A federal judge in Texas has ruled that a debt collector does not comply with the requirements of the Fair Debt Collection Practices Act (FDCPA) when responding to a consumer’s request for verification of a debt by uploading a letter via the Consumer Financial Protection Bureau (CFPB) online portal.  The case is Ghanta v. Immediate Credit Recoveries, Inc. (Case No. 3:16-cv-00573, U.S. District Court, Northern District of TX).

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

Background

Emory University hired Immediate Credit Recovery, Inc. (ICR) to collect tuition expenses allegedly owed by Plaintiff. ICR sent initial correspondence to Plaintiff on June 11, 2015. The letter included the following language: 

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification.

(Editor’s note: Emphasis was added by the court in its Order.)

In response, plaintiff emailed correspondence to ICR on June 22, 2015, disputing the debt. Plaintiff sent a second request for debt verification to ICR via the CFPB online portal on November 9, 2015. ICR uploaded a letter to the CFPB portal on November 9, 2015, stating that its client, Emory University, indicated plaintiff “does in fact owe the balance” and “is responsible for th[e] bill.” 

ICR reinitiated collection efforts against plaintiff by sending a collection letter on December 14, 2015. Plaintiff filed a lawsuit claiming that the December letter violates the FDCPA because ICR failed to mail him verification of the debt before reinitiating collection efforts. 

ICR argued that the letter electronically uploaded to the CFPB portal (the portal letter) constitutes sufficient debt verification, rendering the subsequent collection efforts lawful. But plaintiff claims the portal letter is insufficient to satisfy defendant’s debt verification obligation because it (1) was not mailed to plaintiff, and (2) does not contain enough information to allow him to sufficiently dispute the debt. 

Both parties moved 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. 

The Court’s Decision

The case was heard by the Honorable Reed O’Connor, United States District Court Judge. 

Judge O’Connor wrote: 

“The FDCPA provides that if a consumer notifies the debt collector within 30 days of receiving initial communication that the debt, or any portion thereof, is disputed, the debt collector must “cease collection of the debt” until it “obtains verification of the debt . . . and a copy of such verification . . . is mailed to the consumer by the debt collector.” 15 U.S.C. § 1692g(b). 

ICR first argued that the plaintiff did not have the requisite standing to bring the case because Plaintiff did not establish a “concrete” injury as required under Spokeo v. Robins, 136 S. Ct. 1540, (2016). Judge O’Connor quickly dismissed that argument by deciding that plaintiff’s alleged FDCPA violation is sufficient to establish that he suffered injury from the reinitiation of collection efforts and grant standing to maintain suit.

Judge O’Connor then determined that the dispute in this case centers on whether ICR failed to properly verify the disputed debt and mail a copy of the verification to plaintiff before reinitiating collection efforts—thus violating § 1692g(b) of the FDCPA. 

Failure to Mail Debt Verification 

Judge O’Connor wrote: 

“Because Plaintiff disputed his debt in writing within 30 days of Defendant’s June 22, 2015 initial collection letter, Defendant was required under the FDCPA to cease collection efforts until it obtained verification of the debt and mailed a copy to Plaintiff. 15 U.S.C. § 1692g(b). Defendant (ICR) urges this Court to impose a contemporary view of the FDCPA and read “mailed” as a requirement to merely “send” verification of the debt in any way practical. 

While modes of communication have certainly changed since the FDCPA was enacted in 1977, Congress alone possesses the power to amend the statute’s requirements as this Court is not empowered to engage in interpretive updating. 

Defendant argues it has complied with the FDCPA’s purpose, but the Court must begin with the text of the statute, not its spirit, to determine what it requires. Section 1692g unambiguously requires the debt collector to send the consumer verification of the debt by mail. 15 U.S.C. § 1692g(b). Defendant’s electronic upload of the portal letter falls outside the FDCPA’s minimum requirement that the debt verification be “mailed” to the consumer. 

When the text of a statute is plain and unambiguous, as is the FDCPA’s requirement that the debt collector mail debt verification to the consumer, the Court must enforce the language according to its terms. 

Defendant was unable to cite, and the Court is unaware of, a case finding the debt collector satisfied its statutory duty to mail the consumer verification of the debt by electronically uploading a letter to the CFPB portal.” 

Insufficient Debt Verification

Judge O’Connor also agreed with the Plaintiff on this issue. He wrote: 

“Even if this Court were to find that Defendant’s electronic debt verification addressed to CFPB satisfied the FDCPA’s requirement that it be “mailed” to the consumer, the portal letter does not contain enough information to constitute debt verification. 

The FDCPA does not define what constitutes sufficient debt verification, and the Fifth Circuit has not directly addressed the issue. Accordingly, verification will carry its ordinary meaning. Verification is defined as an “acknowledgment” or “recognition of something as being factual.” See Black’s Law Dictionary (defining “verification” as “acknowledgment” and “acknowledgment” as “recognition of something as being factual”) (10th ed. 2014); see also Webster’s Unabridged Third New International Dictionary (1986) (defining “verification” as “the act or process of verifying or the state of being verified: the authentication of truth or accuracy by such means as facts, statements, citations, measurements, or attendant circumstances”). This Court finds that the dictionary definitions of verification shed limited light on the sufficiency or insufficiency of Defendant’s portal letter. 

Circuit courts that have addressed the FDCPA’s verification requirement found that it requires, at a minimum, enough information to allow the consumer to “sufficiently dispute the payment obligation.” Debt verification under the FDCPA usually requires “an itemized accounting detailing the transactions in an account that have led to the debt” because it allows the consumer to determine if he or she actually owes the debt. 

Defendant’s portal letter fails because it contained no information for Plaintiff to determine if he had already paid the alleged debt or Defendant was attempting to collect from the wrong consumer. Defendant’s portal letter did not indicate the amount of the debt, when the alleged debt accrued, or any description of the transaction resulting in the alleged debt. The portal letter merely responded to the CFPB by reiterating the creditor’s belief that Plaintiff “does in fact owe the balance,” which does not provide enough information for Plaintiff to adequately dispute the debt. 

The portal letter at issue here stated that the creditor, Emory University, confirmed “Mr. Ghanta does in fact owe the balance. Mr. Ghanta did not graduate and felt he should not have to pay [Emory]. He is responsible for the bill.” The Court finds that without further details as to how and when the debt accrued, the portal letter fails to provide sufficient information for Plaintiff to adequately dispute the debt.” 

insideARM Perspective

This case should be reviewed by compliance departments at every debt collector. It discusses two issues that should be front and center when responding to verification requests. 

First, the FDCPA requires mailing of the verification. Section 1692g(b) of the FDCPA provides in relevant part: 

“If the consumer notifies the debt collector in writing within . . . [thirty days] that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of the judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.” 

As much as the industry would like to increase the use of electronic communications with consumers (a preferred method of communication for many consumers), the 1977 statute does not, on its face, allow that alternative. 

Second, the question of what is necessary to properly respond to a validation request is open to interpretation. Industry best practices would say that more information and detail is better than less information and detail. At a minimum the response should provide detail on “the amount of the debt, when the alleged debt accrued, or any description of the transaction resulting in the alleged debt.” Copies of statements, charges and other critical information should also be included.

Yesterday the Financial Services Roundtable (FSR) submitted a letter to Treasury suggesting its recommendations for how to grow the economy and create jobs. FSR CEO Tim Pawlenty (former Governor of Minnesota and Republican presidential candidate) said, “Improving the financial regulatory system, while protecting consumers, will grow the economy and expand opportunity for more Americans.”

The recommendations include both executive and legislative actions, and support three goals:

1. Enhancing policy coordination among federal financial regulatory agencies
2. Focusing supervisory and enforcement policies and practices on material risks to promote financial stability and economic growth
3. Modernizing financial laws and regulations 

The recommendations include:

• Coordinate Regulatory Policies
• Set Prudential Standards Based on Risk Not Arbitrary Asset Thresholds
• Harmonize Cybersecurity Compliance Standards Across All Regulations
• Discontinue FSOC Nonbank Designations
• Promote Comprehensive Housing Finance Reform and Improvements to Mortgage Regulations 
• Improve Living Wills, Stress Test, CCAR and other Prudential Requirements
• Fix CFPB, Protect Consumers, and Enhance the Market for Consumer Financial Services
• Protect and Enhance Retirement Savings
• Align Supervision and Enforcement Practices with Financial Stability and Economic Growth
• Repeal Government Price Controls on Debit Cards
• Promote Strong Insurance Markets
• Revise Volker and Promote Strong and Liquid Capital Markets

More detail on each of the above can be found by reading the letter and its associated 100+ page recommendation report, here.

insideARM Perspective

The majority of these recommendations do not directly relate to the ARM industry, however a few may have an impact, including:

Harmonize Cybersecurity Compliance Standards Across All Regulations
The Administration should establish a more rational, integrated cybersecurity framework that would advance the mutual interests of government and industry in protecting and defending cyber space. FSR urges all federal and state regulators to harmonize their cybersecurity compliance approaches to determine rigorous and appropriate levels of preventative measures an institution should establish and maintain, while still maintaining flexibility for each agency’s unique statutory authority and areas of focus and oversight.

Cybersecurity has become a pain point for collection agencies and other vendors to major creditors, as they struggle to respond to audits from many directions, with disparate requirements — but the same goals.

Fix CFPB, Protect Consumers, and Enhance the Market for Consumer Financial Services

Treasury should support reforms to the Consumer Financial Protection Bureau (CFPB) to align the mission of that agency with the Core Principles. Treasury should support improvements in the governance structure of the CFPB, for example, by creating a commission to ensure greater accountability in the management of the agency.

A change in the governance structure of the CFPB would likely affect the influence dynamic as the bureau continues its process of rulemaking for the debt collection industry. It is unclear exactly what that would mean, but given the significant influence that banks have, insideARM would guess that this would have an effect on the outcome of first party rulemaking.

MINNEAPOLIS, Minn. — With Mother’s Day being this month, moms are in the spotlight, but as a survey recently conducted by the International Association of Commercial Collectors (IACC) indicates, whether you’re a mom, daughter, sister, aunt or grandmother, the collections industry is a choice one for women, with a significant number of respondents saying it was easy to break into the field and that they have advanced in their careers since they started.

The purpose of the IACC Women in Collections survey, conducted in April of 2017, was to gain insight into the experience of women entering and working in the collections industry and learn what personal traits and professional proficiencies served them best as they started their careers, as well as after they were established. The survey also provides insight into what experience women brought to their positions in collections and the type of education or training most women had upon entering the field.

The 71 women who responded to the survey ranged from being Vice-Presidents to COO’s and CFO’s within their companies, to senior managers and sales representatives, to support staff and receptionists, with anywhere from 2 weeks of experience to 40 years. Forty-six percent held either bachelor’s or associate degrees, while 34% said they had “specialized training” that included high school diplomas, J.D.’s, MBA’s, and Paralegal or Medical Lab Technician certifications.

Easy to enter, and advancement possible – but hard work involved

A significant majority – 65% — said that it was easy to break into the collections field, with one respondent commenting, “It was easy to get into the industry, but it’s harder to be successful. It takes a lot of hard work, energy and dedication. This is not just a job, it’s a career.” Another respondent found her path to a collections career was assisted by women who came before her, saying, “I was hired by a company where the majority of the management was comprised of women.”

With 76% indicating that they had advanced in their collections careers since they began, one respondent commented, “I feel women have the opportunity to do what they set their minds to in the industry in this day and age,” while another concurred, saying, “There are opportunities at all levels, in any department.”

Honing in on essential personality and professional traits

Female respondents were asked to select the most important personality traits essential for women to succeed in commercial collection using a scale ranging from “very important” to “not important.” An overwhelming number considered the most important traits to be: “self-motivated” (90%), “relating well with people” and “verbal communication skills” (tied at 87%), and “confidence” and “trustworthiness” (tied at 84%).

Other traits garnering high scores included “being ethical” and “remaining calm under stress.”

“These traits aren’t any more important for a woman than for a man,” said one respondent. Another added a couple of her own traits, stating, “Wanting to help another individual through a difficult time through patience and understanding is extremely important.”

Another question which gauged the professional competencies needed to succeed in commercial collections gave top ranking to these “very important” categories: “Critical thinking, decision making and learning skills” (93%), “negotiating skills” (91%),  and “maintaining relations between client and customer despite potentially unpleasant circumstances” (90%). Other qualities more than half of respondents ranked as “very important” included: “time management” (84%), “familiarity with policies and procedures and commitment to following them” (77%), and “customer service” (74%).

Customer service experience important? Yes. Telemarketing? No.

Survey respondents were asked to rank the types of professional experience they thought were most beneficial to them as they were getting established in the field, with the selections including: sales, call center experience, telemarketing, accounting, accounts payable/receivable, and customer service.

Overwhelmingly, the majority selected customer service as the most important experience they attained before entering the collections field at 42%, with the next closest, sales, at 27%. One respondent commented that customer service is most important, “because it teaches you how to handle different personalities in an efficient way in order to obtain the best result.”

The remaining choices, in descending order, were: accounts payable/receivable (15%), call center experience (9%) and accounting (7%). No one chose telemarketing.

Women were also asked where they thought were the greatest opportunities for women entering the field today, and responses reflected some of the same areas of experience respondents thought were important to bring into the profession that are mentioned above, including: sales, customer service, management, and marketing.

One respondent summarized her experience as a woman working in the collections field by saying, “I believe being a woman in the industry is a privilege. I find it almost easier speaking to people and am able to obtain payment just by being a nice individual. Having an outgoing personality and great communication skills also helps me in collecting.”

An industry of opportunity

“IACC’s survey data clearly demonstrates that the commercial collections field is at least as equally accessible for women as it is for men, with plenty of opportunities for advancement with hard work and dedication,” said Jessica Hartmann, IACC’s Executive Director. Hartmann added that staying up to date on the latest educational trends is also vital to succeeding in the industry, stating that was the motivation for the creation of the IACC’s Emerging Leaders Task Force and other educational initiatives this past year.  

“IACC is a leader in the industry, and aware of its responsibility to educate its members in areas of opportunity,” continued Hartmann. “The organization is always challenging itself to look at what new and exciting opportunities might be available.”

ABOUT IACC

The International Association of Commercial Collectors, Inc. (IACC) is an international trade association comprised of more than 350 commercial collection agencies, attorneys, law lists and vendors. With members throughout the U.S. and in 25 international countries, IACC is the largest organization of commercial collection specialists in the world. The IACC contributes to the growth and profitability of its members by delivering essential educational and professional tools and services in a highly collaborative and participatory environment. For more information, visit www.commercialcollector.com

insideARM created the following infographic to assist readers in following the many developments related to the Department of Education (ED) private collection agency contract, which began in 2009.

Read the latest insideARM news story here.

 

 

 

 

 

 

 

 

 

 

 

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In the past 24 hours insideARM has learned of two new developments in the seemingly endless battle over the Department of Education RFP for private collection agency (PCA) services. 

ONE – Litigation Related to the December 2016 Awards 

Yesterday, the Honorable Susan G. Braden, Chief Judge of the Court of Federal Claims issued an order for a Preliminary Injunction that continues most (but not all) of the terms of the Temporary Restraining Order (TRO) previously issued in the multiple lawsuits over the Department of Education (ED) RFP for Private Collection Agency work under Solicitation No. ED-FSA-16-R-0009. insideARM wrote about the terms of that TRO in our article on May 1, 2017 and noted that a hearing was scheduled for May 2, 2017 at 10:00 AM to address various motions that were filed in the case. 

The hearing held yesterday was to address the following matters: 

1. A May 1, 2017 Motion from the Government (ED) to Dismiss Count VII of Continental Services Group, Inc.’s (ConServe) March 28, 2017 Complaint Continental Services Group, Inc v. United States, No 17-499. 
2. Continental Services’ March 29, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction (ECF No. 7), filed in Continental Services Group, Inc v. United States, No 17-499 and renewed on May 1, 2017; 
3. Pioneer Credit Recovery, Inc.’s April 28, 2017 Motion For Preliminary Injunction (ECF, filed in Continental Services Group, Inc v. United States, No 17-499; 
4. Account Control Technology, Inc.’s April 28, 2017 Motion For Preliminary Injunction, filed in Account Control Technology, Inc. v. United States, No. 17-493;
5. Progressive Financial Services, Inc.’s (“Progressive Financial”) April 21, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction, filed in Progressive Financial, Inc. v. United States, No. 17-558; and
6. Collection Technology, Inc.’s (“Collection Technology”) May 1, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction, filed in Collection Technology, Inc. v. United States, No. 17-578. 

insideARM was not present at yesterday’s hearing. But, from reading the Order, it appears there was a packed house of participants.

In addition to the parties named above, two other additional named plaintiffs (Pioneer Credit Recovery, Inc., Collection Technology, Inc., Progressive Financial, Inc.) and six intervenors (The CBE Group, Inc., Premiere Credit of North America, LLC, GC Services Limited Partnership, Financial Management Systems, Inc., Value Recovery Holdings, LLC., and Windham Professionals, Inc.) participated in the hearing. The 6 intervenors were companies that were awarded PCA contacts in December, 2016. The 7^th company selected at that time, Transworld Systems, Inc., was not listed as an intervenor but is surely an interested party. The court also noted that Performant Recovery Inc. had filed an appearance in the case.

It appears that the parties could not agree on much. As a result, Judge Braden reacted.

Per the Order: 

“After argument in Continental Services v. United States, No. 17-449, the court invited all Plaintiffs, Intervenor-Plaintiffs and the Government to convene in the court’s chambers to prepare a draft order to preserve the status quo until the United States Department of Education (“ED”) issues corrective action, in response to the Government Accountability Office’s (“GAO”) March 27, 2017 Decision in Gen. Revenue Corp., B-414220.2, Mar. 27, 2017, 2017 WL 1316186. Upon circulating the draft order, other Plaintiffs and/or Intervenor-Plaintiffs who did not elect to participate in that process objected. Counsel for some of the Intervenor-Defendants also objected. 

Under these circumstances, after reading all pending motions and considering argument on May 2, 2017, as well as prior arguments by the parties, the court has decided to grant the Government’s May 1, 2017 Motion To Dismiss (Count VII). Accordingly, Count VII of Continental Services’ March 28, 2017 Complaint is dismissed, without prejudice to being re-raised at a later date. In addition, the court has decided to enter a preliminary injunction.”

Editor’s Note: All other counts in the complaint remain.

The full order outlined the Judge’s reasoning for issuing the order.

Judge Braden’s Order is as follow:s 

“Accordingly, it is ordered that the United States of America, the United States Department of Education, and their officers, agents, servants, employees, and representatives are enjoined, pursuant to Rule 65(d), from:

(1) authorizing the purported awardees to perform on the contract awards under Solicitation No. ED-FSA-16-R-0009; and

(2) transferring work to be performed under the contract at issue in this case to other contracting vehicles to circumvent or moot this bid protest.

The purpose of this Preliminary Injunction is not to micromanage the ED’s debt collection efforts, but to protect the interest of all parties and afford the Government an opportunity to reach a global solution of the aforementioned cases. 

This order will remain in effect until COB May 22, 2017, the first business day after the Department of Justice represented that the ED will file a notice announcing corrective action, in response to the March 27, 2017 GAO Order, or until such time as all the parties agree to an alternative joint order. 

One key change to the terms of the April 24, 2017 TRO was included in yesterday’s Order. It related to a portion of the TRO that read: 

“This Order, however, does not prohibit The CBE Group, Inc., Premiere Credit of North America, LLC, and Transworld Systems, Inc. from continuing to service only “inrepayment” accounts, i.e., those accounts where the contractor and borrower have a mutually agreed upon repayment schedule (see Task Order No. ED-FSA-09-0-0008 at 48), pursuant to Contract Nos. ED-FSA-17-D-0006, ED-FSA-17-D-0007 and EDFSA-17-D-0009, awarded on December 9, 2016, for a period of sixty days, and without further consent of the court.” 

Judge Braden rescinded that provision in yesterday’s order: 

“In effect, this Preliminary Injunction rescinds the April 24, 2017 modification to the March 29, 2017 Temporary Restraining Order, because it provided a competitive advantage to CBE Group, Inc. and Premiere Credit of North America, LLC over Collection Technology, Progressive Financial and Performant Recovery, Inc. that filed appearances in this case after April 24, 2017.” 

TWO – Litigation Related to ED’s decision in April, 2015 to issue Award Term Extensions (ATE) to 5 private collection agency contracts initially awarded in 2009 

Yesterday insideARM also learned of new development in the 2015 litigation over the ATE’s issued to GC Services, Windham, FMS, ACT, and ConServe. insideARM last wrote about that case on March 13, 2017. That article provides a detailed background of the litigation. 

On April 28, 2017 ED filed a “Status Report” to the court. In that status report ED states: 

“On April 28, 2017, the contracting officer offered new award term extension task orders to plaintiffs Enterprise Recovery Systems, Inc. (ERS) and Pioneer Credit Recovery, Inc. (Pioneer). Both were asked to indicate their acceptance by signing and returning the task orders no later than noon on Monday, May 1, 2017.” (Editor’s Note: ERS is now known as Alltran Education.) insideARM has not learned whether or not ERS and Pioneer have accepted the award term extensions. 

“Also on April 28, 2017,the contracting officer informed plaintiffs Coast Professional, Inc. (Coast) and National Recoveries, Inc. (NRI) that — in accordance with the terms of the small business set-aside contracts that both firms currently have with ED — each firm must choose whether to retain their current set-aside contract or instead to receive an award-term-extension task order as a result of the corrective action. Coast and NRI informed ED on April 28, 2017, that they each have opted to continue to perform under their respective set-aside contract, and both firms also simultaneously objected to being forced to choose. Each firm relatedly requested that we state in this status report that the issue is still in dispute. 

In light of the on-going proceedings and the Court’s orders issued in Continental Services v. United States, Case No. 17-449, as well as the other recently-filed related cases, ED will not transfer any accounts to ERS or Pioneer under the newly issued award-term-extension task orders resulting from the corrective action in this case until further guidance is provided by the Court.

As the Government explained in its motion to dismiss and reply, the corrective action plan proposed by ED in this matter moots the claims of all four plaintiffs.” 

insideARM Perspective 

Just when you think this matter can’t get any more challenging or confusing, it does, in fact, get more challenging and more confusing. insideARM can’t even begin to hazard a guess on how this story ends. There are so many parties and so many competing interests, it is hard to believe that a global settlement can be reached that will accommodate all the parties. 

To assist in digesting the full set of ongoing developments, we have produced an infographic.

You can see the infographic here.

insideARM will continue to monitor and report on developments, and update the infographic.

The Preliminary Injunction runs through COB on May 22, 2017.  At the very least we expect an update on the various cases at that time.

———–

Editor’s note: An earlier version of this story listed FMA as a company involved in litigation over the Award Term Extentions (ATE). That was incorrect; insideARM regrets the error. 

Business Insider Australia reported yesterday that a debt collection startup called InDebted has received $1 million in funding. The company provides small to mid-sized businesses with technology-enabled collection services.

According to the article, InDebted’s investors say that the industry remains “archaic,” and is dominated by outdated work processes including snail mail and phone calls.

According to the company’s website, “We will leverage all of the contact methods you can provide. This could be phone, email, postal, and even social media. In addition, we leverage the information you provide to search for other potential contact methods.”

Under the “Legal” link in the footer is a brief Compliance tab, which states that the company “complies with all relevant legislation as appropriate and where applicable.”

Investors in InDebted say that the new cash infusion would be used to expand to international markets, though the article doesn’t list which markets specifically. 

insideARM Perspective

It is true that the majority of the debt collection industry – at least in the United States – remains tied to “archaic” work processes. However in many cases, that is not due to industry choice.

Many savvy and compliance-minded collection agencies say they would love to use modern technology, including email, text, chat –- or whatever means is most comfortable to consumers today. When it comes to adhering to outdated, but still in-force, collection regulations, they generally do not have good options. The risk of lawsuits and the constraints enforced by creditor clients have severely curtailed progress.

My guess is that InDebted and other firms like it primarily sell their services directly to creditors for use in their own collection efforts. So it may be a little misleading to say that a company is going to revolutionize the way debt is collected… at least to those on the inside who understand these distinctions.

At least for now, “first party” collections – collections performed by the creditor that owns the account, in their own name — have greater flexibility than third party collections (those performed post-charge off by companies hired by the creditor to collect on contingency fee). 

Here are a few examples:

One, creditors’ collectors can use a consumer’s email address (if they have it) or cell phone number (but be careful before putting it on an ATDS), and do not have to worry about whether the consumer’s consent passes to them. In the case of 3^rd party collectors, some courts have said it does; some have said it doesn’t. Third party collection agencies – those firms typically referred to when one says “the debt collection industry” – do not have such flexibility.

Two, there are much more specific — and extensive — disclosures required of 3rd parties by both state and federal regulators which do not fit into 140 characters. This becomes a non-starter when it comes to texting.

Three, anytime a collector moves so much as a comma in a letter to a consumer, it creates the potential for a lawsuit because of possible confusion that may be caused. So the concept floated by some FinTechs that tout the use of extremely personalized (and friendly) copy is — while considered best practice in the rest of society — an extremely risky prospect in the world of third party collections.

How to move forward?

One act that would help to alleviate the threat of lawsuits would be for creditors to include broader language in their consumer contracts that clearly gives them the ability to pass consent to their agents. For example,

Consent to Communications. You consent to us contacting you using all channels of communication and for all purposes. We will use the contact information you provide to us. You also consent to us and any other owner or servicer of your account contacting you using any communication channel. This may include text messages, email, automatic telephone dialing systems, and/or an artificial or prerecorded voice. This consent applies even if you are charged for the call under your phone plan. You are responsible for any charges that may be billed to you by your communications carriers when we contact you.

As part of their debt collection rulemaking process, the Consumer Financial Protection Bureau is contemplating whether the same rules and restrictions that currently apply to third parties should also apply to first parties. While this may make sense as it relates to some specific rules, in the case of communications, it will simply turn back the clocks for more companies and more consumers.

The answer isn’t to cut off innovative FinTechs. The answer is to bring the regulatory scheme up to date so that all legitimate firms can operate on a level playing field, and communicate with consumers in the way they prefer, without having to jump through crazy hoops like using snail mail to gain consent to send an email.

SCOTTSBLUFF, Neb. — Accelerated Receivables Solutions, Inc. (ARS), located in Nebraska, was recently designated by the United States Small Business Association to be a Historically Underutilized Business (HUB). The association is charged with insuring the validity and eligibility of the applicants.  A “Historically Underutilized Business” is an entity with its principal place of business in a zone that has been determined to be “historically underutilized”, and at least 35% of the company’s employees live in the HUBZone. 

Steve Laws, COO of ARS, said “we are excited about the opportunities we now have access to through this certification.   We have a great team of dedicated employees that now have the potential to help clients in new markets we have not historically served.”

About Accelerated Receivables Solutions (ARS)

ARS is a nationally recognized accounts receivable management company that specializes in healthcare collections. In business for more than seventy-five years and family owned and operated for more than thirty-five years, ARS brings a proven track record of successful revenue cycle services. 

For more information, please contact: Darren Cook at dcook@ar-solutions.biz or (616)610-6619.

This is the 2nd in a 3-part series about best practices for auditing collection agencies that support revenue cycle management. For Area 1, Cash Handling, click this link. 

Well-trained collection agents can profoundly improve revenue cycle management, while poorly trained agents can expose providers to trouble from regulators and even patient litigation. Routinely auditing training policies and procedures can go a long way toward documenting a provider’s best efforts to manage vendor activity and compliance with applicable regulations. 

10 Questions to Ask About Your Collection Agency’s Training Program

The robust and ongoing training of medical collections agents is crucial to both the patient experience and a provider’s compliance with applicable rules and regulations. Ensure your agency invests time and resources to develop competent agents who understand how to engage patients in payment arrangements that protect your relationships AND your bottom line. Be sure to ask: 

1. How do you ensure your agents understand regulatory guidelines and standards of professional courtesy?
2. Do you provide specific training about managed care, federal health care programs, insurance benefits?
3. Does your training material cover HIPAA, Truth in Lending, the Fair Credit Billing Act, the Fair Credit Reporting Act and the Fair Debt Collection Practices Act?
4. How do you deliver your training? Is there a manual, is the material online? How do you refresh training as the rules change?
5. How do you monitor agent calls? How often? What technology is in place to assist in the effort?
6. Do you have dedicated call monitoring compliance or QA staff on hand?
7. How do you address problems with agents that are uncovered during call monitoring?
8. What kind of alternative financing or payment arrangements are agents trained to offer and facilitate?
9. How do you handle patient complaints or disputes that arise on agent calls?
10. Do you have a formal, written dispute resolution procedure in place? Can you give examples of how you’ve resolved disputes? 

Download a complimentary copy of this questionnaire here: Agency Training Program Questionnaire

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This article was co-authored for insideARM by Ryan L. DiClemente, Esq. and Francis X. Riley III, Esq.

While most people think of the Telephone Consumer Protection Act (“TCPA”) as regulating telephone solicitations and junk faxes, a recent putative class action sought to expand the TCPA’s reach to a new frontier – employment related communications.  In Dolemba v. Kelly Services, Inc., plaintiff brought a putative class action against the defendant staffing company for alleged violations of the TCPA and the Illinois Consumer Fraud Act (“ICFA”) arising from a single phone call and voice message left on plaintiff’s cellular phone.  

Specifically,  plaintiff alleged that she previously applied for employment with defendant in March 2007 and indicated her interest in office related positions, such as accounts payable and accounts receivable.   Plaintiff filled out an employment application, provided her cellular phone number, and authorized the defendant “to collect, use, store, transfer, and purge the personal information that [she] provided for employment-related purposes.” Plaintiff was never offered employment by or through defendant and she never received any communications from defendant between the end of 2007 and February 2016.  On February 26, 2016, plaintiff received a call from defendant through an Automated Telephone Dialing System (“ATDS”).  Since she did not answer the call, defendant left a voice message soliciting individuals for employment as machine operators in certain areas.  Thereafter, Plaintiff filed a putative class action against the defendant for violations of the TCPA and the ICFA arising from this communication to her cellular phone.  

The defendant moved to dismiss plaintiff’s claims and to strike the class allegations.   Defendant argued that plaintiff consented to receive the subject calls regarding employment opportunities from defendant and therefore, plaintiff could not sustain her TCPA claims.  Plaintiff did not dispute that she provided her cellular number to defendant, but argued: (i) her consent expired long before she received the call from defendant in 2016; and (ii) the defendant’s call exceeded the scope of any consent she provided.  

The Court agreed with the defendant and found that plaintiff had “pleaded herself out of court by attaching her employment application, which indicates she consented to receiving calls from [defendant] for employment-related purposes.” The Court further held there were no allegations concerning plaintiff’s revocation of her consent and consent “does not expire at some point in time on its own.”  The Court also disregarded plaintiff’s contention, made upon information and belief, that the defendant treats applications as outdated after some period of time.  It held that these allegations cannot be construed as revocation by “reasonable means,” as silence or inaction cannot be an effective means of revoking one’s consent.  

The Court also rejected plaintiff’s contention that her consent was only limited to communications regarding the office-type positions identified in her application.  The Court found that the consent provided allowed defendant to “use her personal information for ‘employment-related purposes’” and defendant’s communications fell within the “broad consent” provided.  The Court ultimately dismissed her TCPA claim with prejudice finding that any further amendment would be futile.  

The Court likewise dismissed plaintiff’s ICFA claim.  It held that plaintiff’s receipt of “one prerecorded message does not rise to the level of an oppressive practice” under the ICFA and her alleged damages of “loss of time and…battery life” were so negligible they were unquantifiable.  The Court also rejected plaintiff’s attempt to support her ICFA by alleging defendant’s communication violated Illinois’ Automatic Telephone Dialers Act (“ITA”).  Specifically, the Court held that the defendant’s communications did not fall within the purview of the ITA’s definition of a “recorded message” because it did not solicit the sale of goods or services and provided information about a job opportunity.  

While this case represents a “win” for defendants, it also highlights a new area of potential risk for employers who communicate with applicants and/or employees through the use of an ATDS or prerecorded messages.  Employers should closely monitor these emerging risks and take steps to ensure their communication policies and procedures with their applicants and/or employees comply with the TCPA’s requirements. 

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Editor’s note: Class actions against call centers will be an important topic covered at the upcoming insideARM First Party Summit, June 5-7 in Frisco, Texas. Gary Eidelman, Saul Ewing Partner, and Tim Collins, General Counsel at Convergent Outsourcing, Inc., will be speaking about Wage & Hour and Other Critical Employment Issues – What Should you be Doing to Protect Your Company?

 

This is the 1st in a 3-part series about best practices for auditing collection agencies that support revenue cycle management. For Area 2, Training, click this link. 

The rise of high deductible medical plans has changed the face of the consumer healthcare experience, forcing providers to dedicate increasing attention (and resources!) to the financial aspects of patient care. As more and more providers seek to find the right balance between a clinical focus and the needs of running a business, revenue cycle vendors are engaged to take on the expanding work of patient financial services on behalf of providers. This includes first-party work like sending bills and adjudicating claims efficiently, as well as third-party delinquent account collections—all under the yoke of growing regulation.

Even when vendors are engaged, responsibility remains with providers to ensure that their service providers are (and stay) compliant and well positioned for the evolving regulatory landscape as it pertains to medical collections.

Over the next few days, we’ll focus on three areas providers should focus on in their audit of revenue cycle vendors. Each article will also be accompanied by a questionnaire that is free to download. We’ll start with… 

Cash Handling

From a patient’s perspective, contact from a first-party collection agency should look and feel very much like an extension of the trust they’ve developed with their provider. As vendors handle the financial aspects of the patient experience, patient trust can and will erode if they make a payment that is never remitted to the provider client. Enter the importance of vendor cash management. How should providers conduct a thorough audit of a collection agency’s cash handling practices? 

Download a complimentary copy of this questionnaire here: Cash Handling Questionnaire