PHOENIX, Ariz. — BillingTree®, the leading payment technology and merchant services provider, today announced the appointment of Bryan Schreiber as Chief Financial Officer. Schreiber will oversee the company’s expansion plans to spearhead growth and drive revenue in new and existing focus markets, including ARM, Healthcare, Financial Services, Property Management and more.

Prior to joining BillingTree, Schreiber held financial leadership positions at FinTech providers including FundTech and BankServ and was most recently head of Finance, US Payments, Treasury & Enterprise Solutions at D+H. Schreiber has worked in the finance and accounting industry for more than 25 years and is a Certified Public Accountant (CPA) in the state of Arizona.

Schreiber’s appointment comes during a period of major expansion for BillingTree which has grown its headcount by 30% since its recapitalization by private equity firm Parthenon during Q4 2016. The company continues with plans to increase its workforce to support its rapid growth and has also announced two new senior appointments to its leadership team:

• Kathy Baker joins BillingTree as Director of Risk and Underwriting and brings over 20 years of experience in the merchant acquiring industry. Baker was the former Director of Enterprise Business Compliance at TSYS Acquiring Solutions, where she was responsible for developing the company’s Risk and Security strategy and will now lead the risk management and underwriting teams at BillingTree.
• Steve Recchia joins as Director of Sales and leads the BillingTree Sales and Account Management Team in alignment with the company’s business development strategy. Recchia is tasked to help accelerate growth in key markets including accounts receivable management, financial services, healthcare, property management, and student loan industries.

“The newest members to the BillingTree team reflect both the success the company is experiencing and our commitment to supporting the ongoing needs of our current and future customers” said Edgars Sturans, CEO and President at BillingTree. “Bryan, Kathy and Steve bring an invaluable set of skills to the team and will help broaden and strengthen our position as the leading payment technology provider in the markets we serve. It is an exciting time to be part of BillingTree and all three will help continue the success we’ve had in the fast-changing payments industry.”

About BillingTree

BillingTree® is the leading provider of integrated payments solutions to the healthcare, ARM and financial services industry verticals. Through its technology-enabled suite of products and services, BillingTree enables organizations to increase efficiency and decrease the costs of payment processing while adhering to compliance regulations. Leveraging more than a decade of market experience, BillingTree is dedicated to growing payments with technology through an integrated omni-channel offering, suite of proprietary products and value-added services, and a Company-wide focus on delivering extraordinary customer service.

Yesterday afternoon the Department of Education (ED) issued a press release that has garnered little national attention, yet may be very significant for the ARM industry. 

Per the press release: 

“Today, U.S. Secretary of Education Betsy DeVos announced her intent to appoint Dr. A. Wayne Johnson as Chief Operating Officer of Federal Student Aid (FSA). Dr. Johnson is a highly regarded leader with more than 30 years of experience in the financial services industry and holds a Ph.D. in higher education leadership. 

“Wayne is the right person to modernize FSA for the 21st Century,” said Secretary DeVos. “He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers.” 

The term for this position is five years. It was left vacant when Mr. James Runcie, the former chief operating officer of the Education Department’s Office of Federal Student Aid, resigned in May. 

A May 24, 2017 article in BuzzFeed News noted: 

“I cannot in good conscience continue to be accountable as Chief Operating Officer given the risk associated with the current environment at the [Education] Department,” the chief operating officer of federal student aid, James Runcie, wrote in his resignation memo, which was obtained by BuzzFeed News.” 

Dr. Johnson is uniquely qualified for this position. Johnson has previously held executive positions at VISA USA, Providian Financial, and First Data Corporation. Most recently, Johnson was also Founder, Chairman, and former CEO at First Performance Corporation and CEO of Reunion Financial Services Corporation / Reunion Student Loan Finance Corporation. In those prior positions Johnson has been involved in high volume, large scale operations that required a focus on technology, compliance, and customer service. 

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FSA needs expertise in all of those areas. The portfolio is huge. The federal student loan portfolio now approaches $1.4 trillion. Technology issues are rampant. Student borrowers constantly complain about fragmented information and multiple servicers of different loans for the same consumer that do not communicate. Customer service for these students needs to be improved – and improved dramatically. Compliance with regulations governing the industry should be a core part of the DNA of FSA.

However, Johnson brings additional skills and knowledge to the table. As noted in an article published yesterday in the Wall Street Journal:

“Dr. Johnson, who went back to earn his Ph.D. in educational leadership in his 60s, appears to have done his homework for the job. He wrote his dissertation on the weaknesses of the decision-making process students go through before they borrow tens of thousands of dollars to pay for college.

“There is more federal protection in place when you buy a car than there is when you sign up to take on student debt. It comes down to basic consumer protection.”

insideARM Perspective 

Dr. Johnson will be stepping into a position with significant challenges. FSA is under fire from multiple fronts. Among the critical issues that Johnson will need to deal with in the coming months are:

• Allegations that FSA has been mismanaged in the past. See this May 25, NPR story.
• A prior ED proposal to move to a single source model for servicing the massive ED portfolio. See this May 22, 2017 insideARM article on the issue.
• The ED PCA RFP that has been mired in protests and litigation. See here for a link to an insideARM.com page that provides a history of our ED RFP related articles. 

Hopefully, Johnson’s diverse business background and understanding of large scale operations, student loans and customer service will provide the expertise needed to resolve these and many more issues at FSA.

Last week the state of Maine adopted a new debt collection law, HP 836 (LD1199), titled “An Act To Promote Fiscal Responsibility in the Purchasing of Debt, which add new requirements for debt buyers. 

The full text of the bill is available here.

Maine defines a “debt buyer” as:

“A person that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether the person collects the debt or hires a 3rd party, which may include an attorney-at-law, in order to collect the debt. “Debt buyer” does not include a supervised financial organization as defined in Title 9-A, section 1-301, subsection 38-A or a person that acquires charged-off consumer debt incidental to the purchase of a portfolio predominantly consisting of consumer debt that has not been charged off. A debt buyer is considered a debt collector for all purposes under this chapter.”

Under the law, a debt buyer may not collect or attempt to collect a debt unless the debt buyer possesses the following:

1. The name of the owner of the debt;
2. The original creditor’s name at the time of the charge-off;
3. The original creditor’s account number used to identify the debt at the time of the charge-off, if the original creditor used an account number to identify the debt at the time of charge-off;
4. The principal amount due at charge-off;
5. An itemization of interest and fees, if any, incurred after charge-off claimed to be owed and whether those were imposed by the original creditor or any subsequent owners of the debt;
6. If the debt is not from a revolving credit account, the date that the debt was incurred or the date of the last charge billed to the consumer’s account for goods or services received. In the case of debt from a revolving credit account, the debt buyer must possess the date of the last extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money;
7. The date and amount of the last payment, if applicable;
8. The names of all persons or entities that owned the debt after the time of the charge-off, if applicable, and the date of each sale or transfer;
9. Documentation establishing that the debt buyer is the owner of the specific debt at issue. If the debt was assigned more than once, the debt buyer must possess each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer; and
10. A copy of the contract, application or other documents evidencing the consumer’s liability for the debt. If a signed writing evidencing the original debt does not exist, the debt buyer must possess a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money.

The law also states that a debt buyer may not sell or otherwise transfer ownership of a debt without the information and documentation listed above, and may not sell or transfer ownership of or information relating to a resolved debt.

In order to file a complaint against a consumer, a debt buyer must allege all of the following in their complaint: 

1. The information described above, including that the debt buyer possesses the documentation described above;
2. The basis for any interest and fees described above;
3. The basis for the request for attorney’s fees, if applicable;
4. That the debt buyer is the current owner of the debt; and
5. That the cause of action is filed within the applicable statute of limitations period.

And in a collection action initiated by a debt buyer, the debt buyer must attach all of the following to the complaint:

1. A copy of the contract, application or other document evidencing the consumer’s agreement to the debt. If a signed writing evidencing the original debt does not exist, the debt buyer shall attach a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money or the last payment or balance transfer; and
2. A copy of the bill of sale or other writing establishing that the debt buyer is the owner of the debt. If the debt was assigned more than once, the debt buyer shall attach each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer.

Finally, the law outlines penalties for non-compliance, and the fact that bona fide error is an acceptable defense, assuming the debt buyer can show a preponderance of evidence that the violation was not intentional, and occurred in spite of the maintenance of procedures reasonably adapted to avoid any such error.

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RMA International (formerly Debt Buyers Association) worked with the bill’s sponsor and issued this statement from Mark Naiman, RMA Board President: “RMA is pleased with the consumer protections adopted in Rep. Sanborn’s bill as they are highly consistent with the rigorous national-leading standards contained in RMA’s Certification Program. As a result, RMA does not expect this new law to result in any major compliance concerns for RMA certified companies but plans to monitor the implementation of the new requirements to identify any unintended consequences that might occur.”

 

BROOKFIELD, Wisc. — Surefire Data Solutions, LLC, located at 250 N Sunnyslope Rd Suite 220, Brookfield, WI 53005-4809, has become an affiliate member of ACA International, the Association of Credit and Collection Professionals. 

As an affiliate member, Surefire Data Solutions, LLC demonstrates its commitment to supplying quality goods and services to the credit and collection industry, as well as pledging to abide by the association’s code of conduct. 

About Surefire Data Solutions

Founded in 2010, Surefire Data Solutions is an innovative technology company that provides performance and compliance focused solutions that enable Accounts Receivable Management (ARM) Professionals to reduce the complexity, cost and risk associated with doing business.  Over the past 7 years, the Surefire team has developed applications for process improvement through automation, network management, compliance & tracking and data analysis. For more on Surefire Data Solutions, LLC, visit www.surefiredata.com. 

About ACA International

Founded in 1939, ACA brings together third-party collection agencies, law firms, asset buying companies, creditors, and vendor affiliate, representing more than 230,000 industry employees. ACA establishes ethical standard, produces a wide variety of products, services, and publications, and articulates the value of the credit and collection industry to businesses, policymakers, and consumers. For more information about ACA International, visit www.acainternational.org.

 

ST. GEORGE, Utah, — TCN, Inc., a leading provider of cloud-based call center technology for enterprises, contact centers, BPOs and collection agencies worldwide, announced today the unveiling of VocalDirect, a new direct-to-voicemail technology feature for its flagship cloud-based contact center platform, TCN Platform 3.0. TCN’s new streamlined ringless voicemail technology enables businesses and contact centers to instantly send a voicemail directly to the voicemail boxes of thousands of customers all at once. Fully integrated with TCN Platform 3.0’s business intelligence (BI) suite, VocalDirect helps businesses easily create effective omni-channel (inbound, outbound and SMS) communication campaigns.

According to the 2016 Global Mobile Consumer Survey by Deloitte, mobile phones have become an essential part of people’s lives. The report states that more than 40 percent of consumers check their phones within five minutes of waking up, and over 30 percent check their devices five minutes before going to sleep and half doing so in the middle of the night. All told, consumers look at their phones approximately 47 times a day. To better assimilate with the 24/7 “on-the-go” mentality, VocalDirect provides businesses and contact center professionals with the ability to connect and engage with consumers in a non-invasive manner, allowing them to listen, respond and save messages in their inboxes at their own convenience. 

“VocalDirect is a safe, reliable and effective feature that streamlines and enhances communication efforts in one direct and ringless approach,” said Terrel Bird, CEO and co-founder of TCN. “With the addition of VocalDirect, TCN further strengthens our commitment to providing first-rate cloud-based call center technology to businesses of any size at an affordable price.” 

With its pay-for-use pricing structure, TCN’s contact center technology platform is suitable and scalable for businesses of all sizes.                  

Key benefits of VocalDirect include:

• Usable On All Carrier Networks — Delivered seamlessly and successfully, straight from the source
• Business Intelligence (BI) — Offers unique insights and analytics with the ability to view and evaluate the impact and progress of a campaign
• Delivery Guaranteed — Required to pay only for the successfully connected and delivered voicemails
• Time-Efficient — Instantly send thousands of voicemail messages to customers around the globe at one time, with no send limits.
• Omni Channel — Integrated with call, text and email campaigns to offer a comprehensive approach to inbound and outbound communication efforts
• List Building — Scrub cell phone data to repurpose and build future campaign lists 

VocalDirect is built on top of TCN’s advanced cloud-based contact center suite, Platform 3.0, that eliminates the need for complicated hardware. The platform improves connectivity between agents and customers and increases efficiency without the need for additional staff. It provides industry-leading features such as predictive dialer, IVR, call recording and business intelligence. Its “always-on” cloud-based delivery model gives end-users the ability to quickly and easily scale and adjust to evolving business needs. 

To learn more about TCN’s VocalDirect, click here. 

About TCN

TCN is a leading provider of cloud-based call center technology for enterprises, contact centers, BPOs, and collection agencies worldwide. Founded in 1999, TCN combines a deep understanding of the needs of call center users with a highly affordable delivery model, ensuring immediate access to robust call center technology, such as predictive dialer, IVR, call recording, and business analytics required to optimize operations and adhere to TCPA regulations. Its “always-on” cloud-based delivery model provides customers with immediate access to the latest version of the TCN solution, as well as the ability to quickly and easily scale and adjust to evolving business needs. TCN serves various Fortune 500 companies and enterprises in multiple industries including newspaper, collection, education, healthcare, automotive, political, customer service, and marketing. For more information, visit http://www.tcnp3.com or follow on Twitter @tcn.

ROCHESTER, N.Y. – Employees of Continental Service Group, Inc., d/b/a ConServe, recently spent the day at the Nathaniel Rochester Community School #3, one of Rochester’s City Schools, presenting the concepts of financial literacy, entrepreneurialism and workforce readiness to students in grades one through six. Delivered through grade level-appropriate lesson plans created by Junior Achievement (JA), the ConServe team embraced the opportunity to educate our community’s youth with information that will empower them to succeed in the future.

“The ConServe team is committed every day to providing financial solutions and education to adults in need, and they truly understand the importance of fostering these same positive financial habits in youth” said Patricia Leva, President of Junior Achievement of Central Upstate New York. She continues “JA is proud to partner with ConServe employees to bring their expertise and inspiration to students in the Rochester City School District, helping break the cycle of poverty and improve the quality of lives.  We are equally delighted to be a recipient of the Jeans for Charity program which will allow JA to bring this message of hope and empowerment to even more students in our community! “     

 “ConServe endorses the concept of people taking control of their financial destiny – we believe in Fostering Financial Freedom®.  As our Jeans for Charity recipient for June, we are helping to instill these concepts and skills in the young adults of our communities while they are still in school.  In this way, we are investing in their future and providing them with the tools they will need to achieve their long-term goals” adds Mark Davitt, President of ConServe.

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. 

About ConServe’s Jeans For Charity program

ConServe’s Jeans For Charity initiative began in 2008 when the team’s employees had an idea to launch a program that would provide a way for the company’s mission of “improving the human condition” to coordinate with the organization’s commitment of giving back to their community.  ConServe employees are given the opportunity to participate in monthly charitable donations, benefitting a wide-range of recipients, in exchange for having the option of dressing down and wearing jeans to work for the entire month. The funds raised by the employees’ generosity are supplemented by the organization’s Matching Gift Program – symbolizing ConServe’s commitment to good corporate citizenship. This ongoing initiative, which has inspired countless replications throughout the region, is just one of the ways in which ConServe supports varied and diverse community agencies. To date the program has donated over $650 thousand to local community organizations.

Visit us at www.conserve-arm.com

About Junior Achievement of Central Upstate New York  (JA) 

Junior Achievement is a global non-profit organization that prepares and inspires students to succeed in a global economy by offering in-school and after-school programs in financial literacy, workforce readiness and entrepreneurship.

JA programs start in Kindergarten and are available for all grade levels through high school. Each lesson contains hands-on activities that align with New York State learning standards while encouraging innovation, creativity and critical thinking. JA programs are independently evaluated and are taught by a community volunteer who brings real life examples of success into the classroom and makes everyday lessons in math, social studies and English/language arts relevant to the real world.

The result is a unique learning opportunity for our kids and a future generation of engaged consumers, qualified employees and leaders who will drive the economic growth of our community. 

Visit them online www. rochesterny.ja.org

A $200 debt turned into a $500 jury verdict against a debt collector for violating the Fair Debt Collection Practices Act (FDCPA). Then that $500 jury verdict morphed into a request for over $73,000 in attorney’s fees for the prevailing party. Finally, that request translated into an award of $36,000. 

The case is Heling v. Creditors Collection Service Inc. (Case No. 5-CV-1274, U.S.D.C., Eastern District of Wisconsin). 

Background 

The plaintiff, Lori Heling, filed her complaint in this case on October 26, 2015. She alleged that the defendant, Creditors Collection Service Inc. (CREDITORS), violated the terms of the FDCPA, 15 U.S.C. § 1692, et seq.  

In her complaint Heling alleged that in April of 2015, CREDITORS sued her in Sheboygan County Circuit Court for an unpaid debt. Ms. Heling also alleged that she never received actual service of summons in that case, so CREDITORS served her by publication and, ultimately, the Circuit Court entered default judgment against her in the amount of $390.09, which included a $50.00 attorney fee, a $44.46 service fee, and a $94.50 filing fee. CREDITORS then attempted to collect on that judgment by garnishing Ms. Heling’s wages. 

At one point, CREDITORS sent a Garnishment Notice to Ms. Heling’s employers; that notice listed $396.14 as the outstanding judgment, $22.00 in post-judgment interest, and $122.50 as “[e]stimated costs of this earnings garnishment.” 

This notice prompted Ms. Heling to contact CREDITORS and its attorneys. During a phone call with CREDITORS, Ms. Heling was informed that she owed $538.94, which was allegedly more than she actually owed.  At that point, Ms. Heling informed CREDITORS that she was prepared to pay the judgment against her but would like to have the judgment against her vacated. CREDITORS informed Ms. Heling “that it could not have the judgment vacated.” Ms. Heling claims that, in taking these actions, CREDITORS violated the FDCPA by misrepresenting the amount, character, and status of the debt she owed and incorrectly stating that CREDITORS could not have the judgment vacated.

In December of 2015 CREDITORS filed a motion to dismiss the case. On February 2, 2016, the court denied that motion to dismiss. 

Several other motions were filed and orders entered in response thereto, including a motion for summary judgment that was denied by the court. The case proceeded to trial. 

In October 2016, after a two day trial, a jury awarded plaintiff $500 in damages. CREDITORS filed post-trial motions that were denied by the court. 

On February 6, 2017, the attorney for the plaintiff filed a Petition for Attorney’s Fees pursuant to the FDCPA’s fee-shifting provision.  

On June 12, 2017, the court filed an order awarding Attorney Fees. It is the details of the “ask” and the “award” that are interesting. 

The plaintiff’s motion for attorney’s fees 

Plaintiff’s attorney sought over $77,000 in attorney’s fees and costs for their work in this case. Defendant argued that she is entitled to no more than $1,500. 

Per the plaintiff’s motion:

“Plaintiff anticipates that Defendant will suggest that this was a simple FDCPA case that did not warrant the time and effort required to prosecute this matter to its ultimate conclusion. But the assertion that this was a simple FDCPA case is not a reasonable argument that can be posited given the considerable procedural history of this matter – a history driven almost exclusively by Defendant. 

In response to Plaintiff’s complaint, Defendant filed a motion to dismiss pursuant to Rule 12(b)(6), based on the Rooker-Feldman doctrine, and to dismiss pursuant to Rule 12(b)(6) for failure to state a claim. Defendant’s motion was denied in its entirety. Defendant subsequently filed its answer to Plaintiff’s complaint and asserted three (3) separate affirmative defenses, though it proceeded without pursuing any of the three (3) defenses at trial. 

In addition to the filing of its motion to dismiss, Defendant subsequently filed a motion for summary judgment, which resulted in the taking of four (4) depositions, three (3) witnesses for the Defendant and the deposition of the Plaintiff. Ultimately, Defendant’s motion for summary judgment was denied and this case proceeded to trial before a jury.  At the conclusion of the trial, the jury entered a verdict in favor of Plaintiff and against Defendant and awarded Plaintiff statutory damages. 

In response, Defendant once again persisted in its attempts to have the current matter decided in its favor with the filing of post-trial motions for judgment in its favor or for a new trial. As with its motions to dismiss and for summary judgment, Defendant’s post-trial motions were denied in their entirety and on January 23, 2017, this Court entered judgment in favor of Plaintiff.” 

In the motion, plaintiff’s attorneys also outlined numerous attempts to settle the case. But claimed that CREDITORS never responded to any settlement offers. 

The defendant’s argument against an award of attorney’s fees 

CREDITORS filed a Brief Opposing an award of Attorney’s Fees.  They objected to the plaintiff’s request for nearly $74,000 in fees upon the basis that plaintiff was not “successful” in this action, i.e. though she “prevailed” by obtaining a statutory damage award for one-half ($500) of the nominal award allowed under the “additional” or statutory damages provision of the FDCPA. They argued that plaintiff did not succeed in obtaining an award that justifies an award of attorney fees. Finally, they argued that any such award as that sought by the plaintiff is excessive, unreasonable and unfair. 

They also noted in their brief that plaintiff was seeking attorneys’ fees in the amount of $73,429.50 from an agency that had at the time of trial three employees, including its owner. 

The Court’s Decision  

The court disagreed with defendant’s policy arguments about whether the plaintiff was entitled to an award of attorney’s fee. The court held that plaintiff was entitled to an award of attorney’s fees. 

The court then conducted the actual fee analysis using the “lodestar method.” The “lodestar” analysis involves setting a reasonable hourly rate and the number of hours which should have reasonably been expended to litigate the claims at issue. Those figures are multiplied to achieve the lodestar, which may then be adjusted for various reasons. 

HourlyrRate 

The Court first determined that plaintiff carried the burden to show appropriate market rates for her counsel’s time, and awarded her fees based on the hourly rates she proposed. 

Reasonableness of time spent 

The court then looked at the time spent on the case. The court wrote:

“Plaintiff’s initial demand is for $73,429.50 in fees for 203.8 hours of work.  The Court concludes that many of these hours were unreasonably expended in what can only be described as a mine-run FDCPA case. The complaint is a mere forty-five paragraphs.  Though a motion to dismiss was filed, the Rooker-Feldman issue it raised was not novel or particularly complex; the Court disposed of it in a ten-page order.

Given the limited claims that survived the motion, discovery was simple and short, with only a handful of depositions taken. Summary judgment was also relatively brief, and the Court addressed it in just seventeen pages. Trial itself took less than two full days, with five witnesses and less than thirty exhibits presented across barely six hours. 

The hours Plaintiff’s attorneys expended addressing each of these tasks were excessive. Plaintiff’s attorneys are experienced consumer rights litigators and are receiving an hourly rate commensurate with that experience. By the same token, they cannot charge their client, or Defendant by way of the instant motion, at the rate of a novice in addressing issues they have likely seen on numerous prior occasions. 

In the end, excessiveness pervades Plaintiff’s fee bill. The Court declines to waste its time by addressing this problem with respect to each individual line item of Plaintiff’s seventeen-page bill. Rather, in light of the nature and history of this case, and the experience of Plaintiff’s attorneys, the Court believes that no more than 120 hours could have been reasonably expended in litigating this matter.” 

Lodestar adjustment 

Finally, the court discussed a “lodestar” adjustment. The court made a further adjustment: 

“Overall, Plaintiff was partially successful in vindicating the claims and damages her lawsuit entailed. The Court concludes that an appropriate, across-the-board reduction for Plaintiff’s partial success is twenty percent, or $8,485.20.” 

The court closed the order with the following statement: 

“If a minor violation of the FDCPA necessitates discovery and a jury trial to resolve, it would offend Congress’ intent in passing the FDCPA to fail to reasonably compensate plaintiff’s counsel for the time and effort needed to obtain redress for the consumer. Plaintiff’s motion for attorney’s fees will be granted in the amount of $36,190.80.” 

insideARM Perspective 

This case defines the phrases “Monday Morning Quarterbacking,” and “Hindsight is 20/20.” An account with an initial balance of approximately $200 turns into litigation that lasts over 20 months! It is hard to not look back and suggest all parties would have been better off settling the case early. While plaintiff did receive an award of attorney’s fees, the final award was less than 50% of what was requested. Is there a “winner” in this case? 

This case is a warning to all ARM firms about the risks of trial and the FDCPA fee-shifting provisions. This result has to have a heavy impact on a 3-person company.

With the RFP “Do-Over” in process one might think the ED RFP litigation would be on hold.  That would be an incorrect assumption. Attorneys for ED and the various firms involved in the RFP litigation are still generating billable hours and pumping out enough pleadings to kill a small forest. The most significant activity has occurred in the past 7 days.  

First – the quick background

insideARM last wrote about the Department of Education (ED) RFP on June 1, 2017. In that article we reported on a significant order issued by the judge presiding over the litigation surrounding the RFP and subsequent protests. As noted in that article, Chief Judge of the United States Court of Federal Claims, Susan G. Braden, issued an order extending indefinitely her Preliminary Injunction prohibiting ED from placing any accounts to any ED Private Collection Agency (PCA) “until the viability of the debt collection contracts at issue is resolved.” 

Meanwhile, as also noted in that article, the ED RFP “Do-Over” is in progress.  Tomorrow, June 16, 2017, is the due date for the submission of revised proposals (unless ED extends the deadline, as they have in the past). Assuming no extension, ED will be evaluating past performance and management approach, selecting the most advantageous proposals, making responsibility determinations and addressing other pre-award activities through August 24, 2017. ED says it will make awards on August 25, 2017. 

Now, the latest

 

On June 9, 2017 Alltran Education, Inc. (Alltran) filed two separate pleadings. 

The first was a Notice of Appeal of Judge Braden’s Preliminary Injunction. Specifically, Alltran is appealing that aspect of the injunction that prohibits ED from allowing Alltran to perform under its award-term extension (“ATE”) contract (i.e., Task Order No. ED-FSA-17-O-0007 under Contract No. GS-23F-0291K). insideARM wrote about that award on May 3, 2017.  

The second pleading was a Motion to Stay the Preliminary Injunction (as to Alltran).  Specifically, Alltran requests that the Court stay the portion of the injunction currently prohibiting ED from “transferring work” to Alltran’s award-term extension (“ATE”) contract (i.e., Task Order No. ED-FSA-17-O-0007 under Contract No. GS-23F-0291K).

The most recent activity occurred yesterday, June 14, 2017. The court issued a new order denying ED’s earlier motions to dismiss the lawsuits previously filed by Continental Service Group, Inc. (ConServe) and Pioneer Credit Recovery, Inc. (Pioneer). A copy of this latest order can be found here. 

ED had asked the court to dismiss these lawsuits as “Moot” since ED was proceeding with their RFP “Do-Over”. Though she viewed ConServe and Pioneer to be in different situations, Judge Braden disagreed with ED. 

As to ConServe, Judge Braden wrote: 

“The Government’s May 19, 2017 Notice Of Corrective Action, however, did not “completely and irrevocably eradicate[] the effects of the [] violation[s]” alleged in the March 28, 2017 Complaint. At present, Continental has no contract under which it can receive new debt collection accounts. Consequently, Continental is not able to compete for new accounts, until the corrective action is complete and the ED awards new contracts under the Solicitation.” 

As to Pioneer, Judge Braden wrote:

“Pioneer appears to be in a different position, because, on April 28, 2017, Pioneer was offered an award term extension task order under a prior contract. See Coast Professional, Inc. v. United States, No. 15-2017, (Editor’s Note: This was the same ATE that was given to Alltran and referenced above.) Nevertheless, the ED’s corrective action plan does not moot Pioneer’s April 10, 2017 Complaint, because it does not require that the ED stay collection work by the seven awardees of the disputed contracts. If the ED assigns debt collection work to the awardees of the disputed contracts, the amount of collection work available to Pioneer will decrease. Accordingly, Pioneer will suffer a loss of work. Therefore, the corrective action plan does not “completely and irrevocably eradicate[] the effects of the [relevant] violation.” 

The Government previously has represented to Pioneer and the court that the ED “will not transfer any accounts under any of [the seven current] contracts, or otherwise authorize, order or accept any work under those seven contracts, pending the resolution of this protest.” But, the May 19, 2017 Notice of Corrective Action and the May 25, 2017 Amendment To Defendant’s Notice Of Corrective Action did not mention any stay of collection work by the current awardees. Therefore, the court has determined that the ED’s corrective action plan does not moot Pioneer’s case. If Pioneer, however, is completely satisfied with the Government’s representations, it may voluntarily dismiss the April 10, 2017 Complaint, pursuant to RCFC 41(a)(1)(A)(ii).” 

insideARM Perspective 

So, the ED RFP story continues with the addition of these latest chapters.  One of the most interesting items in this latest order was this sentence: 

“The Government previously has represented to Pioneer and the court that the ED “will not transfer any accounts under any of [the seven current] contracts, or otherwise authorize, order or accept any work under those seven contracts, pending the resolution of this protest.” 

This has been assumed, but not been made completely clear by other activity in the case.

insideARM will continue to monitor this story and report on new developments. We have often been asked for a summary of all our articles on the subject. This page provides a running history of our ED related coverage. 

This article originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

The U.S. Department of Health and Human Services Office for Civil Rights (“HHS”) recently issued a quick response checklist to outline steps a HIPAA covered entity or business associate should take in response to a cyber-related security incident. The HHS checklist offers general, step-by-step guidance for healthcare providers in the event of a security incident that includes: (1) immediately executing response procedures and contingency plans to fix technical problems to stop a security incident; (2) reporting a security incident to appropriate law enforcement agencies; (3) reporting all cyber threat indicators to federal and information-sharing analysis organizations; and (4) reporting a breach to the HHS as soon as possible (but no later than 60 days after the discovery of a breach affecting 500 or more individuals). 

While the HHS checklist is certainly a practical resource for healthcare providers, it does not (and absolutely should not) alleviate a healthcare provider’s responsibility to create, implement, and continuously test/update an incident response plan (“IRP”) tailored to that provider’s circumstances and vulnerabilities. Relying solely on the HHS checklist without an IRP will surely result in panic-based reactions with no structure to guide next steps when a cyber-related security incident inevitably occurs. Further, because of the strict requirements contained in the HIPAA Security Rule – including a duty to identify and respond to security incidents, mitigate harmful effects, and document security incidents and outcomes – a healthcare provider must be particularly vigilant in being cyber-prepared.  

Effective and adequate cybersecurity requires early preparation to ensure an appropriate and effective response later. The HHS checklist, though helpful, should be viewed merely as one of a multitude of best practice guides issued by federal agencies for health care providers and other businesses in developing and implementing cybersecurity measures. For more information about how to best respond to a cyber-related security incident and protect your business against a cyber-attack, see the Department of Justice’s Incident Response Procedure Instructions or the Federal Trade Commission’s Data Breach Response Guide. Please contact Jonathan Klein at (215) 640-8535, jklein@clarkhill.com or another member of Clark Hill’s Cybersecurity team if you have any questions.

This article was authored by Jonathan L. Pompan, Alexandra Megaris, and Katherine M. Lamberth. It was previously posted on Venable.com and is re-published here with permission. You may also want to review “What’s Inside the CFPB Enforcement Policies and Procedures Manual 2.0,” by the same authors.

 

An internal Consumer Financial Protection Bureau (CFPB) playbook and memo reveal how key decisions are made throughout the examination process, who is responsible for making those decisions, how information is evaluated, and the intersection between CFPB examinations, investigations, and enforcement.

Although many institutions supervised by the CFPB look to the CFPB Supervision and Examination Manual and Supervisory Highlights to know what to expect during examinations, even companies accustomed to government examination can find the process to be particularly opaque and confusing. To shed light on the CFPB examination process, we obtained through a Freedom of Information Act (FOIA) request the CFPB’s Supervision, Enforcement, and Fair Lending (SEFL) Examination Playbook (Playbook) and SEFL Integration Memorandum (Memorandum).

A copy of the Playbook and Memorandum are available for download here.

The documents show that the outcome of a CFPB examination will depend on multiple decision makers, at various stages, and the importance of such factors as the exam findings and matters requiring attention, whether there is a violation of law, deterrence, variety of products and potential violations, size and complexity of the institution, self-correction, history, and cooperation. Companies that disagree with the examination findings should provide substantive input and objections to the findings, present additional information and documentation at the earliest stages possible, and consider appropriate remediation steps, if any.

The Examination Process

The Playbook identifies and describes the key decisions that arise at each stage of the examination process, as well as who within the CFPB is responsible for making and implementing each key decision. The purpose of the Playbook is to provide guidance to decision makers on their roles and responsibilities, referred to as “decision rights,” throughout the examination or target review.

As outlined by the Playbook, the examination process is composed of four stages: scoping, on-site analysis, off-site analysis, and report review. An overview of each of the activities that are conducted at each stage is provided below, as are key decisions and corresponding decision rights.

Scoping

Scoping involves setting examination priorities and schedules across markets and for individual examinations. It also includes conducting pre-examination activities such as preliminary information requests and determining the scope of the examination. Key decisions that arise during this stage, and relevant decision makers, include the following:

• Examination Priorities. The Assistant Directors (ADs) for the Office of Supervision Policy (OSP) and the Office of Fair Lending (FL) are responsible for determining examination priorities.
• Examination Schedule. Regional Directors (RDs) in the Office of Supervision Examinations (OSE) are responsible for determining the timing and sequence of examinations for the calendar year.
• Specific Scope and Schedule. The Examiner-in-Charge (EIC) is responsible for making decisions regarding the scope of the examination, the preparation of the Information Request, and the examination schedule. These decisions involve determining which activities will be conducted during the examination and relevant modules, and which items of information are pertinent to the examination of the particular institution.

On-Site Analysis

On-site analysis involves conducting interviews, observing the institution, transaction testing, and other examination processes that assess the institution’s compliance with federal consumer financial laws and potential violations. After the on-site examination is complete, additional time may be granted for the off-site analysis of relevant factual findings and other information.

• Formal Documentation and Modifications. The EIC is responsible for making decisions regarding formal documentation of the examination, including appropriate work papers and Fact Verification Memoranda. These decisions involve identifying and clarifying examination procedures and findings. The Field Manager/Senior Examination Manager (FM/SEM) is responsible for making decisions regarding modifications to the scope of the examination once it has commenced.
• Initial Examination Findings. The EIC is responsible for conducting the closing meeting and making related decisions, including any preliminary examination findings, expected corrective actions, recommended rating, or next steps. The EIC is also responsible for preliminarily deciding whether an examination is “clean”—i.e., does not involve any potential violations of federal consumer financial laws—and eligible for review on an expedited track. The Assistant Regional Director (ARD), the OSP AD, and the Office of Enforcement (ENF) are responsible for approving review of an examination on an expedited review track.

Off-Site Analysis

Off-site analysis involves escalating potential violations of federal consumer financial laws discovered during the examination and determining whether an enforcement or supervisory action should be pursued. It is at this stage that collected information and findings can lead to an enforcement action.

• Interpretations of Non-Routine Questions of Law. If an examination involves potential violations of federal consumer financial laws, the OSP Program Manager is responsible for determining whether an interpretation is required, and for framing the potential violations through preparation of a memorandum seeking the interpretation. For non-routine questions of law, the Legal Division is responsible for determining whether a violation has occurred, except where the question of law involves a regulation – then the Office of Regulations is responsible for the determination.
• PARR Letter. A Potential Action and Request for Response (PARR) Letter notifies the institution that the CFPB is considering whether to propose a supervisory or enforcement action, based on preliminary findings of potential legal violations. The FM/SEM is responsible for determining whether a PARR letter should be sent. The OSP Program Manager is responsible for drafting the PARR Letter, which is approved by the RD.
• ARC. Decisions on whether potential legal violations should be escalated to the Action Review Committee (ARC) are also made by the FM/SEM, who drafts the ARC memorandum to support the ARC’s evaluation of relevant facts and law in determining whether public enforcement is appropriate. The ARC evaluates over thirteen factors spread among four categories: violation, institution, policy, and justice. The RD is ultimately responsible for approving the ARC memorandum. The ARC then recommends to the Director whether the matter should be handled through the supervisory process or public enforcement action.

Report Review

• Expedited Review. Under the expedited track, the examination report is reviewed by the FM/ SEM and the OSP Program Manager and Deputy AD. The ARD is responsible for collecting input from the OSP POC and finalizing the report, which is then approved by the RD.
• Full Review. Under the full-review track, the examination report is reviewed by the FM/ SEM, the OSP Program Manager and Deputy AD, the Legal Division, and staff of the Office of Enforcement. The ARD is responsible for collecting and incorporating input, and finalizing the report after the content has been reviewed and ratified by the OSE AD, OSP AD, RD, and SEFL Associate Director.

In addition to providing further information on key decisions throughout the examination process, the Memorandum contains sections on:

• SEFL Coordination and Prioritization: Includes information on SEFL strategy, information sharing and scheduling, and tool choice (i.e., oversight through examination or investigation)
• Enforcement Attorneys’ Role in Examination Work
• Action Review Committee (ARC) Process
• Compliance and Disposition of Required Actions

Supervisory Appeals

The Playbook and Memorandum do not provide any information or guidance on the examination appeals process, which remains an area for which the CFPB has not provided any public statistics and there is little substantive transparency. That said, in our experience, the appeal of supervisory matters benefits from having a robust submission of relevant information during an examination, and doing so can help to stave off an enforcement recommendation. The CFPB appeals policy states that only facts and circumstances upon which a supervisory finding was made will be considered by the appeals committee, and that it is an appellant’s burden to show that the contested supervisory findings should be modified or set aside.

Prior to the establishment of the CFPB depository, institutions were the only members of the consumer finance industry subject to federal supervision. The paradigm shifted with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), which vested the CFPB with broad regulatory powers, including the authority to examine certain non-depository institutions for compliance with the federal consumer financial laws.

The CFPB has supervisory authority over depository institutions with over $10 billion in assets, as well as payday lenders, mortgage companies, private student lenders, and larger participants of other consumer financial markets, such as debt collection and credit reporting. In accordance with the Dodd-Frank Act, supervision is risk-based, and in exercising its authority the CFPB must focus on the institutions and products that pose higher degrees of risk to consumers. Through examinations, the CFPB is responsible for assessing institutions’ compliance with the federal consumer financial laws and detecting risks posed to consumers and markets for consumer financial products and services.