LiveVox Offers a Sneak Peek of its Big Data-Driven Business Intelligence & Analytics Suite at CRS 2016

May 8, 2016 By Leave a Comment

Ø  LiveVox will host a ‘Compliance and Analytics (C&A) Learning Hub’ at CRS 2016 to provide business leaders with a unique opportunity to learn about two significant macro trends re-defining the industry – compliance and business intelligence & analytics

Ø  Staffed with experts in their fields, the C & A Learning Hub is available to CRS attendees during the conference and offers two specific sessions with limited availability:

 ·       Sneak peek, 30 min. demonstrations of LiveVox’s Business Intelligence & Analytics suite

·       1-on-1, 30 min. compliance meetings with LiveVox General Counsel, Mark Mallah

Ø  To reserve a time, click here

Ø  The C & A Learning Hub takes place in conjunction with the 2016 Collection and Recovery Solutions (CRS) conference being held May 11th – 13th in the Four Seasons, Las Vegas

SAN FRANCISCO, May 4, 2016 – LiveVox Inc., a leading provider of cloud contact center solutions for enterprise operations, announced it will host the first-ever Compliance and Analytics (C&A) Learning Hub at the 2016 CRS conference. The C & A Learning Hub will provide attendees with an opportunity to learn about leveraging compliance trends and big data to optimize contact center performance in collections and recovery.

On the rationale behind the C & A Learning Hub, Dusty Whitesell, Chief Evangelist, LiveVox, Inc. states, “In an environment where compliance concerns continue to impair productivity, optimizing efficiency has never been as challenging and critical to a business’ ability to remain competitive. Leaders must be able to make smarter decisions and this is where business intelligence & analytics have become a differentiator. Utilizing big data was not a common practice in collection and recovery contact centers because the cost barrier was simply too high – but that is no longer the case. LiveVox’s cloud technology has dramatically reduced the cost of entry for utilizing business intelligence & analytics and we are seeing it uncover operational insights like never before. We are excited to have experts in both fields on hand next week to share their knowledge. We’d also like to thank Resource Management Services for recognizing the benefit of such a program and look forward to another great CRS event.”

Led by experts in financial services, the C & A Learning Hub will be located adjacent to the exhibit hall at CRS 2016. The format is shaped to ensure an intimate and interactive discussion on both topics by providing two opportunities to meet with the experts.

Ø  30 min. BI & analytics demonstrations with Sr. Business Consultant, Jim Lynch

·       Demonstrations will provide attendees with a sneak peek at how LiveVox’s BI & Analytics suite is being used to make smarter decisions through capabilities including:

o   Root cause analysis

o   Data discovery and visualization for decision making

o   Business performance optimization

·       Lynch works with leaders of some of the largest operations to improve in-house and outsourced agency operations utilizing data

·       For session availability during CRS, please click here

Ø  1-on-1, 30 min. compliance meetings with LiveVox General Counsel, Mark Mallah

·       Meetings provide attendees with the opportunity to meet directly with Mark Mallah and key LiveVox personnel to help develop and improve compliance strategies

·       Mallah works directly with numerous legal and business leaders across the industry on a daily basis to understand the latest legal and regulatory trends, including the TCPA and best practices in managing risk

·       For meeting availability during CRS, please click here

 About LiveVox, Inc.

LiveVox is a leading provider of cloud contact center solutions for enterprise operations.  Through a patented PCI-certified cloud platform and redundant IP/MPLS mesh, it delivers true multi-tenant, highly scalable and burstable contact center solutions such as ACD, dialer, IVR, centralized call recording, business analytics and compliance suite. LiveVox enables fast deployment of contact center solutions from the cloud, while offering customers full control to manage their day-to-day business requirements in a cost-efficient way. For more information, visit http://www.livevox.com.

 

 

 

LiveVox Offers a Sneak Peek of its Big Data-Driven Business Intelligence & Analytics Suite at CRS 2016

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Accounts Receivable Management

Filed Under: News

N.C. Fed. Court Rejects Defendant’s TCPA Arguments as to ‘Revocation of Consent,’ ‘ATDS’

May 8, 2016 By Leave a Comment

This article previously appeared on The Consumer Financial Services Blog and is republished here with permission. 

Allison Hayes

Allison Hayes

The U.S. District Court for the Eastern District of North Carolina recently rejected a defendant’s arguments that its contract with the plaintiff did not allow revocation of prior express consent under the federal Telephone Consumer Protection Act (TCPA), and that the defendant’s telephone communication system was not an “automatic telephone dialing system” under the TCPA.

A copy of the opinion in Cartrette v. Time Warner Cable, Inc. is available at:  Link to Opinion.

In 2013, the plaintiff requested that the defendant install cable services at her home, and agreed to a services agreement that included a paragraph titled, “Robo-Calls,” stating: “[Defendant] (or persons acting on our behalf) may use automated dialing systems or artificial or recorded voices to contact you or leave you messages if you do not answer.”  The plaintiff also provided the defendant with her cell phone number.

In October 2013, the defendant began calling the plaintiff’s cell phone regarding an unpaid installation fee. The plaintiff disputed the debt, and during a live telephone conversation on Jan. 14, 2014, the plaintiff claimed she instructed the defendant to cease all calls to her cell phone.

However, between Jan. 29 and Feb. 11, 2014, the plaintiff received on her cell phone six additional calls from the defendant, four of which she answered and two of which were voicemail messages. Approximately one month thereafter, on March 10, 2014, the plaintiff brought this action against the defendant.

The defendant called the plaintiff using its proprietary communication system, the Outbound Enterprise Interactive Voice Response (IVR). The IVR was integrated with the defendant’s billing system, which contained information about customer accounts, including customers’ telephone numbers.

Each day, the IVR reviewed the billing system to identify overdue accounts and call the telephone numbers associated with those accounts. If a call was not answered, the IVR left a voicemail message asking the customer to return the call. If a call was answered, the IVR played a message asking to speak with the account holder, and if the call recipient indicated that she was the account holder then the IVR played another message providing information about the overdue account.

The plaintiff alleged that the defendant committed six violations of 47 U.S.C. § 227(b) through calls placed to her cell phone between Jan. 29 and Feb. 11, 2014.

As you may recall, the TCPA imposes liability as follows:

It shall be unlawful . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a paging service, cellular telephone service, . . . or any service for which the called party is charged for the call.

47 U.S.C. § 227(b)(1)(A)(iii).

The TCPA, at 47 U.S.C. § 227(b), allows calls made with “prior express consent of the called party.”  Accordingly, prior express consent is an affirmative defense to liability under the TCPA.

With respect to revocation of prior express consent, the Federal Communications Commission (FCC) recently issued a Declaratory Ruling and Order (“2015 FCC Ruling”), clarifying that under the TCPA “[c]onsumers have a right to revoke consent, using any reasonable method including orally or in writing. Consumers generally may revoke, for example, by way of a consumer-initiated call, directly in response to a call initiated or made by a caller.”  In the Matter of Rules and Regulations Implementing the Tel. Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7996 ¶ 64, 2015 WL 4387780 (2015).

The defendant telecommunications service company argued that the TCPA and the defendant’s services agreement afforded the plaintiff no right to revoke her prior consent to receive autodialed telephone calls from the defendant.  The defendant also argued it did not use an automated telephone dialing system (ATDS) as defined in the TCPA, and that the content of its calls fell outside the scope of the TCPA.

The defendant sought summary judgment regarding the issue of revocation of prior consent on two bases: first, that the TCPA does not provide the plaintiff the right to revoke her prior consent to autodialed calls; and second, that the parties’ services agreement precludes such revocation.  The plaintiff countered that she revoked her prior consent through oral instructions to the defendant on Jan. 14, 2015, as well as through 17 subsequent calls to the defendant.

The Fourth Circuit Court of Appeals had not yet ruled on the issue of revocation of consent under the TCPA.  Accordingly, the Court looked to the Third and Eleventh Circuit Courts of Appeals’ rulings that consent is revocable under the TCPA.

The District Court here reasoned that in cases involving revocation of consent under the TCPA, a consumer complaining about unwanted telephone calls often has a contractual relationship with the company placing those calls.  When a consumer enters into a contract with a service provider, the contract may require that the consumer provide her telephone number and consent to receiving automated or prerecorded calls.  Provision of a cell phone number demonstrates express consent by the cell phone subscriber to be contacted at that number.

However, the Court held, such a contract does not prevent a consumer from revoking her prior express consent pursuant to the TCPA. The District Court noted that other courts have held that parties lack legal authority to contract around rights provided by the TCPA.

Here, the parties agreed that the plaintiff gave her prior express consent to receive calls from the defendant’s IVR system.  The defendant also did not dispute that the plaintiff instructed the defendant to discontinue telephone calls regarding the disputed debt. However, the defendant disputed whether such instructions effected a valid revocation under the TCPA and the services agreement.

In light of the FCC Ruling and existing case precedent, the Court held that there was a genuine issue of material fact regarding whether the plaintiff’s instructions to the defendant constituted a valid revocation.

The District Court further held that the defendant’s position that the TCPA affords no right to revoke consent was “ill-founded,” because the defendant’s motion for summary judgment was filed without benefit of the recent 2015 FCC Ruling, and because the defendant’s argument relied upon a handful of non-binding district court opinions that themselves acknowledge other courts’ recognition of revocation. The District Court further noted that the validity of these cases is called into question by the 2015 FCC Ruling.

The Court additionally held that the defendant’s other argument, that its services agreement prevented the plaintiff’s revocation under the TCPA, also lacked legal support.  The defendant attempted to distinguish its services agreement from courts’ readings of other contracts on the basis that it contains a clause explicitly addressing autodialing.  The Court disagreed that the distinction was remarkable where consumers’ provision of their telephone numbers represents the same express consent as their signature on a contract.

The District Court reasoned that the plain language of the services agreement is silent with respect to revocation of consent to autodialed and prerecorded voice calls.  Moreover, the defendant presented an unsigned, form copy of the agreement, which it uses for all of its customers, and the terms appear not to be negotiable; and use of an autodialing system is not an essential term of the agreement.

For all of these reasons, the Court held that the plaintiff had a valid right to revoke her prior express consent pursuant to the TCPA.

Regarding whether the defendant’s IVR was an ATDS, the defendant contended that the “present capacity” of the IVR did not include the ability to use a random or sequential number generator.  The plaintiff disagreed, pointing to the IVR’s present and potential ability to dial telephone numbers from a preprogrammed calling list without human intervention.  The Court agreed with the plaintiff, holding that the defendant’s IVR was an ATDS as that term is used for purposes of the TCPA. See § 227(a)(1).

The District Court further noted that independent of the TCPA’s prohibition on nonconsensual telephone calls made using an ATDS, the TCPA also imposes liability on parties that use an artificial or prerecorded voice to call a cell phone without prior consent. § 227(b)(1)(A)(iii).  Therefore, independent of the Court’s determination regarding the defendant’s use of an ATDS, the Court ruled that the plaintiff established a genuine issue of material fact that defendant’s IVR satisfies § 227(b)(1)(A) through its use of prerecorded voice messages.

Finally, the Court held that the defendant’s argument that the content of its call fell outside the scope of the TCPA was without merit.  The defendant argued that its calls related to an overdue account, and not to telemarketing.  The Court held that “calls concerning plaintiff’s disputed debt were analogous to debt-collection calls, which fall within the scope of the TCPA.”

The Court concluded by noting that it was considering entering summary judgment in the plaintiff’s favor, and ordered the defendant to show why summary judgment should not be entered against it.

N.C. Fed. Court Rejects Defendant’s TCPA Arguments as to ‘Revocation of Consent,’ ‘ATDS’
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Accounts Receivable Management

Filed Under: News

Currently Pending FCC Petitions in TCPA Matters

May 8, 2016 By Leave a Comment

This article is republished with permission from Michael Storz, and Drinker Biddle & Reath LLP. It originally appeared on www.tcpablog.com.

Laura Phillips

Laura Phillips

With the TCPA dockets remaining active going into 2016, we decided to put together a list of notable petitions pending at the FCC.  The following list provides details on most petitions that the FCC has yet to rule on, including links to the petition and, where applicable, the public notice, some background on the issues implicated by the petitions, and details on important dates associated with the proceeding.

Nonpublic draft FCC orders on the following petitions are currently on circulation before the Commission for a vote:

Further details on these petitions are included below.

A.  Petitions Relating to “Prior Express Written Consent”

  • Rita’s Water Ice Franchise Company, LLC
    • Petition
    • Public Notice
    • Summary: Rita’s Water Ice sent text messages alerting consumers when their favorite ice cream flavors were in stock. Rita’s required the consumer to provide prior express written consent, but had been sued because the consent obtained prior to the FCC’s Oct. 2013 clarification on text messages allegedly did not meet the standards set forth in that order. The FCC sought comment on Rita’s request for a retroactive and prospective waiver of its prior-express-written-consent requirement for automated telemarketing calls. Rita’s claims that it is similarly-situated to other parties who have received such waivers.
    • Timing: Petition was filed on Dec. 02, 2015. Public notice was released Dec. 14, 2015. Comments were due Jan. 13, 2016, and replies were due Jan. 28, 2016.
  • National Cable & Telecommunications Association
    • Petition
    • Public Notice
    • Summary: The National Cable & Telecommunications Association (“NCTA”) petitioned the FCC for retroactive and prospective waiver on behalf of its members, arguing that its members are similarly situated to the original petitioners granted waiver in the FCC’s July 2015 waiver order. It alleges that its members “and no doubt every other party to the proceeding – have faced similar confusion” to that which justified the waiver for the original petitioners. The FCC sought comment on NCTA’s request “that its members be included in the group of entities recently granted a retroactive and prospective waiver of the Commission’s prior-express-written-consent requirement for automated telemarketing calls.”
    • Timing: Petition was filed on Oct. 01, 2015. Public notice was released Nov. 3, 2015. Comments were due Dec. 03, 2015, and replies were due Dec. 18, 2015.
  • SUMOTEXT Corp.
    • Petition
    • Public Notice
    • Summary: SUMOTEXT Corp. (“SUMOTEXT”) hosts Common Short Codes (“CSCs”), 5-6 digit abbreviated phone numbers used to identify service providers to wireless consumers.  It provides a platform that allows consumers to opt into or out of text message alerts, often by texting words like “JOIN” to a specified CSC.  SUMOTEXT requested a declaratory ruling or clarification that “when a company receives a text message from a consumer requesting to receive more than one text message returned to them that a combination of: (1) the company’s Call to Action advertisement; (2) the content of the inbound text message request the consumer sent to the company; and (3) the content of the company’s opt-in confirmation message reply to the consumer can be used as evidence that the disclosures required by the TCPA were provided in a ‘clear and conspicuous’ manner.”  SUMOTEXT claims that such a ruling is needed because “plaintiffs’ lawyers . . . text ‘JOIN’ to a CSC, lie in wait to receive the very messages they request, and then claim that the business cannot prove that the Commission’s TCPA disclosures were satisfied.”  The FCC sought comment on SUMOTEXT’s alternative requests for declaratory ruling or clarification.
    • Timing: Petition was filed Sept. 03, 2015. Public notice was released Nov. 12, 2015. Comments were due Dec. 18, 2015, and replies were due Jan. 08, 2016.
  • National Association of Broadcasters
    • Petition
    • Public Notice
    • Summary: National Association of Broadcasters (“NAB”) filed a petition seeking retroactive and prospective waiver of the FCC’s prior express written consent rules, arguing that “NAB and its members . . . should be availed the same benefit of the waivers that the Commission granted to” previous waiver recipients. Citing the FCC’s July 2015 acknowledgement that its 2012 TCPA Order contained confusing language with respect to its prior express written consent rules, NAB contended that “[t]he same confusion as to whether the 2012 TCPA Order required an additional prior express written consent was articulated by NAB and other similarly situated commenters.” NAB asked the FCC to declare that all parties to the proceeding are entitled to retrospective and prospective waivers as articulated in the 2015 TCPA Order, or alternatively, that at least it and its members were so entitled. The FCC sought comment on both proposals.
    • Timing: Petition was filed on Aug. 18, 2015. Public notice was released Sept. 25, 2015. Comments were due on Oct. 26, 2015, and replies were due on Nov. 09, 2015.
  • F-19 Holdings
    • Petition
    • Public Notice
    • Summary: F-19 Holdings, a national gym franchiser, includes in its gym membership agreements the option of providing the gym member’s cellular telephone number. According to the public notice, “F-19 Holdings contends that persons who have provided a cellular telephone number ‘have consented to contact, in some form or manner, from Fitness 19 at that number,’ and further states that ‘gym members can specifically consent to receiving telemarketing text messages for promotions and gym services’ but that such consent has never been a condition to joining the gym.” F-19 Holdings also argued that it and its members were similarly situated to earlier waiver recipients. The FCC sought notice on F-19 Holdings’ request for “a retroactive waiver of the prior express written consent requirement that the Commission adopted in 2012.”
    • Timing: Petition was filed July 29, 2015. Public notice was released Sept. 25, 2015. Comments were due Oct. 26, 2015, and replies were due on Nov. 09, 2015.
  • Kale Realty
    • Petition
    • Public Notice
    • Summary: Kale Realty sent texts to recipient with whom it contended it had business or personal relationships noting that it had been selected as a top area workplace in attempt to solicit applications for employment. The FCC’s public notice explains that “Kale Realty also states it is similarly situated to the parties to whom the Commission granted a retroactive waiver in the 2015 TCPA Order and, therefore, requests the Commission grant it the same relief. More particularly, Kale states that it is the defendant in a putative class action lawsuit based on the allegation that it ‘sent a single unsolicited text advertisement in violation of the TCPA’ without obtaining ‘satisfactory consent.’ Kale now requests a retroactive waiver of the application of the Commission’s 2012 prior express written consent requirements . . . .”  The public notice sought comment on these issues.
    • Timing: Petition was filed July 23, 2015. Public notice was released Sept. 25, 2015. Comments were due Oct. 26, 2015, and replies were due on Nov. 09, 2015.
  • Blackboard, Inc. – CURRENTLY ON CIRCULATION
    • Petition
    • Public Notice
    • Summary:  Blackboard, Inc. (“Blackboard”) offers a “mass notification platform,” used primarily by educational institutions to communicate regarding emergency closures, threat situations, event scheduling, and other information.  In its petition, it stated that it had been subject to several private actions initiated by consumers alleging that they received prerecorded messages on their wireless device in error.  Blackboard observed that consumers may receive such messages in error due to reassignment of the number by a wireless carrier, a recipient’s decision to forward calls to a different phone number, or other good faith errors about which neither Blackboard’s educational customers nor Blackboard itself would know.  Blackboard accordingly asked the FCC to declare that organizations are not liable for placing autodialed calls to wireless lines “when such calls are made for emergency purposes or are made with prior express consent, but do not reach the intended recipient due to wireless number reassignment or other good faith error.”  The FCC’s public notice sought comment on this proposal.
    • Timing: Petition was filed Feb. 24, 2015.  Public notice was released Mar. 23, 2015.  Comments were due Apr. 22, and replies were due May 07, 2015.
  • Mammoth Mountain Ski Area, LLC
    • Petition
    • Public Notice
    • .Summary: In its petition for expedited declaratory ruling, Mammoth Mountain Ski Area, LLC (“Mammoth”) sought “a clarifying or forbearance ruling that consents obtained prior to the October 16, 2013 rule change through consumers’ voluntary provision of their telephone number remain valid as prior contractual obligations and invalidating these consents amounts to an improper retroactive impairment of Mammoth Mountain’s contractual rights.” Alternatively, it sought “a ruling that the 2012 Order interpreting the TCPA improperly defined the term “prior express consent” as written, signed consent because this reading of the statute is manifestly contrary to the plain meaning of the TCPA and Congressional intent that written consent not be required under the TCPA.” The FCC sought comment on both contentions.
    • Timing: Petition was filed Feb. 23, 2015. Public notice was released Mar. 09, 2015. Comments were due April 06, 2015, and replies were due April 21, 2015.
  • Edison Electric Institute and American Gas Association – CURRENTLY ON CIRCULATION
    • Petition
    • Public Notice
    • Summary: In their petition for expedited declaratory ruling, Edison Electric Institute (“EEI”) and American Gas Association (“AGA”) stated that “Utilities often need to provide information to customers about, among other things, planned or unplanned outages, repair work, service cancellation, service restoration, or energy efficiency. These calls or texts are always important, and are often critical.” EEI and AGA contended that the FCC’s prior express written consent rules could impede these functions. Accordingly, their petition requested that “the Commission confirm, under the Telephone Consumer Protection Act, that providing a telephone number to an energy utility constitutes ‘prior express consent’ to receive, at that number, non-telemarketing, informational calls related to the customer’s utility service, which are placed using an automatic telephone dialing system or an artificial or prerecorded voice.” The FCC sought comment on this suggested interpretation.
    • Timing: Petition was filed Feb. 12, 2015. Public notice was released Feb. 24, 2015. Comments were due Mar. 26, 2015, and replies were due Apr. 10, 2015.
  • Citizens Bank, N.A.
    • Petition
    • Public Notice
    • Summary: In its petition, Citizens Bank, N.A. (“Citizens Bank”) stated that it was facing a lawsuit from a debtor who defaulted on her loans. The plaintiff there had held out her cell number as a business number in connection with her businesses. Citizens Bank called this number to collect the loans, and the plaintiff sued, claiming that she had not consented to the calls. Accordingly, the petition asked the FCC to answer the question: “where a called party takes purposeful and affirmative steps to release her cellphone number to the public for regular use in normal business communications – by, inter alia, listing the cell phone number in advertisements and internet sites as the sole contact number for her business – has the party provided prior express consent to receive non-telemarketing calls on that number?” The FCC sought comment on this question.
    • Timing: Petition was filed Jan. 16, 2015. Public notice was released Feb. 12, 2015. Comments were due March 16, 2015, and replies were due March 31, 2015.
  • Other Items by Petitioners Claiming to Be Similarly Situated to Waiver Recipients
    • In addition to the above items, the FCC has recently issued a few public notices on petitions by numerous entities claiming that they are similarly-situated to other petitioners who received retroactive waivers with respect to the FCC’s advertising fax opt-out notification requirements. (See public notices 1, 2, and 3).  The FCC has also recently issued a public notice seeking comment on a petition by Papa Murphy’s Holdings, Inc., a pizza chain claiming to be similarly-situated to the parties that received waivers with respect to the FCC’s prior-express-written-consent requirements for automated telemarketing calls in the FCC’s July 2015 TCPA Order.  That public notice is available here.  Comments on the Papa Murphy’s petition are due Apr. 21, 2016, and replies are due May 06, 2016.

B. Other Petitions

  • Kohll’s Pharmacy & Homecare Inc.
    • Petition
    • Public Notice
    • Summary:  Kohll’s Pharmacy & Homecare Inc. (“Kohll’s”) filed a petition for waiver seeking a declaratory ruling that certain faxes describing the health benefits of flu vaccination did not constitute unsolicited advertising under the TCPA.  Kohll’s contended that the faxes did not promote the sale of any good or service but rather provided health information.  Alternatively, Kohll’s sought a declaratory ruling that the faxes are exempt from the TCPA on the same reasoning underlying the exceptions for healthcare-related calls subject to HIPAA.  Finally, Kohll’s argued that exempting healthcare related calls, but not faxes, would violate the First Amendment as an overly burdensome restriction on commercial speech without a rational basis.  The FCC issued a public notice seeking comment on each of these arguments, as well as any other issues raised by the petition.
    • Timing: Petition was filed Mar. 25, 2016.  Public Notice was released Apr. 21, 2016.  Comments are due May 23, 2016, and replies are due June 06, 2016.
  • Todd C. Bank
    • Petition
    • Public Notice
    • Summary: Noting that the TCPA includes a number of restrictions that apply to residential lines, attorney Todd C. Bank filed a petition for declaratory ruling arguing that these calling restrictions apply to any line registered as a residential telephone line—including those that are in fact used for business purposes by the subscriber.  Thus, Bank requested that the FCC clarify “that the [TCPA’s] restrictions . . . on unsolicited, pre-recorded telephone calls . . . apply to calls made to home-business telephone lines that are registered with the telephone-service provider as residential lines.”  Bank contended that there is no public policy basis on which to distinguish residential lines that are used for personal purposes from those that are used for business purposes, and requested that the FCC issue a declaratory ruling to that effect.  The FCC’s public notice sought comment on Bank’s requested action.
    • Timing: Petition was filed Mar. 07, 2016.  Public Notice was released Mar. 22, 2016.  Comments are due Apr. 21, 2016, and replies are due May 06, 2016.
  • Joseph T. Ryerson & Son
    • Petition
    • Public Notice
    • Summary:  Joseph T. Ryerson & Son (“Ryerson”) used an electronic tool to send a fax that was then received by one of their customers via an electronic fax transcriber service.  Thus, the fax never existed in paper form.  Ryerson, stated that this transmission was effectively an email, and asked the FCC “to declare that  alleged ‘faxes’ that initiate in digital form and are received in digital form do not fall within the TCPA.”  Ryerson contended that the TCPA rules, on their face, preclude any application to purely electronic transmissions, and that applying the TCPA to such transmissions would raise vagueness concerns that would violate the First and Fifth Amendments.  The FCC sought comment on whether “faxes both initiated and received in digital form are beyond the Telephone Consumer Protection Act’s coverage (including restrictions on certain unsolicited faxes),” as well as on any other issues raised by Ryerson’s petition.
    • Timing:  Petition was filed on Nov. 4, 2015.  Public notice was released Nov. 24, 2015.  Comments were due Dec. 8, and replies were due Dec. 15.
  • Lifetime Entertainment Services, LLC
    • Petition
    • Public Notice
    • Summary:  Lifetime Entertainment Services, LLC (“Lifetime”) placed an unsolicited, prerecorded call to a residential telephone line in order to inform the recipient that “Project Runway” had moved from Bravo to the Lifetime network.  The call resulted in a lawsuit alleging that the call was a telemarketing call.  Lifetime contended that it was an informational call, as it did not seek to sell any new services, and was simply intended to inform current subscribers of a new show available to them.  The FCC public notice stated that “Lifetime asks the Commission to clarify that a call to provide information about a service change is not made for a commercial purpose, that such informational calls are neither advertising nor telemarketing, and that these calls are therefore not prohibited by the TCPA and the Commission’s rules.  Alternatively, Lifetime asks the Commission to grant a retroactive waiver of section 64.1200(a)(3) of the Commission’s rules for the call sat issue in the related litigation, stating that removing such calls from liability would be consistent with the statutory purpose of the TCPA and Commission precedent, and that subjecting cable programmers to the burden and cost of litigation would discourage the flow of useful information to subscribers and viewers, contrary to the public interest.”  The FCC sought comment on these issues.
    • Timing:  Petition was filed on Dec. 11, 2015.  Public notice was released Feb. 05, 2016.  Comments were due on Mar. 07, 2016, and replies were due on Mar. 21, 2016.
  • Broadnet Teleservices, LLC –  CURRENTLY ON CIRCULATION
    • Petition
    • Public Notice
    • Summary:  Broadnet Services, LLC (“Broadnet”) provides telephone outreach services for government entities.  It sought a declaratory ruling that “the TCPA rules do not apply to calls made by or on behalf of federal, state, and local governments when such calls are made for official purposes.” Broadnet argued that “[a]bsent such action, citizens that rely on their wireless phones as their primary, or only, means of telephone communication will be deprived of important opportunities to engage with their government that wired citizens currently enjoy.”  The FCC issued a public notice citing this argument and seeking comment on Broadnet’s petition.
    • Timing:  Petition was filed Sept. 16, 2015.  Public notice was released Sept. 31, 2015.  Comments were due Oct. 29, 2015, and replies were due Nov. 13, 2015.
  • Anthem, Inc.
    • Petition
    • Public Notice
    • Summary:  Anthem, Inc. (“Anthem”) requested that “the Commission expressly except non-telemarking health care-related calls from the current restrictions that otherwise apply under the Telephone Consumer Protection Act.”  According to its petition, “Anthem makes telephone calls and sends text messages to its members to provide information which empowers them to be engaged in their own health care decisions.” Anthem’s petition goes on to state that these calls include, inter alia, “[c]alls to persons with identified chronic health conditions to help them manage those conditions . . . Calls to pregnant mothers to promote adequate prenatal care . . . Post discharge calls to patients to encourage compliance with recommended health care follow up measures.”  The FCC issued a public notice seeking comment on this proposal.
    • Timing:  Petition was filed June 10, 2015.  Public notice was released Aug. 31, 2015.  Comments were due Sept. 30, and replies were due Oct. 15, 2015.
  • RTI International – CURRENTLY ON CIRCULATION
    • Petition
    • Public Notice
    • Summary:  RTI International (“RTI”) provides the federal government with research and survey data collection services.  It submitted a petition asking the FCC to “confirm that the TCPA does not restrict research survey calls made by or on behalf of the federal government.”  Specifically, it argued that the TCPA applies only to calls placed by a “person” and the federal government does not qualify as a “person” under the definitions contained in the TCPA.  The FCC sought comment on RTI’s interpretation of the TCPA.
    • Timing:  Petition was filed Sept. 29, 2014.  Public notice was released Nov. 19, 2014.  Comments were due Dec. 23, 2014, and replies were due Jan. 12, 2015.
  • National Employment Network Association – CURRENTLY ON CIRCULATION
    • Petition
    • Public Notice
    • Summary:  National Employment Network Association (“NENA”) contacts Americans on behalf of federal government entities, including the Social Security Administration.  Noting that the contacts it facilitates are often crucial in helping recipients leave the welfare rolls, it argued that “the most cost-effective means of disseminating information of anon-commercial nature that is mandated by law and for the purpose of lifting people out of poverty and contributing to the economy is in the public interest and, therefore, allowable under the Commission’s rules.”  The FCC issued a public notice requesting comment on whether “a long-standing relationship between a beneficiary of federal benefits and a federal agency logically implies the beneficiary’s consent to receive autodialed and prerecorded non-telemarketing calls and text messages under the TCPA, and that such consent includes calls made by a public or private intermediary or associated third party that “stands in the shoes” of the federal government.”
    • Timing:  Petition was filed Aug. 05, 2014.  Public Notice was released Sept. 19, 2014.  Comments were due Oct. 20, 2014, and replies were due Nov. 03, 2014.
  • Vincent Lucas
    • Petition
    • Public Notice
    • Summary:  Vincent Lucas, a consumer who allegedly received unsolicited telephone solicitations, requested “an  expedited  declaratory  ruling holding  that  a  person  is  vicariously  or  contributorily  liable  if  that  person  provides  substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates 47 U.S.C. §227(b) or (c).”  The FCC issued a public notice seeking comment on this request.  The FCC’s public notice also stated that “Lucas argues that the Commission has the authority to determine vicarious liability under the TCPA and that such liability should apply to those who assist telemarketers in violating the TCPA. In addition, Lucas makes the argument that recognizing vicarious liability for assisting illegal telemarketing will greatly assist in enforcement of the TCPA. Lucas asserts that the Commission can make the requested clarification without a separate rulemaking proceeding.”
    • Timing:  Petition was filed June 18, 2014.  Public Notice was issued July 09, 2014.  Comments were due Aug. 08, 2014, and replies were due Aug. 25, 2014.
  • Acurian, Inc.
    • Petition
    • Public Notice
    • Summary:  Acurian provides clinical trial patient recruitment and retention solutions for the life sciences industry.  Its petition explains that “[a]mong other things, Acurian provides a service that matches individuals to pending clinical drug trials.”  To enable this service, Acurian places calls to consumers.  According to Acurian, “[t]hese telephone communications do not entail commercial solicitation or marketing of any kind; the sole purpose of these calls is to contact the individual and refer him or her to a local doctor who is participating in a clinical trial in which they are interested.  Acurian does not convey any information about the commercial availability of goods or services and does not solicit payment from the individuals it contacts.”  Accordingly, Acurian asked that the FCC clarify that “a telephone call to a residential telephone line seeking an individual’s participation in a clinical pharmaceutical trial is exempt from the restrictions on prerecorded calls enacted as part of the Telephone Consumer Protection Act.”  The FCC issued a public notice seeking comment on that issue.
    • Timing:  Petition was filed Feb. 05, 2014.  Public notice was released Feb. 20, 2014.  Comments were due Mar. 24, 2014, and replies were due Apr. 08, 2014.

Currently Pending FCC Petitions in TCPA Matters
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A Q&A for Agencies on the FCC’s 2015 TCPA Clarification

May 1, 2016 By Leave a Comment

TCPA White Paper ThumbnailOn July 18, 2015 the FCC published a declaratory ruling in response to questions from the telecommunications, telemarketing, and receivables management industries.

This ruling was intended to provide direction and clarity around the definition and use of technology used in contacting consumers; however, many felt this ruling in fact muddied the waters further.

What follows is a Q & A from a webinar we produced. We’ve allowed the original panelists the opportunity to update and change their answers to reflect evolving best practices.

Additionally, we’ve included a section on what the recent CBE ruling means for the industry.

This free whitepaper is presented as part of our TCPA Toolbox, offering a full suite of compliance and operational tools for the industry.

Our content sponsor for this TCPA topic is Infutor Data Solutions. Infutor Data Solutions provides marketers, data analysts, and fraud specialists with elite compiled databases including consumer, business, new movers, public and private telephone numbers, automotive owners, and email data. Infutor’s compiled data assets are highly regarded in the information industry and used by many of the largest information companies, non-profit agencies, retailers, automotive marketers, fraud and skip-tracing agencies.

Utilizing these core compiled databases, Infutor also provides automated data processing solutions, including telephone append, e-append, TCPA compliance, identity validation and verification, enterprise data linking, master data management (MDM), and several proprietary cleansing processes.

A Q&A for Agencies on the FCC’s 2015 TCPA Clarification

http://www.insidearm.com/freemiums/a-qa-for-agencies-on-the-fccs-2015-tcpa-clarification/
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Debt Collection Litigation in the Cross Hairs: CFPB’s Consent Order Against New Jersey Law Firm Creates More Problems Than Solutions

May 1, 2016 By Leave a Comment

Debt Collection Litigation in the Cross Hairs: CFPB’s Consent Order Against New Jersey Law Firm Creates More Problems Than Solutions
http://www.insidearm.com/opinion/debt-collection-litigation-in-the-cross-hairs-cfpbs-consent-order-against-new-jersey-law-firm-creates-more-problems-than-solutions/
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Walking for Suicide Prevention

May 1, 2016 By Leave a Comment

Mike Ginsberg

Mike Ginsberg

I recently learned that a person commits suicide about every 12.3 minutes in the United States. That’s 42,773 Americans a year. This is a staggering statistic.

It got me thinking about my last 25 years in the accounts receivable management industry.  I can point to about a half a dozen examples of prominent leaders taking their own lives.  I think about the families, the companies, the communities that were impacted by the loss.  Perhaps if the individual realized all of the love and affection around him or her different decisions made have been made.  Unfortunately mental anguish can severely distort one’s view on life and others may not notice until it is too late.

Experts say the best way to prevent suicide is through early detection, diagnosis, and treatment of depression and other mood disorders.  We often don’t learn that someone is in need of help until it is too late. As executives in business – and as professionals within our community – we can do our part to build awareness about suicide prevention. Too many people at risk don’t seek help so we have to reach out to them.

My wife found out about the American Foundation for Suicide Prevention last year, 26 years after tragedy struck her own family. The AFSP was started in 1987 by a small group of caring individuals who established a source of support for suicide research and education. These founding families – who have each lost someone to suicide – joined with scientists to create what is today the AFSP, a powerful advocate for mental health and suicide prevention.

In June, my wife and I are walking all night through New York City to help build awareness for this important cause. The support we have already received from our community is overwhelming. To learn more about this wonderful event ad read our story, please visit our page.

If you decide to make a financial contribution I assure you that it will go to a worthwhile cause.  I encourage you to open up discussions within your own families, companies, and communities. Change starts with communication.

Walking for Suicide Prevention
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Executive Change: Stellar Recovery, Inc. Promotes Rachel Frady to Chief Compliance Officer

May 1, 2016 By Leave a Comment

Rachel Frady has been promoted to the Chief Compliance Officer of Stellar Recovery, Inc.  Rachel has over 13 years of experience in the collection industry, with extensive knowledge of every department as she has held management roles in Quality Assurance, Client Services, Administration, and Compliance.

Prior to joining Stellar Recovery, Rachel was with a leading BPO and Third Party agency where she oversaw multiple departments including Administration and Quality Assurance. Rachel led the implementation and oversite of auditing procedures to ensure compliance with client contractual requirements and government regulations. Additionally, Rachel was responsible for communicating all audit findings to executive management and worked directly with specific departmental management teams to correct audit defects.

As the Chief Compliance Officer at Stellar Recovery, Rachel will oversee the Compliance, Quality Assurance, and Training Departments. Her first initiatives for Stellar Recovery will include:

  • Undertaking an exhaustive review of all existing compliance-related policies and procedures
  • Developing and implementing new and revised policies and  procedures designed to strengthen and enhance Stellar’s Compliance Management System (CMS)
  • Closely monitor and stay abreast of all collection industry-specific legal and regulatory requirements to ensure compliance in all aspects of the business

The compliance department is set up to make sure consumers, clients, and Stellar Recovery are all protected while giving the best in class customer experience to consumers, best in class customer service and brand protection to clients, and best in class policies and procedures to Stellar operations personnel.  Rachel also works hand in hand with Assurance Law Group, Stellar Recovery’s Captive Law Firm.

Under Rachel’s leadership, the Compliance Department, managed by Valle Martin, Director of Compliance, is responsible for complaint handling and tracking, policy review, and compliance auditing.  The Training Department is led by Amanda Marcum Nolan, Trainer, which includes new hire training, continuous training and development with current call center agents and management staff.  The Quality Assurance Department is under the direction of Yahaira Cruz and Michelle DeSalvo, who along with several quality assurance analysts are responsible for call monitoring, account auditing, and production audits.

Rachel commented that “Stellar Recovery understands the importance of Compliance and as a company, and individuals, we are committed to a standard of excellence in everything we do when it comes to consumer experience, client relationships, and employee support.”

Stellar Recovery, Inc. Corporate Headquarters is located in Jacksonville, Florida, with a satellite office in Kalispell, Montana.  Please visit our website at www.stellarrecoveryinc.com.

 

Executive Change: Stellar Recovery, Inc. Promotes Rachel Frady to Chief Compliance Officer
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New ProPublica Article Criticizes Debt Collection Litigation on Medical Accounts; Paints One Firm as Outlier

May 1, 2016 By Leave a Comment

As part of an ongoing investigation, Propublica published a lengthy article today by Paul Kiel titled For Nebraska’s Poor, Get Sick and Get Sued. The article was co-published with The Daily Beast. The article has already been picked up by other publications and websites.

Kiel covers consumer finance for ProPublica. Recently, his focus has been on debt collection and high-cost lending. His work in 2013 was honored as a finalist for both a Gerald Loeb Award and a Best in Business award from the Society of American Business Editors and Writers.

The article discusses the practice of use of litigation to collect delinquent healthcare accounts in the State of Nebraska. It is clear that Mr. Kiel spent a considerable amount of time researching the story before publication. The story is less than flattering to the debt collection industry.

The sidebar to the story states this story is part of an ongoing investigation labeled Unforgiven: The Long Life of Debt:  The way lenders and collectors pursue consumer debt has undergone an aggressive transformation in America. Prior stories in the series include the aforementioned Kiel story, From the ER to the Courtroom, Old Debt, Fresh Pain, Unseen Toll, Debt Collection Stories, and Suing Soldiers Worldwide.

The article focuses largely on suits related to healthcare accounts filed by one specific Nebraska collection agency, Credit Management Services (CMS). To provide comparison, the author reviewed debt collection litigation practices in similar sized locales and states where court filing fees were similar to the filing fees in Nebraska.

Nebraska has some of the lowest court filing fees in the country. The article notes, “The cost to file a lawsuit in Nebraska is $45. In New Mexico, where suits are filed at about one-third the rate as in Nebraska, the fee for smaller debts starts at $77.”

While the article is generally critical of all debt collection litigation, it also paints CMS as somewhat of an outlier.

“In 2013, CMS filed almost 30,000 lawsuits in Nebraska, more than the rest of the collection agencies in Nebraska combined. That would be a staggering number of suits in any state. In New Jersey, with a population nearly five times larger, only one company, the nation’s largest debt buyer, filed more than 30,000 lawsuits that year.”

insideARM Perspective

This article should be read by all in the ARM industry.

These types of articles continue to dominate the general public’s view of the debt collection industry. The stories are never properly balanced. But, a balanced article is not on the agenda.

Kiel did include excerpts from a statement from the Nebraska Collectors Association (NCA) in the article. The select excerpt said collection agencies file suits as “a last resort,” after attempts by the original provider and the agency to resolve the debt have failed. “Cooperatively working with the consumer is always the preferred approach to the collection process.”

However, insideARM was able to obtain the full statement from the NCA. It would have been a more balanced article if Kiel had included more from the NCA. A copy of the NCA statement can be found here. insideARM commends NCA for going beyond the typical, extremely brief, response to provide additional context.

At last week’s insideARM Larger Market Participant Summit the keynote address was delivered by Patrick Hillman, Senior Vice President from LEVICK, a prominent public relations and communications firm.  Mr. Hillman also stayed at the Summit to participate in a second session: “On the Record” – A Discussion with National Consumer Finance Reporters.” (As it happens, Hillman filled in for Paul Kiel, who was unable to attend because of an illness.) After the Summit concluded, Hillman commented: “The reputation challenges to the industry as a whole are incredibly complex.” That may be the understatement of the century.

New ProPublica Article Criticizes Debt Collection Litigation on Medical Accounts; Paints One Firm as Outlier
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Consumer Finance Reporters to the Debt Collection Industry: Give us Facts and Data

May 1, 2016 By Leave a Comment

The debt industry has a story, but it is one told about it, rather than by it, generally.

And, according to a crisis management consultant, that’s the wrong way for the industry’s stories to be told.

Consumer media outlets — your Wall Street Journals; your nightly news segments; your Times, both Financial and New York — generally have one story about the industry that they tell, and it goes like this: the debt collection industry is among the most complained about industries in the American marketplace, and these complaints are based on egregious behavior exhibited by debt collectors who use unscrupulous tactics to get the last nickel from widows and fixed-income seniors.

The media are also quick to use data — specifically FTC and CFPB complaint numbers — with which to measure the abuses against consumers. They rely on first-person anecdotes from affected consumers. What they don’t have, often, are collection industry voices or data, at least according to a panel discussion of consumer reporters at last week’s insideARM Larger Market Participant Summit.

The panel consisted of Teddy Downey of The Capitol Forum, Rachel Witkowski of The Wall Street Journal, and Patrick Hillmann of the crisis management firm Levick. [Editor’s note: Paul Kiel, the ProPublica reporter who authored this article released today, as well as last year’s well-read Color of Debt article, was slated to be on the panel as well, but fell ill and was unable to travel to the conference.]

It was Hillmann who described the industry as one in crisis — almost perpetually. And while most in the industry see that as a true statement, few have taken the next step to develop a Crisis Management Plan that will safely navigate a company through a rough news cycle. Or even to get positive news stories out into the media stream.

Part of that Crisis Management Plan, according to both Hillmann and Witkowski, is a willingness to engage with reporters. And this has been a blindspot for the industry as a whole. Too often, management at collection agencies have felt that keeping a low profile would also keep them out of the cross-hairs of regulators and consumer attorneys. However, collection agencies in the marketplace aren’t able to hide from regulators; and, actually, it’s that kind of philosophy that contributes often to the negative news cycle. “If there isn’t some sense of open communication,” says the Wall Street Journal‘s Witkowski, “it makes it difficult to have a relationship.”

That relationship with reporters is a key aspect of a Crisis Management Plan — but it’s also a relationship that can’t be faked. “Canned responses can make a company sound insincere,” says Hillmann, especially responses that eschew hard data for unsupported platitudes. “The more data that you can provide to journalists, the better,” The Capitol Forum‘s Downey told the audience. “In particular, if you can highlight the costs and benefits related to a certain topic of interest, it will likely help a reporter see your side more clearly.”

“The CEO who is most available is best,” added Hillmann. While all agencies should consider some sort of media training, specifically for talking to reporters, consumer groups, and regulators, reporters, for the most part, aren’t interested in talking to a PR person. “Find ways to train your executives to be more comfortable when they’re speaking with reporters,” Hillmann said. “You want to make sure your process enables your team to get the reporter in touch with the person or people within your company who have the best information.”

Reporters want to be able to support a story with figures and hard data. According to Hillmann, “Anything you can do to help explain things clearly and concisely is good. Give journalists a lot of useful information, but make sure it tells a clear story that can be explained to the general public.”

Stories that would be most valuable to pitch to media outlets — whether its insideARM or the Wall Street Journal — are ones where you have data that backs up a clear point of view. Of particular interest to financial journalists, for instance, would be information and data that shows inconsistencies in how the CFPB is reporting complaint numbers. “We don’t want magic stories about how you’re helping,” Witkowski said. “We want data — we want to see direct effects.”

Consumer Finance Reporters to the Debt Collection Industry: Give us Facts and Data
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White House, ED, and CFPB Announce Major Student Loan Initiative But Don’t Address Post-Default Issues

May 1, 2016 By Leave a Comment

Yesterday the White House hosted a call together with the Department of Education (ED) and the Consumer Financial Protection Bureau (CFPB), to announce actions to ensure that student loan borrowers are aware of their options for repayment, and that they are guaranteed strong consumer protections. Here is a link to the full announcement.

Those speaking on the call were:

  • Liz Allen, Deputy Assistant to the President and Deputy Director of Communications
  • Secretary John B. King, Jr., Department of Education
  • Richard Cordray, Director of the Consumer Financial Protection Bureau

And joining for the Q&A was Seth Frotman, Assistant Director of the Office of Students & Young Consumers at the CFPB.

New initiatives announced include:

  • New Goal to Enroll 2 million More Borrowers in Plans like Pay As You Earn (PAYE). The President’s PAYE and related income-driven repayment plans are available to help borrowers who may be struggling to manage their debt effectively.
  • Launch of StudentLoans.gov/Repay. To help borrowers easily navigate the complexity of student loan repayment options, the U.S. Digital Service and ED’s Office of Federal Student Aid have launched StudentLoans.gov/Repay to help drive students to their best repayment option in five steps or less.
  • Strengthening Consumer Protections through New Standards for Student Loan Servicing. ED and the Department of Treasury (Treasury) have developed student loan borrower rights and protections in three areas: (1) providing accurate and actionable information about account features, borrower protections, and loan terms; (2) establishing a clear set of expectations for minimum requirements for communication and services provided by student loan servicers, including adequate and timely customer service; and (3) holding servicers accountable for fixing errors, being responsive to borrowers, and resolving problems by ensuring that borrowers, federal and state agencies and regulators, and law enforcement officials have access to appropriate channels of recourse when violations of federal or state consumer financial laws occur.
  • Better Information to Help Borrowers Take Action on their Debt: CFPB Prototype Student Loan Payback Playbook. The CFPB is seeking comment on a new set of student loan servicing disclosures—a student loan Payback Playbook – that provides borrowers personalized information to better understand their repayment options and find a monthly payment they can afford. A copy of the CFPB public request for information is available here.  
  • Ensuring Effective Student Loan Counseling.  ED will work to improve the timing and content of current loan counseling efforts, including statutorily required entrance and exit counseling, to help students make better borrowing decisions, increase college completion, promote successful loan repayment, and reduce delinquencies and defaults.
  • Leveraging Research to Drive Better Student Outcomes. ED will pilot Advancing Insights through Data (AID), a research partnership program that will offer other federal agencies and affiliated researchers data access to conduct research that can inform and advance policies and practices that support students’ postsecondary success and strengthen repayment outcomes for borrowers.
  • Modernizing Credit Reporting for Student Loans to Ensure Fair Treatment Of Borrowers. ED and Treasury, in consultation with the CFPB, are working collaboratively with the credit reporting industry to develop guidance for servicers, lenders, and others who furnish data to the credit bureaus to determine how best to report student loan data so that it is fair, consistent, and accurately reflects repayment activity.
  • Over 40 new student debt challenge takers. Earlier this month, the White House issued a call to action for colleges, universities, non-profits, businesses, state and local governments, and other employers to help more borrowers better understand their options, and to take action to enroll those borrowers in PAYE and related plans so they can manage their monthly payments and avoid delinquency and default. In the few short weeks since the Debt Challenge was launched, there have been over 40 commitment makers, and we are encouraging more colleges, businesses, non-profits to take action.

insideARM Perspective

insideARM spoke with experienced ED collection executives for reactions to the above. They offered these thoughts:

  1. The very easy to read and understand format is impressive. The concern from an industry perspective is that this addresses pre-default servicing only, and it does not address communication issues with the borrowers. For instance, as a consumer gets used to this level of easy to understand communication, what happens when they default?  Will they expect same communication standards they had when it was in pre- default?  Will they be waiting for texts and emails from their collection agency that will not be forthcoming due to FDCPA and litigation risks?
  2. This doesn’t address the issue that this is a complicated repayment process and it will take multiple borrower contacts.  If new debt collection rules affect “first party,” restricted call attempt rules would hamper the ability for servicers to effectively communicate this information.
  3. The proposed Playbook isn’t so forthcoming about the “costs” and negatives of lower payments in higher overall interest costs, or the fact that forgiven debt is taxable. In fact, the Department of Education would come down hard on collection agencies for not giving full disclosure to consumers about these consequences.
  4. Nowhere does ED address the fact that loan forgiveness is taxable to the borrower.

Indeed, during the Q&A, one reporter asked several insightful questions, which in my opinion, weren’t answered.

  • First, is the goal to get only defaulters into income driven repayment plans, or all borrowers? The reporter highlighted the risks both to taxpayers (in the form of lost revenue) and to borrowers (in the form of increased interest payments on an outstanding balance that remains higher for a longer period). The answer to this, and most other questions asked, was that the administration wants to be sure all borrowers are aware of all of their options, and that they make the choice that works best for them.
  • Second, the reporter said he’d been told by many companies that students simply don’t respond to their calls, texts, etc. So how does the administration propose to reach students with this information? The answer to this, essentially, was that they’ve created this great website. And because it’s so accessible to everyone, and because it’s so user friendly, it will draw people.

Another asked whether there would be a parallel effort to reduce the cost of education, which is what drives the need for such excessive borrowing in the first place. The response included an explanation of some of the drivers of the cost of education, including:

  • The systematic reduction in the investment by states in higher education, which pushes more of the burden onto students.
    [Author’s commentary: I gather this means that the tuition bill had been kept artificially low – however this doesn’t explain the outrageous increase in tuition at private schools, which has significantly outpaced inflation.]
  • Students who start but don’t finish college.
    [I see how this can make it hard to pay back loans, when you didn’t get a degree, so don’t get the benefit of better job opportunities. But I don’t see how this affects the cost of tuition in the first place.]

It was mentioned that President Obama is working to implement America’s College Promise, which provides tuition-free community college for two years for “responsible students.”

[This may be a terrific idea for many, but it also doesn’t address what is driving the cost of tuition – in this case, it just means the taxpayers – rather than students — will cover this cost. I gather the argument here is that the government recovers this money in the form of future taxes from people who can now get better jobs because of their education.]

 

White House, ED, and CFPB Announce Major Student Loan Initiative But Don’t Address Post-Default Issues
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