CHICAGO, Ill. — Commercial Collection Agencies of America recently released its  year-end report and analysis of delinquent account placement with its agency membership. Annette M. Waggoner, Executive Director reports the number of commercial (business to business) accounts placed with agency members rose by 10.82% in 2016 when compared to 2015.

The dollar amount of accounts placed increased by 10.58%. Ms. Waggoner noted that the second  quarter of 2016 registered the largest dollar amount of placements in the eight quarter history  studied while the fourth quarter registered the second largest dollar amount of placements.

The association also studied the average-sized account placed with agency members, which ranged  from just above $2,400 to slightly above $3,100 in both 2015 and 2016. The average-sized account in the fourth quarter of 2016 was 16.64% higher than in the fourth quarter of 2015.

An expanded study also provided an analysis for the pre-recession period through current day. Regarding the number of accounts placed, at the outset of the recessionary period, 2007-2009, agencies reported an increase, followed by a sharp decline from 2010-2013. In 2014 and 2015, there were numerous fluctuations between quarters, while a steady increase was exhibited in 2016.

The same study examined the dollar amount of increases. Between 2007 and 2009, there was a consistent increase in the dollar amount of commercial accounts placed with third party agencies. Between 2010 and 2013, there was a consistent decline. As seen in the number of accounts placed, the index fluctuated between quarters in 2014. In 2015 and 2016, the highest levels in the dollar amount of accounts placed were reported.

The increases in number of accounts placed and dollar amount of accounts placed are encouraging to the seasoned professionals, which make up the membership. While manufacturing output is increasing and according to the economists, industrial sector output growth has been improving over the past months, members note that significant gains in their clients’ sales will have to occur before a notable uptick in account placement will be realized.

About Commercial Collection Agencies of America

Commercial Collection Agencies of America is the premier association for commercial collection agencies, elevating the standards of the collection industry by providing the superior certification program in the industry. The association requires adherence to a strict code of ethics in addition to fulfillment of continuing education of its members. The rigorous certification requirements, set by an Independent Standards Board, ensure that member agencies
provide the highest level of professional service while they collect billions of dollars on behalf
of creditors worldwide.

A list of certified agencies and affiliate members can be found at: www.commercialcollectionagenciesofamerica.com.

To contact the Commercial Collection Agencies of America, email Executive Director, Annette M.
Waggoner at awaggoner@commercialcollectionagenciesofamerica.com.

Yesterday the Federal Communications Commission (FCC) released a public notice soliciting comment on a petition by All About the Message, LLC (AATM) for declaratory ruling under the Telephone Consumer Protection Act (TCPA).

The petition requests that the FCC “declare that the delivery of a voice message directly to a voicemail box does not constitute a call that is subject to the prohibitions on the use of an automatic telephone dialing system (‘ATDS’) or an artificial prerecorded voice under the TCPA.” Alternatively, AATM requests a retroactive waiver for AATM and its customers “pursuant to 47 CFR § 1.3, with respect to any voicemail message delivered by AATM or on behalf of an AATM customer to any recipient” by direct-to-voicemail insertion technology.

The public notice includes instructions. The deadline to file comments is May 18, 2017.

 

On April 12, a federal judge in Illinois ruled that prior express consent in a credit card agreement defeated a Telephone Consumer Protection Act (TCPA) claim, but there was a genuine issue of fact for a jury to decide whether 87 calls to a consumer over a period of 19 days was a Fair Debt Collection Practices Act (FDCPA) violation.  The case is Losch v. Advanced Call Center Technologies, LLC. (Case No. 15-C-6644, U.S. District Court, ND of IL, Eastern Division.) 

The case came before the Honorable Judge Gary Feinerman on defendant’s motion 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. 

A copy of Judge Feinerman’s Memorandum Opinion and Order can be found here. 

Background 

Plaintiff, Jenna Losch, brought a lawsuit against defendant, Advanced Call Center Technologies, LLC (ACCT) alleging that ACCT violated the TCPA, 47 U.S.C. § 227 et seq., and the FDCPA, 15 U.S.C. § 1692 et seq., Doc. 1, by calling her cell phone on numerous occasions over a two-week period.

The court determined the following facts as undisputed:

• Losch visited a Banana Republic store in Chicago on May 4, 2014.
• Losch decided to obtain a Banana Republic credit card after a sales associate explained that it would entitle her to a discount for her purchases that day.
• The sales associate briefly reviewed the terms of the credit card agreement with Losch, and she then signed the agreement and provided her cell phone number.
• Losch was generally familiar with how the credit card worked, and she knew that she would be bound by the terms of the credit card agreement even if she did not read them.
• Among those terms were the following:

This Agreement. This is an Agreement between you and Synchrony Bank, 170 Election Road, Suite 125, Draper, UT 84020, for your credit card account shown above. By opening or using your account, you agree to the terms of the entire Agreement. The entire Agreement includes the four sections of this document and the application you submitted to us in connection with the account. These documents replace any other agreement relating to your account that you or we made earlier or at the same time.

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, 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. 

• Losch charged the purchases she made at Banana Republic that day to the Banana Republic card, and she later used the card to pay for other purchases.
• In the late summer or early fall of 2014, Losch began experiencing financial hardship and stopped making payments on the card.
• ACCT makes outbound debt collection calls on behalf of Synchrony Bank, the bank that issued Losch’s card.
• ACCT was assigned to make collection calls to Losch, and it used an automatic dialer system to call the cell phone number that Losch provided on her credit card application.
• ACCT called Losch 87 times between December 5 and December 23, 2014.
• Three to five calls were placed each day, and no two calls were made less than about two hours apart.
• Losch did not pick up any of the calls until December 23. On that occasion, she told the ACCT representative that she was unable to pay the debt and asked that ACCT halt the calls.
• ACCT did not call her again. 

The Court’s Decision – The TCPA Claim 

Judge Feinerman quickly decided the TCPA issue. He wrote: 

“ACCT is correct that Losch consented to be called. To obtain her credit card, Losch signed a contract that, as noted above, contained this language: 

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, automatic telephone dialing systems, and/or an artificial or prerecorded voice. The contact information Losch provided was her cell phone number, and that is the number that ACCT called. 

That ACCT rather than Synchrony Bank made the calls is of no legal consequence. The credit card agreement expressly contemplated the possibility that a “servicer” would contact Losch, and the TCPA treats consent given to a creditor as if it were given to a third-party debt collector acting on the creditor’s behalf.

Accordingly, Losch provided her prior express consent to receiving debt collection calls from ACCT when she obtained her Banana Republic card. That consent necessarily defeats her TCPA claim.” 

The Court’s Decision – The FDCPA Claim 

On the FDCPA claim Judge Feinerman wrote:

“The FDCPA provides in relevant part:

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

… (5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. 

Whether repeated phone calls were made with intent to annoy, abuse, or harass depends on the volume and pattern of calls. Generally, there are two types of evidence presented to show an intent to harass under § 1692d(5). First, where a plaintiff has shown that he asked the collection agency to stop calling … and the collection agency nevertheless continued to call the plaintiff … . Second, the volume and pattern of calls may themselves evidence an intent to harass. 

Because ACCT did not continue to call Losch after she asked it to stop, Losch opposes summary judgment based on the volume and pattern of ACCT’s calls. 

As a general rule, whether the volume and pattern of a debt collector’s calls violates the FDCPA is a jury question.

ACCT called Losch’s cell phone 87 times over a period of nineteen days, with three to five (but usually five) calls each day. True, ACCT did not call Losch early in the morning or late at night, or make one call immediately after another. Those facts certainly could lead a reasonable jury to find in ACCT’s favor, but not necessarily so.

ACCT continued to call Losch day after day, at various times of day, on weekends and weekdays for over two weeks, any belief that Losch was not answering the calls because she missed them inadvertently or that she would have wanted to be called at a different time became less and less reasonable—or so a reasonable jury could find. A jury thus could conclude that, at some point during those nineteen days, ACCT’s intent in continuing to call crossed the line from “a legitimate persistent effort to reach the plaintiff.

Losch’s FDCPA claim therefore survives summary judgment.”

insideARM Perspective 

This case provides a positive result for the ARM industry on the TCPA claim and the issue of prior express consent. However, the case proceeds on the FDCPA claim. The court ruled that whether 87 calls in 19 days shows intent to annoy, abuse, or harass is a question of fact for the jury to decide. The judge denied the motion for summary judgment on the FDCPA claim. 

The real FDCPA question for the ARM industry is this: What is the dialer penetration rate that should be used to avoid potential liability for “annoying or harassing?” Years ago, a 5-times per day dialer penetration rate was commonplace. However, most ARM companies have backed off that type of call frequency.  The CFPB has clearly indicated in their Outline of Proposed Rules that they believe that type of call frequency is too high.  

What is the magic number?

The industry awaits final CFPB rules.

Editor’s Note:

First party collection activity is becoming a larger segment of ARM industry business every year. Virtually every type of business does some amount of first party collections, whether handled internally or outsourced.  This is the second of two excellent articles featured this week at insideARM about first party collections written by Linda Straub Jones from Lexis Nexis Risk Solutions.

Reminder: The insideARM 3^rd Annual First Party Summit is being held June 5-7 in Frisco, TX. This is the ARM industry’s only conference dedicated to first party activity – from customer care, customer service, to collections. If you want to learn more on this topic register here now.

I frequently speak with the collection departments of many banks and credit unions.  Since my job revolves around compliance, that’s where the conversation generally leads to – compliance within the credit and collections industry.  One surprising trend in these conversations is the number of first party collections personnel who say they aren’t concerned about the CFPB’s upcoming collections rulemaking, or the FDCPA.  While most collection departments in banks and credit unions do follow many aspects of the FDCPA, especially those relating to fairness when dealing with consumers, they also state that since the FDCPA doesn’t apply to creditors collecting their own debt, they don’t necessarily have to follow those rules. 

While all of this is true, one thing that many people forget is that the FDCPA and the CFPB’s upcoming collections rules aren’t the only regulations that first party’s need to be aware of when doing collections – let’s not forget about UDAAP!  Under the Dodd-Frank Act, all covered persons or service providers are legally required to refrain from committing Unfair Deceptive Abusive Acts and Practices (UDAAPs).   In fact, CFPB Bulletin 2013-07 revolves around UDAAP in the collection of consumer debts.  If you haven’t read this recently, I’d suggest a quick review of this bulletin.

The CFPB is actively pursuing first parties for UDAAPs related to their collection activities.  Additionally, the CFPB can determine exactly what it considers a UDAAP – while there are general guidelines as to what a UDAAP is in the Bulletin, the CFPB leaves much of the interpretation to its own discretion. 

But first, let’s review what UDAAP means:

UNFAIRNESS: An act or practice is unfair when:

1. it causes or is likely to cause substantial injury to consumers; 
2. the injury is not reasonably avoidable by consumers; and 
3. the injury is not outweighed by countervailing benefits to consumers or to competition. (A “substantial injury” typically takes the form of monetary harm)

DECEPTIVE ACTS OR PRACTICES:  An act or practice is deceptive when:

1. it misleads or is likely to mislead the consumer;
2. the consumer’s interpretation of the behavior reasonable; and
3. behavior is material (the misleading representation, omission, act, or practice etc. ) (Representation, omission, implication etc.  May disclose to avoid deception.) 

ABUSIVE ACTS OR PRACTICES: An act or practice is abusive when:

1. it materially interferes with the ability of a consumer to understand a term or condition product or service; or 
2. takes unreasonable advantage of – a lack of understanding about the cost, risks, or conditions of the product or service; the inability of the consumer to protect themselves when selecting or using a consumer financial product or service; or takes advantage of consumer’s trust that entity is acting in their best interest. 

In order to understand better what the CFPB considers a UDAAP in first party collections, look no further than two suits that took place in 2016.

• August 2016: Wells Fargo. Student Loan servicing practices. $410K in relief and $3.6 M in civil money penalty. The Bureau identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information.
• September 2016: Navy Federal Credit Union. $23 M in redress and $5.5 M civil money penalty for threatening to file suit, garnish wages, contact commanding officers, and change the credit scores of members who fell behind on payments.  The CFPB further found that in most cases Navy Federal did not intend to act on any of its threats to its members.

It’s important to note that even if you are a smaller bank or credit union, this doesn’t exclude you from the CFPB’s supervision.  The CFPB has said time and time again that it looks to its consumer complaint portal for leads as to which companies are being unfair, deceptive or abusive to consumers.  No matter your size, if you are participating in UDAAP’s against consumers, the CFPB will pay attention to you!

All information provided in this article is general in nature and is provided for educational purposes only.  It should not be construed as legal advice.  For legal advice applicable to the facts of your particular situation, you should obtain the services of a qualified attorney licensed to practice in your state.

 

 

New enterprise wide brand identity supports the company’s exponential growth and long-term business strategy

PHOENIX, Ariz. — Empereon-Constar, a leading provider of end-to-end customer engagement and customer management solutions, today introduced the new trademarked enterprise brand, unveiling an updated logo and launching a redesigned website as part of the comprehensive rebranding strategy.

“Empereon-Constar’s rebranding evolved as a result of our diversified expansion and rapid growth,” stated Travis Bowley, Chief Executive Officer. “Although we remain two distinct, but affiliated and privately held entities, our more comprehensive brand identity as Empereon-Constar supports our enterprise wide efforts and long-term business strategy as we move forward in the global marketplace.”

Over the last three years, Empereon-Constar has experienced significant growth contributing to an average 24% annual growth year over year. Empereon-Constar’s partnership seamlessly provides our clients’ with leading business process outsourcing, end-to-end customer engagement and customer management solutions.

While the brand, logo, and website have changed, the company’s core mission remains the same – to “provide end to end customer interaction solutions” across the whole spectrum of consumer service and accounts receivable management for varied and multiple industries always delivering quality service to Empereon-Constar’s client partners.

“The redesigned logo and website showcase our innovative, industry-leading customer account services,” said Yvonne Torrijos, Chief Marketing Officer. She added, “Our rebranding provides a fresh look for the company that resonates with our employees and emphasizes our value driven approach to becoming a trusted partner of our clients.”

Visit our website www.empereon-constar.com for more information.

About Empereon-Constar

Empereon-Constar is a leading business process outsourcing company providing end-to-end customer engagement and customer management solutions for New Sales Account Generation, Risk and Fraud Operations, Collections Operations and Tech Support across the entire customer account lifecycle.

Empereon-Constar’s full range of consumer and commercial services includes: lead generation, inbound / outbound sales, account origination, customer care, customer service, technical support, first party collections, recovery collections, credit bureau dispute management, fraud risk management, anti-money laundering, loan servicing and loan processing. Our world-class services and unique global strategy allows us to meet the needs of our client partners across multichannel (email, chat, phone) communication platforms, provide exceptional customer experiences, and consistently deliver world-class performance results, while maintaining the highest level of data security and compliance.

There is another new consumer payment option available – Amazon Cash. The execution appears incredibly simple. Here’s how it works, from Amazon’s site:

Get a barcode via text message or print-at-home. Bring this barcode into any participating store and show it to the cashier to add cash to your Amazon Balance.

Then there is a big yellow button, “Get your barcode.” That’s it.

Currently participating retailers are: CVS, Speedway, Kum & Go, D&W Fresh Market, Sheetz, Family Fare Supermarkets, and VG’s Grocery.

At this time, the funds are available for use only to make purchases on Amazon.com. But I suspect this is a precursor to an Amazon payment product – like PayPal or Venmo – for payments to other merchants or individuals.

There is no doubt that consumers will eventually start to ask (if they haven’t already) whether they can make payments on their debts with one or more of these new forms of payment. Technology providers, creditors, collectors, and regulators would do well to work through the hurdles to making these options available.

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

Since the birth of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) well over 150 Consent Orders have been entered against every sector of the financial services industry. Many of these Consent Orders came with a great deal of fanfare with exuberant press releases and exorbitant penalties. But what happens when all monies owing to affected consumers are paid and a surplus of funds remains? Under the Miscellaneous Receipts Act the money is to go to the U.S. Treasury. However, a recent federal court decision uncovered an attempt by three State Attorneys General to divert the money elsewhere, apparently possibly with the CFPB’s blessing. 

In 2014, the CFPB brought an action against Sprint in the United States District Court for the Southern District of New York for improper and unauthorized charges to its customers’ wireless telephone bills. In 2015, the parties settled the case and the CFPB sought judicial approval of the settlement, which initially was rejected by the Court because the CFPB failed to appropriately explain why the settlement was fair, reasonable and consistent with the public interest. After amending its application, the Court approved the settlement for $50 million, which would pay the claims of affected consumers. Consistent with the terms of prior CFPB Consent Orders, if any balance remained after the payment of all claims, the money would be returned to the CFPB to determine other equitable relief that reasonably would be related to the allegations against Sprint. To the extent any remaining funds existed thereafter, the monies were to go to the U.S. Treasury.

Sprint also settled with the Federal Communications Commission (“FCC”) for similar allegations as well as entered into agreements with all 50 state Attorneys General and the Attorney General for the District of Columbia.

Complete redress was made to Sprint customers sometime in 2016; however a balance of $15.14 million remained. After consultation with the FCC and the Attorneys General, the CFPB could not identify any equitable relief to which the remaining settlement funds could be applied. Rather than comply with the terms of the Consent Order and return the balance to the U.S. Treasury, the CFPB held onto the money. Shortly thereafter, three Attorneys General from Vermont, Kansas and Indiana petitioned the District Court to intervene and modify the Consent Order to redirect the undistributed settlement monies to develop a research and training institution for consumer protection, in affiliation with the National Association of Attorneys General (“NAAG”). Sprint filed an opposition to that motion but ultimately consented to the Attorneys General request. In their joint submission to the court, Sprint and the Attorneys General reported that the CFPB took no position on the matter.

The District Court rejected the petition and the joint submission for three reasons: (1) the proposal would fundamentally alter the Consent Order and redirect funds earmarked for the U.S. Treasury, possibly violating the Miscellaneous Receipts Act; (2) the modification of the Consent Order was not reasonably related to the allegations set forth in the complaint against Sprint, and the NAAG project would not provide any assistance to consumers affected by Sprint’s billing practices; and (3) both the CFPB and Sprint “unmistakably knew” by the plain terms of the Consent Order that undistributed settlement funds were to go to the U.S. Treasury. The Court ordered the CFPB and the Department of Justice to respond separately to the intervention motion. Specifically, the Court ordered the CFPB to advise where the unexpended funds have been deposited during the pendency of the motion to intervene. 

Providing monetary and equitable relief to consumers is an important role of the Bureau, however it has taken it on the chin lately with the Administration and Republicans building a “for cause” case to remove Director Cordray. This matter only adds potential traction to the claims that the CFPB is a “rogue agency.” The worst thing the CFPB can do is attempt to ignore statutory requirements in crafting enforcement actions.  By doing so, the Bureau loses credibility, potential respectability and risks additional adverse findings by the courts. Ignoring the law as well as its own settlement agreement in the name of consumer protection simply cannot be reconciled. Now more than ever the CFPB should work to strengthen its reputation and ability to continue its mission in a well-measured and reasonable way. 

A United States District Court judge in Minnesota has dismissed, with prejudice, a Telephone Consumer Protection Act (TCPA) case that appeared to be a “relatively straightforward case,” but instead mushroomed into contentious and costly litigation.  The case is Ung v. Universal Acceptance Corporation, (Case No, 15-127 U.S. District Court, MN). 

The case was originally filed on January 20, 2015, and was assigned to the Honorable Richard H. Kyle, U.S. District Court Judge, MN. insideARM originally wrote about it on August 16, 2016. In that article, we reported that Judge Kyle, relying on the Supreme Court case of Spokeo v. Robbins, (136 S.Ct. 1540 (2016), denied a request to dismiss the plaintiff’s TCPA claim for lack of standing.

Though we have not previously written a second story on the case, we have included it one other time in our TCPA Resources/Caselaw grid. On January 24, 2017 Judge Kyle denied Ung’s request for class action certification.

The latest act in this case involved a motion for summary judgment brought by Universal Acceptance Corporation (Universal).

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.

Background 

Judge Kyle’s April 6, 2017  Memorandum Opinion and Order provides a concise background on the case and, at the same time, provides insight into his subsequent opinion: 

“On the surface, this is (and should be) a relatively straightforward case; indeed, the events giving rise to the action are undisputed. As is often the case, however, things are not quite as simple as they might seem. Universal is the financing arm of Interstate Auto Group, Inc., d/b/a CarHop (“CarHop”), an Edina, Minnesota company that sells used cars nationwide to people with poor or no credit. A person interested in buying a CarHop vehicle must submit a financing application listing credit references and the name of the buyer’s landlord. This provides Universal with contact information for persons who could pass along messages if the buyer were to fall behind on the vehicle’s payments.

Ung was one such individual whose contact information was provided by a car buyer. In 2013, Joseph Holley purchased a Kia Sorrento from a CarHop location in Crystal, Minnesota; he provided Ung’s name and cell-phone number, listing Ung as his landlord. Holley eventually fell behind on the Kia’s payments and Universal began placing calls to Ung. It is undisputed that between June and October 2014, Universal called him twelve times on his cell phone. Ung alleges that each of these calls was placed without his consent and, accordingly, violated the TCPA.

The foregoing is, in essence, the entire crux of this case. But against this simple backdrop, the parties have attempted to drag the Court down a rabbit hole, raising complex arguments about the intricacies and capabilities of the telephone system Universal used to call Ung.”

In a footnote to this statement, Judge Kyle commented: 

The parties’ arguments and blizzard of briefing remind the Court of Alice, having passed through the looking glass, exclaiming, “It seems very pretty . . . but it’s rather hard to understand! . . . Somehow it seems to fill my head with ideas – only I don’t know exactly what they are!” Lewis Carroll, Through the Looking Glass, ch. 1.           

This, according to the parties, is because the TCPA only prohibits calls made using an “automatic telephone dialing system [ATDS] . . . to any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii) (emphasis added). The statute defines an ATDS as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” § 227(a)(1). The parties’ entire dispute, therefore, has devolved into a question about the phone system on which Universal called Ung’s cell phone: Ung contends that it qualifies as an ATDS, while Universal contends it does not. The parties have submitted nearly 100 pages of briefs – and a small mountain of documents – addressing the intricacies and capabilities of Universal’s telephone system, and having pored over those submissions, the Court concludes that no genuine issue of fact exists, as set forth below.” 

The Court’s Decision 

As noted above, Kyle granted Universal’s motion for summary judgment. The key to his decision was a determination that Universal did NOT use an ATDS to call the plaintiff. 

Per the opinion: 

“According to the Federal Communications Commission (FCC) – which is tasked with enacting regulations to implement the TCPA, 47 U.S.C. § 227(b)(2) – the hallmark of an ATDS is the ability to dial numbers without human involvement. As early as 2003, the FCC recognized that the “basic function” of an ATDS is “the capacity to dial numbers without human intervention.” The FCC has never wavered from this “human intervention” requirement, repeatedly reiterating that the capacity to independently place calls without the involvement of a live person remains central to determining whether telephony qualifies as an ATDS. 

There are two key reasons for this. First, the FCC’s interpretation hews to the TCPA’s text, which requires that an ATDS have the “capacity” to “dial” telephone numbers. 47 U.S.C. § 227(a)(1) (emphasis added). Without the capacity to dial on its own, telephone equipment simply cannot be an ATDS. Second, the FCC’s interpretation hews to the purpose behind the TCPA, which was aimed at slowing (if not stopping) the rapid increase in telemarketing calls.

The FCC’s understanding of this “basic function” of an ATDS proves critical in this case, because there is no genuine issue here that Universal’s calls to Ung – and every other landlord whose contact information was provided by a CarHop customer – required human intervention.” 

However, plaintiff argued that human intervention was irrelevant to whether Universal’s telephone equipment qualifies as an ATDS. In support, he noted that in a July 2015 Order, the FCC declined to “adopt a ‘human intervention’ test” for whether telephony qualifies as an ATDS. 

Kyle responded to that argument: 

“But contrary to Ung’s assertion, this does not render human intervention irrelevant to the inquiry. Rather, the FCC’s 2015 Order simply made clear that there are no bright-line rules for determining when calling equipment is an ATDS, and human intervention remains a factor – a key one – to be considered in the analysis. This is precisely why the 2015 Order also provides that “[h]ow the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination.” 

Finally, Kyle addressed the issue of future “capacity” of a piece of equipment to become an ATDS.  He wrote: 

“Ung also makes much of the fact that in its 2015 Order, the FCC recognized that a telephone system may have the “capacity” to autodial calls even if not presently being used for that purpose. (Mem. in Opp’n at 6-7 (citing authority for the proposition that the “capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities”).) Yet, by this logic, almost any telephone equipment could be considered an ATDS. It does not take a creative mind to envision a 1960s-era rotary phone attached to modern computer equipment, rendering the rotary phone capable of dialing telephone numbers, but no one would suggest a rotary phone is an ATDS because of this “potential functionality.” Indeed, the FCC cited this very example in its 2015 Order when cautioning against stretching the definition of an ATDS too far.” 

insideARM Perspective 

At insideARM we usually like to provide our own, unique, perspective to a case. However, in this case, the conclusion of Judge Kyle provides a better perspective than anything we could write.  Judge Kyle concluded his opinion with the following: 

“What started as a simple case more than two years ago has now wended its way through more than 200 docket entries, including several Motions to Dismiss, a failed mediation, a Motion for Class Certification, and the instant Motion for Summary Judgment. In the Court’s view, it is now time for this case’s journey to come to an end. Because the evidence does not suggest Ung was called using an ATDS, his TCPA claim fails as a matter of law, and Universal is entitled to summary judgment. 

Based on the foregoing, and all the files, records, and proceedings herein, IT IS ORDERED that Universal’s Motion for Summary Judgment (Doc. No. 194) is GRANTED, and Ung’s Complaint (Doc. No. 1) is DISMISSED WITH PREJUDICE. LET JUDGMENT BE ENTERED ACCORDINGLY.”

Yesterday, insideARM reported on the public release of the Government Accountability Office (GAO) decision on protests filed in response to the December 2016 awards of Department of Education (ED) contacts for Private Collection Agency (PCA) services.  In yesterday’s article, we promised a more detailed review of the decision. The protests themselves are subject to a GAO protective order and unavailable to the public. The GAO document that was released to the public is a redacted version of the decision. Thus, it is difficult to fully understand some parts of the decision.  

As noted in yesterday’s article, an award was to be made to the responsible offeror or offerors that submitted a proposal which conformed to the solicitation and was determined to be the “most advantageous” to the government. For the purposes of determining which proposals were the most advantageous, the agency was to consider three factors: (1) past performance; (2) management approach; and (3) small business participation. Past performance and management approach were equal in importance, and small business participation was less important than either of the other factors.

The decision was written by Susan Poling, GAO General Counsel. Ms. Poling provided two charts that depicted ED findings for the 3 critical factors. The charts showed the following:

 

 

 

Ms. Poling then addressed the issue of the timeliness of some of the protests. Several of the intervenors and ED had sought dismissal of several of the protests, arguing that they were untimely. Poling disagreed. 

Several intervenors and ED also argued that the protesters are not interested parties to challenge the agency’s evaluation of the awardees’ proposals. Again, GAO disagreed and concluded that the protesters are interested parties to challenge the awardees’ evaluations. 

The decision then moved to the root of the problems with ED’s awards – the evaluations of the key factors. 

Past Performance Evaluations – Generally 

GAO identified a number of concerns with ED’s evaluation of proposals under this factor. Per the decision:

“Some of the errors appear to have impacted the evaluation of several proposals. In such circumstances, we address below the nature of the concern and highlight representative examples. In other instances, the errors appear to have been unique to individual proposals. 

As a general matter, we will review an agency’s past performance evaluation to determine whether the evaluation was conducted fairly, reasonably, and in accordance with the solicitation’s evaluation scheme. We will question an agency’s evaluation conclusions where they are unreasonable or undocumented. Additionally, it is fundamental that a contracting agency must treat all offerors equally, and therefore it must evaluate offers evenhandedly against common requirements and evaluation criteria.”

GAO also noted as a problem the fact that the agency appears in several circumstances to have unreasonably either ignored or discounted relevant information bearing on the quality of offerors’ past performance if it was not included in one of ED’s prior Contractor Performance Assessment Reporting System (CPARS) reports.

They found that this applied the evaluation of Delta Management Associates, Inc. (Delta), Texas Guaranteed Student Loan Corp (TG), and Van Ru Credit Corporation (Van Ru). 

Ms. Poling wrote:

“[There was]……….a pattern by the agency of neglecting to consider, or unreasonably discounting, relevant past performance information, based on what appears to be the agency’s fixation on ED’s prior Contractor Performance Assessment Reporting System (CPARS) reports to the exclusion of other past performance information. It is apparent that the agency unreasonably relied almost exclusively upon CPARS reports in lieu of reasonably considering available past performance information, which the agency itself identified as being highly relevant.” 

Other Specific Past Performance Evaluation & Documentation Concerns 

The decision next moved to a discussion of other past performance evaluations and documentation concerns. 

Ms. Poling noted:

“The record also reflects certain other anomalies in the evaluation of offerors’ past performance. Notwithstanding the protesters’ detailed rebuttals to the agency’s contemporaneous evaluation findings, in many instances the agency’s reports fail to respond–either specifically or generally–to the protesters’ arguments.”

Automated Collection Services, Inc. (ACSI) 

ACSI submitted its own proposal, as well as an additional proposal as part of a contractor team. GAO referred to ACSI when addressing the proposal submitted by ACSI, and the ACSI Team when addressing the proposal submitted by ACSI as part of a contractor team. 

We noted in yesterday’s article that “in several instances, the ED contracting officer, who was also the source selection authority (SSA) disagreed with the ratings initially assigned by ED’s lower-level evaluators, and adjusted the ratings.” 

The ACSI Team challenged the SSA’s decision to change its past performance rating, which ED’s technical evaluation committee (TEC) evaluated as highly satisfactory, to neutral. Ms. Poling agreed with the protester that the SSA’s determination to change the ACSI Team’s past performance rating was inconsistent with the terms of the solicitation, and was otherwise unreasonable. 

TG

TG also challenged the agency’s assessment of an overall satisfactory rating of its past performance. GAO agreed that the record does not support the reasonableness of the agency’s evaluation of TG’s past performance. The TEC found TG’s three past performance references to be highly relevant, and the agency noted positive indicators of performance on TG’s highly relevant contracts; nonetheless, the agency assigned TG a satisfactory rating overall. Ms. Poling concluded “that the agency’s documented evaluation does not reasonably support the agency’s evaluation of TG’s past performance.”

Williams & Fudge, Inc. (W&F) 

W&F argued that the SSA improperly downgraded its past performance to marginal. The record reflected that the TEC evaluated W&F’s past performance as satisfactory. The SSA, while adopting the TEC’s underlying evaluation findings, disagreed with the TEC’s overall satisfactory rating, and instead rated W&F’s past performance as marginal solely because of the relatively small size of the references. The GAO agreed with W&F. Poling wrote: 

“We find that the SSA’s assignment of a marginal rating for W&F’s past performance was unreasonable. We find that the SSA’s assignment of a marginal rating for W&F’s past performance was unreasonable. Accordingly, at worst, W&F’s past performance should have been rated neutral.” 

Collecto Inc. d/b/a EOS CCA (Collecto)/TG/General Revenue Corporation (GRC) 

Collecto, TG, and GRC argued that the agency failed to adequately document and support their satisfactory ratings. In response to the protests, the TEC Chair asserted that the TEC declined to afford certain protesters more credit in the evaluation of their past performance because those protesters presented past performance information “in a self-serving manner” without providing “concrete details. 

Poling determined: 

“These assertions are unreasonable for several reasons. First, these concerns were not documented and are not supported by the contemporaneous record. Second, the nature of the TEC Chair’s criticism is unreasonable and unsupported. Therefore, we find the agency’s post hoc justifications for its ratings are unsupported by the record and unreasonable.” 

The decision next turned to arguments made by some of the protests concerning the companies that were awarded. Two issues were raised. Failure of one awardee to disclose negative judgments and failure of 5 awardees to disclose material changes in key personnel. insideARM refers readers to pages 20-23 of the decision for the GAO discussion of these matters. Note: The GAO sustained the protest of Gatestone & Co International, Inc (Gatestone) with respect to certain of the awardees’ failure to update their proposals based on a material change. 

Failure to Consider Totality of the Proposals 

This section of the decision applied primary to GRC and Collection Technology, Inc. (CTI). But 4 other protesters had similar issues. 

Poling determined: 

“To reach the consensus management score, the TEC reviewed section A of the offerors’ proposals (which included their management plans and key personnel resumes), while the quality control evaluator (QCE) evaluated the QCPs. The evaluators, however, do not appear to have contemporaneously reviewed the entirety of the offerors’ proposals with respect to their complete management approaches (i.e., management plan, key personnel resumes, and QCP). The agency’s cabined review of proposals under the management approach factor, however, resulted in an unreasonable evaluation in several instances. This was because offerors logically organized their proposals in accordance with the solicitation’s instructions, but were penalized by the agency’s failure to consider the merits of the management plan and QCP in a holistic manner as contemplated by the RFP’s evaluation criteria. 

In several other cases, it appears that the agency similarly failed to reasonably consider the entirety of the offerors’ management approaches (i.e., the management plan and QCP). Therefore, the evaluation of the following additional protesters’ management approaches appear to have suffered from similar flaws as addressed in this section: ACSI; the ACSI Team; Collecto; and W&F.” 

Other Unstated Evaluation Criteria 

The GAO also determined that ED imposed additional unstated evaluation criteria in the evaluation of proposals for GRC, ACSI, the ACSI Team, CTI, Performant Recovery, Inc (Performant), Progressive Financial Services, Inc. (PFS), Allied Interstate LLC (Allied). GAO determined that any evaluation on this basis with respect was unreasonable. 

Other Evaluation & Documentation Concerns 

The GAO identified other evaluation and documentation concerns that negatively impacted Delta, the ACSI Team, GRC, Van Ru, and Collecto. 

Summary of the Sustained Protests 

Poling summarized the decision to sustain to protests. 

“As set forth above, the record shows that the agency’s evaluation of proposals was unreasonable in numerous respects. Our review shows that the proposals were reasonably evaluated in some respects, but that the evaluation was unreasonable in many other respects. 

Accordingly, we conclude that the following protesters have established a reasonable possibility of competitive prejudice to prevail in their bid protests: DMA; GRC; TG; ACSI; the ACSI Team; CTI; Performant; Allied; Collecto; Van Ru; PFS; Gatestone; and W&F. “ 

The decision then turned to the protests that were denied. 

Sutherland Global Services (Sutherland) 

The GAO determined: 

“We find no basis to question the agency’s determination that Sutherland’s proposal warranted an unsatisfactory rating under the small business participation plan factor. The record reflects that Sutherland failed to submit the required participation plan and otherwise failed to commit to meeting the 31 percent minimum mandatory small business subcontracting set-aside requirement.” 

Account Control Technology, Inc. (ACT) 

The GAO determined: 

“We find no basis to question the agency’s determination that ACT’s proposal warranted a marginal rating under the small business participation factor. Additionally, the agency assigned ACT’s proposal a weakness because, in addition to missing the majority of the subcategory goals, ACT did not propose to subcontract to SDB or SDVOSB concerns any of the core debt collection-related activities.” 

Global Receivables Solutions, Inc. (f/k/a West) 

The GAO determined: 

“We find no basis to sustain GRS’s protest because the agency reasonably determined that its past performance was less than satisfactory. The record reflects that the TEC rated GRS’s past performance as unsatisfactory due to performance issues on GRS’s incumbent contract. Specifically, the TEC noted that the protester had received a marginal rating for quality on the most recent CPARS report for its incumbent contract.” 

Alltran Education, Inc (f/k/a ERS) 

The GAO determined: 

“We find no basis to question the SSA’s determination that Alltran’s proposal warranted a marginal rating for past performance. The TEC initially rated the protester’s past performance as satisfactory. In reaching that conclusion the TEC noted that Alltran had highly relevant past performance, including as a prime contractor on the incumbent requirements. The TEC noted that Alltran received a very good quality rating on its most recent CPARS report for the incumbent contract, but also noted that Alltran was rated as unsatisfactory for regulatory compliance based on its 23 percent error rate during the agency’s 2015 focused review. 

The SSA disagreed with the TEC’s satisfactory rating, and instead determined that Alltran’s past performance was marginal. Specifically, in addition to the unsatisfactory history of regulatory compliance on the incumbent contract, she also found that Alltran had been suspended for violating agency policies and procedures in performing debt collection activities for rehabilitation when performing its incumbent contract. 

In this regard, we find nothing unreasonable with the SSA considering the conduct that lead to the suspension when the conduct arose in connection with Alltran’s performance of the incumbent requirements, especially where the concerns were exacerbated by Alltran’s subsequent unsatisfactory regulatory compliance rating following the agency’s focused review.” 

insideARM Perspective 

There is a lot to be digested from this decision.  The story has not ended.  In fact, insideARM has learned that ACT has filed a lawsuit challenging this decision. The complaint is not available to the public. The case is captioned Account Control Technology, Inc v. United States of America, (Case No. 1:17-cv-00493, U.S. Court of Federal Claims). 

insideARM will continue to monitor further developments.

The use of “scripts” by consumers to bait telephone debt collectors into alleged FDCPA violations is a calculated strategy dating back more than 10 years.  Typically a consumer obtains such a script from a consumer attorney or from a website.  The consumer will then make an inbound call to a debt collector and read certain questions off of the script, seeking to maneuver the debt collector to make a statement that facially violates the FDCPA.  These scripts usually include vague, leading questions about interest or credit reporting.  If the debt collector “takes the bait” and makes an unintended mistake, a consumer attorney will sue or send a demand letter to the collection agency shortly after the call. Most collection agencies have in place specific training for collectors to identify and avoid such baiting, focusing on the common scripts and the certain States or geographic areas where such baiting most often occurs.

In the latest episode of The Debt Collection Drill, Attorneys John Rossman and Mike Poncin discuss a new baiting strategy by consumers that is resulting in a substantial number of claims and specific strategies for avoiding liability. 

Download it here: http://traffic.libsyn.com/thedrill/TDCD_ep64a.mp3