Every week, AccountsRecovery.net brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.
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Appeals Court Rules Receipt of One Text Message Not Enough to Confer Standing To Allege TCPA Violation
The Court of Appeals for the Eleventh Circuit has ruled that the receipt of one text message is not enough of a violation of the Telephone Consumer Protection Act to give someone standing to file a lawsuit under Article III of the Constitution, potentially throwing a wrench into the arguments made by plaintiffs in virtually every TCPA case. More details here.
WHAT THIS MEANS, FROM KELLY KNEPPER-STEPHENS OF TRUEACCORD: In the TCPA world where damages are virtually unlimited resulting in multi-million settlements, a recent Eleventh Circuit decision brings relief to a defendant sued for sending one text message. In Salcedo v. Hanna the Eleventh Circuit found that Plaintiff was not harmed by one text message when there is no evidence that Plaintiff suffered any injury. Plaintiff attempted to say that the one text message made his phone unavailable and invaded his privacy right to fully enjoy the use of his cell phone. But, as the Eleventh Circuit noted, texts do not tie up a cell phone. Standing is a Constitutional requirement. Article III of the US Constitution requires a Plaintiff to have standing in order to bring lawsuit, like this TCPA class action. To establish standing a Plaintiff must have (1) suffered an injury in fact or harm, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be fixed by a favorable judicial decision. For potential TCPA defendants everywhere this is a landmark decision, at least for those cases involving text messages.
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Plaintiff Seeking $700k in Damages For Receiving 343 Collection Calls After Revoking Consent
A Pennsylvania man has filed a lawsuit alleging he received 343 debt collection calls on his cell phone after he revoked his consent to be contacted, accusing the defendant of willfully violating the Telephone Consumer Protection Act. More details here.
WHAT THIS MEANS, FROM LAURIE NELSON, ESQ OF PAYMENTVISION: While we do not know how the case of Kearney v. Bank of America, N.A (BOA) will end (just filed on Sept. 5) the case reminds of the substantial financial penalties that can result due to a failure to adhere to the Telephone Consumer Protection Act (47 U.S. C.§ 227 et seq.) (“TPCA”). It was just in May of this year that a court confirmed the $61 million class-action judgment issued in the case of Krakauer v. Dish Network ( No. 18-1518, 2019 WL 2292196 4th Cir. May 30, 2019) which makes the demand of $700,000 in this case not as extreme as it may sound for unconsented calls.
Regardless if BOA is doing everything right today, with the filing of this case, whatever process is in place at BOA is now questioned. The Plaintiff claims that with no prior consent, the Plaintiff’s verbal request to cease followed by a second request made by the Plaintiff to stop to avoid any indication that a conversation should be assumed as implied consent, 343 calls were placed to the Plaintiff. It will be interesting to review the answer BOA files in response to this case. Will they be able to provide prior consent, will a recording of the call be presented that disputes the claim that the Plaintiff requested the cease of communication? While it is unlikely that BOA will take the matter through to litigation which would allow all to see a detailed insight into their processes today, this is a compelling case to follow. It is also a GREAT reminder of the necessity for all who are regulated under the TPCA to ensure there are adequate procedures in place to continually review policies and ensure all employees are following the policies in place.
Advocacy Group Report Details How Consumer Attorneys Say Their Clients Are Treated by Collectors
More than 70% of consumer attorneys have represented individuals who were threatened with a lawsuit by a debt collector to try and recover a time-barred debt, and nearly two-thirds of those attorneys have “recently” worked on cases where a lawsuit to collect on a time-barred debt was actually filed, according to the results of a survey conducted by the National Association of Consumer Advocates that was released yesterday. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: In the lead up to the deadline for submission of final comments to the Notice of Proposed Rule (NPR) for debt collection, it is not surprising that piece-meal data and research will start trickling in from the consumer advocates. In this case, the National Association of Consumer Advocates (NACA) undertook an online survey to provide a snapshot of a consumer’s experience “through the eyes of the attorneys” who represent them in debt-collection related matters including litigation. Industry should not be surprised by the results of this survey including the small sample size.
According to their website, NACA is a “nationwide organization of more than 1,500 attorneys who represent and have represented hundreds of thousands of consumers victimized by fraudulent, abusive and predatory business practices”. Despite boasting of such a large membership, only 134 members chose to respond to this survey. That is a .08% response rate.
Most market research companies will tell you that the average external response rate for online surveys is somewhere between 15-20%. NACA’s response rate is therefore negligible.
The most interesting results came from questions involving litigation and time barred debt. First, it must be remembered that the FDCPA does not prohibit the collection of time-barred, yet the report makes a big deal of saying that 85% of attorneys that responded (113 attorneys) had represented 653 consumers in the past two years where a debt collector attempted to collect on a time-barred debt. That’s approximately 5 consumers per attorney over 24 months.
The survey conflates a myriad of responses on the issue of lawsuits and time barred debt. Ironically, the same respondent pool was unable to identify the amount of consumers who were actually sued on a time barred debt. The survey instead notes that 64% of attorneys surveyed (85 attorneys) “have recently worked” on a case where a debt collector sued on a time-barred debt when the actual question was how many consumers have you represented within the past two years where a debt collector sued on a time barred debt. Surprisingly, 40% of the attorneys surveyed (53 attorneys) stated that they have not represented any attorneys who were sued on a time-barred debt and less than 50% of attorneys surveyed (approximately 67 attorneys) claims to have represented between 1 and 5 consumers over the past 24 months. Since the determination of a time-barred is a legal conclusion, the survey failed to ask any follow up questions of the respondents specifically whether the court determined that the debt was time-barred or whether the attorney raised the issue in an affirmative defense.
Expect to see more surveys and data when the final comments are filed on September 18. It will be incumbent upon industry to critically review not only the results and methodology of this data during the post NPR advocacy period leading up to the final rule.
VoApps Files Court Docs Detailing Why Its Product Should Not Be Subject to TCPA
A pair of court documents in a potential landmark case were quickly making the rounds yesterday, as VoApps sought to prove, once and for all, that it’s Direct Drop Voicemail product should not be considered a call, as defined under the Telephone Consumer Protection Act. More details here.
WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON & MESSER: With the recent filings in the Saunders case, the Court should rule that direct drop voice mail does not violate the TCPA. Why? Because this time the filings have clarified for the Court the bottom line with regard to direct drop voice mails: that direct drop voicemails involve calls that are sent to the landlines of the Telecom carriers and never involve calls to telephone numbers assigned to wireless carriers or wireless telephony. Direct drop voicemails are not sent to the phone equipment itself, either. The basic premise of the TCPA involves calls to numbers assigned to wireless carriers. After all, that is what the plaintiff’s bar has been litigating for years – calls via automatic telephone dialing systems and artificial or prerecorded voice calls made to cell phone numbers. The TCPA, in plain language, states that it is illegal to make calls (iii) to any telephone number assigned to a . . . cellular telephone service . . .”. The calls at issue in Saunders are “calls” that are not assigned to a cellular telephone service and therefore should not violate the TCPA’s restriction on automated technology.
Courts understand simple concepts and don’t like to get mired down in thousands of pages of technical information because they don’t have the bandwith to deal with such cases. Here, the simple and straightforward arguments should resonate with the court in Saunders. Let’s keep our glasses half full and anticipate a common sense ruling that benefits all industry.
Judge Denies MTD Over Inclusion of ‘Fees’ and ‘Charges’ in Letter When They Didn’t Affect Balance
A District Court judge in Indiana has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by including line items for “interest” and other “charges” even though the amounts were zero and no such fees could be added to the balance. More details here.
WHAT THIS MEANS, FROM DENNIS BARTON OF THE BARTON LAW GROUP: In Driver v. LJ Ross & Associates Inc., the collector’s letter had column headers that included “Total Interest Added” and “Total Non-Int Charges/Adjstmnts.” Under each column, the amount stated “$0.00.” The underlying contract did not allow for interest to be added. Plaintiff argued the letter implied interest might be charged and was confusing. Plaintiff said the reference to interest was misleading and an unfair practice.
Although not all courts have the same standard, the Seventh Circuit (in which this district court is loctated) “has made clear that a ‘dunning letter is false and misleading if it impl[ies] that certain outcomes might befall a delinquent debtor when, legally, those outcomes cannot come to pass.’ ” The court applied this standard to deny the collector’s motion to dismiss because stating fees and collection costs of “$0.00” (instead of “N/A” or omitting any reference to interest) could be read by an unsophisticated consumer to mean interest might accrue in the future.
Sadly, many other courts have reached this same conclusion. And while this type of case exemplifies how far many courts have gone to unreasonably side with consumers at the cost of commonsense, this is a trend that should not be ignored. When interest does not accrue, a collection letter should either not reference interest at all or use “N/A” to indicate interest is not applicable to the account. And although those of you that do list interest as “$0.00” when it will never accrue may justifiably grumble about state of justice in America, please do so while contacting your letter vendors to make the needed changes.
Tech Giants Make Last-Minute Push to Amend CCPA While Most Companies Say They Will Not Be in Compliance When Law Goes Into Effect
Companies, including some of the largest in the country, are engaging in a last-minute push to amend the California Consumer Privacy Act before it goes into effect in four months, as a majority of companies predict they will not be able to comply with the law when they must start doing so on Jan. 1. More details here.
WHAT THIS MEANS, FROM JUNE COLEMAN OF CARLSON & MESSER: California’s Consumer Privacy Act (CCPA) and its amendments mean that financial services companies need to be prepared to address the obligations set forth in this new law, as amended. The CCPA was enacted last year in a week, from drafting the bill to signing by the Governor, with an effective date of Jan. 1, 2020. This delayed start date was to fix any loopholes that existed when the legislation was signed so quickly. The law as enacted with amendments, in general, will require the financial services industry to provide notice of information collected. The CCPA will also require the financial services industry to field requests to remove/delete personal information if requests and if the request does not interfere with the business transaction. Thus, the financial services industry will probably not need to delete information, but will need to respond to these requests. The CCPA contains a private right of action for data breaches, under limited circumstances, and no private right of action as to notices and responding to requests.
California’s legislative season ended on Sept. 13, the deadline for bills to be approved by both houses and forwarded to the Governor for signing. During the past nine months, the legislature has considered many amendments to the CCPA. But only about five were sent to the Governor’s desk by last Friday. AB 1355 appears to have added an exception related to credit reporting activity, but the exception does not apply to data breaches and appears to only last until 2021. And AB 25 limits the application of the CCPA to information gathered during an employment application process, at least until 2021. Both of these amendments are good for the industry.
Also, be on the watch for new proposed regulations by California’s Attorney General. California’s Attorney General can pursue government actions against an offender, but will be prioritizing their efforts toward large businesses, according to the Attorney General’s office. The Attorney General cannot pursue any actions until July 2020, or six months after regulation is enacted. Since, final regulation will probably not be in effect on Jan. 1, when the law goes into effect, AG actions against offenders will be delayed. But this also means that companies will lack the guidance from the new regulation to interpret the CCPA. This will be important to watch over the coming months to determine whether the amendments because law and when the regulation will go into effect.
Judge Grants Defendant’s MSJ in FDCPA Case Over Alleged Abusive Behavior
A District Court judge in Missouri has granted a defendant’s motion for summary judgment after it was accused of violating the Fair Debt Collection Practices Act because it allegedly harassed the plaintiff. The harassment? Nine calls in a nine-month span and inquiring about the plaintiff’s job and tax return status. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: Harassment? This case stands for the proposition that certain members of the plaintiff’s FDCPA bar continue to engage in legal harassment and we (those of us on the defense side of things) need to work with each other to expose bad behavior when it becomes a business model.
In Benson v. Portfolio Recovery Assocs., LLC, 2019 U.S. Dist. LEXIS 145328 (E.D. Missouri August 27, 2019, Plaintiff, through her counsel Kimmel & Silverman, P.C. (“K&S”) (located in Ambler, Pa), brought a case alleging harassment due to the content and frequency of phone calls she received. Sounds reasonable until you find out that at the time the case was brought, Plaintiff’s counsel had no recordings nor did he even have the dates of the calls. This is unfortunately typical of K&S. This writer has had multiple similar cases with them over the years and they all follow the same pattern. Plaintiff seeks defendants records, not to prove the case, but to first investigate. In Benson it turned out there was an extraordinary number of calls, enough to shock one senses, “the undisputed evidence shows that Defendant made nine calls to Plaintiff, in eight months, placed no less than 6 days apart.” Id at *12. (emphasis added)
As to the content of the calls, on the first call Ms. Benson advised that she would like to pay her outstanding account (of $390.17) and an agreement was made to pay it when Ms. Benson received an expected tax refund. They set a date for the payment to be made and the collector advised repeatedly, that if the money doesn’t come in by the anticipated date Ms. Benson should call in and push the date out. Wow how unreasonable the collector was? And if that wasn’t bad enough, when the date came and went and there was no call, a collector reached out to Ms. Benson and had the impudence to ask Ms. Benson, “How can I work with you on getting this resolved?” Id at *10. But wait it got worse, when Benson advised she had been out of work since the past December, the collector pointed out that payments had ceased some six months earlier. Why wasn’t the collector was fired on the spot?
At this point you probably understand I’m mad on behalf of my colleague who had to deal with this nonsense – it’s bad enough that a phone call case was brought with no evidence or investigation but to forge ahead to force a summary judgement motion is simply wrong on so many levels. A review of the Court’s opinion evidences that Plaintiff’s counsel performed the same slipshod work in opposing the motion. As I said earlier, this case unfortunately mirrors previous cases filed by the same firm. Any suggestions for a plan of attack the next time one of these gets filed?
Agency Calls Former Employee Who Accused Company of Hiding Call Recordings ‘Unstable’ and ‘Disgruntled’
A published report is bringing to light a lawsuit filed by a former employee of a collection agency who is accusing the company of engaging in illegal activity and not providing copies of call recordings that were requested by a state attorney general’s office. The agency has filed a motion to dismiss the lawsuit, claiming it is the action of an “unstable disgruntled employee who secretly compiled and stole information” from the company. More details here.
WHAT THIS MEANS, FROM AMY JONKER OF JONKER LAW GROUP: A former collection agency employee is suing his former employer for intentional infliction of emotional distress, assault, breach of contract, and negligence claiming that the collection agency’s president and owner verbally abused and mistreated him, constructively fired him, and failed to pay him after he discovered that the collection agency was engaging in illegal collection activities. The purported illegal activities include lying to a state attorney general about the existence of call recordings that proved FDCPA violations, creating fake client documents, and illegally retaining client funds. The collection agency is accusing the former employee of being unstable and disgruntled but does not have an explanation for why the recordings are available even though the collection agency’s president signed a letter to a state attorney general stating the recordings were lost.
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