A group of 12 Republican Senators have sent a letter to CFPB Director Rohit Chopra in which they urge him “to reverse course and stop using inappropriate tactics to harm financial institutions’ reputations and customer relationships in order to advance your liberal policy preferences.”

In their letter, the Senators assert that “rather than operating as a tough, but fair and sensible regulator, the CFPB is again pursing a radical and highly-politicized agenda unbounded by statutory limits.”  As examples of “uncontrolled and unwarranted” CFPB actions, the Senators point to the following:

• The CFPB’s use of “name-and-shame tactics to pressure companies into eliminating [overdraft fees].”  The lawmakers’ point to the chart published by the CFPB in February 2022 that listed the top 20 banks by revenue from overdraft fees and statements made by Director Chopra in his July 2022 media interviews indicating that he was “gratified to see where the market has been shifting” while warning that the CFPB would be “increasing our supervisory scrutiny of the institutions that are most dependent on [overdraft fees] as part of their deposit account revenue.”  The Senators state that “[i]t is hard to view [this] statement as anything other than a threat that banks who do not bow to the CFPB’s pressure campaign could expect the agency to target them for increased supervision.”

• The CFPB’s change in its risk-based supervision rule to allow the CFPB to publicly disclose a decision to subject a nonbank to risk-based supervision.  The Senators observe that the rule change “did not give a nonbank the same discretion to defend itself and instead requires a nonbank to keep confidential information relating to the CFPB’s decision, including facts that could call into question the Director’s decision or raise procedural concerns with it.”  The Senators state that since the CFPB has never used this authority, the rule change “appears to serve as a threat to nonbanks…whose practices are legal but not in line with your liberal policy views.”

• The CFPB’s change in its rule on adjudication proceedings to allow the Director, at any time, to direct that any matter be submitted to him or her for review.  The Senators assert that this change allows Director Chopra to “authorize CFPB staff to bring an enforcement case based on a novel legal theory and then you can personally rule that it is a valid theory.”

• A mass email sent by the CFPB to the customers of a bank that is the subject of a CFPB enforcement action about accounts alleged to be opened without customers’ consent.  The Senators assert that the mass email “was not a legitimate investigative or litigation tool, but rather a means to damage the bank’s customer relationships.”

We recently urged Director Chopra to discontinue the CFPB’s current practice of using a potpourri of methods that lack transparency and predictability to interpret federal consumer financial laws.  In our open letter, we called on Director Chopra to instead restart use of the official staff commentaries that are subject to input from stakeholders and provide certainty that they will be binding.

We are surprised that in their letter, the Senators did not criticize the CFPB’s updates to its Supervision and Examination Manual that instruct examiners to consider discrimination in connection with non-credit products and services as an unfair act or practice.  For the reasons we have discussed, we believe the CFPB’s UDAAP interpretation is legally flawed.  Moreover, given the complexity of the questions the CFPB’s expansion of UDAAP raises, we believe this type of a drastic change should be done through a rulemaking and not through an amendment to an examination manual.

POTOMAC, Md. — Women in Consumer Finance (WCF) recently renewed its partnership with industry innovator Spring Oaks Capital to support The Magic of Connection for attendees at its annual unique in-person professional development experience. This year’s event will be held December 5-7, 2022, in Palm Springs, California.

WCF provides inspiration, a guiding hand, and a support system women can leverage to recharge their careers and deliver value to their employers. The event is not about compliance, best practices, or even finance. It’s about women, our common professional challenges, and how to create and tell our own career story – no matter where we are on our professional journey. We take a unique approach to building confidence, connection, and careers. There is nothing else like it.

At the center of that unique approach is the way we ensure all attendees leave the annual event with deep connections forged through a shared experience. We call this “The Magic is in the Connection.”

“This is an investment in your current and future leaders. If you’re not investing in them, someone else will. These are the people who are making decisions that impact your business by millions of dollars. So a few thousand dollars to support their own personal and career development isn’t much to ask,” said Marcelo Aita, Executive Chairman, Spring Oaks Capital. “Women in Consumer Finance is an essential part of our talent development program.”

“As an introvert myself, I can totally identify with how intimidating it can be to meet new people at a conference. Yet new relationships are absolutely an essential part of professional growth. So we focus intentionally on creating a shared experience in a manageable way. Attendees are assigned to small teams that meet even before the event starts. This makes the conference feel intimate and friendly,” explained Stephanie Eidelman, Women in Consumer Finance CEO and Co-Chair.

This year, we’re incorporating team leaders for the small groups. These are volunteers who have previously attended the conference and who will make sure that nobody gets left behind (literally and figuratively). If you’re an introvert or new to the event, these are your people. We don’t want anyone feeling uncomfortable or out of place, as every woman has a place at our table.

We’d like to thank our Magic is in the Connection Sponsor, Spring Oaks Capital, for recognizing what’s truly unique about Women in Consumer Finance and supporting the event as one of our largest sponsors.

About Women in Consumer Finance

Women in Consumer Finance is an event and community for women at all levels in the context of a common industry. If you work in any role at a lender, creditor, servicer, law firm, technology or service provider, or regulator, this event is for you. We provide inspiration, a guiding hand, and a support system women can leverage to recharge their careers and deliver value to their employers. WCF is not about compliance, best practices, or even finance. It’s about women, our common professional challenges, and how to tell our own career story – no matter where we are on our professional journey. We take a unique approach to building confidence, connection, and careers. There is nothing else like it. WCF 2022 takes place in person in Palm Springs, California on December 5-7. www.womeninconsumerfinance.com

About Spring Oaks Capital

Spring Oaks Capital is a national financial technology company focused on the acquisition of credit portfolios. The company subscribes to an employee and consumer-centric operating philosophy that creates high-value jobs, a significant performance lift, and the highest standards of compliance. Spring Oaks’ business strategy is rooted in innovative data-driven technology to maximize collection results and a contact platform that offers multi-channel options to meet each consumer’s communication preference. Spring Oaks has the management vision and experience to nurture a culture and DNA that is unique in the space. The executive team maintains deep experience end-to-end across the consumer finance lifecycle with some of the largest global banks and innovative FinTech platforms. To learn more about Spring Oaks and our revolutionary FinTech platform, please visit www.springoakscapital.com.

BURLINGTON, Mass. – Finvi, a leading provider of enterprise workflow automation software built to accelerate revenue recovery and simplify the payments process, recently launched a new integration between its payments platform and Katabat workflow software. With the addition of the embedded Finvi Payments solution, Katabat is now an all-in-one workflow and payments platform designed to increase collections rates and streamline operations through a combination of powerful digital engagement and payment processing tools.

This new integration offers Katabat users built-in compliance rules and modern, digital communication capabilities, such as text messages and emails, combined with convenient, familiar payment options (e.g., debit, credit, and ACH) to help meet the demands of today’s mobile, fast-paced world.

As the popularity of digital payments has increased over the years—with transaction volume expected to reach $1,765B in 2022 and an estimated $3,528B by 2027, according to Statist—not having a self-service online payment option can cause friction and impede collection efforts.

The new payments option not only allows agents to take payments over the phone via credit, debit or ACH directly within the Katabat portal, but also provides these same options for clients through a self-service portal, giving them the 24/7 access they have come to expect. 

“Today’s consumer demands convenience and flexibility—as a true partner to our clients, we want to help them offer that convenience in the easiest possible way,” said Tim O’Brien, Finvi’s CEO. “This new all-in-one solution does that by giving our clients everything they need in one implementation—omnichannel communications and modern payment options. The days of promissory notes and paper checks are gone.”

With text messaging quickly gaining popularity as one of today’s primary forms of communication, the addition of secure payment options to Katabat’s already robust digital and omnichannel communication platform was the next logical step in the product’s innovation. 

“Having the ability to reach consumers via their channel of choice, including text or email, is key for our clients,” explained O’Brien. “Our number one priority is to provide the advanced technology our clients need to drive revenue recovery success. With that in mind, we couldn’t be more excited to offer this functionality to our Katabat clients.”

Interested in learning more about this integration? Sign up for a live webinar on Monday, September 26, 2022.

About Finvi 

Formerly Ontario Systems, Finvi is a premier provider of enterprise technologies that streamline and accelerate revenue recovery for clients across healthcare, government, accounts receivable management, and financial institutions. Through process automation and modern, compliance-minded communication and payment tools, Finvi allows its client partners to generate more revenue at reduced cost and fulfill their stated business outcomes by effectively engaging those who pay. 

With offices in the states of Massachusetts, Indiana, New Mexico, Delaware, and Washington as well as employees across the country, Finvi continues to build upon 40 years of success using a distinctly human-centric approach to innovation and service. A recognized brand in the revenue cycle management (RCM) market, Finvi helps 600+ hospital networks—including 5 of the 15 largest systems in the U.S.—optimize cash collections and provide a single, satisfying patient financial experience. Finvi also serves 8 of the 10 largest ARM agencies in the United States as well as a number of financial institutions across the globe. Additionally, Finvi’s workflow platforms power governmental agencies and court systems across the country at the federal, state, and municipal levels. 

Rochester, N.Y. — Continental Service Group, Inc., d/b/a ConServe, a leader in the collections industry, proudly announces that it has added Alicia McKeighan to their Compliance department in the role of Associate Vice President, Compliance.  In this new role at ConServe, McKeighan will oversee the company’s compliance and ethics team, by working closely with ConServe leadership, employees, Clients and their Consumers to ensure best-in-class compliance practices.

With over 37 years of success in the industry, ConServe has defined itself as an innovator and role-model in the field while effectively redefining collections by understanding that compliance matters.   

“We are thrilled to add Alicia to the ConServe team,” said Pam Murphy, ConServe Vice President of Compliance and Privacy Officer.  “Amidst the dynamic changes in the collection industry over the years, our focus on ethics and compliance ensures the highest standards of compliance, ethics, risk management and increased corporate governance.  Expanding our team and bringing on Alicia anchors that commitment.”

McKeighan has been in the accounts receivable management industry for 13 years and was formerly the Chief Compliance Officer at Afni, Inc.  During her 13 years in the industry, she has acquired experience in litigation management, regulatory interactions, service provider oversight, complaint handling, credit reporting, audit and monitoring, policies and procedures, and training.  She has served on ACA International, Inc.’s (ACA) Ethics Committee and Federal Affairs Committee in past years. Additionally, she was a member and active participant in InsideARM’s Consumer Relations Consortium.  She also held the Credit and Collection Compliance Officer (CCCO) and the Scholar and Fellow designations with ACA International.  Alicia is based in central Illinois and loves spending time with her family.  McKeighan states, “ConServe’s commitment to doing the right thing at the right time, the right way, aligns well with my personal values.  I am eager to join ConServe and its best-in-class compliance team to reinforce and strengthen ConServe’s efforts and commitment to Fostering Financial Freedom® for their Clients and their Consumers.” 

About ConServe

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients.  Anchored in ethics and compliance, and steadfast in their pursuit of excellence, they are a consumer-centric organization that operates as an extension of their Clients’ valued brands.  For over 37 years, they have partnered with their Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals.  Visit us online at: www.conserve-arm.com

DENVER, Colo. — Harvest Strategy Group is pleased to announce the addition of Pete Klipa as Chief Operating Officer. Mr. Klipa brings 20 years’ executive experience in the accounts receivable space with a strong consumer-focused perspective. His experience includes eight years with Discover Financial Services as senior manager of recovery. Mr. Klipa will be a valuable asset to the team, as well as to Harvest’s clients and vendor partners, as he brings his cross-functional leadership background to further the quality, efficiency, expertise, and performance on which Harvest has built its reputation. 

“Pete has a proven ability to successfully manage large scale recovery operations, analyze processes and performance, and implement sophisticated operational standards and growth metrics. Pete’s talent and expertise will also support our growth and diversification objectives,” said Brad McCurnin, President and CEO at Harvest.

“I’m
excited about the opportunity to apply my strengths and experience for the
benefit of a great company, our partners, and the consumers we serve. When the
role presented itself and I met the team, I knew this was where I belonged at
this point in my career. With Harvest’s analytics-driven operations and strong
vendor network, I know we’ll do great things together,” said Mr. Klipa.

Mr.
Klipa spent 2018-2022 as SVP of Creditor Relations for the National
Foundation for Credit Counseling in Washington, DC.
There he directed creditor activities by developing, implementing, and
maintaining proactive and positive relationships with and between financial
institutions, member agencies, and the organization. He served as an advocate
for consumers, engaged with the top twenty credit card operations and
marketplace lenders, optimized operations, and implemented emerging
technologies. Mr. Klipa also met with the CFPB and OCC regarding strategy and
regulatory opportunities. 

[article_ad]

From
2003-2018, Mr. Klipa established his robust loss mitigation and recovery leadership
capacity in several long-term management and executive roles across the
accounts receivable management industry including American Credit Acceptance,
Discover Financial Services and NiSource Corporate Services. He managed
recoveries for major companies in the utility, credit card, and automotive
finance fields, building out operations, managing vendor relationships,
providing performance oversight, producing valuable metrics tracking and
analysis systems, and measurably boosting performance.

After
earning his B.S. in Mathematics and Business Administration from Otterbein
College in Westerville, OH, Mr. Klipa originally began his career with the
United States Air Force as a Cost Analysis Officer in the Electronic Systems
Center at the Hanscom Air Force Base in Massachusetts. During this time, he
earned his M.S. in Systems Management from Western New England College. He then
spent ten years in finance and analyst roles for a utility provider in Ohio,
accumulating increasing knowledge and responsibilities until becoming the
company’s Director of Revenue Recovery. 

About Harvest
Strategy Group

Harvest
Strategy Group provides single-point-of-contact,
nationwide recovery management services for banks, finance companies, debt
buyers, and credit unions. The company fosters an entrepreneurial environment
and encourages its staff to challenge boundaries, think outside the box, and feel
a sense of ownership and accountability for results. Harvest’s mission is to
lead the accounts receivable management industry through strength in
partnerships, exceptional service, and the delivery of superior results. To
join the team, apply
to Harvest Strategy Group online.

On August 30, the California Department of Financial Protection and Innovation (CA DFPI) published a notice of rulemaking action, proposing amendments to the Student Loan Servicing Act.

According to the CA DFPI, when the Student Loan Servicing Act first became effective in 2017, student loans contained traditional student loans, defined in the proposed rules as federal student loans, and private student loans offered by traditional lenders, such as banks and credit unions. In the last five years, education financing products, such as income share agreements and installment contracts, have emerged. The proposed rules clarify that such products are student loans, and servicers of such products are covered by the Student Loan Servicing Act and must be licensed.

The proposed amendments’ stated objectives include:

• Clarifying that all education financing products are student loans within the definition of student loan in the Student Loan Servicing Act and the Student Loans: Borrower Rights law;

 [article_ad]

• Clarifying that servicers of all education financing products must be licensed as student loan servicers under the Student Loan Servicing Act;

• Clarifying that servicers of all education financing products are subject to and must comply with all laws applicable to student loan servicers;

• Defining terms used in the rules relating to education financing products;

• Specifying that servicers of all education financing products must submit an annual report to the department regarding the volume and dollar amount of all education financing products serviced during the previous year on the form specified by the CA DFPI; and

• Revising certain existing regulations to remove requirements deemed unnecessary, based on the CA DFPI’s experience administering the Student Loan Servicing Act, to reduce regulatory burden.

The notice triggers a 60-day comment period (ending October 28) for interested parties to submit comments.

Print:Email this postTweet this postLike this postShare this post on LinkedIn

Thanks to inflation and complications following government programs, tax season did not go as planned for many collections & recovery executives this year. Companies who do not prepare adequately for the ’23 tax season will be disappointed again.

Though tax season is still a few months away, there’s more pressure than ever on collections & recovery executives to take advantage of this upcoming season.

Why? Because for many companies, the 2022 tax season was a big disappointment.

Delinquencies were high. As they surged in the first quarter of 2022, consumers ushered in April still dreaming of paying down debt with their refunds. But the traditional windfall never came.

In 2022, due to student loan freezes, unemployment relief programs, the expanded Child Tax Credit, and more, many people didn’t receive their traditional “lump sum” tax refunds in the amounts they might have anticipated.

[article_ad]

A similar surprise awaited collectors, debt buyers, and creditors. As these groups entered the first post-Reg F tax season, expectations were high; after all, risk had increased, and so had investments in omnichannel strategies and QA process changes. Immediate revenue requirements were, naturally, top of mind. Meanwhile, the perfect labor market equation doesn’t exist in consumer finance. Hiring and training effective agents is so challenging that it can make successful operations — and therefore, successful conversations with borrowers and debtors — feel just out of reach.

Plus, inflation hit hard.

When April stormed in, all of these conditions came together to disappoint the ARM industry. Call after call, consumers surfaced themes of inflation and reduced refunds. It was no one’s fault. But we can learn from it. It’s up to collectors and those who purchase or service debt to understand that a repeat of last tax season could be in the cards if they remain unprepared.

Preparing for Tax Season: Prioritize Outcomes

There’s more pressure than ever to make tax season 2023 a success. The competition is stiff on two fronts:

1. Collectors have to participate in a race against one another to be the first to contact a borrower at the right time. They must get the proper place in line in order to make additional contact later that remains within regulations, and in order to remain top of mind for the borrower when a windfall does come.
   
   
2. Collectors compete against the borrower’s other debt types (again, in many ways due to Reg F frequency rules, but also due to the borrower’s financial status), and so must understand the state of that mix, as well as the financial state of the borrower, in general.
   

These races aren’t won by speed, but by preparation

What does preparation entail? Not only do collections & recovery departments need to find new ways to increase their likelihood of a right-party contact, but they also need to ramp up their understanding of payment intent. And, perhaps most importantly, they need to commit to making every conversation the most effective conversation.

Focus on outcomes and how technology can help

Last tax season made the collection industry’s urgent need for technology more clear than ever. We all saw how critical it is for debt servicers to both create opportunities and then appropriately capitalize on those opportunities.

In theory, it sounds easy: Get someone on the phone and have a productive conversation. But is it really possible to know what makes a conversation successful without accurate, contextual understanding of those conversations — and access to information about their results?

Without the aid of an advanced analytics solution and an optimization strategy that makes use of it, agencies and collections & recovery departments will flounder again in 2023. The plan, then, is to make software decisions now to meet the urgent need.

September and October: Optimization Season

To summarize, in order to avoid a repeat of The Great Tax Season Disappointment of 2022, collectors, debt buyers, and creditors should focus on two elements of their collections strategy, starting right now:

1. Maximizing outreach opportunities
   
2. Optimizing the value of every conversation

Why now?

While it’s never too late to improve your operations, planning and preparing for tax season success can’t be just another headache come January. That kind of pressure will leave it perfectly positioned for de-prioritization (again), and you’ll end up continuing to try to get ahead only after you’ve fallen behind.

Instead, plant the seed and stash the acorns today. It’s a lot better to start now if you want to reap rewards in Spring.

Start simple with software selection

Through accessible insights, automated QA, automated call notes, real-time assistance, and other high-value applications of AI and machine learning, you can reach more borrowers at the right time. Then, when conversations do happen, you can easily guide them toward ideal outcomes, making for a better tax season than the last one — all while avoiding the risks brought by Reg F.

POTOMAC, Md. — As an event focused on getting more women to the decision-making tables where products are designed and policy is set, Women in Consumer Finance is committed to helping important causes not only within our community but across our wider society. The WCF Community Impact Program supports organizations that provide life-changing opportunities to women and girls of color.

We are grateful to have support this year from NCB Management Services, Inc. and Bridgeforce, which allows us to make substantial donations to these organizations:

LIFT employs a unique coaching model to help parents break the cycle of poverty for their families. Through their own hard work – and with LIFT’s support – parents create greater financial stability and career opportunities and set their families up for success. They have obtained college degrees, purchased homes, paid off credit card debt, built child savings accounts, and started businesses — all proven factors of a better future for their children. 99% of LIFT members are people of color; 93% are women. LIFT was recently featured in Forbes.

For the Good targets areas in Kenya where school enrollment is low, especially among girls. Despite considerable progress globally in primary school enrollment over the past twenty years, there continues to be low transition to secondary school. All of the data points to the critical role education plays in increasing incomes and improving health for women and their families. More importantly, it brings agency and power to half of the world. FTG works directly with communities and parents to address the myriad barriers to keeping girls in school.

“We are incredibly proud to sponsor an event that has literally revolutionized “the voice” of women in consumer finance. As an organization, we are committed to the support and investment in our female work force to ensure that they always have a place at the table. There is no doubt that we are a better organization for doing so,” said Ralph Liberio, President & CEO of NCB Management Services, Inc., which is supporting this program for the second year in a row.

“Through our work in the industry, we recognize that poverty is often inherited and women, especially those of color, sometimes encounter obstacles in the business world. These strong women are eager to work hard and make a better life for their families – they just need some support and guidance,” said Michelle Macartney, Managing Partner of Bridgeforce. “As part of our commitment to promoting women in business and serving as a good industry steward, we are proud to sponsor Women in Consumer Finance and serve as a Lead Community Impact partner to provide that support.”

About Women in Consumer Finance

Women in Consumer Finance is an event and community for women at all levels in the context of a common industry. If you work in any role at a lender, creditor, servicer, law firm, technology or service provider, or regulator, this event is for you. We provide inspiration, a guiding hand, and a support system women can leverage to recharge their careers and deliver value to their employers. WCF is not about compliance, best practices, or even finance. It’s about women, our common professional challenges, and how to tell our own career story – no matter where we are on our professional journey. We take a unique approach to building confidence, connection, and careers. There is nothing else like it. WCF 2022 takes place in person in Palm Springs, California on December 5-7. (more at www.womeninconsumerfinance.com)

About NCB Management Services, Inc.

NCB Management Services, Inc. was established in 1994 and is headquartered in Trevose, PA with satellite offices in Jacksonville, FL, Sioux Falls, SD, and Lincoln, NE. NCB is a well-recognized and admired leader in the Accounts Receivable Management (ARM) Industry as a national collection agency as well as a national debt buyer of unsecured consumer credit products and asset classes. The company is a customer-centric, regulatory-compliant organization with a robust infrastructure that has blended many years of experience with the latest in new information systems and communication technology. NCB has developed a reputation as a valued business partner, providing superior customer interaction and achieving maximum results while protecting our clients’ valued reputation. (more at www.ncbi.com)

About Bridgeforce

Bridgeforce helps financial services companies of all sizes bridge the gap between pressing challenges and emerging opportunities to succeed and thrive. Whatever the need, we bring a unique combination of skill, talent, and insight to the project—and the right people armed with direct and relevant experience. We are thinkers and doers known for our extraordinary commitment and hands-on approach to providing the best recommendations—as well as practical, actionable, and measurable solutions. Our approach results in extraordinary value for our clients’ investments and sustainable positive change for the future. (more at www.bridgeforce.com)

In a recent Tenth Circuit decision, the Court of Appeals considered whether an alleged violation of the Fair Debt Collection Practices Act (“FDCPA) was material under a “reasonable consumer” standard rather than a “least sophisticated consumer” standard. See Tavernaro v. Pioneer Credit Recovery, Inc., No. 20-3219, 2022 WL 3153234 (10th Cir. Aug. 8, 2022).

In Tavernaro, the plaintiff borrowed money to pay for schooling and subsequently defaulted on the loan. The debt was sold to a federal student loan guaranty agency, which then contracted with the defendant debt collector to help collect the debt. In an attempt to collect the debt, the defendant sent the plaintiff’s employer a packet with an Order of Withholding from Earnings, which required the plaintiff’s employer to withhold a portion of his earnings and remit the withheld wages to the debt collector.

The federal student loan guaranty agency’s logo was displayed on the first page of the letter at the top-right corner and the letter clarified that the agency held the loan. On the second page of the letter, near the middle of the page, the debt collector was named in the letter. Specifically, the letter stated, “Pioneer Credit Recovery, Inc. is assisting ECMC with administrative activities associated with this administrative wage garnishment.” The letter instructed the employer to remit payment to the debt collector and provided the debt collector’s mailing address. After the employer withheld a portion of the plaintiff’s wages and garnished the funds to the debt collector, the plaintiff filed a class action lawsuit against the debt collector claiming that it violated Sections 1692e and 1692f of the FDCPA. The plaintiff asserted that the debt collector used the federal agency’s name and logo on the first page of the letter to deceive the reader into believing that the agency was the sender of the letter.

The district court dismissed the plaintiff’s complaint for failure to state a claim finding that the alleged facts were insufficient to establish materiality for purposes of Section 1692e. Specifically, the district court concluded that the allegations did not even raise the possibility that the letter was materially misleading under the least sophisticated consumer standard because the plaintiff failed to allege how knowledge of who mailed the letter was material to his, his employer’s, or the least sophisticated consumer’s response. Since the court found the letter was not misleading for purposes of the Section 1692e claim, the court further concluded that the letter was not unfair or unconscionable under Section 1692f.

While the Tenth Circuit affirmed the district court’s decision, it found that materiality should be measured through the perspective of the “reasonable consumer” rather than that of an “unsophisticated consumer.” The Tenth Circuit cited the Supreme Court’s 2016 decision, Sheriff v. Gillie, in which the Supreme Court stated that it has yet to decide “whether a potentially false or misleading statement should be viewed from the perspective of the least sophisticated consumer . . . or the average consumer who has defaulted on a debt.” 578 U.S. 317, 327 n.6 (2016). The Tenth Circuit also focused on how the reasonable person standard is “well ensconced in the law in a variety of legal contexts in which a claim of deception is brought” and emphasized the Federal Trade Commission’s use of a “reasonable consumer” standard to protect consumers from false advertising and the “reasonable consumer” standard application of the Truth-in-Lending Act.

The Tenth Circuit certainly got it right by recognizing that courts often construe the hypothetical consumer to be more sophisticated than the actual least sophisticated consumer and that “in reality the standards are comparable in practice” as even under the least sophisticated consumer standard, courts agree that an interpretation of a collection letter cannot be bizarre or unreasonable. The “reasonable consumer” standard more accurately reflects the standard that is used by courts when considering Section 1692e claims under the FDCPA.

You can find the opinion here.