whole. The Reyes case was heard by a panel of 3 Circuit Judges. The panel judges heard the appeal and rendered a decision.  

After a panel has heard the appeal and issued its opinion, either party to the appeal may choose to request another hearing “en banc.”  This request asks the court to hear the case again, this time with all of the court’s judges listening to the case. 

In this case, Reyes argues: 

“Rehearing or rehearing en banc is warranted because this case presents a question of exceptional importance because the panel decision: 

(1) conflicts with the holdings of the Third, Gager v. Dell Financial Services, LLC, 727 F.3d 265 (3d Cir. 2013); Ninth, Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037 (9th Circ. 2017); and Eleventh Circuits, Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014); that consumers have the right to revoke consent to be robocalled under the Telephone Consumer Protection Act. 

(2) conflicts with the Federal Communications Commission’s authoritative conclusion that consumers have the right to revoke consent to be robocalled under the Telephone Consumer Protection Act. In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 F.C.C. Rcd. 7961, 7964, 7969 (July 10, 2015); and 

(3) opens the door to widespread fine-print waivers of substantive consumer protection law.” 

The Petitioner’s argument is effectively summarized in the introduction section of the Petition: 

“The Telephone Consumer Protection Act (TCPA) is intended to curb the staggering numbers of unwanted robocalls Americans receive by prohibiting autodialed or pre-recorded calls to consumers’ cell phones unless consumers give “prior express consent.” Three federal courts of appeals—every other court of appeals to have considered the question—and the Federal Communications Commission (FCC) have concluded that, inherent in the concept of TCPA consumer consent is the ability to revoke that consent. Neither the other courts, nor the FCC have so much as hinted at any exceptions or qualifications to that right, which is grounded in the text and purpose of the TCPA and is consistent with the common law. To the contrary, the FCC has stressed that the very notion of TCPA consumer consent dissolves if that consent is irrevocable. The panel decision in this case is in conflict with those well considered rulings. The panel held that a consumer’s consent to be robocalled on his cell phone is not revocable where the consent occurs in the context of a contract. If left to stand, that holding creates chaos and uncertainty, especially for nationwide companies that use automated systems to contact their customers’ cell phones—in addition to the usual compelling reasons to avoid a circuit split, following the panel’s ruling may put a company in the crosshairs of an FCC enforcement action. 

Rehearing should also be granted because it opens the door to the evisceration of statutory consumer rights. Federal consumer protection statutes cannot be contracted around. Otherwise, in the modern world of lengthy, one-sided, boilerplate contracts, companies will seek to avoid compliance with federal law by dropping waivers into the fine print. Perhaps a company would prefer not to comply with the Federal Debt Collection Practices Act, the Truth in Lending Act, or the usury limits imposed by the Military Lending Act. If all it took for a company to avoid liability for violating those laws was to include a waiver in the fine print, those consumer protections would have little value. Here, by saying that consent to be robodialed cannot be revoked if it is in a contract, the Court creates an incentive for each company using robodialers to insert exactly that language into their contracts.” 

insideARM Perspective 

TCPA attorneys will be watching this case with great interest. Our insideARM Perspective in the June, 2017 article provided comments from two prominent attorneys in the space. Their comments hold true to this development. 

However, this story may be destined for multiple additional chapters. Regardless of the outcome at the Court of Appeals, it seems the issue may wind up at the Supreme Court to resolve the conflict in the circuits. 

insideARM will continue to monitor the case and report on future activity. 

As of July 18, Oregon House Bill 2356 has passed both the House and Senate, and is now awaiting signature by the Governor. The bill establishes requirements under which a debt buyer or debt collector acting on a debt buyer’s behalf may bring legal action to collect a debt, details illegal practices, and specifies licensing requirements for debt buyers.

The full text of the bill can be seen here.

Regarding requirements to bring legal action in the collection of a debt, the bill establishes the following:

(1) A debt buyer that brings legal action to collect or brings legal action to attempt to collect purchased debt, or a debt collector that brings legal action on the debt buyer’s behalf, shall include in an initial pleading that begins the legal action:

(a) The original creditor’s name, written as the original creditor used the name in dealings with the debtor;

(b) The name, address and telephone number of the person that owns the debt and a statement as to whether the person is a debt buyer;

(c) The last four digits of the original creditor’s account number for the debt, if the original creditor’s account number for the debt had four or more digits;

(d) A detailed and itemized statement that shows:

(A) The amount the debtor last paid on the debt, if the debtor made a payment, and the date of the payment;

(B) The amount and date of the debtor’s last payment on the debt before the debtor defaulted or before the debt became charged-off debt, if the debtor made a payment;

(C) The balance due on the debt on the date on which the debt became charged-off debt;

(D) The amount and rate of interest, any fees and any charges that the original creditor imposed, if the debt buyer or debt collector knows the amount, rate, fee or charge;

(E) The amount and rate of interest, any fees and any charges that the debt buyer or any previous owner of the debt imposed, if the debt buyer or debt collector knows the amount, rate, fee or charge;

(F) The attorney fees the debt buyer or debt collector seeks, if the debt buyer or debt collector expects to recover attorney fees; and

(G) Any other fee, cost or charge the debt buyer seeks to recover; and

(e) The date on which the debt buyer purchased the debt.

The bill provides a lengthy list of illegal practices — including the following, fairly detailed, account relating to medical debt:

(q) Collects or attempts to collect any debt that the debt collector knows, or after exercising reasonable diligence would know, arises from medical expenses that qualify for reimbursement under the Oregon Health Plan or under Medicaid, except that:

(A) The debt collector does not engage in an unlawful collection practice if the debt collector can produce an affidavit or certificate from the original creditor that shows that the original creditor complied with Oregon Health Authority rules barring payments for services that Medicaid fee-for-service plans or contracted health care plans cover; and

(B) For purposes of this paragraph, a prepaid managed care health services organization, a coordinated care organization or a public body, as defined in ORS 174.109, or an agent or assignee of the organization or public body, is not a debt collector if the organization or public body seeks to collect a debt that arises under ORS 416.540.

Finally, the bill outlines in extensive detail the requirements for submitting and having a licensing application approved by the Director of the Department of Consumer and Business Services.

According to the summary by the legislature, the bill becomes operative January 1, 2018, and takes effect on 91st day following adjournment sine die. (Editor’s note: “Sine die” is Latin for “without a day”. The term is used to describe an adjournment when the date to reconvene is not specified, such as when Congress intends to leave town for the last time in a year.)

insideARM Perspective

This legislation is yet another example of state activity regulating debt buyers and debt collection of debt buyer accounts.  insideARM has previously reported on some of this activity. See here and here for other examples. 

It is clear that the goal of this bill fits the national narrative regarding collection of accounts by debt buyers.  The mandate – give consumers more information! The buying and selling of consumer debt is confusing. The legislation enacted in Oregon is demanding more transparency for the consumer.  It is likely other states will follow this lead in the future.

SACRAMENTO, Calif. – As of August 1, 2017, the Receivables Management Association
International’s (RMA’s) Receivables Management Certification Program (RMCP) has been expanded to include first-in-the-nation criteria for the purchase of judgments.

“The purchase of pre-judgment receivables is quite different than the purchase of judgments,” said Mark Naiman, RMA Board President. “The nature of the asset changes through the awarding of a judgment which necessitates obtaining data and documents unique to the new asset class. RMA takes great pride in the continuing evolution and refinement of the best practices contained in its national certification program and ultimately aims to strengthen the single compliance footprint available to the financial services industry for the protection of consumers.”

Among the major substantive changes contained in version 5.1:

• Appendix A – Standard # 18 (Purchase & Sale Documentation Requirements) – Makes revisions to incorporate specific requirements for the purchase and sale of judgments. The current standard focuses exclusively on the purchase and sale of pre- judgment receivables.
• Appendix A – Standard # 19 (Representations & Warranties) – Strengthens the existing standard to require that “best efforts” be used to obtain specified representations and warranties.
• Appendix A – Standard # 20 (Due Diligence) & Standard # 21 (Sale Restrictions) – Moves the current “due diligence” requirements that are a part of Standard #21 to its own standard (Standard # 20) to highlight the importance RMA places on due diligence.

The RMCP is designed to provide rigorous uniform industry standards for the purchase, sale, and collection of debt by debt buying companies, collection agencies, collection law firms, receivables brokers, and creditors. The program offers companies the opportunity to enhance business operations by voluntarily adopting consumer protection standards that go above and required by state and federal laws and regulations.

To ensure that RMA certified companies fulfill Certification Program requirements, companies are monitored through limited and full compliance audits performed by independent third party auditors, as well as through a structured self-compliance audit process.

You can access the new version of the RMCP by clicking here.

About Receivables Management Association International

Receivables Management Association International (RMA) is the nonprofit trade association that represents more than 550 companies that purchase or support the purchase of performing and nonperforming receivables on the secondary market. The Receivables Management Certification Program and Code of Ethics set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer. RMA provides its members with extensive networking, educational, and business development opportunities in asset classes that span numerous industries. The association continually sets the standard in the receivables management industry through its highly effective grassroots advocacy, conferences, committees, task forces, publications, webinars, teleconferences, and breaking news alerts. Founded in 1997 as the Debt Buyers Association, RMA is headquartered in Sacramento, California.

CHATTANOOGA, Tenn. — “NACS Campus Prayer Team supports our vision in a spiritual way,” shares Dallas S. Bunton, Sr., CEO and Chairman. “Praying, acknowledging work family that are dealing with sickness, pain, family problems or whatever; that may be shared in a confidential way.”  The company’s prayer team is comprised of a dozen employee servant leaders ranging from front line staff to the executive management team, with the shared goal to serve NACS work family in a positive Christian spirit.

“As a company owner I often thank God there are those that pray for me, for the company to be successful, to provide quality service to our clients and a great place to work for our employees,” states Mr. Bunton. Over the 2016 holiday season the Campus Prayer Team coordinated several ‘Gift and Giving’ events for those in need.  This spring the Campus Prayer Team came together and put on a special Mother’s Day program followed by a Father’s Day celebration, as shown in photos on the left.  Now this month, the Campus Prayer Team coordinated a ‘Back to School Bash’ as shown in photos on right, for the employees children and families, where school supplies and safety resource information was provided along with a barbecue picnic luncheon and several additional fun coordinated activities. “Jesus served, Jesus encouraged His followers to serve and do good.” explains Mr. Bunton. ”This is what sets our work vision apart from other companies. We serve the needs of the consumer, treating them with dignity and respect.” The NACS Campus Prayer team coordinates a monthly open prayer forum held in the Employee Pavilion on campus where staff are welcomed to participate and connect through fellowship.

About NACS

NACS began its Chattanooga-based operations in 1981 with less than 20 employees, specializing in the professional collection of healthcare receivables. Today, NACS along with its affiliate company, Medical Services, Inc. is a full service healthcare receivables management, company; comprised of multiple specialized divisions with a growing professional workforce of over 300 employees. Visit www.NACScom.com and www.MedicalServicesmso.com

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Recently, several Federal Reserve Banks issued a scam alert concerning a scheme that is being promoted in online videos that claim U.S. citizens may make payments using fictitious accounts held at the Federal Reserve Banks.  These fictitious accounts have been referenced as “secret accounts” and/or “Social Security Trust Accounts.” The individuals publishing the videos claim that substantial amounts are held within them for each U.S. citizen. 

The Federal Reserve Bank of New York posted this notice simply dated July, 2017. The Federal Reserve Bank of Atlanta posted this notice, dated July 12, 2017. The Federal Reserve Bank of Cleveland also posted a notice. 

Per the notice on the New York Federal Reserve site: 

“To facilitate the scheme, the individuals publishing the videos have also offered bogus information on how other individuals may use online portals, such as bill-pay websites, to initiate payments from the fictitious accounts using Federal Reserve Bank routing numbers. Any video, text, e-mail, phone call, flyer, or website that describes how to pay bills using a Federal Reserve Bank routing number or using an account at the Federal Reserve Bank is a scam. 

The Federal Reserve Banks provide banking services only to banks and governmental entities; individuals do not have accounts at the Federal Reserve.  If a Federal Reserve Bank receives a request to make a payment on behalf of an individual, the Federal Reserve Bank will decline to make the payment.” 

insideARM Perspective 

Yesterday, insideARM received reports from two separate ARM companies indicating they have already had consumers attempt to pay their delinquent accounts through this process. insideARM recommends a review of your payment processing system and procedures to determine whether you have the ability to “catch” this scam in real time. 

Scams like this have been around forever in one form or another. Yet, it is amazing how many people will watch the online videos and believe that there is a magical account somewhere that can be tapped to pay your bills or make a purchase. 

The New York Federal Reserve site provides this information: To report instances of fraud relating to these schemes, please e-mail RTN.fraud@ny.frb.org.

Last week a federal judge in Indiana refused to dismiss a lawsuit that alleged a debt collector had violated the Fair Credit Reporting Act (FCRA) by obtaining a copy of a consumer’s credit bureau report without a permissible purpose. The case is Pigg v. Fair Collections & Outsourcing of New England, Inc. (Case No. 16-cv-01902, U.S.D.C., Southern District of Indiana.

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

Background

Plaintiff Vivian Pigg had entered into a lease agreement with her landlord, Ashford Keystone Apartments, and later incurred a debt as a result of a default on the lease agreement. The debt was transferred to defendant Fair Collections & Outsourcing of New England (Fair Collections), and Fair Collections attempted to collect the debt from Ms. Pigg. On June 18, 2015, Ms. Pigg reviewed her TransUnion report and noticed that Fair Collections procured her credit report on April 15, 2015. Ms. Pigg claims that Fair Collections never received permission from Ms. Pigg to obtain her credit report. Ms. Pigg also claims that Fair Collections procured her credit report without a permissible purpose. 

The FCRA claim was brought under 15 U.S.C. § 1681b(f). The relevant portion of the statute reads as follows: 

[A]ny consumer reporting agency may furnish a consumer report . . . [t]o a person which it has reason to believe intends to use the information 

(1) in connection with a credit transaction involving the consumer on whom the information is to be furnished and

(2) involving the

(a) extension of credit to or

(b) review or collection of an account of the consumer. 

Fair Collections filed a Motion to Dismiss Count I (the FCRA claim) of plaintiff’s First Amended Complaint.

Fair Collections argues that Ms. Pigg “admits that she defaulted on her rental agreement with her former landlord” and that “[Fair Collections] began attempting to collect from her the unpaid rent on behalf of [her] former landlord.” Fair Collections then argues that “[t]hese admissions demonstrate that [Fair Collections] obtained [Ms. Pigg’s] credit report for the permissible purpose of ‘collection of an account.’” 

The plaintiff argued that in order for the credit agency to furnish a consumer report to a person, it “must be in connection with a credit transaction involving the consumer, and then, either involving extension of credit to that consumer or review or collection of an account of that consumer.” Ms. Pigg claims that Fair Collections ignores the first requirement that the consumer report must be in connection with a credit transaction and focuses solely on the language “collection of an account.” Ms. Pigg argues that a lease agreement is not considered a “credit transaction.” 

The court summarized the two positions as follows: 

“The parties dispute the interpretation of this statute. Fair Collections believes that to have a permissible purpose to retrieve a consumer’s credit report, the information must simply be in collection of a debt, and without the requirement that it be in connection with a credit transaction. Conversely, Ms. Pigg’s interpretation of the statute is that in order to have a permissible purpose, the information must be both in connection with a credit transaction and involving the collection of an account.” 

The Court’s Opinion

The court agreed with the plaintiff. Citing the case of Miller v. Wolpoff & Abramson, LLP, 309 Fed. Appx. 40 (7th Cir. 2009) the court wrote:

“Here, the Court emphasizes that Fair Collections’ only developed argument is that under 15 U.S.C. § 1681b(a)(3)(A), the debt need not be in connection with a credit transaction. The Court, however, agrees with the court in Miller that insofar as 15 U.S.C. § 1681b(a)(3)(A) is concerned, a credit transaction is a necessary prerequisite. Fair Collections did not present any arguments or authority to demonstrate that Ms. Pigg’s debt is in connection with a credit transaction. Its only other argument with respect to whether Ms. Pigg’s lease agreement is a credit transaction is that Ms. Pigg “is being extended a form of credit which will ultimately be collected from her,” but it cites not authority to support this proposition. 

The court is not making a finding as a matter of law that Ms. Pigg’s lease agreement with her former landlord is not considered a credit transaction. It also does not foreclose the possibility that Fair Collections had another permissible purpose under the FCRA to retrieve Ms. Pigg’s credit report. Rather, it finds that based upon Fair Collections’ narrow argument, it has failed to present any grounds to dismiss Ms. Pigg’s FCRA claim.

For the reasons detailed herein, Fair Collections’ Motion to Dismiss Count I of Plaintiff’s First Amended Complaint is DENIED.” 

insideARM Perspective

This is an interesting case discussing the permissible reasons to obtain a consumer’s credit bureau report. To be clear, this Order is NOT a final adjudication. The court was very clear that it did not, as a matter of law, determine that the lease agreement with her former landlord is not considered a credit transaction. The Order is simply ruling on a defendant’s motion to dismiss the case. The issues will ultimately be adjudicated through a different pre-trial motion or trial on the merits.

However, the lesson or “take-away” from this case should be a review of the permissible reasons for obtaining a consumer’s credit bureau report and maintenance of policies and procedures to ensure compliance with those reasons. To be safe, a conservative position would be to NOT obtain a credit bureau report unless both prongs of the above referenced statute are clearly met.

Pennsylvania Attorney General Josh Shapiro announced last week that he is creating a Consumer Financial Protection Unit to protect Pennsylvania consumers from financial scams. He also announced the appointment of Nicholas Smyth, who helped create the federal Consumer Financial Protection Bureau (CFPB), as Assistant Director of the Office of Attorney General’s Bureau of Consumer Protection with a dedicated focus on financial initiatives.

According to the announcment:

The effort will focus on lenders that prey on seniors, families with students, and military service members, including for-profit colleges and mortgage and student loan servicers.

The focus of consumer financial protection shows Attorney General Shapiro’s commitment to protect Pennsylvanians from scams. In recent weeks, Attorney General Shapiro filed a lawsuit with other Attorneys General against Education Secretary Betsy DeVos, after DeVos announced plans to roll back a critical student lending rule, and he also took action with colleague Attorneys General, urging the Federal Communications Commission to allow telephone companies to block illegal robocalls.

Smyth brings expertise in auto finance, student lending, debt collection and issues impacting military families. At the CFPB, Smyth led the investigation of the subprime auto lender Drivetime, which resulted in an $8 million settlement in 2014. He worked on CFPB v. ITT Educational Services, Inc., the CFPB’s first enforcement action against a for-profit college. Smyth also worked on an investigation of U.S. Bank’s MILES Program, a subprime auto finance program for military service members, which led to $6.5 million in consent orders.

Before joining the CFPB as its fourth employee, Smyth was part of a team at the U.S. Treasury Department that drafted and revised the CFPB’s enabling act, the Consumer Financial Protection Act of 2010 (Title X of the Dodd-Frank Act).

insideARM Perspective

This action comes amidst a serious push by Republicans in Congress to eliminate — or at a minimum restructure the CFPB, subject it to Congressional budget approval, and fire its Director, Richard Cordray.

Other states have also taken steps to double down on consumer finance laws, which has caused some to be accused of overreach. This article published in March accuses the Minnesota Department of Commerce. The article quotes a letter sent to Governor Mark Dayton by three Republican members of the Minnesota House of Representatives,

“[Court opinions and other legal filings published in the last several months] paint a disturbing picture of dubious motivation and disregard for the law, in which the good work of public servants is overshadowed by the inappropriate behavior of a few high-level officials. These conclusions come not just from adverse parties, but from state and federal judges of high regard. “

Two particular cases are mentioned as examples. Neither are debt collection related, but both are similar to arguments that have been made against the CFPB. One is a so-called consumer protection case pursued in the absence of supporting evidence; the other concerns the state’s apparent ability to collect any or as much personal data as it deems necessary to pursue an investigation.

In February, Maria Vullo, New York’s Superintendent of Financial Services, sent this letter to state legislators that highlighted conflict between the Governor and the Attorney General over a proposal related to the structure of the state’s financial services regulatory bodies. The Attorney General had sent a letter describing a proposal by the Governor to be,

“Wholly unnecessary overreach by the Executive that would alter the enforcement arrangement the Legislature established when creating DFS, resulting in unnecessary and harmful overlapping state enforcement authority, which could jeopardize ongoing and future investigations.”

Vullo says,

“The Governor’s Proposals only serve to protect New Yorkers from misconduct committed by banks and insurers, student loan servicers, and bad actors. The Proposals do not create overlapping enforcement jurisdiction. The Proposals do not alter the balance of authority between DFS and the Attorney General. And the Proposals do not require additional or duplicative funding for DFS. The Attorney General’s opposition to the Proposals are based on nothing other than petty concerns over turf.”

While quite a few states have had their own consumer protection laws for years, it seems that the current uncertainty at the federal level will only serve to fuel activity among states to revisit, strengthen, or augment existing laws or enforcement structures.  

RICHARDSON, Texas – RGS Financial, Inc., a leading BPO and ARM services provider, is pleased to announce the recent addition of Rob Norwood as Vice President of Sales. Mr. Norwood, a 24-year veteran of the credit and collections industry, has led national sales teams in a career that has helped fuel the growth of several companies engaged in collections and revenue cycle management. He has demonstrated an unwavering commitment to client satisfaction and is knowledgeable in multiple collection verticals.

“I am extremely excited about the opportunity to help RGS garner new business relationships as well as help support our current clients”, said Mr. Norwood. “RGS has a great reputation and commitment to service to their clients and the engagement of the people their clients serve. They have a history of valuing their employees and are on the cutting edge with regard to data security, privacy regulations, and compliance. “

Mike Ryalls, RGS CSO, said “We are thrilled to have Rob join the RGS team.  He has a proven track record of successful sales and has been responsible for the extensive growth of companies in the financial services, student loan, and health care segments. We are very excited to combine his business acumen and client-centric sales approach with our great team.” 

About RGS Financial

RGS Financial is a nationally recognized BPO and accounts receivable management company. RGS boasts proven capabilities and strategies for exceeding the needs of both clients and consumers.

RGS is built on a solid foundation of these core business values:

• Professional integrity
• Client and customer respect
• Attentive service
• Focused responsiveness
• Dedication to achieving solutions
• Business accountability

The RGS founding partners set out from the beginning to establish a company based on solid business values. These values are who RGS is and reflect what RGS provides both its clients and the consumers it serves. RGS leaders have leveraged their diverse experience to build solutions that exceed today’s typical business objectives. In addition, the expertise of RGS employees means that each customer is treated with the utmost respect. 

Rob Norwood can be reached at rob.norwood@rgsfinancial.com or phone 803.448.2799

Today the Consumer Financial Protection Bureau (CFPB) published guidance on new timelines for the Notice of Proposed Rulemaking (NPRM) for debt collection. 

The guidance appeared in two separate locations:

Kelly Cochran, Assistant Director for Regulations, published a post in the CFPB blog titled Spring 2017 rulemaking agenda. Read the blog here. 

The section on debt collection reads as follows: 

“We are also engaged in rulemaking activities regarding the debt collection market, which continues to be the single largest source of complaints to the federal government of any industry. We are concerned that because consumers cannot choose their debt collectors or “vote with their feet,” they have less ability to protect themselves from harmful practices.

In January 2017, we published the results of a survey of consumers about their experiences with debt collection. We have also received encouragement from industry to engage in rulemaking to make the standards clear and address issues of concern under the Fair Debt Collection Practices Act (FDCPA), such as the application of the FDCPA to modern communication technologies under the 40-year-old statute. We released an outline of proposals under consideration in July 2016 concerning practices by companies that are “debt collectors” under the FDCPA, in advance of convening a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. Building on feedback received through the SBREFA panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures. We intend to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.”

Emphasis added by insideARM. 

Also, published today on the website of the Office of Information and Regulatory Affairs, Office of Management and Budget was a more definitive date for the NPRM. The date listed on that site was 9/00/2017. See that notice here. 

insideARM last wrote about the proposed rulemaking on June 8, 2017, when CFPB Director Richard Cordray spoke at the summer meeting of the CFPB’s Consumer Advisory Board. At that time he announced that the Bureau will be separating the “right consumer, right amount” aspect of its debt collection rulemaking in order to ensure that complexities are properly addressed by intertwining rules for both creditors and their clients. 

For additional background read insideARM’s detailed coverage of the CFPB’s debt collection rulemaking:

CFPB Outlines Debt Collection Rulemaking Proposals

insideARM Perspective on CFPB Outline of Proposed Debt Collection Rules – Communication Part 1 (Contact frequency and voicemail messages)

insideARM Perspective on CFPB Outline of Proposed Debt Collection Rules – Communication Part 2 (General time, place, and manner restrictions; decedent debt; and consumer consent)

insideARM Perspective on CFPB Outline of Proposed Debt Collection Rules – Information Integrity (Data integrity, data transfer, substantiation, validation notice)

insideARM Perspective on CFPB Outline of Proposed Debt Collection Rules – Litigation and Time-Barred Disclosures

What Collectors Really Need to Know About the CFPB’s Proposed Rules – a podcast by Attorney John Rossman

15 Industry Experts React to CFPB Outline of Proposed Debt Collection Rules

Webinar: CFPB Rulemaking and Overview (August 16, repeated on August 18) – free for Compliance Professionals Forum members; $59 for others

President of FMA Alliance Shares Experience at Debt Collection SBREFA Hearing

Creditor Rights Law Firms Well-Represented on CFPB’s Small Business Review Panel

Small Business Representative Shares Her Thoughts About Yesterday’s Debt Collection SBREFA Hearing

insideARM Perspective

While the two notices deliver similar messages, industry insiders believe that the September timeframe will be difficult to meet. The CFPB has a heavy agenda right now. Most suspect that the “later in 2017” description in the Spring 2017 rulemaking agenda the is most accurate. 

insideARM will continue to monitor and report on this critical item.