WALTHAM, Mass. –– CallMiner, the leading platform provider of award-winning speech and customer engagement analytics announces that Phillips & Cohen has opted to expand its use of CallMiner Eureka to support quality of service and the customer experience it provides across all existing global offices.

Phillips & Cohen, a pioneer in Deceased Account Management services, serves the consumer banking and credit industry in addition to specialized industries including financial services, healthcare, utility, education and telecom.  The company selected CallMiner Eureka speech analytics because it would allow them to increase quality monitoring from 1-2% to 100% of agent/client interactions. This in turn would enable agents to improve the level or compassion and compliance — two critically important metrics for the company.

Building robust scorecards in the speech analytics platform based on a high percentage of calls, combined with a greater level of operational oversight driven by physical call review and analytics outputs, also provides Phillips & Cohen with a true view of the voice of the customer.

“Voice of the customer feedback is a real game-changer for us as the nature of our work makes it a challenge to obtain through traditional feedback and survey methods,” says Nick Cherry, Chief Operating Officer at Phillips & Cohen Associates.

 “From a post call perspective, the scorecards provide meaningful trend analysis and voice of the customer measures we simply didn’t have before. Cross-matching telephony data with account activity is also something we couldn’t do without speech analytics. It’s the little things – like being able to search for calls with specific traits that would be incredibly time-consuming without Eureka,” Cherry says.

In addition, Phillips & Cohen uses EurekaLive, a real-time solution that provides next best action guidance to agents while they are on a call. Company President & Chief Compliance Officer, Howard Enders commented, “Guidance in real-time provides agents with the reassurance that they have completed all the required actions and that the customer is satisfied. This has really encouraged them to raise their game and allows us to demonstrate active compliance to clients across the globe.”

“We have been working with Phillips & Cohen in the United States for a number of years. 2017 has seen us complete the implementation with Phillips & Cohen in Canada, Australia and the UK and we are really excited to expand the partnership further, with Spain next on our joint agenda,” says CallMiner CEO, Terry Leahy.  “The level of insight on the voice of the customer and the value they have already been able to achieve with Eureka is impressive. Over time they will see even greater value and we are proud that our technology will contribute to their continued success,” Leahy concludes. 

About Phillips & Cohen Associates

Phillips & Cohen Associates Ltd. was established in the United States in 1998 and has expanded internationally building a reputation as a responsible and trusted partner to creditors around the globe. The global group includes offices in Manchester, UK, three offices in the United States including a dedicated analytics center, offices in Quebec, Canada and Melbourne, Australia and a newly founded office in Madrid, Spain. The business has achieved national and international prominence by providing highly effective financial recovery services built around a uniquely compassionate style of customer engagement. With clients ranging from mid-sized firms to leading national and international creditor and banking institutions, the company serves the consumer credit, banking, and finance markets, as well as
specialized industries including home shopping, utility, telecoms, debt purchase, local & central government. www.phillips-cohen.com.

About CallMiner

CallMiner believes that resolution is the fundamental driver of positive customer experiences. When contact center agents and others responsible for customer engagement are empowered by insight and feedback in real-time, they can dramatically improve the rate of positive outcomes. With the tagline “Listen to Your Customers, Improve Your Business” our goal is to help companies automate the overwhelming process of extracting insight from phone calls, chats, emails and social media to dramatically improve customer service and sales, reduce the cost of service delivery, mitigate risk, and identify areas for process and product improvement. Highlighted by multiple customer achievement awards, including six Speech Technology implementation awards in the past four years, CallMiner has
consistently ranked number one in customer satisfaction, including surveys conducted by DMG Consulting and Ovum. www.callminer.com.

Collection attorneys have closely followed the course of Bock v. Pressler & Pressler (Pressler), a case involving the issue of “meaningful attorney involvement” in debt collection litigation. Last week there was another update to the case.

Here is a summary of the case, concluding with the latest update:

In 2011, on behalf of its client Midland Credit, Pressler filed a collection law suit against Bock, a consumer, in state court. Bock hired an attorney and the case was settled for a monetary sum.

Bock then filed a Fair Debt Collection Practices Act (FDCPA) suit against Pressler, alleging the original compliant had been filed without “meaningful review.” The Pressler attorney responsible for the case testified in discovery that it took him 4 seconds to review the case.

Both sides filed Motions for Summary Judgment.

Editor’s Note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

On June 30, 2014 the District Court of New Jersey found in favor of Bock. Pressler appealed. Oral argument was heard on November 10, 2015.

Taking place in parallel was the Supreme Court case of Spokeo Inc. v. Robbins — which raised the question of whether a plaintiff has standing if there is no “concrete” harm, but merely a statutory procedural violation.

Citing oral arguments that had just taken place the week before in the Spokeo case, the panel in Bock asked that counsel from both sides address that case. In an article describing the case at the time, attorney Joann Needleman said:

“Specifically, the panel was concerned whether the decision in Spokeo could directly impact the Bock case, which, like Spokeo alleged no actual harm.  The panel even hinted whether the Bock case should be stayed. Newburger suggested that if the Supreme Court sided with Spokeo and held that actual harm was needed to bring an action like an FDCPA claim, then many consumer protections statutes would be gutted. The Bock case, Newburger argued, should then be reversed and dismissed. Flitter, arguing for Bock, said that Spokeo was a class action and since the parties agreed on damages in the matter below, Spokeo was inapplicable.”

On May 16, 2016 the Supreme Court ruled in favor of the defendant, Spokeo.

On July 27, 2016 the Court of Appeals in Bock issued a non-precedential opinion, remanding the case back to the District Court to determine in the first instance whether Bock has Article III standing, given the Supreme Court’s decision in Spokeo.

And, filed last week on May 25, 2017, the New Jersey District Court upheld its summary judgement ruling in favor of Bock. You can see a copy of the ruling here.

insideARM Perspective

Numerous attorneys have pontificated about the implications of “meaningful involvement”. Among others, insideARM recently published a two-part discussion on the topic by Tomio Narita. Read part one here and part two here.

As Tim Bauer offered in his earlier perspective on the matter, the stage has become much broader than this one case.

In April 2016 the CFPB reached a settlement with Pressler in an unrelated matter – (Pressler said this about that settlement) — as well as a settlement with the Law offices of Frederick J. Hanna & Associates. See here to read our coverage of the Hanna case.  Collection attorneys everywhere have read the Pressler and Hanna Documents. Policies and practices have already changed.

The CFPB has also issued its Outline of Proposed Rules for Debt Collection. Collection litigation is addressed in that document, most importantly in the substantiation section. Regardless of the ultimate outcome in the Bock case, collection attorneys are operating under different standards than in the past.

Yesterday, Chief Judge of the United States Court of Federal Claims, Susan G. Braden, issued an order continuing indefinitely the Preliminary Injunction in the litigation involving the Department of Education (ED) RFP for private collection agency (PCA) services. A copy of the order can be found here.

In the order Judge Braden points to three recent news articles (one of which was an Op/Ed piece) regarding ED and student loans.  She attached all three articles as exhibits to her order. 

The first referenced article was from POLITICO. It was published on May 25, 2017 with the headline: “GOP threatens to subpoena Education Dept. official who quit.” Judge Braden wrote: 

“On May 25, 2017, the court became aware of press reports indicating that James Runcie, Chief Operating Officer of the Office of Federal Student Aid, Department of Education, resigned rather than testify before the House Oversight Committee about approximately $3.86 billion in fiscal year 2016 that was erroneously paid under the Department of Education’s student loan program and approximately $2.21 billion in Pell grants.” 

The second article referenced in the order was an opinion piece by Persis Yu, published on May 22, 2017 in THE HILL. Persis Yu is the Director of National Consumer Law Center’s Student Loan Borrower Assistance Project. The headline for that opinion read: “Department of Education must end the billion-dollar student loan collection boondoggle.” Regarding that article, Judge Braden noted: 

“In addition, the court became aware of another recent press report, based on a Consumer Financial Protection Bureau Report, concluding that, “[t]he value added by the private collection agencies working for the Department of Education is highly questionable[,] but unquestionably expensive. Student loan borrowers deserve to understand their options and be set up for success. Taxpayers deserve to get their money’s worth.” 

Judge Braden then chastised all of the parties: 

“Neither of these relevant developments were brought to the attention of the court by the Department of Justice attorneys representing the Department of Education in the above captioned bid protest cases. Of course, none of the counsel of record for the private debt collection companies did so either, because these reports belie numerous representations to the court about the “so-called” harm to the student debtors and the public fisc from the preliminary injunction pending in this case.” 

Finally, Judge Braden discussed an article published on May 26, 2017 in the New York Times, “Trump Administration Considers Moving Student Loans from Education Department to Treasury.” Judge Braden wrote:

“In addition, on May 26, 2017, the New York Times published an article indicating that “the Administration is considering moving responsibility for overseeing more than $1 trillion in student debt from the Education Department to the Treasury Department.” If so, the bid protests before the court will become moot.” 

Judge Braden concluded the order with the following: 

“For these reasons, the preliminary injunction will remain in place to preserve the status quo until the viability of the debt collection contracts at issue is resolved. See Litton Sys., Inc. v. Sundstrand Corp., 750 F.2d 952, 961 (Fed. Cir. 1984) (“The function of preliminary injunctive relief is to preserve the status quo pending a determination of the action on the merits.)” 

insideARM Perspective

The ED RFP story continues to take unusual turns.  This order is most unusual.

First, the order was apparently issued sua sponte. The injunction was set to expire today. But, the order does not reference that it was issued in response to a motion from one of the parties.

Secondly, Rule 201 of the Federal Rules of Civil Procedure governs “Judicial Notice of Adjudicative Facts.” That rule reads as follows:

Rule 201. Judicial Notice of Adjudicative Facts

(a) Scope. This rule governs judicial notice of an adjudicative fact only, not a legislative fact.

(b) Kinds of Facts That May Be Judicially Noticed. The court may judicially notice a fact that is not subject to reasonable dispute because it:

(1) is generally known within the trial court’s territorial jurisdiction; or

(2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.

(c) Taking Notice. The court:

(1) may take judicial notice on its own; or

(2) must take judicial notice if a party requests it and the court is supplied with the necessary information.

(d) Timing. The court may take judicial notice at any stage of the proceeding.

While Judge Braden’s order does not use the term “Judicial Notice,” it is clear that she is taking the articles into account. She attached the articles as exhibits!  As to the article by Persis Yu of the National Consumer Law Center, it seems incredibly odd to consider an Op/Ed piece as something “whose accuracy cannot be reasonable questioned.” That article is, by its very nature, an OPINION. 

What does this order mean? For one, it prohibits ED from placing any new accounts, even to the small business contractors. However, it is not clear what, if anything, it means to the RFP process that was re-started last Friday. See our May 22, 2017 article on the “Do Over” here.  

The Preliminary Injunction remains in place “until the viability of the debt collection contracts at issue is resolved.” insideARM has no idea how what that means or how that issue can be resolved to Judge Braden’s satisfaction. 

Finally, Judge Braden didn’t mention this passage when referencing the NY Times article:  

“The Treasury Department recently conducted a pilot project in which its employees tried to collect on defaulted loans, a job the Education Department contracts out to private companies. 

The experiment, which began in mid-2015, did not end well.

The Treasury Department hoped to increase collection rates and help borrowers better understand their repayment options. It failed on both goals. A control group of private collectors recovered more money and got more borrowers out of default.”

For more information regarding that pilot program see this article from the U.S. Department of Treasury website. 

CLEVELAND, Ohio — Law Offices of Timothy M. Sullivan is proud to announce the addition of our newest attorney Jeff Koberg, and the acquisition of the Ziegler Metzger LLP Collection Practice.

Mr. Koberg graduated with his Juris Doctor from Case Western Reserve University.  Previously, his main areas of practice included Creditor’s Rights, Foreclosure Representation, and Loan Workouts.  He will continue using his many talents, including being the lead of the acquired Ziegler Metzger LLP Collection Practice, at the Law Offices of Timothy M. Sullivan.

We look forward to this addition and expect great potential from the acquisition.  Jeff’s 26 years of Creditors Rights and Commercial Collections experience will, no doubt, be a great asset to our team.

President, Timothy M. Sullivan, said,

“We are thrilled to add Jeff and his collections practice to our firm.  Jeff is an outstanding attorney and a class act, admired and respected by his peers.  We are excited to have the resources he brings to help us continue to provide exceptional service to our commercial collections clients.” 

About The Law Offices of Timothy M. Sullivan

The Law Offices of Timothy M. Sullivan is a collections law firm located in Cleveland, Ohio. Founded in 2005, it is a certified Veteran Owned Small Business (VOSB). The Law Offices of Timothy M. Sullivan offer a collaborative collections approach to best meet the needs of their clients.

Please visit www.timsullivanlaw.com or call 888.774.8805 for more information on services we provide.

While on its face, Stauffer v. Navient Solutions, LLC (Case No. 15-cv-1542, U.S. District Court, Middle District of PA) is a student loan case, it offers an important lesson for healthcare providers and decision makers.

By way of brief recap, in March 2017, a United States District Court Judge ruled that Navient Solutions, LLC (Navient) did not violate the Telephone Consumer Protection Act (TCPA) when it contacted the Plaintiff (Stauffer) regarding a delinquent student loan on a cell number she provided in a different, and years-later, loan application to the same loan servicer.

A copy of the court’s Memorandum can be found here, and contains a concise review of the TCPA restrictions and the history of the FCC’s rulings interpreting the TCPA. In case you missed it, insideARM’s Tim Bauer covered the background, the decision, and key insights on the case.

Connect the dots

In the “insideARM Perspective” Bauer concluded,

This is not a case that should be limited only to student loans. It is a fact scenario that exists quite often outside of the student loan world. Many credit grantors deal with this fact situation on a regular basis: A consumer has more than one account with the same creditor; The accounts were not opened at the same time; The consumer provides express consent to be called on his/her cell phone in the account documentation; The express consent is written; The consent language is well drafted; The consumer consents to be called “at the current or any future number that [she] provided for [her] cellular telephone or other wireless device using automated telephone dialing equipment.”

What can healthcare providers take from this case? Does it offer anything beyond just an Express Written Consent parable?

Re-frame information-gathering as a best interests issue

It’s especially noteworthy that the court in Navient seemed to care that the defendant does what many processors do; it services loans at the account level, rather than by individual loan. From this, healthcare providers might reasonably infer that account-level consent, disclosure, and other administrative housekeeping can potentially provide something of a safe harbor. That is, if providers are crystal clear that any information provided at any point in the patient journey will apply to the entirety of the business relationship, it may be helpful on many levels.

There are a great many regulatory hot-button issues that could be well managed by contemplating this simple idea — keep account-level records, and make it clear to patients that this is your organization’s policy, and it’s in place in order to offer the best care and account service possible.

Keep — and socialize — a centralized command center

At least from a best-efforts perspective, it seems like being able to demonstrate intentional account-level processes and clear, up-front patient disclosures is an ounce of prevention that could get in front of many pounds of potential consent and due diligence issues.

Consider obtaining and/or maintaining account-level evidence of:

1. Express written consent to contact patients via phone, text and email that will apply to all future encounters and provide for the deployment of both healthcare and other communications, for a span of time that may extend past a patient’s active relationship with a provider.
2. Documentation of compliance with 501(r) assessments of charity care eligibility, so that those determinations can influence all encounters and color any efforts to collect payment in future.
3. Identity verification, address and other contact information, and any kind of manual or software-generated financial profiling information for those patients found to be ineligible for charity care, so that suitable self-pay arrangements can be made for aggregate balances due — potentially to manage the recovery of an outstanding sum over several encounters.
4. Any payment arrangements, promissory notes, records of payment, and information arising from financial arrangements to satisfy outstanding self-pay balances.

Patients are prone to understand — and even welcome — a clearly-articulated, centralized model for records and account maintenance as one way providers are working to take a “whole patient” view of care. For providers, keeping aggregated, account-level records of consent, disclosures, compliance documentation and financial information is also a best practice for the sake of business efficiency, risk management, and effectiveness.

This article was written by John Banghart and Jami Mills Vibbert. It previously appeared on the Venable blog, and is republished here with permission.

Earlier this month, an unprecedented cyberattack affected a large number of Microsoft Windows-based computers through a type of malware known as ransomware. Although ransomware has been increasingly prevalent over the last few years, this particular version, called “WannaCry,” spread quickly and widely around the world. Many believe that the cyberattack will continue.

Ransomware is generally spread via email messages that contain infected attachments. When a user opens the attachment, a program runs that encrypts the user’s computer and demands a ransom be paid, typically in bitcoin, for a key that will unencrypt the files. In this case, the attackers are asking for between $300 and $600 to unlock the files.

As of Sunday, it had impacted tens of thousands of systems, more than 200,000 individuals, in more than 150 countries. Many of these attacks occurred in Europe and Russia. Perhaps the most notable impact occurred in Britain, where several hospitals were infected, leaving operations, including patient care, debilitated to the point where patients had to be turned away to other, non-impacted hospitals. Auto manufacturers, railroad operators, and others have also been impacted in Europe.

Due to some quick thinking on the part of a British malware researcher, the spread of WannaCry has slowed, but risk still remains. Most believe that businesses will continue to be impacted at the beginning of the workweek; worse, the fix engineered by the researcher likely will be accounted for in the next version of the ransomware.

It is important to note that WannaCry takes advantage of a vulnerability in Windows systems for which Microsoft released a patch in March of this year. If your Windows systems have not been patched, or if you are running older versions such as Windows XP, you may be vulnerable and should take appropriate steps immediately.

The best way to avoid getting attacked by this ransomware is to ensure you have installed the patch. The best way to avoid getting attacked by other ransomware is to evaluate threats to your organization, assess your risk, and ensure you are taking appropriate mitigation and remediation steps. Those steps should include training users on how to spot and avoid phishing attempts, conducting regular penetration tests and cybersecurity gaps assessments, and keep all systems up-to-date with the latest version of software.

If you are attacked, the best defense against ransomware is to have secure backups of all critical systems so that if you are attacked, you can restore your systems quickly without having to pay the ransom. If you do not keep secure backups of your critical systems and data, you should begin doing so immediately.

Venable’s nationally recognized Privacy and Data Security practice uniquely brings together legal, policy, and technical experts to help our clients with a wide range of cybersecurity issues, including those discussed above. If you are worried about being or have been impacted by WannaCry, other malware, or have any cybersecurity-related questions or concerns, please contact the authors.

—–

Editor’s note: insideARM’s upcoming (June 5-7, in Frisco, TX) First Party Summit will be addressing cybersecurity with three sessions, including:

• What do recent New York State cybersecurity regulations — and the OCC’s ANPR — mean to creditors and call centers?
• Cyber liability insurance: Understanding what you don’t know
• The 30 security questions and audit focus points every senior manager should know, plus the “A” answers to those questions

HILLSIDE, Ill. — XServe Solutions LLC (XServe) is a Certified Minority Woman-Owned private collection agency with specialization in the recovery of higher education and government receivables.  XServe is committed to providing high-quality, cost-effective solutions allowing our clients to reduce operational costs, increase revenue and allocate internal resources to core responsibilities.  Sandra Rivera, the President and CEO, has assembled a team of professionals with extensive experience in all facets of collection operations.  

Why start an agency in today’s climate?  XServe understands the importance of qualified subcontractors with the ability to execute work strategies at a high level and not just fulfill a requirement.  In a consistently changing industry businesses have had to downsize, staff-up, re-forecast, and everything else you can think of all while maintaining what is in the best interest of the consumer. XServe is committed to providing a subcontracting partnership which maintains high performance while focusing on security and compliance. The last thing you need to worry about is your subcontracting partner. 

XServe Solutions has tailored our privacy and information security strategy to align with our client’s business objectives and regulatory requirements.   We have architected our security program to ensure adherence to increasingly stringent regulatory conditions within the higher education, government, healthcare and financial services industries, as they pertain to consumers’ rights.  

We are here to support our clients’ success. 

About XServe Solutions

XServe Solutions is a Certified Minority/Women Owned Small Business specializing in receivable collections and looking for sub-contracting opportunities ranging from Education to Government. For further information please contact us at the number listed below, visit our website at www.xservesolutions.com or send an email to info@xservellc.com.

Yesterday, the United States Court of Appeals for the District of Columbia Circuit heard oral arguments in a case that could dramatically impact the future of the Consumer Financial Protection Bureau (CFPB). The case is PHH Corp. v. Consumer Financial Protection Bureau, United States Court of Appeals, D.C. Cir., Case No. 15-cv-01177. 

Background

insideARM has published numerous articles about the case. PHH, a mortgage company in Mount Laurel, N.J., wanted the U.S. Court of Appeals for the District of Columbia Circuit to vacate a June 2015 enforcement ruling by the CFPB that said PHH violated anti-kickback provisions in Section 8(a) of the Real Estate Settlement Procedures Act (RESPA) and had to give up $109 million in what CFPB Director Cordray had said were ill-gotten mortgage reinsurance premiums. 

Our April 19, 2016 article described the case and the arguments presented.

Our October 11, 2016 article covered the original decision in the Court of Appeals. Among other issues, the case called into question the CFPB’s structure and authority.

On October 12, 2016 we published an article by Kelly Knepper-Stephens that discussed the potential impact the decision could have on the CFPB’s enforcement powers.    

In November, the CFPB filed a petition with the D.C. Circuit asking it to grant a rehearing en banc of its decision.

On January 4, 2017 insideARM published an excellent article by Barbara Mishkin from the Ballard Spahr LLP law firm that described the flurry of legal activity that occurred after the CFPB filed its petition for rehearing en banc. 

On February 16, 2017 insideARM wrote about the D.C. circuit granting the request for rehearing. 

Since the change in administration the “players” in this saga have changed. The CFPB is taking one position. Obviously, PHH is taking the opposite position. But the new player is the Department of Justice (DOJ). Under the Trump administration DOJ is now siding with PHH and taking the position opposite to the CFPB. See the insideARM March 22, 2017 article on the DOJ position. 

The Oral Arguments 

The arguments presented to the full 11-judge panel centered around whether the CFPB’s independent, single-director structure runs afoul of the Constitution. To listen to the complete hearing, click here. The court allocates specific time limits to the parties. PHH was allocated 30 minutes. The DOJ was allocated 10 minutes. The CFPB was allocated 30 minutes. 

PHH, was represented by Gibson, Dunn & Crutcher partner Theodore Olson. Mr. Olson spoke first. Olson sought to distinguish the CFPB from other federal commissions. As is often the case with appellate arguments, Mr. Olson was not allowed to stay “on script” for long. The judges immediately began peppering him with questions. Olson argued the biggest problem with the CFPB structure is that the CFPB’s power is vested in one person as opposed to being distributed among several people as in agencies such as the Federal Trade Commission (FTC). 

Attorney Hashim M. Mooppan represented the Department of Justice (DOJ). He spoke next. Moopan was immediately questioned by the judges regarding the difference in impact on executive power between a multi-member commission and a single director agency. He was specifically asked if/how the CFPB single director structure differs from the Social Security Administration (SSA), where the single head of that agency “controls 24% of the national budget and probably ½ to ¾ of the population.”  Mr. Mooppan was never permitted to answer that question before other judges asked additional questions. 

Mooppan was also asked about the CFPB exemption from the appropriation/budget process. But, he responded by saying that “in terms of the Article II analysis they (DOJ) are not relying on the exemption from the budgetary process. Despite the 10 minutes originally allocated to the DOJ, the judges asked Mr. Moopan so many questions that his portion of the argument took over 25 minutes of the court’s time.

The CFPB was represented by CFPB attorney Lawrence Demille-Wagman. He began his argument by stating that the CFPB position is that after the expiration of the Director’s 5-year term the Director could hold over until a new Director is appointed. But, he noted that Director Cordray would lose his “for cause” protection after his term expires. 

Questions directed to Demille-Wagman focused on the lack of the ability of a new President to appoint a new director for the CFPB when the President typically appoints other commission chairpersons immediately after the start of a new administration.  

It is difficult to predict where the judges stand by simply listening to their questions. However, the questions suggested that there is a split of opinions in the full panel. Two words best described the hearing: Mixed Messages. 

insideARM will continue to monitor this case. A decision from the court is not expected for several months.

The White House released its 2018 budget proposal to Congress this week. Buried (the second to last item) in a 171-page Major Savings and Reforms supplement is one half-page that addresses the CFPB. The section is called, Restructure the Consumer Financial Protection Bureau. Here’s what it says:

The Budget proposes to restructure the Consumer Financial Protection Bureau (CFPB), limit the Agency’s mandatory funding in 2018, and provide discretionary appropriations to fund the Agency beginning in 2019.

Justification 

Restructuring the CFPB to refocus its efforts on enforcing enacted consumer protection laws is a necessary first step to scale back harmful regulatory impositions and prevent future regulatory hurdles that stunt economic growth and ultimately hurt the consumers that CFPB was originally created to protect. Furthermore, subjecting the reformed Agency to the appropriations process would provide the oversight necessary to impose financial discipline and prevent future overreach of the Agency into consumer advocacy and activism.

insideARM Perspective

With a current budget of approximately $600 million, this proposal essentially guts the agency by 2019. However, the CFPB’s budget isn’t currently controlled by Congress, so the cuts shown above can’t practically be made unless there is a structural change to how the bureau is funded before the end of this fiscal year. Still, it’s a clear sign of what the President thinks of the currently independent agency.

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The Federal Trade Commission (FTC) announced yesterday that, together with the State of Florida, it requested that a federal court temporarily halt a massive phony debt relief operation that bilked tens of millions of dollars from financially strapped consumers, including the elderly and disabled.

According to the FTC and Florida, Jeremy Lee Marcus, Craig Davis Smith and Yisbet Segrea, through 11 companies, got people to pay hundreds or thousands of dollars a month by falsely promising they would pay, settle, or obtain dismissals of consumers’ debts and improve their credit. Over time, victims found their debts unpaid, their accounts in default, and their credit scores severely damaged – some were sued by their creditors, and some were forced into bankruptcy.

The FTC and Florida allege that the defendants falsely claimed non-profit status to appear more credible and legitimate. The defendants then promised consumers guaranteed debt consolidation loans for tens of thousands of dollars with attractive interest rates and significantly lower monthly payments than consumers were paying their creditors. Once consumers agreed to the purported loan, the defendants almost immediately debited the consumers’ bank accounts for an initial loan “repayment” or a processing fee, and then kept debiting consumers’ bank accounts each month, in amounts ranging from $200 to $1,000 or more. The FTC and Florida charge that the defendants, despite taking these monthly payments, failed to extend consumers the promised debt consolidation loans.

The defendants also called people who were already enrolled with debt relief providers claiming they were taking over the servicing of those accounts and falsely claiming they would provide the same or similar services. Many of their victims had worked for years with their previous debt relief providers and had saved money in escrow accounts for use in negotiating with creditors. The defendants told these consumers to transfer their escrow money to defendants, and then debited up to $1,000 each month from the consumers’ bank accounts. Contrary to the defendants’ promises, people got little to nothing for their money and ended up in worse financial positions.

Marcus, Smith, Segrea and their companies are charged with violating the FTC Act, the FTC’s Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act.

The corporate defendants are Financial Freedom National Inc., formerly known as (f/k/a) Institute for Financial Freedom Inc. and Marine Career Institute Sea Frontiers Inc., also doing business as (d/b/a) 321 Loans, Instahelp America Inc., Helping America Group, United Financial Support, Breeze Financial Solutions, 321Financial Education, Credit Health Plan, Credit Specialists of America, American Advocacy Alliance and Associated Administrative Services; 321Loans Inc., f/k/a 321 Loans Inc., also d/b/a 321Financial Inc.; Instahelp America Inc, f/k/a Helping America Team Inc., also d/b/a Helping America Group; Helping America Group LLC, f/k/a Helping America Group Inc.; Breeze Financial Solutions Inc., also d/b/a Credit Health Plan and Credit Maximizing Program; US Legal Club LLC; Active Debt Solutions LLC, f/k/a Active Debt Solutions Inc., also d/b/a Guardian Legal Center; Guardian LG LLC, also d/b/a Guardian Legal Group; American Credit Security LLC, f/k/a American Credit Shield LLC; Paralegal Support Group LLC, f/k/a Paralegal Staff Support LLC; and Associated Administrative Services LLC, also d/b/a Jobfax.

Relief defendants that profited from the scheme are JLMJP Pompano LLC; 1609 Belmont Place LLC; 16 S H Street Lake Worth LLC; 17866 Lake Azure Way Boca LLC; 114 Southwest 2^nd Street DBF LLC; 110 Glouchester St. LLC; 72 SE 6^th Ave. LLC; Fast Pace 69 LLC; Strategic Acquisitions TWO LLC; Halfway International LLC, also d/b/a 16 H.S. Street 12Plex LLC, 311 SE 3^rd St. LLC, 412 Bayfront Drive LLC, 110 Glouchester St. LLC, 72 SE 6^th Ave. LLC, 114 SW 2^nd Street JM LLC, 8209 Desmond Drive LLC, and HLFP LLC; Halfway NV LLC, also d/b/a Halfpay International LLC; and Nantucket Cove of Illinois LLC.

The Commission vote approving the complaint was 2-0. The U.S. District Court for the Southern District of Florida entered a temporary restraining order against the defendants on May 9, 2017, followed by a preliminary injunction on May 17, 2017.

insideARM Perspective

insideARM applauds actions taken against firms whose business model is rooted in deception. The allegations suggest deception aimed at the most vulernable. The alleged activity, if true, is despicable. Similarly, last year we reported that the CFPB took action against World Law Group and several affiliates for taking millions in up-front fees for legal services that never materialized.

Debt settlement and debt relief options are everywhere. Turn on a radio or TV and you are bound to hear multiple commercials adertising these services. How is a consumer to differentiate a legitimate company from a scam? insideARM would suggest that consumers thinking about debt settlement, go to www.ftc.gov and search for “Debt Relief Services” before consulting with any debt settlement or debt relief company.