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Consumer Advisory Board Member Reminds CFPB We Are a Credit-Based Economy

  • Written by T. Steel Rose

The CFPB announced seven new appointees to their Consumer Advisory Board. One of those appointed to this three-year position is Joann Needleman, Vice President of Maurice & Needleman, P.C. and past president of NARCA. Needleman has extensive litigation experience in state and federal courts and has successfully defended creditors against claims brought under the Fair Debt Collection Practices Act and Fair Credit Reporting Act.

Needleman is a third generation attorney. Her grandfather was a criminal attorney and her Father was a civil attorney.

“I started practice with my father,” Needleman said. “One of my first cases was a commercial collection case; then moved over to the consumer side. The commercial side was not as busy at the time. I got involved in NARCA in 1995. I met my partner there. FDCPA and defense litigation is now most of the practice. I developed advocacy initiative at NARCA and have been on the board since 2006.”

Needleman voiced her concern over the controversial case of CFPB v. Frederick J. Hanna & Associates, P.C. She stated that NARCA is not representing Hanna but is concerned about the action against Hanna. She further commented saying NARCA would be concerned if any agency under the executive branch of the government began determining how attorneys can practice law because attorneys are governed by their State Bar.

“The States determine how we practice law. Our clients also dictate how we discharge our duties in the best interest of our clients,” Needleman said.

“There is a general concern when a federal level agency says, ‘we don’t like the way you practice law.’ From the attorney’s perspective we occupy a unique space; we have always felt that the FDCPA does not especially apply because the States determine how litigation takes place. In 1977 attorneys were exempt from FDCPA. In 1986 they were put back in. Consumers did not insist but different collection groups felt that it was an unfair advantage. Anything pre-collection, the FDCPA does apply. But at litigation the FDCPA must stop at the courthouse door.”

As of December 2014, two bills in Congress will exempt lawyers from FDCPA. One being H.R. 2892, which most recently was referred to the House Committee on Financial Services in July 2013. The other is S.2328, which was read twice and referred to the Committee on Banking, Housing and Urban Affairs.

“We have had bi-partisan support in both houses,” said Needleman. “They should be re-introduced next session. Many Congressmen are lawyers so they understand the situation.”

Another item that has collection professionals concerned is being examined by the CFPB. Needleman had some comments about how to prepare for an exam should one arise.

“The problem in preparing for a CFPB exam is there are no rules,” Needleman said. “The CFPB said they were going to look at unfair deceptive practices (UDAPs), which is very subjective. The best way to prepare is to look at the exam modules to find out what they will be looking for; that would be a good template. The question is what are the laws in your jurisdiction? If you are nationwide you have wider exposure. You should also look at the CFPB quarterly supervisory highlights to determine what is of great concern to them. Make sure your Complaint Management System (CMS) has board oversight, training and vendor control, and complaint documentation and resolution. Outside audits would be helpful. Make sure your staff and vendors are trained and are complying with consumer protection law.”

“Several companies provide documentation services and the CFPB wants to ensure compliance with consumer protection laws. At the end of the day, the CFPB has found some employees did not understand the FDCPA and consumer financial protection. The FDCPA had limited enforcement powers; the CFPB can now supervise non-bank entities. The FTC did not work directly with financial services. The CFPB does have this mandate.” FDCPA had no regulations and was left to States to interpret. It never addressed voice mail. The CFPB has the power to issue a civil investigation demand (CID), which is a subpoena. However, Needleman commends the CFPB for putting together 30 people to provide input on the Consumer Advisory Board. One member is a payday lender, for example. Needleman said that after one meeting it has been helpful.

“My goal is to remind them, we all work in a credit based eco-system,” Needleman said. “Collections is not an outlier. You can’t have one without the other. Mortgages and student loans exist. I keep reminding them collections is a key part; and you have to keep it moving or the system breaks down.

“For example mortgages became very difficult. Your debt to income ratio has to be higher, so certain people will have a hard time buying a home especially first time buyers. If you create huge barriers to collecting debt you affect consumer credit in the American economy.”