On April 12, 2022, in response to the lawsuit filed against it by the CFPB TransUnion issued a statement defending its actions and alleging the CFPB is the party that failed to act within the spirit of the previous consent order between the parties. In its statement, which can also be found here, TransUnion said:

“The claims made by the CFPB against TransUnion and John Danaher, a former executive, are meritless and in no way reflect the consumer-first approach we take to managing all our businesses. 

In January 2017, TransUnion entered into a consent order with the CFPB relating to how it markets TransUnion Credit Monitoring, a subscription product that offers consumers credit monitoring and identity theft protection services, as well as access to their credit scores. Shortly thereafter, as required by the consent order, TransUnion submitted to the CFPB for approval a plan detailing how it would comply with the order. The CFPB ignored the compliance plan, despite being obligated to respond and trigger deadlines for implementation. In the absence of any sort of guidance from the CFPB, TransUnion took affirmative actions to implement the consent order.

We have been in compliance with our obligations and we remain in compliance with the consent order today. Rather than providing any supervisory guidance on this matter and advising TransUnion of its concerns – like a responsible regulator would – the CFPB stayed silent and saved their claims for inclusion in a lawsuit, including naming a former executive in the complaint. Despite TransUnion’s months-long, good faith efforts to resolve this matter, CFPB’s current leadership refused to meet with us and were determined to litigate and seek headlines through press releases and tweets. The CFPB’s unrealistic and unworkable demands have left us with no alternative but to defend ourselves fully.

Over the last several years, and under the direction of new leadership, TransUnion has led the credit reporting industry in making significant changes aimed at benefitting consumers and increasing transparency in the credit reporting process.”

insideARM Perspective:

In addition to accusing TransUnion of “duping consumers”, within the last 60 days the CFPB has called medical debt a “doom loop”, accused auto lenders of holding personal items ransom, said a student loan servicer lied, and referred to credit bureaus as “a cartel“.  It’s hard to tell whether using this inflammatory and divisive rhetoric is merely an attempt to seek headlines or whether there’s some other purpose behind this shift away from civility. 

Suffice it to say, TransUnion’s statement paints a completely different picture than the one illustrated by the CFPB’s complaint. It seems TransUnion is ready to get into the ring with the CFPB and make its version of the facts known, and it will be interesting to see what surfaces as the fact-finding portion of this lawsuit commences. We will keep you posted with developments as they occur. 

On March 18, the District Court for the Southern District of Texas entered an injunction against a credit repair organization, Turbo Solutions, Inc. d/b/a Alex Miller Credit Repair, and its owner Alex Miller for alleged violations of the FTC Act, Credit Repair Organizations Act (CROA), and the FTC’s Telemarketing Sales Rule (TSR). The complaint against Turbo Solutions and Miller alleged multiple violations, including making false promises regarding the company’s ability to improve consumer’s credit scores and unlawfully charging consumers upfront fees for these services.

On March 1, the U.S. Department of Justice, acting on behalf of the FTC, filed a complaint against Turbo Solutions and Miller, alleging that the company operated a deceptive credit repair scheme by claiming to help repair consumers’ credit, but failing to deliver on its promises. Specifically, the complaint alleged that the company’s advertisements and telemarketing practices made false representations about its ability to delete inaccurate and negative accounts from consumer’s credit reports, provide credit improvement results in 40 days, and boost consumer’s credit scores by 50-200 points in violation of the CROA and TSR. The complaint also alleged that the company filed or caused to be filed false identity theft reports through the FTC’s website. Finally, the complaint alleged that the company routinely collected advance fees of $1,500 in violation of the TSR’s prohibition on collecting payment for credit repair services prior to completion of the services, and the company failed to provide required disclosures to consumers regarding its services and cancellation policies.

In its order granting a permanent injunction, the District Court found that the United States had shown, and that the defendants had not contested, that the defendants had engaged in the alleged deceptive conduct. The court’s permanent injunction prohibits Turbo Solutions and Alex Miller from charging advanced fees, making certain promises and statements regarding their ability to improve consumers’ credit, filing identity theft reports on behalf of third parties, and failing to provide required disclosures in connection with credit repair services.

This case follows other enforcement measures taken by the FTC and CFPB against credit repair organizations that have allegedly made false representations regarding credit repair services. Prior articles covering some of these measures can be found here and here. Troutman Pepper will continue to monitor and report on these enforcement actions and other important issues related to the credit repair industry.

ROCHESTER, N.Y. — Belvista Software President Christopher Ball is pleased to
announce the promotion of employee Jacob Liddle to Manager of Consulting
Services in what is anticipated to be the company’s first step in the expansion
of its consulting services. Liddle first joined the Belvista Software team in
December of 2021 as a business analyst. He brings with him more than seven
years of experience in the financial services and accounts receivables
industries.

Prior to his work at Belvista Software, Liddle spearheaded
multiple projects with a primary focus of automating workflow and reducing the
need for manual intervention in IT and operational processes. His projects have
included: automating vendor processes, digitization of consumer correspondence
workflow and the creation of tools to replace common ad hoc scripting tasks.

By thoroughly analyzing the end-to-end process, identifying
key deficiencies and developing a solution that addresses both the human and
technological elements, Liddle’s projects have resulted in hundreds of
thousands of dollars in corporate savings, and have enabled the reinvesting of
numerous full-time employees into revenue-generating roles. In his most recent
project, Liddle’s consulting expertise resulted in annual savings of $350,000
and the transition of 10 full-time employees into more value-added positions.

Liddle strives to bring a wholistic approach to technology
and the people it supports by developing tailored strategies that will work for
each individual company’s needs and processes, regardless of scope or size. His
new role is the first of several anticipated additions at Belvista Software as
the company seeks to expand the scope of its consulting services.

Together, Liddle and Ball bring their vast experience
working with a variety of systems of record to help companies streamline their
automation processes, optimize workflow and increase revenue. To learn more
about how Belvista Software can help, or for more information on available
services, interested parties are invited to visit www.belvistasoftware.com or to
reach out through the provided contact information.

About Belvista Software LLC

At Belvista Software, we know that you don’t have to be a
big company to make a big impact. That’s why our comprehensive approach to debt
collection software and IT consulting services provides affordable solutions that
fit every scale and business size. From software development, implementation
and conversion to daily workflow management, we specialize in delivering
industry-leading technology with a human touch. 

PHOENIX, Ariz. — Remitter USA Inc., an AI powered digital communications platform used to improve payment recovery, has appointed leading Accounts Receivables Management professional Holly Balchan to head its Business Integration initiatives.

Balchan joins the team from Mercantile Adjustment Bureau, which was acquired by Remitter in October 2021, where she headed business development and special projects. She started her career, which includes consulting & advisory services, in ARM directly from college, working for a then leading asset buyer, prior to joining a tier one collection agency heading up its business development.

“I’m excited to make the transition to the Remitter team at a very exciting time for the company, while continuing to work closely with the Mercantile Team. Remitter is a great cultural fit and shares my own philosophy and values when it comes to ensuring the highest standards of the holistic customer experience.  The US market is experiencing significant growth in digital collection strategies and I look forward to assisting Remitter in expanding its North America operations,” said Holly Balchan, EVP Business Integration, Remitter.

Remitter has ambitious plans for growth in the Americas with continued expansion in the USA, Canada, and South America both organically and via acquisition.

“Holly will be an extremely skilled and valuable member of the team as we continue our expansion throughout the US and internationally. She possesses a sound knowledge of the ARM business from the buyer, seller and third-party perspectives and has a strong and diverse network of industry contacts. Holly’s marketing and new market development experience makes her the perfect addition to Remitter’s executive team as we continue to grow the business exponentially” said Brett Luntz, CEO, Remitter.

Remitter is a white-label communications platform, uses AI to optimise customer engagement and enhance the recovery of accounts receivables.

The acquisition of Mercantile, a leader in receivables management services, has increased total headcount to over 200 and added well known premier clients to Remitter’s blue chip customer base.

About Remitter
Remitter is a white-label fintech communications platform which uses artificial intelligence to optimise customer engagement and enhance the recovery of accounts receivables.

SAN DIEGO, Calif. — National Loan Exchange, Inc. (“NLEX”), a division of Heritage Global Inc. (Nasdaq: HGBL) and a leading loan sale advisor of charged off and nonperforming asset portfolios, announced today that Ashley Arens-Yager has joined its team as Assistant Vice President – Sale Operations, where she will interface with the buyer network and support the internal growth initiatives.

For more than 16 years, Ms. Arens-Yager has been in the debt buying industry, where she has engaged in both debt acquisitions of tens of billions and bankruptcy servicing inventory. Most recently she was the New Business Development Officer at Jefferson Capital Systems which is one of the nation’s leading purchasers of secured and unsecured consumer bankruptcies and charged-off receivables. At Jefferson Capital Systems, Ms. Arens-Yager curated and maintained business relationships with clients generating approximately $200 million in portfolio acquisitions annually.

“We couldn’t be more thrilled that Ashley is joining NLEX,” said Chris Jenkins, Senior Vice President – Sale Operations for National Loan Exchange. “She is a seasoned executive equipped with tremendous knowledge and experience in the receivables space which will be a tremendous asset to our team. As NLEX continues to grow, Ashley will be an integral part of our best-in-class service.”

Ms. Arens-Yager has spent majority of her career in operations and business development roles, which have allowed her to gain extensive experience and knowledge to significantly benefit in the debt sale process from start to finish, including contract negotiations and management of the post-sale support process. 

About National Loan Exchange, Inc.

NLEX is a subsidiary of Heritage Global Inc. (NASDAQ: HGBL) and a leading loan sale advisor in the United States and Canada. Over the course of 25 years, NLEX has closed more than 5,000 sales representing over $150 Billion in transactions. Our leadership and sales teams have a combined history in excess of 150 years in the financial services industry. NLEX offerings include national, state, and regional portfolios on behalf of many of the world’s top financial institutions. 

About Heritage Global Inc.

Heritage Global Inc. (NASDAQ: HGBL) is an asset services company specializing in financial and industrial asset transactions. The company provides a full suite of services including market making, acquisitions, dispositions, valuations and secured lending. Heritage Global focuses on identifying, valuing, acquiring and monetizing underlying tangible and intangible assets across twenty-eight global sectors. The company acts as an adviser, as well as a principal, acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios, intellectual property, and entire business enterprises.

More companies in collections / recovery should be using email as a key consumer communication channel. The reasons are clear. 50% of consumers prefer to receive communication from brands via email, plus email is a cost-effective way to contact consumers, whether it’s used in lieu of a letter or a phone call. So, why aren’t more companies in recovery / collections using email as a major contributor to their digital debt collection consumer contact strategy?

There are several common compliance myths related to debt collection email best practices holding the industry back. Here are three of them. Don’t let them dissuade you from using email more extensively to improve your digital debt collection strategy.

Myth #1: Creditors must send a handoff letter or email to consumers before a third-party collector can use the email address for collection emails.

Reg F outlines how to use email to reach out to consumers once the debt is passed to a third party debt collector, and it places a lot of the onus on the creditor.

Reg F does discuss creditors sending a hand-off letter or email to the consumer before passing the email address to a third party agency. However, the process outlined in Reg F is a safe harbor, not a mandate.

Based on a recent survey of Consumer Relations Consortium members, many creditors have elected not to take this extra step. That doesn’t necessarily preclude a collection agency from communicating with a consumer via email. Whether or not an agency elects to communicate via email without a handoff letter will depend on risk aversion. Operating outside of the procedure provided in Regulation F may present the risk of an (alleged) third-party disclosure; however there is nothing prohibiting agencies from using email without a handoff letter.

This concern only applies in the case of email addresses passed from creditor to agency. Agencies can also take steps to get consent from consumers themselves. That starts with soliciting consent and preference any time a consumer is interacting with your organization, whether that is on the phone or via your self-service portal.

Learn more about how creditors can mitigate compliance risk in collection emails here.

Myth #2: Collection emails only take the place of physical letters.

Sending an email in place of a physical letter is a great place to start when it comes to developing a functional email process. But you shouldn’t stop there.

According to Drew Marston, Senior Director of Digital Integration at Resurgent Capital Services, you absolutely should start developing your email process using “transactional emails.” This includes emailing administrative documents to consumers, like payment confirmations, for example.

Starting with sending that information via email will help your organization build a successful email process. Then, you can build on that process.

Because emails are a low cost way to contact consumers, emails can (and should) be integrated into your digital debt collection strategy not as a substitute for physical letters, but as a discrete third option in addition to phone calls. 75% of consumers report using their cell phones to check email. Using varied, marketing-style email content opens up a new way to reach consumers, and is a great way to drive consumers to your self-service portal, where they can handle their account anytime, anywhere. (PS – this is a good time to remind you that your self-service portal has to be mobile friendly!) 

Myth #3: There is no limit to the number of collection emails you can send to consumers.

On the other end of this spectrum, there is a belief that because there are no explicit restrictions on the number of emails you can send to a consumer, emails can be sent as frequently as you want. But sending too many emails presents at least two major risks:

• A potential (alleged) violation of the FDCPA due to perceived harassment
  
• SPAM labeling due to, well, spamming the customer (which results in a poor email reputation)
  

The strategy behind email is using it at the right frequency and with the right messaging. This will vary not only based on the type of account you’re servicing and the kind of consumer you’re trying to reach, but based on your organization’s technical abilities and content management strategy. Without a library of email content, sending frequent emails doesn’t make much sense. Organizations should develop a wide array of emails, and test them to determine what kind of messaging works for account populations.

DENVER, Colo.  — Harvest Strategy Group, Inc. (Harvest) today announced that Rob Yarmo, the company’s Executive Vice President, has retired effective April 1, 2022. Yarmo served in this role for more than 10 years, since October 2011, and oversaw the company’s sales and business development. Jamie Welsh, Harvest’s Vice President of Business Development since 2019, has assumed Rob’s responsibilities.

During Rob’s tenure, he played a critical role in company growth, was instrumental in the acquisition of numerous long-term client relationships, and helped solidify Harvest’s reputation as a leader in the accounts receivable management space.

“Rob not only contributed significantly to the growth of the company, but did so while embodying Harvest’s core values of honesty, integrity and teamwork. I want to thank Rob for the lasting legacy he has left on our company. We will always consider him part of our family,” said David Ravin, Harvest’s Vice Chairman and Executive Vice President.

Yarmo is a 40 year veteran of the credit and collections industry, beginning his career with Creditel in 1981. 

About Harvest Strategy Group

Harvest Strategy Group Inc. 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.

The CFPB has issued a report titled “Credit card late fees” that discusses the consumer impact of late fees by card type, credit score, and geography, and market reliance on late fees.  (Late fees are also among the fees at which the CFPB has taken aim in its “junk fees” initiative.)  Following a pattern established under former Director Cordray, the CFPB used relatively neutral language in its report and more judgmental language in Director Chopra’s comments contained in the Bureau’s press release.

Director Chopra commented as follows:

“Many credit card issuers have made late fee penalties a core part of their profit model.  Markets work best when companies compete on price and service, rather than relying on back-end fees that obscure the true cost.  Given their current practices, we expect that credit card issuers will hike fees, based on inflation, as limits continue to rise.”

The report’s primary findings are:

• Many major issuers charge the maximum late fee allowed under the TILA/Regulation Z safe harbor created pursuant to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).

• Cardholders with subprime and deep subprime credit scores are far more likely to incur repeat late fees in a given year than cardholders in higher credit score tiers.

• In 2019, credit card accounts held by cardholders living in the poorest neighborhoods in the U.S. paid twice as much on average in total late fees than those in the richest areas.  Cardholders in majority-Black areas paid more in late fees for each card they held with major credit card issuers in 2019 than majority white areas.

• Late fees account for 99 percent of penalty fees and over half of the credit card market’s consumer fees.

Neither the CFPB’s report nor Director Chopra’s comments suggest that card issuers are charging late fees unlawfully or without making required disclosures.  Rather, the implication of the report and even clearer implication of Director Chopra’s comments is that card issuers are charging excessive amounts in late fees and should not make inflation-based adjustments.  However, as the report acknowledges, the CARD Act requires that late fees imposed by credit card issuers be “reasonable and proportional” to the violation of the account terms.  It also acknowledges that Regulation Z establishes a “safe harbor” for specific fee amounts and provides that those amounts are to be adjusted annually by the CFPB for inflation.  In 2022, the safe harbor allows a card issuer to impose a fee of $30 for a first late payment and $41 for a subsequent late payments.  (Regulation Z also permits an issuer that can demonstrate that a higher fee is justified as a reasonable proportion of its internal costs to assess a penalty fee that is higher than the safe harbor fees.)

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When the Federal Reserve Board initially set the safe harbor amounts in 2010 at $25 for a first late payment and $35 for subsequent late payments, it indicated that it believed those amounts were generally sufficient to cover issuers’ costs and to deter future violations and also recognized the need to annually adjust those amounts for inflation to cover increases in issuers’ costs.  75 Fed. Reg. 37526 (June 29, 2010).  Perhaps Director Chopra is suggesting that the current safe harbor amounts are too high or that annual adjustments for inflation are unwarranted.  However, he offers no empirical evidence indicating that the safe harbor amounts do not generally represent issuers’ costs.  Even more significantly, any changes to the safe harbor amounts (including their elimination) or the elimination of annual adjustments would require rulemaking by the Bureau.

It seems unlikely that the CFPB intends to launch a new rulemaking in order to lower the maximum permissible credit card late fees.  Such a rulemaking would be opposed by the industry, would be very time consuming, would absorb lots of bandwidth, and its success would be in doubt.  Thus, it appears Director Chopra is once again using his favorite strategy–jawboning.

That strategy seems misplaced here.  If credit card issuers eliminated or significantly reduced late fees, there would be less incentive for cardholders to make timely payments.  Also, it may lead issuers to increase their interest rates, particularly in an economic environment in which market interest rates are rising.  Such an increase in interest rates would result in one segment of cardholders – those who revolve and pay their bills on time – subsidizing those who do not pay their bills on time.

HOUSTON, TX — AIS, a Texas-based FinTech and leading provider of technology- driven default servicing solutions, today announced the hiring of Cliff White as Managing Director, Bankruptcy Compliance.

“Cliff White has been the Justice Department official in charge of bankruptcy enforcement under Attorneys General of both political parties and during times of great change in the bankruptcy law,” said Blake Hogan, President of AIS. “He will bring his unique knowledge and organizational skills to assist our clients in effectively administering their portfolios of default loans and implementing systems that meet the highest standards of excellence and legal compliance.”

For 17 years, White led the United States Trustee Program (USTP), the Department of Justice’s “watchdog” of the bankruptcy system. He retired on March 31st, after 42 years of federal service. He is the recipient of two Presidential Rank Awards – the highest recognition accorded to senior career executives – by President George W. Bush and President Barack Obama. As Director of the USTP, White’s accomplishments include the implementation of key provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that substantially revamped consumer and business bankruptcy practices and the Small Business Reorganization Act of 2019 which streamlined the bankruptcy process for smaller companies.

“Over decades of service in the Department of Justice, I have had a bird’s eye view of the bankruptcy system where I ensured that both debtors and creditors complied with the bankruptcy laws,” said White. “After a fulfilling federal career, I am excited to join the AIS team in bringing their data, technology, and business systems expertise to financial institutions and lenders to enhance both efficiency and regulatory compliance.”

He officially joins AIS on May 2, 2022. Visit www.aisinfo.com/news/Cliff-White for more information.

About AIS:

AIS is a Texas-based FinTech firm offering technology, talent, and data analytics to support Operations and IT functions within the financial services sector. We are committed to lowering costs, improving quality, and delivering faster results for our clients. Our insights, software robotics and workforce solutions drive the day-to-day work so our clients can focus on growing their business. We review client processes, eliminate non-value adds, and streamline productivity. We build financial and legal technology to automate and optimize workforce performance. We recruit, train, and manage highly skilled human resources to meet staff augmentation needs. We serve a variety of industries including banking, automotive finance, credit card, mortgage, insurance, and telecommunications.