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How Industry Leaders Adapted to COVID-19

During the COVID-19 pandemic, no one has been left untouched by the effects of the virus.  Employers and employees both have had to adapt to the ever changing environment by following regulations and the wishes of their clients. Throughout this pandemic, we've had the privilege to talk with leaders in the ARM industry about what they have done to keep up with the ever changing world. In my conversations with some of these leaders, here are the main things I learned.
 
Mr Harry Strausser emphasized the importance of empathy in collections during this pandemic. He says,‘"The ability to communicate is directly proportional to our ability to collect.” By being empathetic towards consumers, collectors have the opportunity to form an incredible relationship with the people they serve. Consumers are now realizing collectors can be a resource for financial education and therefore, the relationship between the two is even more important. Strausser believes, “the overwhelming majority of consumers desire to pay their debts.” Therefore, in this time of pandemic, collectors must be more empathetic than ever. Strausser wrote an article on this topic which can be read on our site here.
 
In a conversation with Mr Gordon Beck, he stressed more than anything the importance of a strong culture during these troubling times. Beck was well equipped to handle the challenges thrown his company’s way which he credits to his team and the culture they have. They were able to transition quickly to remote working and see success as his employees stayed motivated to do their best work possible. When talking to Beck you can hear the pride he has for his company and those who work in it. It is evident he has laid out a plan and been effective in keeping his workplace productive. 
 
Finally when talking to Mr Steve Kusic, he emphasized the importance of staying persistent during these challenges. Although the COVID-19 pandemic has created uncertain times, many clients are still wanting collections to continue. Through this pandemic we have been able to see the importance that debt collectors have in the economy and it is our job to stay persistent through these times, adjust to the new normal, and do our part. 
 
COVID-19 has led to a year that no one could have predicted. However, through the conversations I’ve been fortunate enough to have with leaders in the industry, I have seen the heart and soul of those in the ARM industry. Those in this industry are some of the most determined, compassionate, and strong willed people I’ve ever had the pleasure to talk with. Although the future is uncertain, it is certain that those in the collection industry will persevere.

Ringless Voicemail Latest Grim News

In Caplan v. Budget Van Lines, Case No. 20-CV-130 JCM, 2020 U.S. Dist. Lexis 136865 (D. Nv. July 31, 2020) the Court held that Defendant’s use of RVM to solicit consumers that entered a phone number in a website field but did not actually submit their data to the company by clicking a submit button triggered the TCPA. The Defendant had moved to dismiss the complaint arguing both that RVM is not a “call” because voicemails are an “information service”—again, stop making this argument folks it does not hold water— and because RVM do not interact with the cellular network—a fact which is technically true but almost certainly not alleged on the face of the complaint.

The Caplan court had little trouble rejecting both arguments. The “information service” argument is essentially gibberish and the Court waved it away by noting that text messages are also “information services”—a highly dubious categorization, BTW—but have always been subject to the TCPA. As to the “cellular network” argument the court found that Defendant was trying to elevate “form over substance.” Notably, a properly supported motion raising the “cellular network” angle should be a winner in some cases—the text of the statute simply does not apply to informational RVM’s deployed to business class landlines—but the fact that the messages at issue likely qualified as marketing completely guts this argument (pre-recorded marketing calls to landlines are covered by the TCPA.) So the Defendant lost its critical substantive defense at the pleadings stage and ceded a huge merits win to the class pre-certification, while highlighting a critical common issue. Where have we seen that before?

But while TCPA defendants continues to struggle with the ins and outs of class action defense, the larger issue here is that Caplan is now the FIFTH case to hold ringless voicemails are subject to the TCPA—with zero cases holding otherwise. So for those involved with TCPA compliance—be highly cautious anytime your sales team suggests deploying RVM to contact unconsented, screenscraped, skip traced, or “fielded-but-not-submitted” phone numbers.  Trouble.

https://tcpaworld.com/2020/08/05/overly-eager-tcpa-suit-proceeds-against-company-that-allegedly-sent-ringless-voicemails-to-consumers-who-entered-but-did-not-submit-phone-numbers-on-a-website/

TCPA Strategy Concerning Facebook Supreme Court Case

The Supreme Court’s decision on this matter will be of great significance to entities that place high volumes of automated calls. If the Court agrees with Facebook, plaintiffs’ ability to bring TCPA cases will be greatly curtailed. If the Court agrees with the TCPA plaintiff, the plaintiffs’ bar is likely to continue suing businesses that make automated calls. Entities that place automated calls—or organizations acting on their behalf—may wish to consider submitting amicus briefs on Facebook’s behalf.

TCPA STRATEGY

Until the Supreme Court rules in Facebook, Inc. v. Duguid, companies should continue to implement strategies designed to mitigate the risk of TCPA litigation. Companies should develop and implement robust practices designed to ensure that automated calls are made only to consumers who provide the required consent (which must be written in certain circumstances, including telemarketing calls). This evidence may include, among other things, (i) records of consent to receive calls or texts placed via ATDS or pre-recorded voice, (ii) recordings of calls with consumers, and (iii) dialer logs.

Although every situation is different, a TCPA defendant may be able to secure early dismissal if it can prove that the plaintiff provided the required consent. And if circumstances in which the plaintiff is not the consumer (e.g., if a wrong number is inadvertently entered into a consumer’s records), a company that has robust consent practices should have a strong argument that a class action cannot be certified because individualized inquiries are needed to determine whether each call recipient was called with or without consent.

To read more, click here.

ABA Tells CFPB Debt Collector Time-Barred Debt Disclosure Is Unworkable, Confusing and Legally Inaccurate

ABA Letter to CFPB

Bureau of Consumer Financial Protection 1700 G Street NW Washington, DC 20552 Dear Madam or Sir: The American Bankers Association (ABA) appreciates the opportunity to comment on the Consumer Financial Protection Bureau’s (Bureau) Supplemental Notice of Proposed Rulemaking for time-barred debt disclosures (SNPR). The supplemental notice amends the Bureau’s proposal to implement the Fair Debt Collection Practices Act (FDCPA), adding specific disclosures for third-party collectors to provide to consumers regarding debt for which the applicable statute of limitations has expired, known as time-barred debt.

I. Summary of Comment The proposal contemplates that time-barred debts can be classified into one of four types, a categorization that ABA disputes, and it proposes a specific disclosure to be provided for each type. The Bureau proposes that if a debt collector “knows or should know” that a debt is time barred, the collector must give the appropriate disclosure orally or in writing in the collector’s initial communication with the debtor, or on the first page of any validation notice. The Bureau also proposes specific guidelines for the timing of the time-barred debt disclosures in instances when the debt becomes time-barred during the collection process or when the collector discovers that the debt is time-barred. Four model forms have been proposed, each corresponding to a specific disclosure, and use of a model form in a validation notice, or use of form’s content in other required communications, provides a safe harbor for the debt collector.

As the Bureau acknowledges, there is no data on the dollar amount of time-barred debt in collection in the United States, but it is a fair assumption that time-barred debt is a minority of delinquent debt. According to the FDIC’s Quarterly Bank Profile, net total charge-offs for 2019 amounted to $52.116 billion. While disturbing anecdotes abound regarding harassment of consumers for decades-old debts, there is no empirical evidence that suggests that time-barred debt is a major component of the debt collection or debt sales market. However, as demonstrated by the Federal Reserve Bank of Philadelphia, restrictions on collections are known to reduce credit access by resulting in lower recovery rates. Thus, any proposal that restricts the ability to collect should carefully consider the impact on consumers overall – not just those subject to debt collection.

ABA supports the Bureau’s objective to provide consumers with actionable information regarding time-barred debts. We understand that the proposal represents the Bureau’s attempt to provide consumers with easy-to-understand, useful information on the consumer’s options for repaying a time-barred debt. However, given the legal complexities involved, we believe that use of the proposed disclosures would constitute providing legal advice as to repayment options and/or the legal consequences of opting not to repay. That is not a proper role for debt collectors, and most importantly, will not benefit consumers.

Attempting to provide consumers with customized time-barred debt disclosures will inevitably raise more questions than they answer. A consumer who receives a disclosure that he or she does not understand is likely to contact the debt collector to ask questions regarding whether the consumer has a continuing obligation to pay the debt or whether the consumer can be sued. A collector, who is being paid to collect the debt, will be challenged to respond to those inquiries on behalf of the creditor. Consumers who receive the Bureau’s proposed disclosures will contact collectors for further information. This puts collectors in the awkward position of trying to explain the disclosures without impacting the collector’s ability to recover the amounts owed. Forcing collectors into this difficult position will ultimately lead to consumer frustration and complaints.

Instead, ABA recommends that the Bureau take responsibility for creating educational resources for consumers regarding time-barred debt and consumer options for addressing such debts, in conjunction with a more general time-barred debt disclosure. This would lead to better, more accurate consumer information than the Bureau’s proposed disclosures, which are unworkable, legally inaccurate, confusing, and likely to increase, not decrease, litigation over time-barred debts. To read more, click here.

Deloitte Forecasts Credit Card Charge-Offs Could Increase to 8.1% in 2021

Deloitte is forecasting that credit card charge-offs could increase to 8.1% in 2021, in a new report hitting this week. 

As the methodology explains: “To forecast the impact of the COVID-19 pandemic on the credit card charge-off rate from 2020 to 2024, the research team at the Deloitte Center for Financial Services studied the relationship between the national unemployment rate and banks’ credit card charge-off rate over the past 20 years. 

Charge-off rates showed a one-to-one relationship with the unemployment rate during the 2008–09 financial crisis; however, the correlation somewhat weakened following the peak, with a deceleration in charge-off rates. Charge-off rates are expected to show a lower correlation with unemployment in 2020–24. As a result, the increase in charge-offs will likely be lower in magnitude compared with the rise in unemployment, due to government intervention with unemployment benefits, a financially stronger consumer, issuers’ proactive approach to help distressed borrowers, and nuanced differences in the nature of unemployment compared to the 2008–09 crisis.”

This is part of a new report titled “US Consumer Payments in a Post-COVID-19 World: How to Bolster Payments Institutions’ Growth in Challenging Times” (online here). The report authors write that “we expect to see an acceleration of some recent trends in the way consumers ‘live, work, play, and pay’ and integrate real anddigital more, which will likely stick in a post-COVID world.”

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