A recent opinion issued by the U.S. District Court for the Southern District of Florida in Michael v. HOVG, LLC (United States District Court, S.D. Florida, Case No. 16-62651) ruled that a plaintiff had standing to allege that collection agency HOVG, LLC violated the Fair Debt Collection Practices Act (FDCPA) and Florida Consumer Collection Practices Act (FCCPA) by displaying “certain language” and a Quick Response (QR) code through the transparent window of an envelope sent to the plaintiff.

A copy of the opinion can be found here.

Background

On August 11, 2016, HOVG sent a collection letter to plaintiff Aviyawna Michael, who filed suit alleging the following:

“Plaintiff claims that due to certain language contained in the Letter and ‘a Quick Response (“QR”) code [displayed] through the transparent window of the envelope,’ Defendant violated the FDCPA and FCCPA.”

HOVG responded to Michael’s suit by filing an instant Motion on December 12, 2016, arguing that the Court “must dismiss the Complaint because Plaintiff lacks standing pursuant to Spokeo, Inc. v. Robins” and/or because “Plaintiff fails to state a claim under the FDCPA and FCCPA.”

Opinion

Judge Beth Bloom began discussion of the case by first addressing the issue of the plaintiff’s standing to bring the suit pursuant to Spokeo:

“Standing requires that a plaintiff have ‘(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.’ Spokeo, 136 S. Ct. at 1547. ‘To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’’ Id. at 1548 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)). ‘For an injury to be particularized, it must affect the plaintiff in a personal and individual way.’ For the injury to be ‘concrete,’ it must be ‘real,’ and not ‘abstract’; however it need not be ‘tangible.’”

Further, Judge Bloom noted that “in Spokeo the Supreme Court recognized that ‘Congress may ‘elevate to the status of legally cognizable injuries, concrete, de facto injuries that were previously inadequate in law.’”

Citing case law since Spokeo, with particular emphasis on Church v. Accretive Health, Inc, the Court ruled that the plaintiff did have standing in this case.

With respect to the defendant’s argument that Plaintiff failed to state a claim under the FDCPA and FCCPA , Judge Bloom held the following:

• Plaintiff claimed that the QR barcode’s visibility through the transparent window of the envelope was an FDCPA violation. The Court ruled that “it is irrelevant whether the bar code, when scanned, reveals a scrambled or unscrambled number” and that the plaintiff’s claims survive.
• Plaintiff also claimed that the defendant violated the FDCPA by “improperly advising Plaintiff that ‘you may incur processing charges when utilizing the online and phone methods of payment’” and for “wrongfully portraying the current creditor’s willingness to settle the Consumer Debt for less than the full amount as having the same net result as paying the full amount of the Consumer Debt,” saying such statements would mislead the least sophisticated consumer. The Court ruled that “the Court finds Plaintiff’s allegations sufficiently non-idiosyncratic to survive dismissal.”
• Finally, plaintiff claimed that the defendant violated the FCCPA “by attempting to collect an amount from Plaintiff, to wit, a $5.00 convenience fee for payments made over the telephone or via Defendant’s online payment portal, which Defendant was not expressly authorized by contract or statute to collect.” On that point Judge Bloom ruled on that “the Letter does not attempt to collect a $5.00 convenience fee debt” and that claim “fails, and is dismissed with prejudice.”

insideARM Perspective

This result is a negative one for the ARM industry. First, the Spokeo argument failed. Second, this court’s discussion of the issue of the visibility of a QR barcode can be added to the many other “envelope cases” in the past couple of years. insideARM has written about other similar cases on this issue. See the insideARM FDCPA Resources page and the FDCPA Case law grid (updated on a monthly basis thanks to Joann Needleman of the Clark Hill law firm) for links to other cases and insideARM articles about this issue. Finally, the court refused to dismiss claims regarding a potentially misleading letter.

This case illustrates the risk of a having to defend a FDCPA suit if letters contain ANY language beyond what is absolutely required under the FDCPA. Risk/reward analysis should be conducted before adding any new letters to your strategy and system.

Yesterday the Consumer Financial Protection Bureau (CFPB) and the Attorneys General for the states of Illinois and Washington announced the filing of three separate enforcement actions against Navient Corporation and related entities.

A copy of the CFPB complaint can be found here.

Named as defendants in the action are Navient Corporation, Navient Solutions, Inc., and Pioneer Credit Recovery, Inc. (a unit of Navient that specializes in collecting on defaulted loans). The lawsuit alleges that Navient has been in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collections Practices Act. The suit seeks redress for consumers harmed by Navient’s illegal practices. The CFPB is also seeking to keep Navient from continuing the illegal conduct described in the complaint, and to prevent new borrowers from being harmed. 

The CFPB reports that Navient (formerly part of Sallie Mae, Inc.) currently services the student loan accounts of more than 12 million borrowers, over half of them under its contract with the Department of Education. Altogether, it services more than $300 billion in federal and private student loans, which is more than one-in-four borrowers in the United States.

In the complaint, the CFPB alleges that Navient “failed to provide the most basic functions of adequate student loan servicing at every stage of repayment for both private and federal loans. Navient provided bad information in writing and over the phone, processed payments incorrectly, and failed to act when borrowers complained about problems.”

The Bureau further alleges that Navient “systematically made it harder for borrowers to obtain the important right to pay according to what they can afford and that those practices made paying back student loans more difficult and costly for certain borrowers.”

Among the allegations in 66-page lawsuit, the Bureau charges that Navient: 

• Failed to correctly apply or allocate borrower payments to their accounts
• Steered struggling borrowers toward paying more than they had to on loans
• Obscured information consumers needed to maintain their lower payments
• Deceived private student loan borrowers about requirements to release their co-signer from the loan
• Harmed the credit of disabled borrowers, including severely injured veterans       

The Bureau also alleges that Navient, through its subsidiary Pioneer Credit Recovery, Inc.  (Pioneer), made illegal misrepresentations relating to the federal loan rehabilitation program available to defaulted borrowers. They allege that Pioneer misrepresented the effect of completing the federal loan rehabilitation program by falsely stating or implying that doing so would remove all adverse information about the defaulted loan from the borrower’s credit report.

Finally, the Bureau alleges that Pioneer also misrepresented the collection fees that would be forgiven upon completion of the program. 

Separately, but coordinated with the CFPB action, the states of Illinois and Washington filed their own enforcement proceedings.

The Illinois lawsuit can be found here.

The Washington lawsuit can be found here.

In the Illinois proceeding Sallie Mae Bank and General Revenue Corporation (another unit of Navient that collects on defaulted student loans) are added as named defendants.  In a statement on the Illinois Attorney General website, Attorney General Lisa Madigan commented:

“My investigation found Sallie Mae put student borrowers into expensive subprime loans that it knew were going to fail. Navient’s actions have led to student borrowers needlessly carrying billions of dollars in debt and the company must be held accountable.”

In the Washington proceeding only General Revenue Corporation is added as an additional named defendant.  A statement published yesterday on Washington Attorney General Bob Ferguson’s website notes:

“Today’s lawsuit is the culmination of a multi-year investigation by Washington, Illinois and the federal Consumer Financial Protection Bureau, involving depositions and interviews of Navient executives and the review of thousands of pages of company documents.” 

In a statement released by Navient yesterday the company responded to the CFPB action: 

“The allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit—midnight action filed on the eve of a new administration—reflects their political motivations. Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suit improperly seeks to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer. The regulator-asserted standards are inconsistent with Department of Education regulations, and will harm student loan borrowers, including through higher defaults.

Navient has a responsibility to its customers, shareholders, and employees to defend itself—publicly and in court—against this unsubstantiated, unjustified and politically driven action. We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.”

Navient also published a Fact Sheet that provides bullet point responses to many of the CFPB allegations. Among the responses:

Allegation: Navient didn’t do enough to help borrowers to complete reenrollment so they could stay enrolled in income-driven repayment plans.

Facts: Navient goes above and beyond Department of Education requirements to help borrowers complete government-mandated annual IDR reenrollment requirements.

Under Department of Education regulations, borrowers must reenroll annually in income- drive repayment by submitting updated information about their income and family size. This is not Navient’s requirement.

• Navient sends multiple notices and communications to borrowers to help them complete reenrollment on time, meeting or exceeding all federal requirements.
• Navient has pioneered supplemental approaches to support borrowers to reenroll on time. The approaches—evaluated and enhanced over time—go well beyond what is required by federal regulation or contract and have increased reenrollment rates.
• Navient has also advocated for a streamlined process with policymakers, the Department of Education, Department of Treasury, and the CFPB, including a multi-year enrollment income-driven repayment solution. Numerous consumer advocates have joined in this call for a simpler process.
• It is not in Navient’s financial or reputational interest for borrowers to fail to reenroll in IDR as those borrowers have higher rates of delinquency. In fact, servicers are paid less for past- due borrowers and higher delinquency rates are reflected in Direct Loan servicer performance measures.

insideARM Perspective

The timing of these filings is interesting and does lead one to wonder whether there is some political motivation. However, student loans has been a hot topic for some time, and Navient is one of the larger companies operating in the space.  Scrutiny by government agencies is not surprising. 

The complaints – which contain allegations only – should be compared against the responses in the above referenced Fact Sheet. Nothing has been proven at this stage of the proceedings.

Based on the initial response from Navient, insideARM suspects that these matters will not be resolved quickly. We will continue to monitor and report on further developments.

Yesterday The Washington Post reported that Donald Trump’s pick for Secretary of Education, Betsy DeVos, has ties to the debt collection industry through her investment management firm, RDV Corporation. insideARM posted a story yesterday covering that development.

We were since contacted by Performant, and provided with the following letter to the editor that the company submitted to the Post, expressing its view that their article was unfair and misleading. As of this writing, it does not appear that the Washington Post has published the letter; We are providing it here in full.

To the Editorial Staff of the Washington Post,

I am responding to a recent article published in the Washington Post that reported on a financial connection between Performant Financial and Education Secretary Nominee Betsy DeVos, which also attempted to disparage Performant’s reputation through misleading comments that were both inaccurate and irresponsible.  

I believe that it is important to be transparent, especially in a time of uncertainty and when journalistic integrity is being brought into question. However, upon reading the article I was deeply disappointed to see that the journalist largely ignored our commentary as it relates to our association with Ms. DeVos.  I hold the Washington Post in high regard, which is why I attempted to provide the reporter with as much detail as possible without violating the privacy rights of our current investors.  

The article contained the following inaccuracies:

• Despite communicating that Performant’s current amount of long-term debt was $55.9 million, the reporter chose to grossly overstate the amount and use the initial figure of $147 million from 2012. Furthermore, we indicated that the current lending syndicate contained over 20 lending entities and that several of these entities consist of multiple investors.    
• The article also incorrectly stated that Performant was awarded 14 contracts by the Education Department in 2016 worth more than $20 million. In fact, the Company did not receive any new contracts from the Education Department in 2016, and our only contract with the Department expired in April 2016.
• The reporter referenced that the Consumer Finance Protection Bureau (CFPB) received hundreds of complaints against the Company and that the CFPB had requested information related to Performant’s debt collection practices.  However, the CFPB’s own website notes that during 2016 there were only 90 complaints logged with the CFPB against Performant, related to the over 935,000 contacts made during the year, or far less than 0.01% of contacts made during the year. Furthermore, the CFPB closed its review without taking any action.  However, this reporter has twisted the CFPB criticism of other collectors to make it look like the criticism applies to Performant.

Compliance is at the heart of what we do every day and the implication that Performant is not fully vested in the best interests of borrowers is not something that I take lightly.  For over a quarter-century Performant Financial has worked with borrowers and helped them regain their financial independence and improve their overall credit scores allowing them to do many things that people take for granted such as open a new credit card, purchase a new vehicle or even obtain a mortgage for a new home.  We are disappointed that these issues were inaccurately addressed and that Performant Financial was misrepresented in an attempt to drive a political agenda.

Regards,

Lisa Im
Board Chair and Chief Executive Officer
Performant Financial

insideARM Perspective

One other thing is worth mentioning.

The Washington Post article states, “[T]he company disclosed in 2013 that the Consumer Financial Protection Bureau had requested documents and other information related to its debt collection practices and procedures.”

It should be noted that the CFPB is literally in the business of sending such requests to what it calls “larger market participants.” That is the mission of the CFPB’s Department of Supervision; they supervise the larger players in the market by sending requests for documents and then reviewing practices. While insideARM has no specific knowledge of this (or any) particular supervisory activity, the sheer existence of the request for and review of information should not be deemed evidence of wrongdoing.

The bureau has conducted dozens of such audits in the debt collection market over the last few years. Many do not result in enforcement actions but do identify improvement opportunities… much like the GAO has identified improvement opportunities at the CFPB. 

WILMINGTON, Del. — College Ave Student Loans, a leading fintech lending company of private student loans, announced today that Steve Wilansky has joined the team as Chief Legal Officer. Mr. Wilansky brings more than 30 years of experience in corporate and business law.

“Steve is a valued and welcomed addition to our team,” said CEO and Co-Founder Joe DePaulo. “His vast experience and deep industry knowledge will be instrumental to our future success.”

“College Ave is poised for significant growth in 2017 and beyond as the online student lending market evolves,” said Wilansky. “I look forward to being a part of such a pioneering team of professionals.”

Mr. Wilansky most recently served as Chief Legal and Regulatory Officer at Javlin Capital, a leading commercial finance company. He was a member of the start-up team at Javlin, establishing the legal, regulatory and compliance functions for the company with responsibility for all corporate transactions, governance, capital markets, and regulatory oversight and compliance. The company deployed more than $500 million of capital in its first five years.

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Prior to Javlin, Wilansky founded a boutique consulting firm providing legal and strategic advisory services to firms in the consumer asset acquisition business and the legal collection industry.  His experience also includes serving as General Counsel of the Asset Performance Group of Sallie Mae, as well as Vice President and Chief Legal Officer of its subsidiary, Arrow Financial Services.

During his career, Mr. Wilansky has been involved in numerous legislative and regulatory initiatives impacting the accounts receivable management and specialty finance industries. He served on the Debt Buyers Association (DBA) International Board of Directors and as chair of the DBA Legal Committee, and is a co-chair of the In-House Counsel Roundtable of the National Creditors Bar Association. 

Mr. Wilansky earned a Juris Doctor degree from The George Washington University National Law Center and a Bachelor of Arts degree from Cornell University. 

About College Ave Student Loans

College Ave Student Loans is simplifying the student loan experience so students can get on with what matters most: preparing for a bright future. As a fintech lending company with a sole focus on private student loans, we’re using technology and our deep industry expertise to connect families who need to cover education costs with lenders who can provide that funding. By specializing in student loans, we are able to give our customers the attention they deserve and deliver loans that are simple, clear, and personalized for the individual: we help you find your perfect fit. We offer competitive rates, a wide range of repayment options, and a customer-friendly experience from application through repayment. Visit www.collegeavestudentloans.com.

Media Contacts:                                                                     

Angela Colatriano, College Ave Student Loans, acolatriano@collegeave.com, (302) 684-6066

Emily Hollenbeck, Duffy & Shanley, Inc., ehollenbeck@duffyshanley.com, (401) 278-4432

The Supreme Court of the United States (SCOTUS) heard oral arguments yesterday on a debt collection issue that has received inconsistent opinions from the courts – the practice of filing proofs of claims in a consumer bankruptcy case on out-of-statute (OOS) debt.

The case is Midland Funding, LLC v. Johnson, Docket No. 16-348. It is an appeal from an Eleventh Circuit Court of Appeals decision that determined that filing a Proof of Claim on an OOS debt was, in fact, a violation of the Fair Debt Collection Practices Act (FDCPA).

insideARM has written extensively about the case and other similar cases. On May 25, 2016 we wrote about the original Eleventh Circuit decision. On October 12, 2016 we wrote about SCOTUS agreeing to hear the case. Then on January 3, 2017 we wrote about the Consumer Financial Protection Bureau (CFPB) filing an amicus brief in the case.

Factual/Procedural Background

Our May, 25, 2016 article laid out the factual and procedural background in detail. The following is a summary of the facts.

Aleida Johnson filed a Chapter 13 bankruptcy petition in March 2014. In May 2014, Midland Funding, LLC (“Midland”) filed a proof of claim in her case, seeking payment of $1,879.71. Midland is a buyer of unpaid debt. Midland’s claim against Ms. Johnson originated with Fingerhut Credit Advantage, and the date of the last transaction on her account was listed as May 2003. This was over ten years before Ms. Johnson filed for bankruptcy. The claim arose in Alabama, where the statute of limitations for a creditor to collect an overdue debt is six years.

Ms. Johnson sued Midland under § 1692e of the FDCPA. That section of the FDCPA provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”

Plaintiff alleged that the claim on its face was barred by the relevant statute of limitations. Plaintiff argued that the proof of claim was thus “‘unfair,’ ‘unconscionable,’ ‘deceptive,’ and misleading” in violation of the FDCPA.

Midland moved to dismiss Ms. Johnson’s FDCPA suit, and the District Court granted the motion. The District Court read the Bankruptcy Code as “affirmatively authorizing a creditor to file a proof of claim—including one that is time-barred—if that creditor has a “right to payment” that has not been extinguished under applicable state law. The District Court identified tension between this provision of the Code and the FDCPA, which makes it unlawful to file a proof of claim known to be time-barred.” The court found this conflict to be irreconcilable and applied the doctrine of implied repeal to hold that a creditor’s right to file a time-barred claim under the Code precluded debtors from challenging that practice as a violation of the FDCPA in the Chapter 13 bankruptcy context.

The Eleventh Circuit determined that the Bankruptcy Code does not preclude an FDCPA claim in the context of a Chapter 13 bankruptcy when a debt collector files a proof of claim it knows to be time-barred. The court stated: “We recognize that the Code allows creditors to file proofs of claim that appear on their face to be barred by the statute of limitations. However, when a particular type of creditor—a designated “debt collector” under the FDCPA—files a knowingly time-barred proof of claim in a debtor’s Chapter 13 bankruptcy, that debt collector will be vulnerable to a claim under the FDCPA. Our examination of these statutes leads us to conclude that the Code and the FDCPA can be read together in a coherent way.

However, the Eleventh Circuit drew a distinction between a mere “Creditor” and a “Debt Collector”. The court recognized that the FDCPA does not reach all “creditors.” The court noted that the FDCPA applies only to “debt collectors,” who are defined as “any person who . . . regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” The court also noted that “debt collectors” are “a narrow subset of the universe of creditors who might file proofs of claim in a Chapter 13 bankruptcy and not all “creditors” who file a proof of claim in a Chapter 13 bankruptcy case can face potential FDCPA liability as “debt collectors.”

Finally, the Eleventh Circuit noted: “However, when that creditor is also a “debt collector” as defined by the FDCPA, the creditor may be liable under the FDCPA for “misleading” or “unfair” practices when it files a proof of claim on a debt that it knows to be time-barred, and in doing so “creates the misleading impression to the debtor that the debt collector can legally enforce the debt.

The Oral Arguments at SCOTUS

Most lawyers will advise people not to read too much into the questions asked by judges during oral argument. However, there were several interesting exchanges.

The Midland argument can be summarized by the opening statement of their attorney, Kannon K. Shanmugan:

“The Bankruptcy Code sets up a process for evaluating claims that are subject to potential limitations defenses. Under that process, a creditor seeking to collect on a debt files a proof of claim. For certain types of consumer debt, the creditor also includes information to enable the trustee and other parties in interest to assess the claim’s timeliness and where appropriate to object. A creditor is not required to go further and to certify that there is no valid limitations defense to its own claim. If that is exactly what Respondent and the government are asking this Court to do, under the guise of interpreting the Fair Debt Collection Practices Act. “

Mr. Shanmugan did not get to complete his opening statement before the questions started coming from the Justices. Justice Sonia Sotomayor seemed to be skeptical of the Midland Argument. She commented:

“I’m sorry. I’m having a great deal of difficulty with this business model. Completely. You buy old, old debts that you know for certainty are not within any statute of limitations. You buy them and you call up….and you say…. you don’t have to pay me. But out of the goodness of your heart, you should? Or do you just call them up and say, you owe me money, and you hope that they’ll pay you. And is it the same thing in bankruptcy court? You filed a claim and you hope the trustee doesn’t see that it’s out of time? And apparently, you collect on millions of dollars of these debts. So is that what you do?” 

Sotomayor then pressed attorney Shanmugan further:

“Did you have a good-faith basis to believe the statute of limitations was not applicable? So what do you do with the (advisory) committee notes that say that everyone who files a proof of claim has an obligation to do a good-faith inquiry as to whether it’s an enforceable obligation or not? I’m a little bit confused. The fact that the code anticipates that some people will file unenforceable claims even though they shouldn’t, that that somehow proves that the code invites unenforceable claims?”

Justice Elena Kagan also challenged the Midland position. She commented: 

“……. it seems hard to understand why Congress would want all these unenforceable proofs of claim to flow in, because only two things can happen. One is that the trustee will properly filter out those claims; and the other is that the trustee will be swamped and won’t have the time or the energy or the inclination or he’ll make mistakes, and some of those claims will be deemed enforceable when, in fact, they’re not. So why would anybody want these proofs of claim to flood into the bankruptcy system?”

insideARM Perspective

The complete transcript of the oral argument can be found here. insideARM will continue to monitor the case and report on developments. It is likely that SCOTUS will issue an opinion on the case sometime before the end of June.

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion. See the page here or find it in our main navigation bar from any page on insideARM.

The cornerstone of the page is a chart of significant FDCPA cases. Click on the link in the chart for the complete text of the decision. Where insideARM has already published a story on the case, we provide a link. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group.

FDCPA cases in December 2016 brought both positive and negative outcomes for the ARM industry

Carney v. Unifund CCR, LLC

The gist: The District Court for Minnesota found that a law firm did not commit a FDCPA violation by proceeding with garnishment even though consumer filed a claim exemption, as no determination had been made that funds were exempt. Further representation about knowledge of exempt funds were made to the Court and not the consumer.

Long v. Fenton & McGarvey Law Firm P.S.C.

The gist: Consumer alleged that collection letter was confusing and misleading because it did not explain debt buyer’s relationship to the debt, the distinction between debt buyer and original creditor, and why the law firm was retained to collect. The District Court for the Southern District of Indiana ruled that there was a valid claim for a FDCPA violation because a violation of 1692g is a question of fact.

Kaymark v. Udren Law Offices, P.C.

The gist: Case on issues of whether a law firm violated the FDCPA when it alleged in a foreclosure complaint amounts that were not yet incurred was heard before the 3rd Circuit and remanded back to the District Court for the Western District of Pennsylvania. The law firm argued materiality under Jensen but the Court rejected that argument.

Anderson v. Portfolio Recovery Associates, LLC

The gist: Debt buyer was prevailing party winning on a summary judgment that was unopposed. The District Court for the Eastern District of Missouri refused to grant attorneys’ fees under §1927.

Miran v. Convergent Outsourcing, Inc.

The gist: The District Court for the Southern District of California ruled that a statute of limitation disclosure in a settlement letter was not confusing to a consumer and was not a FDCPA violation, and the debt collector had no duty to advise that acceptance of the settlement offer operated as a novation.

Janetos v. Fulton Friedman & Gullace, LLP

The gist: Remanded from the 7th Circuit to the District Court for the Northern District of Illinois on issue of debt buyer’s liability for law firm’s violation of FDCPA. Although law firm is now insolvent, plaintiff can use the net worth of debt buyer to determine damages.

Essique v. Walnut Woods Condominium Association

The gist: Law firm included a statement of account with validation letter. When debtor disputed the debt, law firm continued collection activity and then subsequently verified the debt. The District Court for the Eastern District of Michigan ruled against law firm on issue of whether the act of sending ledger satisfies 1692g(b) requirement of FDCPA.

Frankowski v. Nathanson

The gist: The District Court for the Eastern District of Michigan ruled that a NSF fee can be considered a debt under the FDCPA.

Liang v. Frontline Asset Strategies, LLC

The gist: The District Court for the Northern District of Illinois ruled that the failure to disclose that a judgment was dormant was not a violation of the FDCPA.

Nunez v. Pinnacle Credit Services, LLC

The gist: The District Court for the Southern District of New York ruled it is not a FDCPA violation to delegate disputes to a third party. Passive debt buyer advised consumer that she should dispute account to their servicer.

Valentine v. Midland Funding, LLC

The gist: The District Court for the Eastern District of Missouri ruled that costs added by debt collector after default judgment and not associated with underlying account stated a claim for a FDCPA violation.

Smothers v. Midland Credit Management

The gist: The District Court for Kansas found that the failure to disclose that payment could revive the debt with a time-barred debt disclosure could be confusing to the least sophisticated consumer.

Boedicker v. Midland Credit Management

The gist: The District Court for Kansas found that a letter that offered payment options, disclosed that the account was past statute of limitations, did not use the term “settle” or “settlement” but did not otherwise disclose that payment could revive the debt was not deceptive under FDCPA.

The Washington Post reported today that Donald Trump’s pick for Secretary of Education, Betsy DeVos, has ties to the debt collection industry through her investment management firm, RDV Corporation.

According to the report, RDV is affiliated with LMF WF Portfolio, a limited liability corporation listed in regulatory filings as one of several firms involved in a $147 million loan to Performant Financial Corp. Until recently, Performant had been one of the agencies on the Department of Education’s unrestricted student loan debt collection contract.

insideARM has reported extensively about the winding road of that contract solicitation, which began in 2013. On December 10, 2016 we reported that the Department of Education (ED) had finally announced the companies selected to receive business in the “Unrestricted Category” under Solicitation No. ED-FSA-16-R-0009, Debt Collection Services for the U.S. Department of Education (ED), Office of Federal Student Aid (FSA). Performant was not one of the firms selected, and is now protesting.

The Washington Post article reported that a senior Democratic aide said Performant is one example of a company with possible connections to DeVos that could lead to conflicts of interest should she be confirmed.

As insideARM reported recently, the protests to the December ED contract award are mounting. At the time of our latest report, January 5, 2017, there were eleven protests filed. As of today, there are 26. 

This article previously appeared on Ballard Spahr’s CFPB Monitor and is re-published here with permission.

As rumors swirl that President-elect Trump is planning to remove Director Cordray immediately after January 20th, conflicting views have emerged about his authority to do so before the appeal in PHH is resolved.  We previously blogged about an article written by Aditya Bamzai, an Associate Professor of Law at the University of Virginia School of Law, that asserted the new President could remove Director Cordray while the PHH appeal is pending if the Executive Branch determines that the Dodd-Frank Act’s “for cause” restriction on removal is unconstitutional.  Professor Bamzai also asserted that Director Cordray could not insist that he be allowed to remain in office following a presidential order to vacate it.

Professor Bamzai’s assertions have been challenged in a blog post written by Brianne Gorod, Chief Counsel at the Constitutional Accountability Center.  Ms. Gorod argues that even assuming there are circumstances in which the President can decline to enforce a statute he believes is unconstitutional, existing opinions of the Department of Justice’s Office of Legal Counsel (OCL) make clear that ignoring the law “would be wholly inappropriate” in the context of the CFPB Director.

According to Ms. Gorod, a major reason why the President can sometimes decline to enforce a law is to avoid taking action that is itself unconstitutional.  She argues that compliance with the Dodd-Frank Act’s for-cause removal provision would not require the President to take an action that he believes is unconstitutional (i.e., removal of the CFPB Director is not required to comply with the Constitution).  She also argues that because “there is every reason to think the courts will ultimately conclude that the CFPB’s for-cause removal provision is constitutional,” it would be inconsistent with OLC opinions for a President to choose not to enforce a statute when there is considerable law supporting its constitutionality.

Ms. Gorod also argues that Director Cordray would not have to leave his position to challenge an attempted removal in court and cites examples under President Ronald Reagan and President George H.W. Bush in which officers resisted a removal order until a court could decide whether removal was proper.

WILMINGTON, Del. –– Phillips & Cohen Associates, Ltd., the global leader in deceased account management, is pleased to announce the expansion of its U.S. operations. 

Headquartered in Wilmington, DE, Phillips & Cohen Associates is adding more than fifty (50) new employees over the course of the first quarter, significantly increasing its U.S. footprint.   Providing compassionate and compliant recovery services for many of the top consumer lenders in the U.S. and world, the expansion is driven by new projects as well as further development of long-standing partnerships.

This domestic expansion comes on the heels of Phillips & Cohen Associates being named a top Delaware Workplace in 2016, the seventh consecutive year that the company has been awarded a Top Workplace honor by The Delaware News Journal. Curtis Vincent, SVP, Global Human Resources commented, “[F]ollowing years of significant international growth, this domestic recruiting objective is evidence of the importance of compassionate and empathic recovery, hallmarks of PCA’s approach.  We are excited for the opportunity to recruit, hire, and train career-minded workers from Wilmington and the surrounding areas.” 

Matthew Phillips, Co-Chairman/CEO, added, “[W]e are excited to begin the new year with this next phase of domestic expansion.   It will continue with many new projects in 2017 and beyond.”

For more information regarding career opportunities and other specific questions, contact the Human Resources Department at PCAhr@phillips-cohen.com. Please, no recruiters.

About Phillips & Cohen Associates, Ltd.

Phillips & Cohen Associates, Ltd. is a full service accounts receivable management company providing customized services to creditors in a variety of specialized market segments.  Phillips & Cohen Associates, Ltd. is headquartered in Wilmington, DE, with additional domestic offices in Colorado and Florida, as well as international offices in the U.K., Canada, and Australia.  For more information about Phillips & Cohen Associates visit www.phillips-cohen.com.  Phillips & Cohen Associates provides Equal Employment Opportunity for all individuals regardless of race, color, religion, gender, age, national origin, disability, marital status, sexual orientation, veteran status, genetic information and any other basis protected by federal, state or local laws.

SANTA CLARA, Calif. — Kinum, an innovative collection and healthcare- revenue-cycle service, announces a strategic partnership with CollBox, the leading collections solution for users of cloud accounting systems. The Kinum/CollBox alliance provides a cutting-edge collections service with its simple, secure, and cloud-integrated placement solution for business.  Businesses connect their accounting software (QuickBooks Online) to the CollBox app in seconds which instantly determines which invoices are available for collections.  Clients select invoices and CollBox advances the invoices to Kinum. The CollBox/Kinum alliance streamlines  debt collections  by integrating  billing and collections into a combined process so you can focus on growing your business.  “Kinum delivers a valuable service to thousands of small businesses across the nation, along with solutions that increase revenue while protecting customer relations. We are thrilled to partner with an innovator like CollBox,” said CEO Bruce Klinger. 

About CollBox

CollBox, the leading cloud collections app, simplifies the process of advancing delinquent accounts to collection agencies.  As the highest-rated cloud collections app on the market, recently named one of the 10 best new apps of the year by QuickBooks, CollBox picks up where A/R management software ends, connecting clients to a network of certified, vetted collection agencies like Kinum saving time, money, paperwork, and worry.  CollBox’s network of agencies combined with our collections’ analytics allow us to identify the best agencies for your industry.  To learn more about Kinum/CollBox’s integrated application, visit https://kinum.collbox.co

About Kinum

A Virginia based, smarter debt collection agency, Kinum is one of the top-rated receivables management companies in the United States. Kinum is an industry preferred debt collection agency, providing customized debt recovery solutions for businesses and healthcare facilities nationwide. Visit us:  www.kinum.com; https://twitter.com/UncleLouiedebt; or https://www.linkedin.com/in/bryanpereyo.

For more information contact:
Bryan R Pereyo, Regional Owner, Kinum, (916) 247-4901 or bryan.pereyo@kinum.com.