I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
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.
Creditor Facing TCPA Class Action Over Wrong Number Calls to Cell Phone
An individual has filed a class-action lawsuit against Charter Communications, alleging the cable provider violated the Telephone Consumer Protection Act by making calls to her cell phone without her consent because it was looking for someone else. The calls allegedly continued after the plaintiff told a representative of the defendant that she was not the person the defendant was looking for. More details here.
WHAT THIS MEANS, FROM KELLY KNEPPER-STEPHENS OF TRUEACCORD: Don’t think that post ACA International that wrong number TCPA cases are waning–they are not as demonstrated by yet another Plaintiff asserting a class action this time against Charter Communications. The allegations serve as a reminder to businesses making calls about the imperative need for clearly documented policies and procedures surrounding the possibility that a number has been reassigned.
First you need to decide how many calls you are willing to make when you don’t know if any number has been reassigned. Remember that in the ACA International case, the court threw out the FCC’s one-call to determine reassignment rule because it did not protect businesses who had properly obtained valid consent to make calls to the numbers. The Court ordered the FCC to find a better solution to the wrong-number problem. While businesses everywhere wait on the FCC and on the reassigned number database (set to drop sometime in the summer of 2020), Plaintiffs still file wrong number cases. So, how many calls can you make to a number you obtained consent to call when you do not realize that it has been reassigned? In January this year a court found two prerecorded messages to a wrong number cell phone did not violate the TCPA – it was reasonable to rely on the consumer obtained by the previous owner of the number. Sandoe v. Bos. Sci. Corp., Civil Action No. 18-11826-NMG (D. Mass. Jan 8, 2020). In the Charter Communications case, the plaintiff alleges six calls over a two month period (well under CFPB NPRM’s max of 7 calls per week).
Second, you need to make sure that you have a sure fire system for capturing revocation. In the Charter Communications complaint, the allegations include the plaintiff telling Charter more than once about the wrong number. Have a policy, train your team regularly, program your systems, test regularly, document, document, document! Business cannot wait on the FCC, develop cautionary policies thinking of the defense you will mount if you end up in a wrong number case.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Sixth Circuit Overturns Lower Court’s Dismissal of FDCPA Suit Over Post-Judgment Interest Calculation
The Sixth Circuit Court of Appeals has overturned a lower court’s dismissal of a lawsuit that alleged a number of parties violated the Fair Debt Collection Practices Act by charging too much in post-judgment interest when attempting to recover unpaid debts. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The Rooker-Feldman doctrine prohibits lower federal courts from reviewing state-court judgments. A consumer who loses a collection case in state court and thinks the court got it wrong should appeal that decision to a higher state court. If the consumer instead files a lawsuit in federal court in an effort to somehow correct or cancel out the state-court judgment, then that suit is subject to dismissal under Rooker-Feldman. The doctrine can be an effective tool for obtaining dismissal of FDCPA claims brought by losers of collection lawsuits, but this case serves as a reminder that the doctrine is narrow in its application. Here, the district court dismissed the consumers’ claims pursuant to the Rooker-Feldman doctrine after determining that those claims amounted to attacks on the underlying state-court judgments. The Sixth Circuit reversed, holding that Rooker-Feldman did not apply because the issue was not whether the state-court judgments were correct, but whether the defendants improperly executed on those judgments. Fortunately, the defendants did not put all of their eggs in the Rooker-Feldman basket. The Sixth Circuit noted that the defendants asserted other defenses to liability, and remanded the case back to the district court to consider those defenses.
Scam Collector Banned From Industry As Part of Settlement With FTC, NY AG
A debt collector who went by the name of “Bobby Rich” has reached a settlement with the Federal Trade Commission and the Attorney General of New York that will ban him from ever participating in the collection industry again and require him to repay $30,000 out of a $1.7 million fine after he was accused of lying to individuals about their debts and using illegal tactics to try and collect on them. More details here.
WHAT THIS MEANS, FROM ETHAN OSTROFF OF TROUTMAN SANDERS: This lawsuit, resulting in a settlement with Robert Heidenreich (a/k/a “Bobby Rich”) and a default judgment against the companies he allegedly owned and controlled, is another example of federal and state regulators working together in the debt collection space. The allegations by the FTC and New York Attorney General read like a laundry list of things no-nos, from threatening arrest to overbiffing, for all participants in the financial services ecosystem. It is also a reminder to all individuals in ownership and management roles that they could be held personally liable for the unlawful activities of companies undertaken in an effort to collect debts from consumers, especially if they involve lying to consumers about how much debt they owe and using illegal scare tactics in an effort to collect it.
These regulators partnered to stop the egregious conduct of a Buffalo, N.Y. based scheme accused of violating the FDCPA, FTC Act, and similar New York state laws by using false and deceptive tactics to collect on debts. Back in October 2018, Rich and six companies were sued, with regulators claiming they would pose as law enforcement officers when placing calls and tell consumers that to avoid arrest or criminal liability the consumer needed to take specific actions regarding their debt. In other calls, defendants’ employees would falsely claim a civil suit had been filed against the consumer or would be filed if the consumer did not pay. The defendants were also accused of “overbiffing” — or demanding more than a consumers’ balance in full. In addition to these tactics, defendants were also accused of unlawfully disclosing consumers’ debts to third parties such as employers and family members, as well as using profane and abusive language.
Within days of the suit being filed, the United States District Court for the Western District of New York granted a temporary restraining order prohibiting the defendants from taking a multitude of actions, appointing a temporary receiver, freezing their assets, permitting immediate access to the defendants’ business premises, and permitting expedited discovery. After a little more than 15 months of litigation, Rich agreed to a lifetime ban from participating in debt collection activities, including processing payments. His settlement includes a monetary judgment of $1.7 million, with Rich being required to surrender $30,000 to the FTC. The remainder of the monetary judgment was suspended due to Heidenreich’s inability to pay, but if he were later found to have misrepresented his financial condition to the regulators, the full judgment would be due.
Judge Grants MSJ For Defense In FDCPA Case Over Call Frequency
A District Court judge in California has granted a defendant’s motion fo summary judgment after it was sued for allegedly violating the Fair Debt Collection Practices Act by calling the plaintiff 15 times during a six-month span. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: Theiiiiirrrrrrr Back. Over the years I’ve noticed how some firms seem to be wedded to certain causes of action, and continue to bring them, despite consistently having the courts reject those claims. In Allen v Credit Collection Services, 2020 U.S. Dist. LEXIS 27363 (E.D. Cal. 2020), granting summary judgment to CCS, we have a perfect example of this behavior. The Eastern Pennsylvania firm of Kimmel & Silverman, PC. seem to love to file claims based on phone calls to their clients. Similar to past claims I’ve seen or handled brought by them, the allegations were that there were many calls and on several calls he asked CCS to stop calling and this activity by CCS was harassing and caused great mental anguish. And as per usual the plaintiff was unable to provide any details of the calls, dates, who he/she spoke to, etc.*
Plaintiff was unable, however, to provide any further support for that very generalized statement other than to claim he asked CCS to stop somewhere “between November and January” of 2017. Plaintiff has failed to indicate who he spoke with at CCS and admits he took no notes concerning the substance of any conversation. The only additional corroboration he offered were various screenshots of an application he used to block unwanted calls, but those screenshots (Ex. I to the Stoddard Decl.) contain no identifying data linking any such calls to CCS. Id. at 3-4
Here’s the problem as I see it, it’s one thing to get two bites of the apple, but at some point bringing the same case over and over again, with the same fact pattern, should lead to sanctions. Yes we have all heard the phrase, “go west young man” but this is taking it too far. While the Court cited to several out of district cases regarding the number of calls, it might have led to sanctions if the court had been provided with the list of the cases previously brought by K&S on eerily similar facts, i.e. no records/details of the alleged calls which turn out to be a low number proven by defendant’s records. I call this the spaghetti cause of action – throw it against the wall and see what sticks.
K&S is not unique. There are other Plaintiff’s FDCPA firms out there spreading weak claims across the country seeking a sympathetic court. When you have one of those, provide a list of how many times the same claim has been brought and rejected – educate the courts and just maybe, you will find a judge who becomes just as offended by this repetitive behavior as you or I. Just sayin.
* – Per CCS records – only eight calls over four months and on those where there was contact, CCS’s recordings showed that there was no request to cease the calls.
Bill Restricting Medical Collection Efforts Passes Idaho House
A bill has been passed by the Idaho state House of Representatives that would establish a waiting period before a healthcare bill could be assigned to a third-party collection agency to be recovered as well as limit the amount that a court can award in attorneys’ fees. More details here.
WHAT THIS MEANS, FROM VINETTA ORCUT OF CHAPMAN FINANCIAL SERVICES: On Wednesday, March 4, HB 515 was reported out of committee with a Do Pass Recommendation and filed for Third Reading.
HB 515 provides a timeline for medical providers before they can begin ECAs.
The medical providers are required to provide a consolidated summary of service that includes the following:
- The name and contact information, including telephone number of the patient;
- The name and contact information, including telephone number of the health care facility that the patient visited to receive services;
- The date and duration of the visit;
- A general description of goods and services provided to the patient during the visit, including the name, address, and telephone number of each billing entity whose health care providers provided the services and goods to the patient; and
- A clear and conspicuous notification that states “ This is not a bill. This is a summary of medical services you received. Retain this summary for your records. Please contact your insurance company and the health care providers listed on this summary to determine the final amount you may be obligated to pay.
Medical providers will be prohibited from assigning accounts to collections until 60 days after the final notice has been sent. This also includes credit reporting, commencing any legal action, or placing a lien.
Medical providers will also be required to bill insurance within 45 days of discharge of services rendered.
This would go into effect on Jan. 1, 2021, once enacted.
The members of Idaho Collectors Association were attempting to change section 48-305 (a) this section provides for a cap of $350.00 on non-contested judgments. This includes filing fees, process server fees, and attorney fees.
ICA members Sky Ipsen, Rich Fairbanks, Carma Farrar, and John Watts did a phenomenal job in both the House and Senate with their testimony. They took countless meetings with both Senators and the creators of the bill. Andy Madden was a tremendous help in getting a call to action out to all of our members. Each member took the time to really personalize their letters and each should be commended for the hard work that they did.
Bill Introduced in Congress to Amend FDCPA
A bill has been introduced in Congress that seeks to amend the Fair Debt Collection Practices Act to require collectors to require more information be included in validation notices and when filing lawsuits against individuals to collect on unpaid debts. More details here.
WHAT THIS MEANS, FROM MICHAEL KLUTHO OF BASSFORD REMELE: There’s a lot going on in HR 5934 which would dramatically amend the FDCPA. It would impose significant changes on debt collectors, from start to finish. Collection notices would change. Much more information would need to be disclosed. Interestingly, and perhaps the only thing that might help, the “in writing” requirements for disputes and requests for “original creditor” information vanish. However, a new definition would be added, with significant implications. Specifically, the term “legal action” would be added which “means any lawsuit or legal proceeding (including litigation, arbitration, enforcement of security interests, post-judgment actions, and mediation) pursued, taken, threatened, offered, or requested by debt collectors.”
And litigating collection accounts would become much more involved and problematic. Amazingly, the amendment would require a debt collector to attach to “the initial pleading filed by a debt collector to commence a legal action to collect a debt” among other things, “admissible documentary evidence of—
“(i) the written agreement, contract, or instrument creating the debt, if any, or other documents showing that the consumer agreed to the agreement, contract, or instrument creating the debt;
“(ii) any terms and conditions relevant to the debt;
“(iii) that the consumer incurred the debt and the amount owed; and
“(iv) that there is a chain of title of the ownership of debt and the right to collect the debt, including documents showing the date of each transfer of ownership of the debt and the identity of each owner of the debt; and
“(D) a sworn affidavit stating—
“(i) that the applicable statute of limitations for collecting the debt has not expired and the date on which such statute of limitations expires; and
“(ii) that the debt collector personally reviewed all applicable records and documents relating to the debt to be collected.”.
Forget about anything normal when it comes to litigating collection accounts. Now, you need to wholly prove up your case in the initial pleading, all with documentation that becomes a matter of public record, no doubt much to the consumer’s chagrin. Now that’s a rabbit hole that even Alice never dared venture down, but this amendment boldly goes where no amendment has gone before (to mix some metaphors – but that’s what it feels like after reading this proposed amendment).
Consumer Groups Blast CFPB’s Time-Barred Debt Proposed Rule
A pair of consumer advocacy groups have come out swinging against the Consumer Financial Protection Bureau’s Supplemental Notice of Proposed Rulemaking that would require debt collectors provide additional notices to individuals when collecting on debts where the statute of limitations to sue to recover those debts has expired. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: I stated in a year-end recap that the biggest disappointment for me in 2019 was overwhelming opposition by consumer groups for the Notice of Proposed Rule (NPR). Consumer groups have been calling for the “regulation” of debt collectors since the FDCPA was enacted. While the NPR is not a perfect proposal, by any means, it is a start and a good baseline for best practices for the debt collections industry. What consumer groups conveniently forget is that rules are more pliable than statutes. Look at the rules for TILA and RESPA, they were amended four (4) times after their effective date to adjust for challenges became apparent once stakeholders implemented them into day-to-day operations.
The CFPB did not hid the fact that time-barred debt disclosure would be forthcoming after the NPR. Further, there was nothing in the NPR that suggested that the CFPB would propose an outright ban on the collection of time-barred debt. The position of consumer advocacy groups in my mind is disingenuous, a political posture and strategy to call into question anything the CFPB does simple because they opposed Director Kraninger. Remember it was these same groups that supported the single director structure when they had their “guy” in the same position.
Regardless of whether the consumer advocates’ position has merit, industry needs to be vigilant. As noted in a recent AccountsRecovery.Net webinar, statute of limitations is a states’ rights issue. Expect to see many of these same advocates lobbying state houses all over the country to reduce current limitations periods if not out right bans on the collection of time-barred debt. The consumer advocates have shown their poker hand, they will be aggressively advocating on the state level for stricter debt collection rules were they belief the NPR failed.
I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
