Gamification Revs Up Employee Engagement and Business Performance in Contact Centers

February 14, 2016 By Leave a Comment

Greg Salvato

Greg Salvato

Employee engagement is widely recognized as essential to high performance cultures. In fact, research from Gallup reports that companies with highly engaged workforces outperform their peers by 147% in earnings per share and enjoy 25-65% less turnover and 37% less absenteeism, among a variety of other benefits.  But a recent article by Josh Bersin, drawing from new studies at Deloitte, explains that “while 90 percent of executives understand the importance of employee engagement, fewer than 50 percent understand how to effectively address this issue.”

There are a variety of factors and trends, some old – some new, which influence the degree of engagement currently exhibited by employees within all types of organizations – and there’s no question that contact centers are uniquely challenged by them. One approach that is demonstrating measurable effectiveness in driving employee engagement to greater levels while simultaneously helping contact center organizations meet the unique demands of a modern workforce is gamification.

For those still unsure about how to confront the serious implications of a disengaged workforce – which Gallup suggests costs the U.S. between $450 billion to $550 billion per year – deliberation over the potential of gamification is long past. It’s time to get in the game.

Perception, investment and record

A November 2012 Gartner press release predicted that “…by 2014, 80 percent of current gamified applications will fail to meet business objectives primarily due to poor design.”  Fortunately, gamification has rapidly advanced, and while the risk of which Gartner warned will not have been eliminated in 2016, the substantial investment by vendors to develop and refine gamification platforms for contact center operations, and the early adopters that have helped to validate their value propositions, make it far less impactful than in 2012, or even 2014. As the demonstrated ROI of successful gamification further multiplies, so too will the momentum behind an already booming trend in adoption of gamification solutions to bolster business culture and results, along with employee loyalty and satisfaction.

A perfect pair

Contact center operations and gamification were meant for each other. Few other business environments bring so many people together to perform similar routines for a common set of business objectives with a similar set of pressures.  Employee attendance, morale, disengagement, turnover, and overall performance are unique challenges for contact centers, in which wages and employee skill levels are often low (in many cases, due to very high turnover), and the work itself can be stressful and monotonous.  Gamification can help tackle these challenges head-on for the following key reasons:

  1. The principles of gamification are common to those of traditional performance management. When gamification initiatives are aligned with the organization’s objectives and related performance management strategies, they are much more likely to succeed. Most modern gamification platforms either provide the scorekeeping rubric required to coordinate gamification goals with business performance targets, or can easily integrate with the measurement and assessment systems already in place.
  2. Gamification can motivate by utilizing a variety of game mechanics to inspire, encourage, accelerate development, and otherwise impact behavior (i.e., leaderboards, competitions, badges, points, levels, challenges, quests, etc.). Gamification design can be simple or complex, social or personal, cerebral or silly and geared to appeal to just about any personality or work style. This is especially important within contact centers where the workforce is comprised of individuals from nearly every generation, personality, and background – and still more so given the unique expectations of Millennials (which Pew Research reports now make up greater than one third of the American workforce).
  3. Gamification’s impact is easily validated. When adequately integrated with the organization’s performance management systems, verifying and measuring ROI and value on a sequential or year over year basis for each KPI and balanced score is a straightforward process; such analytics are often integrated within the leading contact center gamification platforms.  Not every initiative will produce extraordinary results, and some may even fail, but your ability to measure success and improve future results will be based on a financially quantifiable performance record.

Go-time

Gamification has a record of accomplishment in motivating and engaging employees and improving business results for contact centers across every industry sector. Research and strategic analyst Mind Commerce projects the market for gamification will exceed $10 billion by 2020. Continued advances in technology, broader and refined business applications, and an expanded canon of case studies and testimonials of gamification success will ensure these projections can be achieved.

Whether the greatest challenge within your contact centers involves quality, turnover, attendance, competitive positioning, profitability or something else, a gamification strategy can help by fueling employee engagement, encouraging healthy work and life habits, and accelerating the achievement of higher performance levels year-round.

The availability of proven contact center industry gamification solutions is increasing, and if you’re among the executives who remain undecided or unsure about how to rejuvenate your corporate culture and improve employee engagement, the off-season has ended. It’s time to gear-up, game-up, and win.

 

Greg Salvato is CEO of contact center employee engagement and performance management software solutions vendor, TouchPoint One. 

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Accounts Receivable Management

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CEO and President William S. Kolz Earns Certified Receivables Compliance Professional Status

February 7, 2016 By Leave a Comment

Kolz Associates, LLC, a strategic consultant services firm, is proud to announce that our CEO and President William (Bill) Kolz has earned the designation of Certified Receivables Compliance Professional from DBA International.  Mr. Kolz earned this designation after completing the necessary education credits and participating in various DBA International seminars in 2014 and 2015.

According to the DBA International, a nonprofit trade association that represents more than 575 companies that purchase performing and nonperforming receivables on the secondary market the Receivables Management Certification Program and its Code of Ethics set the “gold standard” within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer.

DBA President Kaye Dreifuerst congratulated Bill Kolz of Kolz Associates on becoming a Certified Receivables Compliance Professional, stating that “By becoming Certified, Bill Kolz has demonstrated that he is committed to operating to the highest ethical standards, and will abide by the comprehensive national standards of industry best practices. These Best Practices include, responsible consumer protection, increased transparency and improved educational and operational standards for the industry”. Kaye also stated “I’m pleased to welcome Bill into the DBA Certification program. “

About Kolz Associates

Kolz Associates, LLC provides interim or part-time CEO, COO, CFO and CIO services for emerging to mid-size companies for a fraction of the cost of hiring full-time executive professionals. Kolz Associates brings experience in, data warehouse, information management, reporting, disaster recovery, infrastructure assessments, business continuity planning, portfolio management, financial modeling, scoring, cash flow management, and project management services.

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Accounts Receivable Management

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SoftVu to Launch Compliant Email Marketing and Text Messaging System at the Debt Buyers Conference in Las Vegas

February 7, 2016 By Leave a Comment

Come see how we turned Marketing Automation into Collection Automation

Overland Park, KS  – SoftVu, the leading provider of marketing CRM and email marketing automation solutions will introduce their email automation and text messaging platform designed for the accounts receivable management industry at the upcoming Debt Buyers Association Meeting in Las Vegas, NV.  Serving the financial services industry since 1999, SoftVu has become a trusted partner to leading financial institutions and mortgage lenders by delivering the most advanced email marketing automation system available in the industry.

Today, SoftVu is changing the way Debt Buyers and Collection Agencies communicate with consumers.  Built from the ground up with compliance in mind, SoftVu has developed the most advanced email marketing automation and text messaging system designed to send the right message, to the right device, at the right time.  Using rule driven message campaigns that mirror your collection strategy and action and time-based triggering events, SoftVu delivers a completely customized and personal communication campaign to your consumers.  These campaigns are designed to lower your collection costs, increase contacts to your call center and optimize your liquidation rates.

“We are excited about the opportunities we see in the accounts receivable management space.  Between the growing regulatory constraints being placed on call centers and the increasing costs associated with mailing campaigns, compliant email and text messaging campaigns offer a powerful tool to reduce collections costs, improve contact rates and increase collections for our clients.” commented Tom Goldman, COO of SoftVu.  For more information, visit Booth 503 at the upcoming Debt Buyers Association meeting or visit their website at www.SoftVu.com.

About SoftVu

SoftVu is a leading provider of marketing CRM and email marketing automation solutions to the financial services industry.  Since 1999, SoftVu has been providing banks and mortgage lenders with the most advanced email marketing and lead nurturing tools available. SoftVu now offers a platform designed from the ground up for the Accounts Receivable Management Industry that delivers total compliance and personalized automation to increase collections and lower operational costs. SoftVu delivers the right message, on the right device, at the right time to optimize your collection contact strategy.

Contact:

Tom Goldman, COO

Email:        Tom.Goldman@SoftVu.com

Phone:       (877) 611-0104

Website:    www.SoftVu.com

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Accounts Receivable Management

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Coast Professional Helps Struggling Military Family Put Food On Table at Holidays

February 7, 2016 By Leave a Comment

Nationwide fundraising efforts help America’s vets meet different needs, including the most basic

Collingswood, NJ: Last year, generous ARM industry companies across the country participated in the sixth annual No Debts for Vets Charity Fundraiser, which runs from September 11th through Veterans Day, November 11th every year and benefits veterans through ARMing Heroes (www.armingheroes.org), the collection industry’s charity for military veterans. Hundreds of unemployed, underemployed, and disabled veterans apply for grants each year, all hoping for help to fill the gap between income and expenses for needs that are largely unmet by government programs or even by other military charities. Today, ARMing Heroes shared a remarkable story of how that support makes a direct, positive impact on our country’s military veterans facing financial difficulties.

United States Army Sergeant David Powell dedicated nearly 15 years of his life to serving his country, including two tours of duty in Iraq in an imminent danger pay area, earning no less than a dozen awards, medals, and citations along the way. When a service-connected disability led to his separation from the Army in 2014, David returned home to his wife and five children facing unemployment, limited income, and mounting expenses, struggling not only to pay his rent, but also to provide food for his family. Desperate for help, David applied for a grant from ARMing Heroes, and in December of last year, just before the holidays, he learned that his application was approved. David and his family were immediately awarded a grocery store gift card to put food on the table, as well as a grant to help pay the family’s rent.

Coast Professional, Inc. (www.coastprofessional.com) is one of many companies across the nation that participated in last year’s fundraising effort. As they have done in years past, Coast made a generous corporate donation to the charity, continuing its commitment to supporting vets and their families. Coast currently employs more than a dozen vets, representing approximately six percent of its workforce.

Everett Stagg, CFO of Coast Professional and a Navy veteran himself, commented on the company’s continued support of ARMing Heroes. “As a veteran, I’m extremely grateful for the service that the brave men and women of our military have given to our country. The Coast family came together to honor and show appreciation for those who have served and is pleased to participate in this fundraiser each year.” Coast CEO Brian Davis added, “We are dedicated to the advancement of resources available to veterans and have consistently demonstrated our commitment to increasing the opportunities available to these brave women and men through ARMing Heroes. Coast is proud to support ARMing Heroes and the members of our military.”

David Powell, upon hearing the good news of his grant award, expressed his sincere gratitude to the ARMing Heroes organization:

“We want to thank you from the bottom of our hearts for all that you have done for our family. This has been a hard year and we really needed the relief due the challenges of looking for a job. Your help as put a big smile on my family’s face because they saw a little sigh of relief on my face. From the food to the help with paying the rent. It is very appreciated by us. Have a great Holiday and a Merry Christmas.”

Thanks to generous donors within the ARM industry, the ARMing Heroes grant-making program is able to build momentum every year. Since its inception in 2009, hundreds of desperate vets and their families have received help when they needed it most. Throughout 2016, ARMing Heroes plans to spotlight additional grant recipients and how the charity was able to help ease their financial burdens. Stories of past grant recipients remind us all how rewarding this program can be.

The charity’s flagship No Debts for Vets Charity Fundraising Drive runs from September 11th through Veterans Day, November 11th every year, however tax-deductible donations are accepted at any time online at www.armingheroes.org and via mail to PO Box 353, Collingswood, NJ 08108, payable to ARMing Heroes. Pledges may be made to info@armingheroes.org.  Any amounts pledged or donated now will be applied to the 2016 drive.

About Coast Professional, Inc.

Coast Professional has concentrated on being the most effective collection agency in educational receivables since 1976. They focus on the collection of government and higher education debt, including Federal and non-Federal student loans, accounts receivables, tuition and fees, housing charges, and almost any other debt referred by clients. They currently provide collection services to over 200 government institutions, colleges, universities, and guaranty agencies across the nation, and are a top vendor for the U.S. Department of Education. Its business is founded on treating consumers with respect and professionalism, partnering with consumers to address their obligations while protecting the relationship they have with clients. Learn more at www.coastprofessional.com.

About ARMing Heroes

ARMing Heroes was founded and began operating in March, 2009.  The organization’s mission is to serve the needs of U.S. military veterans, including their spouse and children. ARMing Heroes fills a charitable niche by linking people identified with employment, credit, and financial counseling needs with the accounts receivable management industry, an industry uniquely poised to help in these areas.  Persons interested in volunteering their time and others interested in applying for benefits or pledging other forms of support are encouraged to contact the organization at www.armingheroes.org.

What Can I Do Right Now to Help?

  • Visit www.armingheroes.org and donate now.
  • Make ARMing Heroes your designated charity through the AmazonSmile program.
  • Like the ARMing Heroes page and post this article to your page on Facebook.
  • Tweet about this article on Twitter.
  • Join our group on LinkedIn, the ARMing Heroes Veterans Charity Supporter / Assistance Center.
  • Forward this article via email to your key contacts.
  • Print this article and fax it to your local congressional office and ask them to post our website on theirs as a resource for vets.

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Accounts Receivable Management

Filed Under: News

Failure to Inform a Consumer That a Partial Payment Revives an Out-of-Stat Debt Could Be an FDCPA Violation, Court Says

February 7, 2016 By Leave a Comment

A U.S. District Court Judge in Kansas refused to dismiss a lawsuit that alleged that a debt collection letter was false and/or misleading because it failed to inform the consumer that a partial payment would revive the statute of limitations on otherwise time-barred debt.

The case, Yang v. Midland Credit Management, Inc., 15-2686, 2016 WL 393726 (D.Kan., Feb. 2, 2016) involved the following set of facts:

On January 2, 2015, Defendant, in an attempt to collect a debt, sent a debt collection letter to Plaintiff. The letter stated “[s]pecial offers are now available to help you resolve your unpaid T-Mobile account, which is owned by MIDLAND FUNDING, LLC (“MCM”). Select one of the three options below and get closer to having one less thing to worry about.” The letter showed Plaintiff’s balance as $1,629.69. The options included one discounted payment in full of $651.87, six monthly payments of $217.29, or to call an account manager for more options. The letter further stated:

The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, we may continue to report it to the credit reporting agencies as unpaid.

*If you pay your full balance, we will report your account as Paid in Full. If you pay less than your full balance, we will report your account as Paid in Full for less than the full balance.

The state of Kansas has a revival statute, which states that a partial payment on a debt revives the statute of limitations, regardless of how long the debt has been stale. Plaintiff alleged that if she made one of the six partial payments as offered in the letter, the effect of such payment would revive the statute of limitations.

Plaintiff claimed that MCM’s letter violated two sections of the Fair Debt Collection Practices Act (“FDCPA”): 1) §1692e(2)(A)’s prohibition on the “false representation of . . . the character . . . or legal status” of Plaintiff’s debt; and 2) § 1692e(10)’s prohibition on the “use of any false representation or deceptive means to collect or attempt to collect any debt.”

The case came before the court on MLM’s Motion to Dismiss Plaintiff’s Petition under Fed. R. Civ. P. 12(b)(1) [ Defendant argued the case was not ripe for adjudication] and (b)(6) [Defendant argued the case failed to state a claim for relief under the FDCPA.]

The court’s Memorandum and Order can be found here.

The court rejected MLM’s “ripeness” argument writing:

Defendant does not cite to, nor has the Court found authority to support the claim that a consumer must act upon a debt collector’s representations or deceptive acts in order to suffer an injury. In fact, such a requirement would appear to undermine the deterrent effect of strict liability. Defendant’s motion is denied on these grounds.

The court also rejected MLM’s “failure to state a claim upon which relief may be granted” argument, first discussing and applying the “least sophisticated consumer” standard to plaintiff’s claims, then determining that a motion to dismiss was not the appropriate procedure to decide the issue. The court felt that the matter was best resolved through a future motion for summary judgment. The court wrote:

The summary judgment stage is more appropriate to address the question of whether the letter violates § 1692e(2)(A) or (10) because Defendant’s letter does not inform Plaintiff that any partial payment would result in the revival of Plaintiff’s debt under Kansas law. Accordingly, the Court denies Defendant’s motion to dismiss under Rule 12(b)(6), and invites the parties to instead address in cross-motions for summary judgment the issue of whether the letter sent by Defendant violates § 1692e as a matter of law.

insideARM Perspective

The case is an interesting procedural discussion. It is not a resolution of issue presented. MLM sought to bring an end to the litigation through a motion to dismiss.  However, the court felt that the motion to dismiss the case under Fed. R. Civ. P. 12(b)(1) and (b)(6) was not the appropriate method to resolve the matter. Instead, the parties are directed to bring cross-motions for summary judgment, allowing the court to decide as a matter of law whether the letter violates the FDCPA.

insideARM will continue to monitor the litigation and report on the ultimate outcome.

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Accounts Receivable Management

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Ninth Circuit Rules Prior Consent Fatal to TCPA Suit

February 7, 2016 By Leave a Comment

Yesterday the Ninth Circuit Court of Appeals affirmed a lower court dismissal of a putative Telephone Consumer Protection Act (“TCPA”) class action ruling that the plaintiff had provided “prior express consent” to receive the text messages in question.

The case is Shaya Baird v. Sabre, Inc. et.al (No. 14-55293, Feb. 3, 2016 9th Circuit Court of Appeals). The memorandum opinion can be found here. The ruling in the case was noted as “NOT FOR PUBLICATON”, meaning the case is not eligible to be cited as precedent except as provided by 9th Cir. Rule 36-3. ACA International had filed an Amicus Curiae brief in the matter. The Court of Appeals Panel unanimously concluded that the case was suitable for decision without oral arguments.

The facts of the case were outlined in the lower court’s original opinion granting Summary Judgment in favor of the Defendants.

Plaintiff Shaya Baird booked flights online for herself and her family on the Hawaiian Airlines website. A section of the website entitled “Contact Information,” provided spaces to enter a number for a mobile phone, home phone, or work phone, stating, “At least one phone number is required.” Baird entered her cellphone number. Three weeks later, and about a month before her scheduled departure, defendant Sabre sent a text message to Baird’s cellphone. Sabre contracts with Hawaiian Airlines to provide traveler notification services to passengers. The text message invited Baird to reply “yes” to receive flight notification services. Baird did not respond and Sabre sent her no more messages.

Baird then brought this action, alleging that Sabre violated the TCPA by sending her the unsolicited text message. She sought to represent a class of people who received similar text messages from Sabre.

The appellate panel discussed the Federal Communications Commission (“FCC”), having authority to prescribe regulations to implement the TCPA. The court then cited the FCC’s 1991 ruling: In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, Report and Order, 7 FCC Rcd.8752, 8769 (Oct. 16, 1992) (“1992 Order”).

In that Order the FCC determined that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”

In light of the above, the court decided: “Baird expressly consented to the text message in question when she provided Hawaiian Airlines with her cellphone number. Baird knowingly released her phone number to Hawaiian Airlines while making a flight reservation. She did not provide any “instructions to the contrary” indicating that she did not “wish to be reached” at that number. Therefore, according to the 1992 Order, Baird provided “prior express consent” to receive the text message in question.”

Editor’s Note: Sabre had also argued that the messaging system used to send Baird the text message was not an “automatic dialing system”. The court declined to reach this issue, because they affirmed the district court on the grounds that Baird consented to the text message.

insideARM Perspective

Three things stand out from this case.

First, the unpublished opinion has minimal precedential value.

Second, the court’s common sense views on “prior express consent” are favorable to the ARM industry.

Third, it is somewhat surprising that the opinion says doesn’t mention the July, 2015 FCC   TCPA Omnibus Declaratory Ruling and Order. (See here for the July 11, 2015 insideARM story on this.) There wasn’t even a footnote recognizing that matter and the subsequent appeal of that Order.

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Accounts Receivable Management

Filed Under: News

Two Ground-Breaking Compliance Innovations Launched by JJL Process

February 7, 2016 By Leave a Comment

February 4, 2016 – JJL Process, a technology compliance leader in the process serving industry, is pleased to announce that two ground-breaking compliance initiatives have been launched.  The two compliance innovations are TrueServe process server certification and the “Secret Servee” program.   TrueServe annual certification of process servers in the field is an 8-hour education multi-section course with testing for each section.  The components of the course are general process serving, state-specific process serving and collection industry-specific process serving.  The “Secret Servee” program takes the secret shopper concept to process serving in order to identify any lapses in the consumer experience.  This innovative program is conducted with all servers each year.  Scott Levine, President of JJL Process, said “you can never do enough to ensure process servers are adequately trained and versed in the service of process.”  JJL Process has consistently introduced new process serving compliance innovations over the last ten years.

About JJL Process Corporation

With 25 years experience, JJL Process is a Process Serving Agency specializing in serving collection papers.  Through advanced proprietary technology and forward thinking, JJL has established itself as the technology and compliance leader in process serving.  With technology, JJL believes in free value adds rather than “nickel and diming”.  Compliance runs in JJL’s blood, offering a level of compliance that is not available from traditional process serving agencies.  JJL Process is SSAE-16 and SOC-1 certified and in full compliance with the Process Serving Standards Summit standards. With service, JJL believes in corporate owned and operated state offices, rather than third party affiliates.  JJL has more corporate owned offices than any other process server and continues to expand nationwide!

Contact

For more information on JJL Process, please contact Joel Rosenthal at (561) 312-7602 (phone) or joel.rosenthal@jjlprocess.com (email) or www.jjlprocess.com.

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Accounts Receivable Management

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insideARM FDCPA Caselaw Grid updated through January 30, 2016

February 7, 2016 By Leave a Comment

Among the many compliance resources insideARM provides to the ARM industry, we maintain an “FDCPA Resources” page on our website. See: here.

Among the important elements of the page is a grid of significant FDCPA cases. The grid is updated on a regular basis. Case information and analysis is provided by Joann Needleman, Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Ms. Needleman recently updated the grid with FDCPA cases through January 31, 2016

January FDCPA Cases in the Spotlight

January’s FDCPA-related cases include some positive outcomes and some negative outcomes for the industry. Don’t miss any FDCPA-relevant cases. You can find updated coverage of the most recent, relevant cases at the insideARM FDCPA page, including details on:

Judd v. Credit Control, Mo. District Court

The gist: Missouri court held that subsequent debt collector that was acquired by previous debt collection does not have to send 1692g disclosure.

Todd. V. United States Bank, Pa. District Court

The gist: The court found that the Rocker-Feldman doctrine applies and challenges to costs, fees and interest on a default judgment and writ of execution should have been challenged in state court. Editor’s Note: The Rocker-Feldman doctrine holds that lower United States federal courts—i.e., federal courts other than the Supreme Court—should not sit in direct review of state court decisions unless Congress has specifically authorized such relief.

Halberstam V. Global Credit & Collection Corp., N.Y. District Court

The gist: Telephone call to debtor answered by a third party, where name and number was left (but no ID that debt collector), was deemed a communication under the FDCPA because it induced consumer to contact debt collector. Summary judgment was granted in the consumer’s favor.

insideARM FDCPA Caselaw Grid updated through January 30, 2016
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Accounts Receivable Management

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FLOCK Specialty Finance hires ARM Executive for Business Development and M&A Services

February 7, 2016 By Leave a Comment

Atlanta, Georgia. FLOCK Specialty Finance, a leading specialty finance company which provides capital for the subprime consumer finance markets as well as for debt buyers of distressed and subprime consumer credit obligations, announced that Greg Paulo, an executive in the ARM industry, has joined FLOCK as Vice President of Business Development.

Michael Flock, CEO of FLOCK Specialty Finance announced that Gregory Paulo joins FLOCK as Vice President of Business Development. In his role as Vice President, Paulo will be augmenting FLOCK’s rapid growth as a leader in specialty finance space. Paulo will focus on developing relationships in new markets with credit grantors, debt buyers and originators to provide innovative capital solutions for mid-market sub-prime players. Paulo will pursue opportunities to expand FLOCK’s expert consulting services to help companies raise capital or execute M&A transactions.

Paulo brings 25 years of operational and sales experience in the Accounts Receivable Management Industry. Most recently, Paulo worked at Navient as a Sr. Director managing the Campus, State and Municipal collection sales teams. Prior to Navient, Paulo was President of Redline Recovery Services, a mid-sized ARM firm providing ARM services in the financial, student loan, mortgage and auto industries. Paulo’s’ experience and existing relationships will help FLOCK leverage his extensive network to provide flexible portfolio capital to underserved markets. Paulo added: “I am very excited about joining Michael and his team at FLOCK Specialty Finance. FLOCK’s proprietary structure is well positioned in the market to provide a flexible, unique source of portfolio capital to their clients. “

About FLOCK Specialty Finance:

FLOCK is dedicated to alternative investing in a variety of specialty finance segments. FLOCK’s mission is to provide clients with capital and expertise for the purchase of both charged off debt portfolios as well as for the financing of subprime consumer obligations. FLOCK believes funding is ”More Than a Transaction”. FLOCK’s proprietary funding structure provides growth minded clients with a competitive advantage in multiple classes. Founded in 2007, FLOCK is headquartered in Atlanta, GA. For additional information, please call: 770-644-0850 or visit: www.FLOCKfinance.com

FLOCK Specialty Finance hires ARM Executive for Business Development and M&A Services

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Accounts Receivable Management

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Two Recent Cases Highlight Mandatory Arbitration Provisions

February 7, 2016 By Leave a Comment

Mandatory arbitration provisions may be on the endangered species list, but they are not gone yet.  Two opinions from two different courts were published this past week addressing mandatory arbitration clauses. The cases presented different issues and the results were not consistent.

First, some background.

The CFPB has initiated their Rulemaking Process regarding mandatory arbitration provisions. A SBRFA Panel (named for the Small Business Regulatory Enforcement Fairness Act of 1996), which was convened on October 28. See here for insideARM’s October 7, 2015 story on the rulemaking proceedings.

The CFPB’s proposed rule would restrict the use of arbitration clauses except where 1) the clause does not restrict class actions, or 2) a court has already refused to certify the case as a class action or has dismissed the consumer’s class claims. Widely covered by industry and national news, the proposal will impact many businesses within the financial services industry.

The first case, Harrington v. Regions Bank, No. 2:15-cv-522-Ftm-29MRM (M.D. Fla. Jan. 29, 2016) involves alleged Telephone Consumer Protection Act, (“TCPA”) claims and a potential class action proceeding. The matter came before the Court on Defendant’s Motion to Compel Arbitration and Stay the Judicial Proceedings.

The Plaintiffs disputed the Defendant’s position that the Plaintiffs’ claim under the TCPA is subject to the parties’ arbitration provisions found within various loan documentation executed in connection with the subject debt and other account relationships with Regions.

However, Plaintiffs acknowledged that the arbitration provisions contained within the parties’ signed documents include a delegation clause vesting the determination of the arbitrability of a claim or dispute with the arbitrator, not the Court.

The court agreed with the Bank’s position. In the Granting the Motion to Compel Arbitration, the Court noted in its short Opinion and Order that “[w]hile arbitrability is generally a question reserved for the trial court, the arbitrator may interpret the scope of the arbitration agreement if the parties agree and provide for such delegation ‘clearly and unmistakably’ within the agreement.”

The second case, Hayes v. Delbert Services Corporation, No. 15-1170, (U.S. Court of Appeals, 4th Circuit, Feb. 2, 2016) involved substantially different facts and different claims.

James Hayes, the lead plaintiff-appellant in this case, received a payday loan from a lender called Western Sky Financial, LLC. Defendant-appellee Delbert Services Corporation later became the servicing agent for Hayes’s loan. Because Delbert’s debt collection practices allegedly violated federal law, Hayes initiated a putative class action against Delbert. Hayes claimed that Delbert’s notices and phone calls violated the Fair Debt Collection Practices Act (“FDCPA”) and the TCPA. Hayes also sought declaratory relief to the effect that the loan agreement’s forum selection and arbitration provisions were unenforceable.

Claiming that Hayes and his fellow plaintiffs agreed to arbitrate any disputes related to their loans, Delbert moved to compel arbitration under the Federal Arbitration Act (“FAA”). The district court had previously granted Delbert’s motion.

The court of appeals reversed the district court, ruling that the arbitration agreement in this case is unenforceable.

The 23 page opinion can be found here. In the opinion the court of appeals discusses the lending and collection practices of the original on-line lender, Western Sky Financial, LLC and it various affiliates, including WS Funding, LLC, Cash Call, Inc., Consumer Loan Trust and finally Delbert.  The court’s disdain for the practices is highlighted by use of the term “lending scheme” to describe the history of the loans and collection activity.

The court went through a detailed review of the various contract provisions but, in the end determined that the arbitration agreement failed for the fundamental reason that it purports to renounce wholesale the application of any federal law to the plaintiffs’ federal claims. The court noted: “The arbitration agreement here almost surreptitiously waives a potential claimant’s federal rights through the guise of a choice of law clause.”

insideARM Perspective

As noted above, these two cases are very different. The only common element is the enforceability of a mandatory arbitration provision. One involves a reputable financial institution and traditional lending, the other involves an on-line lender with a dubious history recognized by the court.

From the order:

“Despite Western Sky’s best efforts, the law — or at least the threat of the law — caught up with it. A stream of private litigation and public enforcement actions seems to have led Western Sky to stop issuing new loans in 2013.”

insideARM will continue to monitor and report on mandatory arbitration decisions in the courts. We will also continue to monitor and report on the CFPB  rulemaking in the area.

Two Recent Cases Highlight Mandatory Arbitration Provisions
http://www.insidearm.com/daily/collection-laws-regulations/collection-laws-and-regulations/two-recent-cases-highlight-mandatory-arbitration-provisions/
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