CBE Leaders Highlight TRMA Speaker Schedule

September 11, 2016 By Leave a Comment

CEDAR FALLS, Iowa – A pair of CBE Companies (CBE) executives will deliver timely, important presentations at the TRMA fall conference Sept. 14 in Miami. TRMA is an industry forum for risk management professionals from the telecommunications, pay TV, utility, waste management and other industries.

Curt Martin, CBE Senior Vice President of Operations, will speak to the importance of a talent inventory management process as a key to success in contact centers. His presentation will focus on how to develop and manage a leadership talent pipeline to support a growing company. Martin has 24 years of senior leadership experience in contact centers, managing both onshore and offshore locations.

Mike Frost, CBE Chief Compliance, Sales Officer and General Counsel, will be joined by Attorney Dale Golden of Golden Scaz Gagain, PPLC in presenting the impact of CBE’s recent Telephone Consumer Protection Act (TCPA) court victory and its impact on the credit and collections industry. In Strauss v. CBE, the court confirmed CBE’s Manual Clicker Application does not constitute an autodialed phone call, therefore mitigating the expensive regulatory risk the TCPA poses for calling consumers’ cell phones.

Frost has been a leader in the collection industry, frequently delivering presentations on compliance issues at industry events across the nation. In 2011 and 2012, Frost was named among the Top 25 Most Influential Collection Professionals by Collection Advisor. In 2014 he was named to the Who’s Who in Collections by the same magazine. Frost is a member of the ACA International Board of Directors and was awarded the 2014 Members’ Attorney Program designation. In 2015 Frost served on a panel for the Federal Trade Commission Debt Collection Dialogue.

About CBE Companies

Founded in 1933, CBE Companies is a global provider of outsourced call center services focused on connecting people to solutions. The company specializes in receivables management and customer care services. This narrow focus has enabled the company to be an expert in every aspect of the business. From a one-of-a-kind culture immersion approach to a proven ramp process, CBE’s focused expertise saves its partners money and enables them to focus on their core business.

CBE approaches every business relationship as a strategic partnership. The company shares in its partners’ successes and failures and strives to create more of the former and less of the latter. CBE firmly believes transparency and communication are the cornerstones in the foundation for success. The company’s approach to a strategic partnership begins with open communication; this assures CBE partners that the team handling their business is committed to delivering customer insights, ideas and new ways to accomplish goals.

With more than 1,200 people in six locations globally, CBE Companies can deliver the right solution in the right location(s) for your ever-changing business needs. Its corporate headquarters is located in Cedar Falls, Iowa, with two facilities in Waterloo, Iowa, and additional facilities in Overland Park, Kansas; New Braunfels, Texas and Manila, Philippines. The organization is consistently recognized as a local Employer of Choice. It has also been recognized by Workplace Dynamics as one of Iowa’s Top Workplaces. For more information about CBE Companies, please visit www.cbecompanies.com or call 888-386-0273.

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Accounts Receivable Management

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U.S. District Court Judge Dismisses Collection Litigation Suit Against Bank of America

September 11, 2016 By Leave a Comment

On Tuesday a federal judge in Pennsylvania dismissed a proposed class action against Bank of America over collection litigation on accounts Bank of America had previously securitized.

The case, Willard v. Bank of America, et. al (Case No. 2:16-cv-01199, United States District Court, Eastern District of Pennsylvania) had been filed in March of this year. insideARM had written about the initial filing. See our March 17, 2016 article: Bank of America Hit with Class Action Over Debt Collection Litigation on Securitized Accounts.

The very next day insideARM wrote another story regarding a similar case that had been filed by the same attorney in 2014. See: Bank of America Debt Securitization Case is Actually Round Two.

Background & Procedural History

On March 15, 2016, Plaintiff filed a class action Complaint pursuant to the Fair Debt Collection Practices Act (FDCPA), the Pennsylvania Fair Credit Extension Uniformity Act (PFCEUA), the Unfair Trade Practices and Consumer Protection Law (UTPCPL), and the Racketeer Influenced and Corrupt Organizations Act (RICO). Plaintiff also raised state law claims for unjust enrichment and fraudulent misrepresentation. Plaintiff sued Bank of America (B of A), Bank of America Consumer Card Services (BACCS), BA Credit Card Funding (Funding) (collectively the “Bank Defendants”), Blatt, Hasenmiller, Leibsker & Moore, LLC (BHLM), and 100 John Does.

The summary allegations were that B of A had “engaged in a scheme whereby they issue credit cards to consumers and, then seek to collect the amounts allegedly due from each card holder’s use of the credit card, despite the fact that B of A has sold, transferred, assigned or otherwise conveyed its beneficial interest in each consumer’s credit card account to a trust as part of a financial transaction known as a credit card securitization. Having relinquished its beneficial interest, B of A no longer has a debt obligation owed to it by Plaintiff or the Class.”

The complaint alleged very specific elements of the B of A “sale” process from account creation through securitization; a process that shows an account moving via “sale” from Bank of America to Bank of America Consumer Credit Services to Bank of America Funding LLC to Wilmington Trust Company.

The complaint then alleged:

“Wilmington Trust Company then underwrites a bond offering. The bonds are placed into tranches from senior debt to junior debt and each tranche has a certain amount of assets. Bank of America Consumer Credit Services still services the account by sending out bills and accepts payment, but Bank of America has given up ownership rights as required to Wilmington Trust Company, therefore Bank of America and its entities have given up its rights to sue its cardholders when they default on their debt.”

Finally, the complaint alleged:

“Despite the fact that Bank of America intentionally relinquished its beneficial interest in Bank of America accounts, it has continued to pursue, along with its affiliates and the defendant law firms, collection lawsuits against Plaintiffs and members of the Class to recover the obligations allegedly owed on the Bank of America accounts.”

On May 11, 2016, B of A filed a motion to dismiss the Complaint. On May 18, 2016, BHLM moved for leave to join the motion. Plaintiff then sought in an unopposed motion additional time “to respond to the Motion to dismiss,” which the Court granted.

However, on June 30, 2016, instead of filing a response to the motion to dismiss, Plaintiff filed an Amended Complaint. The Amended Complaint is substantially the same as the original Complaint. Most of the changes represent argument against assertions made by the Bank Defendants in their first motion to dismiss and the addition of paragraphs concerning the filing of UCC termination statements. Plaintiff also adds a seventh count for civil conspiracy, essentially alleging that numerous organizations have engaged in the alleged scheme, including Defendants.

In July and early August, the Defendants filed motions to dismiss the Amended Complaint. On August 22, 2016, Plaintiff filed a response to the motions to dismiss the Amended Complaint.   On August 24, 2016, the Court held oral argument regarding the pending motions. Without leave from the court to do so, Plaintiff then filed a supplemental response on August 28, 2016.

The Court’s Memorandum and Opinion

The Honorable Eduardo C. Robreno presided over the case. He issued a 14-page Memorandum. A copy of the memorandum can be found here.

The Defendants had argued in their motions to dismiss that the Plaintiff’s basic assumptions about the securitization process were incorrect. Judge Robreno agreed with the defendants that “Plaintiff’s premise is fundamentally flawed. As a result, there is no need for the Court to address the individual counts in the Amended Complaint since they all stem from the erroneous allegations.”

Judge Robreno then wrote:

“Plaintiff’s first contention – that B of A loses all interest in the credit card account once it sells the receivables – has been raised previously by this Plaintiff’s counsel and rejected by this Court in a decision subsequently affirmed by the Third Circuit. Scott v. Bank of America, et al, No. 13-987, 2013 WL 6164276 (E.D. Pa. Nov. 21, 2013), aff’d, 580 F. App’x 56 (3d Cir. Nov. 3, 2014). Moreover, every time this argument has arisen across the country, it has been rejected.

The Bank Defendants argue that Plaintiff is relying on a flawed theory that when creditors securitize receivables, they somehow lose the ability to collect on the underlying debt. They contend that, as they explained in Scott, under the Pooling Agreement which controls these sales, the Bank Defendants transfer eligible credit card receivables to a trust, which then sells bonds backed by those receivables. So long as the accounts are in good standing, their receivables remain in the trust. However, if an account falls into default and has all of its receivables charged off as uncollectible, those receivables are immediately ejected from the trust and sold back to Funding, which then sells them back to B of A through BACCS. As the Pooling Agreement makes explicitly clear, the only items being sold to the trust are the receivables, not the underlying accounts. B of A maintains ownership of the related credit card accounts and the right to collect thereon throughout the entire process.

The identical argument, based on nearly identical facts was raised in Scott by this Plaintiff’s counsel. Judge Pratter in that case recognized that “both mortgage and credit card cases[] have rejected unequivocally the idea that securitizing receivables changes the relationship between a debtor and a creditor.” 2013 WL 6164276. She also noted that the Pooling Agreement controlling the transactions made “clear that only receivables, not entire accounts, are sold in the securitization process,” citing Section 2.01, just as the Bank Defendants have argued in this case. Ultimately Judge Pratter concluded that “Scott has not provided the Court with adequate allegations or legal arguments to conclude that the Bank Defendants violated any laws or contract provisions in their handling of her account.”

On appeal, the Third Circuit Court of Appeals affirmed Judge Pratter’s decision holding that,

“Scott misapprehends the effect of securitizing a credit card receivable. ‘Credit card securitization involves the securitization solely of the receivables, not of the accounts themselves.’” Scott v. Bank of Am., 580 F. App’x 56, 57 (3d Cir. 2014).

This Court agrees with the analysis presented in these cases and holds that Plaintiff’s argument to the contrary is meritless.”

Plaintiff also argued that B of A needed to of File a UCC Termination Statement before removing the receivables from the trust and that since that was not done, B of A did not have rights to collect on the accounts.

Judge Robreno also rejected that argument. He wrote:

“Plaintiff’s arguments amount to a straw house built on the sand – their foundations shift and are ultimately insubstantial. Plaintiff admits that her theory regarding the necessity of a termination statement is novel. However, she provides no solid authority from which to build her argument and instead spins only gossamer allegations.

Plaintiff has failed to establish that before receivables associated with a defaulted credit card account may be transferred from a trust back to the bank that issued the card, the bank must request that the trust issue a termination statement.”

As a result of Plaintiff’s flawed premise, the Amended Complaint must be dismissed. Given this fundamental fault, any further amendment to the Complaint would be futile. As a result, the Court will dismiss the Amended Complaint with prejudice.”

insideARM Perspective

Three strikes and you are out? Plaintiff’s attorney has now lost this “securitization” argument three times; twice in the Scott case, and now again in the Willard case. Will there be an appeal of this case? Will there be future lawsuits filed with a different theory or in a different jurisdiction? insideARM will continue to monitor the case and similar cases and report on future developments.

 

U.S. District Court Judge Dismisses Collection Litigation Suit Against Bank of America
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Accounts Receivable Management

Filed Under: News

FDCPA Case Law Review for August 2016, a Busy Month

September 11, 2016 By Leave a Comment

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 August 2016 brought both positive and negative outcomes for the ARM industry

Vetrano v. CBE Group, Inc.

The gist: The District Court for the Eastern District of New York held that a validation letter that asks a consumer to call to settle does not overshadow the validation notice, nor is it misleading.

Campbell v. Sansone Law, LLC

The gist: The plaintiff alleges that 1692g notice included a complaint and was a violation of 1692e because it was not necessary. The District Court for the Eastern District of Missouri ruled that it was not necessary to send the notice because it could confuse the consumer.

Datiz v. International Recovery Associates

The gist: The District Court for the Eastern District of New York held that statements on a debt collector’s website are insufficient to warrant standing to an individual consumer to allege FDCPA claims for false and misleading statements.

Layton v. Frontline Asset Strategies, LLC

The gist: In Missouri, post-judgment interest is collectable in a non-tort case even if the judgment did not specifically award such interest. The plaintiffs claim that the defendants violated FDCPA because they sought interest on a default judgment that was not specifically awarded at the time of default. The District Court for the Eastern District of Missouri ruled against the plaintiffs.

Covington v. Franklin Collection Services

The gist: Collection letter advised consumer to contact their attorney if they did not intend to pay balance in full to “REGARDING OUR POTENTIAL REMEDIES, AND YOUR DEFENSES.” The District Court of Kansas found use of those terms did not infer litigation and that a link was too tenuous.

Lyon v. Bergstrom Law, Ltd.

The gist: The District Court for the Eastern District of California held that a voicemail that did not state a message was from a debt collector was a communication and a violation of 1692e(11).

Gomez v. Oxford Law, LLC

The gist: The 3rd Circuit ruled that a violation of TCPA and the statements contained therein did not threaten litigation and were not a per se violation of the FDCPA.

Davis v. Hollins Law

The gist: Ongoing communications with consumer did not warrant subsequent communications to say that law firm was a debt collector. The 9th Circuit held that the consumer was well aware and that there was no violation of 1692e(11).

Franklin v. Parking Revenue Recovery Services

The gist: The 7th Circuit ruled that parking fines are considered debts under the FDCPA because they arise from a consumer transaction.

Owens v. LVNV Funding, LLC

The gist: Filing of an out of stat proof of claim is not an FDCPA violation. The 7th Circuit held that bankruptcy court anticipates that state claims will be filed and declined to follow the Crawford case from the 11th Circuit.

Neff v. Schlee & Stillman

The gist: The District Court for the Eastern District of Michigan ruled that by using the word “Assignee” of original creditor, the law firm’s letter did not effectively convey the name of the creditor to whom the debt is owed and is thus in violation of 1692g(a)(2).

Holczler v. National Enterprise Systems

The gist: The District Court for the Eastern District of New York found that there is no reason to believe a consumer would be confused by a letter that identified a creditor as “Gap Visa Card” as opposed to “Gap Visa.”

Jackson v. Blitt & Gaines, P.C.

The gist: The 7th Circuit held that an affidavit for wage garnishment to be served on employers of consumers was not legal action for purposes of FDCPA liability.

Anenkova v. Van Ru Credit Corporation

The gist: The District Court for the Eastern District of Pennsylvania found a benign language exception for a bar code on an envelope.

Wade v. Account Resolution Corporation

The gist: Consumer alleged that debt collector violated FDCPA when it added pre-judgment interest when entering a default judgment. Debt collector alleged case was time-barred because complaint was brought more than one year after suit was filed. However, the District Court for the Eastern District of Missouri held that because the claim was based upon action taken when default judgment was entered, the claim was timely.

Toohey v. Portfolio Recovery Associates, LLC

The gist: Claim brought against debt buyer in District Court for the Southern District of New York based upon a CFPB consent order alleging PRA did not have sufficient information to proceed in its state court matters was allowed to proceed.

Rosa v. Encore Receivable Management

The gist: Claim that collection letter advised consumer to call if payment was already made did not overshadow existing validation notice. The District Court for New Jersey found the notice did not provide consumer with either/or scenario.

Dittig v. Elevate Recoveries, LLC

The gist: The District Court for the Western District of Pennsylvania held that a debt collector is under no duty to disclose that a debt being beyond the statute of limitations in no threat of suit. The fact that debt collector offered a settlement does not change that fact.

Dubios v. Atlas Acquisitions, LLC

The gist: The 4th Circuit found that the filing of an out of stat proof of claim is not an FDCPA violation.

Sayles v. Advanced Recovery Systems

The gist: The District Court for the Southern District of Missouri held that even though plaintiff disputed debt outside validation period, the debt collector’s continued failure to mark debt as disputed when reporting to the CRAs was a violation of 1692e(8).

Midland Funding, LLC v. Thiel

The gist: State court in New Jersey affirmed decision that a claim arising from a customer’s use of a store-issued credit card and the use was strictly for the purchase of goods from the issuing retailed and is subject to a 4-year statute of limitations. Further, the filing of a complaint after the statute of limitations is an automatic violation of the FDCPA.

Brooks v. Leon’s Quality Adjusters

The gist: The District Court for the Eastern District of California held that a FDCPA claim against repossession company is denied because they were not found to be a debt collector and were not indirectly collecting debt from the consumer.

FDCPA Case Law Review for August 2016, a Busy Month
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Accounts Receivable Management

Filed Under: News

Phillips & Cohen Associates Announces Asia Pacific Expansion

September 11, 2016 By Leave a Comment

MELBOURNE, Australia — Phillips & Cohen Associates, the global leader in deceased account management, today announced its entry into the New Zealand market, marking the next stage of its expansion in the Asia Pacific region.

The group, which has delivered market leading compassionate recovery solutions since 1997, operates in the US, Canada, the United Kingdom, Australia and recently commenced operations into Ireland.

The company announced that the New Zealand market will be serviced from its Asia Pacific headquarters in Melbourne, Australia. The regional business leader, Don Coulthard commented, “It was always our intention to extend our service into New Zealand once our offering had become embedded in the Australian market. The support from our local and regional clients has been exceptional and they have encouraged us to move into new territories. The timing was right and I’m pleased to say that the interest from the New Zealand market has been strong from the start.

In commenting on the decision to expand its existing footprint, Co-Chairman/CEO, Adam S. Cohen said, “Phillips & Cohen has an impeccable record across the globe in providing highly specialised deceased account management services to major financial institutions and I am certain that our uniquely empathetic approach will be welcomed by the New Zealand market.”

Cohen added, “The Phillips & Cohen approach to deceased account management not only produces incremental revenue but also enhances client brand reputation by providing a best in class, compassionate service at the most sensitive of times in the credit management cycle.  New Zealand is the next of a number of markets in the Asia Pacific region that  our group is exploring as we move to expand our presence in support of our partnerships with the globe’s largest financial institutions.”

Contact
Don Coulthard
+61 3 9999 0661
dcoulthard@phillips-cohen.com.au

Adam Cohen
acohen@phillips-cohen.com

Phillips & Cohen Associates Announces Asia Pacific Expansion

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Accounts Receivable Management

Filed Under: News

SWC Group Donates More than $1,600 to Ronald McDonald House Dallas

September 11, 2016 By Leave a Comment

DALLAS, Texas – SWC Group selected Ronald McDonald House of Dallas (RMHD) as their third quarter 2016 Charities of Choice. Employees from their Carrollton, TX office volunteered to prepare and serve breakfast for families staying at the Dallas house, and raised a total of $1,653 in donations.

“It costs RMHD approximately $125 per night to host a family, but they only ask families to contribute $15 night and will not turn anyone away who cannot pay,” says Jeff Hurt, CEO. “We choose to support RMDH in their mission so that they can continue to provide families the opportunity to remain intact with their loved ones.”

Employees were broken into teams and competed to see who could raise the most money. Team members were allowed to purchase a “jeans pass” in order to generate additional funds. The team who raised the most money was awarded a paid volunteer day in order to serve the families breakfast at the RMHD.  The winning team, Team Robert Volel, selected the menu and submitted it for approval.  On August 24, 2016 the team purchased, cooked and served the food, and cleaned the kitchen up afterwards. It was a great team building experience for SWC Group employees.

“RMHD does great work to help out our local community and we are honored to donate funds for them, and thankful for the opportunity to serve those families in need,” says Hurt. “We look forward to volunteering with them again.”

swc-1

swc-2

About SWC Group

SWC Group is one of the nation’s leading provider of accounts receivable management and consumer service solutions.  They bring 40 years of proven experience in the government, tolling, utility, telecommunications, cable, property management, and education industries. SWC Group annually manages billions of dollars in receivable accounts, proudly serving organization of all sizes from Fortune 500 private firms to small public agencies.

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Accounts Receivable Management

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DC Circuit Rejects FDCPA ‘Meaningful Involvement’ and Related State-Law Claims

September 11, 2016 By Leave a Comment

This article was originally published on the Maurice Wutscher blog and is republished here with permission.

Allan Enriquez

Allan Enriquez

The U.S. Court of Appeals for the District of Columbia recently held that, under the federal Fair Debt Collection Practices Act (FDCPA), a collection letter from a law firm did not misrepresent any meaningful involvement by an attorney.

Because the letter clearly stated that the law firm was acting as a debt collector, and that no attorney with the law firm had reviewed the debtor’s account, the D.C. Circuit held the letter was not deceptive as a matter of law.

A copy of the opinion in Tawanda Jones v. David Dufek, Sr. is available at: Link to Opinion.

A borrower owed a debt to a bank. The bank sold the debt to a third party. The debt buyer hired a law firm to help collect the debt.

The law firm sent a one-page letter to the borrower. The letterhead had the name of the law firm. The letter informed the borrower that the debt buyer had retained the law firm to collect the outstanding debt.

The letter informed the borrower of the amount owed and warned that the debt would be assumed to be valid unless the borrower disputed the debt within 30 days. Furthermore, the letter stated that the borrower could remit payment to the law firm.

The signature block titled the sender of the letter as an attorney. After the signature block, the letter included the following language:

Please be advised that we are acting in our capacity as a debt collector and at this time, no attorney with our law firm has personally reviewed the particular circumstances of your account.

The letter also stated that it was an attempt to collect a debt and any information obtained would be used for that purpose. The text of the letter, including disclaimers, were in the same readable font and size.

The borrower filed suit against the law firm and the debt buyer, arguing that the letter was deceptive under the FDCPA and two analogous District of Columbia statutes.

On a motion for judgment on the pleadings, the lower court found that the letter did not misrepresent the extent of the law firm’s involvement. The borrower appealed.

On appeal, the D.C. Circuit analyzed section 1692e of the FDCPA, which prohibits debt collectors from using “any false, deceptive, or misleading representations or means in connection with the collection of any debt.” 15 U.S.C. § 1692e.

Following the Second Circuit, the D.C. Circuit held that if an attorney is acting only as a debt collector and has not formed a legal opinion about the case, then the attorney cannot send a letter implying otherwise. Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360, 364 (2d Cir. 2005).

The D.C. Circuit rejected the borrower’s argument that using the title of attorney in the letterhead and signature block impermissibly implies that the law firm evaluated the case from a legal standpoint. In support, the Court pointed to the letter’s conspicuous disclaimer regarding the law firm’s involvement.

The Court also held that the letter did not threaten any improper legal action under 15 U.S.C. § 1692e(5) because the letter did not reference any legal action and stated that the law firm had not reviewed the case at the time of transmission.

The Court noted that the collection letter in the original Greco action stated: “At this time, no attorney with this firm has personally reviewed the particular circumstances of your account. However, if you fail to contact this office, our client may consider additional remedies to recover the balance due.” Greco, 412 F.3d at 364.

The D.C. Circuit reasoned that many circuits have agreed that the Greco disclaimer makes clear that an attorney sending the letter was not, at the time of the letter’s transmission, acting as an attorney. The Court did not find anything in the law firm’s disclaimer that made it unclear that the law firm was acting only as a debt collector, despite the fact that the disclaimer came after the signature block.

The Court also rejected the borrower’s claim under the District of Columbia statutes on similar grounds. Specifically, the Court held that the D.C. Debt Collection Law largely mirrors the language of the FDCPA and consequently the borrower’s claim under this D.C. statute also failed. Furthermore, the Court held that the letter did not violate the D.C. Consumer Protection Act because the letter did not threaten a lawsuit.

The Court also held the lower court did not abuse its discretion in an ancillary discovery matter.

Accordingly, the D.C. Circuit affirmed the lower court’s ruling that the letter did not misrepresent the extent of the law firm’s involvement.

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Accounts Receivable Management

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4th Cir. Holds Time-Barred Proof of Claim Does Not Violate FDCPA

September 11, 2016 By Leave a Comment

This article was originally published on the Maurice Wutscher blog and is republished here with permission.

Brent Yarborough

Brent Yarborough

In a split decision, the U.S. Court of Appeals for the Fourth Circuit recently held that “filing a proof of claim in a Chapter 13 bankruptcy based on a debt that is time-barred does not violate the Fair Debt Collection Practices Act when the statute of limitations does not extinguish the debt.”

A copy of the opinion in Dubois v. Atlas Acquisitions LLC is available at:  Link to Opinion. The defendant was represented by Donald Maurice of Maurice Wutscher LLP.

This action involved two consolidated adversary proceedings. In both underlying bankruptcies, a debt buyer filed proofs of claim on loans that were beyond Maryland’s three-year statute of limitations. The debtors filed adversary proceedings seeking disallowance of the claims as time-barred plus damages, costs, and attorneys’ fees under the FDCPA.

The debt buyer stipulated that the debts were time-barred and that the claims could be disallowed, but it moved to dismiss the FDCPA claims. The bankruptcy court dismissed the claims on the grounds that filing a proof of claim is not debt collection activity within the meaning of the FDCPA. The debtors then appealed the bankruptcy court’s ruling directly to the Fourth Circuit.

The Fourth Circuit first determined that the filing of a proof of claim is “debt collection” as defined under the FDCPA, even if there is no direct demand for payment, and even though the bankruptcy court may disallow the claim. The Court disagreed that treating a proof of claim as an attempt to collect a debt would conflict with the automatic stay, explaining that the automatic stay only prohibits debt collection outside of the debtor’s bankruptcy proceeding.

The Court then examined whether a time-barred debt could be a “claim” under the Bankruptcy Code. The Fourth Circuit noted that the Bankruptcy Code provides a very broad definition of the term “claim,” referring to a right of payment recognized under state law.

The Fourth Circuit also noted that, in Maryland, the statute of limitations merely bars the remedy and does not operate to extinguish the debt.  In addition, the Maryland statute of limitations can be revived if the debtor sufficiently acknowledges the debt. The Court thus found that Maryland law recognizes a right to payment on time-barred debt, and thus the holder of a time-barred debt may file a proof of claim in bankruptcy.

The Court next explained that a debt need not be enforceable in court to be a claim in bankruptcy. Under the Bankruptcy Code, debts that are contingent or unmatured can be claims even though they would not be enforceable in court.

Also, the Fourth Circuit noted that, although the Bankruptcy Code provides that time-barred debts are to be disallowed, it does not prohibit the filing of them. The Court noted that the 2012 amendments to the Bankruptcy Code made it easier to determine the timeliness of a proof of claim because creditors are now required to list the last transaction date, the last payment date, and the charge-off date. According to the Court, this provision suggests that the Bankruptcy Code contemplates that untimely claims will be filed, objected to by the trustee, disallowed, and then discharged.

The Court explained that, once discharged, the creditor may not engage in any further effort to collect the debt. On the other hand, if a debt is unscheduled and no proof of claim is filed, then that debt is not discharged and the creditor can continue to seek payment.

The Fourth Circuit was not convinced by the debtors’ argument that overburdened trustees are unable to sufficiently examine and object to each time-barred claim.  The Court also noted that Chapter 13 debtors are rarely required to pay more due to the allowance of additional unsecured claims.  Although other unsecured creditors will receive a smaller share of payments when time-barred claims are included in the plan, the debtor’s payments are generally unaffected. As a result, the Court did not agree that imposition of liability under the FDCPA was the best way to address time-barred claims that evade objection.

The Fourth Circuit then examined some important differences between collection litigation and the bankruptcy process.

First, in bankruptcy a creditor is required to provide specific information, such as the date of last payment, that makes it easier to detect a time-barred proof of claim. Second, the debtor in bankruptcy is protected by a trustee and, in most cases, by counsel. Third, a Chapter 13 debtor voluntarily commences a bankruptcy case, while a defendant in a collection suit is unwillingly sued.

The Fourth Circuit concluded that the protections afforded to a debtor in a Chapter 13 bankruptcy diminish the concern that a time-barred proof of claim is “unfair” or “misleading” in the way that a collection suit on a time-barred debt might be. The Court further noted that the debtor potentially benefits from having the debt treated within the debtor’s bankruptcy case, because the discharge will apply to disallowed claims or to claims included within a completed plan.

Finally, the Court explained that treatment of a time-barred proof of claim under the FDCPA should not change regardless of whether the debt is unscheduled, scheduled as disputed, or scheduled as undisputed.

The debtors conceded that a creditor would not violate the FDCPA by filing a proof of claim on a debt that is scheduled as undisputed, as the scheduling of a debt as undisputed acts as an invitation to the creditor to participate in the bankruptcy plan. But the debtors argued that creditors who are debt collectors should be subject to liability under the FDCPA for filing proofs of claim on time-barred debts that a debtor scheduled as disputed.

The Fourth Circuit disagreed, holding that a disputed debt is more likely to be objected to and disallowed. For time-barred proofs of claims on unscheduled debts, the Court found that FDCPA liability should not attach because of the previously-described interests in discharge and collective treatment of claims.

The dissenting opinion cited the U.S. Court of Appeals for the Eleventh Circuit’s opinion in Crawford v. LVNV Funding, LLC and contended that the FDCPA’s prohibition on collection suits on time-barred debts should apply equally to proofs of claim on unscheduled debts in bankruptcy. The dissent took issue with the majority’s opinion that debtors benefit from the filing of time-barred proofs of claim when they are discharged, either after being disallowed or after being paid in the debtor’s plan with no additional money required from the debtor. The dissent also addressed whether the Bankruptcy Code and the FDCPA are in conflict, a topic that the majority did not need to reach because it found that the FDCPA does not apply to the filing of proofs of claim such as the ones involved in this case.

 

4th Cir. Holds Time-Barred Proof of Claim Does Not Violate FDCPA
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Tim Bauer on the Making of a “Must-Attend” ARM Industry Conference

September 4, 2016 By Leave a Comment

Tim Bauer

Tim Bauer

In January of 2015 I joined insideARM. Shortly thereafter I began working with Stephanie Eidelman, CEO of insideARM, on her annual Larger Market Participant Summit (LMP). With the LMP Stephanie had created a conference that was different. It was timely. It was important for the industry. By the time I started she had done most of the heavy lifting for the 2015 LMP; my primary role for that event was to introduce speakers.

In February of last year Stephanie and I discussed an idea for a new conference – the First Party Summit. We debated the merits of adding a new conference to an already crowded ARM industry calendar. But, because the topic was so important and had not been covered elsewhere, we decided to proceed. I took on the role of being the “Producer” of the inaugural event.

I learned quickly that Stephanie had some “rules” for her conferences.  They were:

  1. Remain true to the tagline on our website (www.theiainstitute.com) “Change is happening, Engage in the dialogue” (It’s about the quality of the conversation)
  2. Find and recruit new, exciting, and credible faces to lead the discussions
  3. Design sessions that are specific and compelling
  4. Create a candid environment

And so began my new career as producer of not just ARM industry conferences, insideARM industry conferences.

Rule #1 – Engage in the dialogue

Rule # 1 was easy for me. Having been to many industry or professional conferences over the years I can’t recall a single speech or lecture that left me thinking: “Boy, am I glad I listened to that.” (Worst of all time? Easy Answer. Continuing Legal Education courses. Those lectures were either boring war stories or lawyers telling me the only thing I could do to avoid malpractice was send cases to them.)

On the other hand, I had positive recollections of conference sessions that were more interactive. Dialogue was better!

I moved forward in the planning of that initial conference. Outside of a Keynote Address or Opening General Session, our sessions were going to be small and interactive; we had four tracks and more than 20 sessions. This year will be similar, however one notable change is that we have included a track devoted exclusively to healthcare First Party work, or Revenue Cycle Management.

Rule #2 – Focus on new, exciting, credible speakers

I used to be a “regular” on the conference speaking circuit. I finally began turning down speaking requests when asked, “What are you speaking about this time, Bauer?” I knew then that I was over-exposed. People don’t want to hear the same speakers year after year after year.

There are a lot of very talented people out there. One benefit about being in the industry for a long time is that I have met a lot of those people over the years. I would show my age if I said, “I pulled out my rolodex.”  Instead, I started going through my Outlook contacts. If I were more contemporary, I might say “I went through my Twitter followers.”

I pushed, prodded, and begged people who I knew were among the best and brightest I have met to get them to agree to speak. Only a few of them had even spoken at an industry event before.  The result – new and different speakers.

Recruiting new speakers in Year 1 was relatively easy. In producing this year’s Summit, I soon realized that Rule #2 gets harder the second time around. How could I not ask back the speakers attendees loved last year? I had to strike a balance.

For this year’s Summit we have over 50 speakers. Only a handful are speakers from last year. Again, I went through my contacts and made the calls. What made it easier this year? The fact that the industry was still talking about last year’s inaugural event.

Rule #3 – Design specific and compelling sessions

This rule is actually the most fun and easiest to meet. The first party business is complex. There are lots of nuances. Topics can involve legal, regulatory, compliance, operations, HR, and IT issues. Topics can vary by industry. What is old news in one industry may be just developing in another industry.

The CFPB has announced its intention to create rules governing first party activity. Businesses are embracing outsourcing as they focus on core competencies and outsource non-core functions. Call center technology is changing by the minute. There is more than enough to talk about.

Rule #4 – Create a candid environment

insideARM conferences are closed to the press.  Even insideARM will not report on specific dialogue at the Summit. The size of the conference rooms, the layout of the rooms, the average size of the audience at any particular session, and other elements come together to create the environment that meets this rule.

insideARM conferences are also different in other, critical aspects. There is NO EXHIBIT HALL. The event is held in a hotel that lends itself to keeping the attendees together, not only for the sessions, but also the social functions (breakfast, lunch, and dinner). Networking is easier.  The Summit is also definitely NOT A BOONDOGGLE.  Attendees come to work and learn. They actually attend the sessions!

The Result

I followed Stephanie’s rules in year 1. We had a terrific inaugural event. Attendee feedback was off-the-charts positive.

I followed the rules again this year.  As a result, this year’s First Party Summit is “content-rich” and “must-attend” if you are involved in any first party activity or plan to get involved in the future. I am confident you would find this conference a good use of your time, and hope you’ll choose to sign up.

Registration is now open for the Second Annual insideARM First Party Summit -October 17-19, 2016. Leading creditors from banking, marketplace lending, retail, auto, telecom, healthcare, utility, and more, as well as agencies and call centers of all shapes and sizes will be in attendance.

Click here to see the agenda, list of speakers, and industries that will be represented. I guarantee that you will see topics that are essential to your business.

I hope to see you in October.

Tim Bauer on the Making of a “Must-Attend” ARM Industry Conference
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What Pokémon Go Can Teach the ARM Industry About Smartphones (Sponsored)

September 4, 2016 By Leave a Comment

Pokémon Go hit the game app world by storm and became an overnight sensation with millions using their smartphones to “capture” Pokémon scattered across the world. What can the massive success of this child’s game teach the ARM Industry?

The answer is sitting on your desk. The popularity of the Pokémon Go app highlights the importance and even dependency Americans have on their smartphones. Consumers don’t want to just connect with others through their phones. They don’t just want to surf the web. They want to interact with their phone and with others through their phone.

Preferred Method of Communication

PDCflow-cellphonesMany ARM agencies are hesitant to capitalize on the massive popularity of smartphones, yet this is clearly the consumer’s preferred method of communication. Whether you are reaching them by phone, text, or email, the smartphone brings these communication channels to one central location for the consumer. Getting the consumer to interact with their debt through the smartphone directly in front of them will lead to higher rates of success for these agencies. The current gaming craze should teach bill collectors just how important the consumer’s smartphone is. Progressive companies are creating collection strategies that match the consumers desire to interact through a smartphone.

Increasing Collection Rates

Today some companies are saving money and increasing collection rates by directing consumers to online payments sites, IVR trees, and various other methods that do not include a live agent. Most consumers are interacting with these applications via their smartphone with high rates of success.  Payments made via a consumer’s mobile phone make up approximately 20% of PDCflow’s online payments received, which is an increase of 18% compared to 2015.

Compliance concerns are one of the biggest issues faced in the ARM industry and obtaining an eSignature to meet the Reg E requirements can be tricky. Some companies get around this by allowing the consumer to receive a text or email with a link, which then directs them to sign a reoccurring payment agreement right on their smartphone.

Even with this advanced technology, only the leading edge companies have implemented this strategy to date. Many agencies and law firms are still mailing payment arrangement agreements to the consumer using the Postal Service with very limited success.

Success in today’s marketplace requires collection companies to use every tool necessary to secure money from the consumer, especially when they are on the phone with an agent or on your website. Waiting for a postal letter or an email to be delivered and returned leads to disconnects and lower collection numbers. It takes far too long in today’s fast-paced technological world.

And what’s more, let’s not forget the fresh lessons of Pokémon Go. Increasingly, consumers live by and through their smartphones. And on those phones, they expect seamlessness and a certain quality of user interface. Company interactions are no exception. Consumers live through their phones and when they deal with companies, for any reason, they expect quality engagement through their smartphones. Of course, compliance is always going to be a concern, but ARM companies that haven’t grappled with ways to make their consumer engagements easier and smartphone-centric are only going to see their recovery rates continue to fall.

For information on PDCflow’s eSignature Solution, click HERE or please call PDCflow at 877-732-4814 to schedule a demo.

Disclaimer: PDCflow is a technology company and provides this information solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. PDCflow’s advice, services, tools and products described herein do not guarantee compliance with any law or industry standard.

What Pokémon Go Can Teach the ARM Industry About Smartphones (Sponsored)
http://www.insidearm.com/revenue-resource/what-pokemon-go-can-teach-the-arm-industry-about-smartphones-sponsored/
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Stellar Recovery Announces Release of Mobile Consumer Website

September 4, 2016 By Leave a Comment

JACKSONVILLE, Fla. — Stellar Recovery is excited to announce the release of a new mobile website that provides consumers a convenient way to resolve their debt from any mobile device.   Innovation and technology are at the forefront of Stellar’s business strategy and the addition of this platform rounds out Stellar’s suite of debt resolution solutions available to consumers.

Joe Tenga, Chief Information Officer said, “Stellar prides itself in providing a user experience that allows consumers to interact through whatever method they are most comfortable.  With the introduction of our mobile website, consumers now have the same convenience of payment, negotiation, and contact options that are offered on our desktop website.”

The mobile website enables consumers to quickly connect to Stellar’s automated Interactive Phone System or to a Live Agent through their mobile phone.  Moreover, it also allows access to Account Management via their mobile phone’s browser.

By offering consumers a variety of ways to interact and communicate, Stellar hopes to increase consumer contacts and minimize compliance issues. Rachel Frady, Chief Compliance Officer added, “The mobile site will easily allow customers to quickly and conveniently communicate directly with our Compliance Department regarding any questions or concerns they may have about their account.”  As the collections industry moves towards a more consumer and compliance-centric approach, Stellar Recovery will continue to leverage the use of technology to mitigate and reduce risks.

Stellar Recovery, Inc. is located in Jacksonville, FL.  Please visit the new mobile website at www.stellarrecoveryinc.com.

Stellar Recovery Announces Release of Mobile Consumer Website
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