Three Overlooked Traps for First Party/Early Out Servicers

First party and early-out servicing provides an enhanced customer service experience and greater responsiveness for consumers.  These qualities make first party and early-out servicing beneficial for creditors as well as consumers.  However, as the prevalence of this type of servicing increases, consumer attorneys and regulators seek to find ways to apply traditional debt collection laws and statutes to first party and early-out servicing.

In the latest episode of the Debt Collection Drill, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/, Mike Poncin http://www.lawmoss.com/michael-s-poncin/ and Dave Cherner http://www.lawmoss.com/david-d-cherner/ discuss risks for first party and early out servicing arising from the FTC DeMayo Opinion, discuss specific State licensing and disclosure requirements (24 States and jurisdictions may require early-out servicers to obtain a collection agency license) and also address possible CFPB rulemaking to modify the definition of default, as determined by meetings that Mr. Rossman and Mr. Cherner have attended with the CFPB through the Consumer Relations Consortium http://www.crconsortium.org/

Debt Collectors Sued for Not Assessing Interest . . . Seriously?!?

The issue of debt collectors assessing interest on accounts was contentious and extensively litigated over the past decade. Courts, regulators and consumer advocates are uniformly opposed to debt collectors assessing interest except in specific circumstances. The Second Circuit Court of Appeals decision in Avila in 2016 further placed a requirement on debt collectors to disclose in a validation notice when interest is accruing on an account, similar to the requirements in the Seventh Circuit. Avila was not, however, the end of the discussion on disclosing that interest is accruing on an account; rather, it was the beginning a new line of cases. Consumer attorneys are now filing and threatening dozens cases (mostly in New York) asserting that if interest is not accruing on an account, the debt collector must disclose that interest is not accruing.  Presently there are two reported decisions holding that a debt collector is not required to disclose when interest is not accruing and more decisions are pending.

In the latest episode of the Debt Collection Drill podcast, Attorneys John Rossman (http://www.lawmoss.com/john-rossman/) and Mike Poncin (http://www.lawmoss.com/michael-s-poncin/) are joined by Attorney Dave Cherner (http://www.lawmoss.com/david-d-cherner/) to discuss this recent spate of lawsuits and strategies for avoiding liability. The attorneys also discuss the recent addition of Mr. Cherner to the Moss & Barnett team and options for agencies to outsource their chief compliance officer needs.

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Collection Agency Sued for Including Too Many Disclosures in Letter Wins Case

Debt collection is clearly one of the most heavily regulated industries in the United States. Federal, State and local regulators place onerous, duplicative and often confusing requirements on companies seeking to collect debts.  Further, when collection agencies comply with the myriad of laws, many face lawsuits from consumer attorneys claiming that the attempts at compliance somehow violate the law.

In the this episode of the Debt Collection Drill, Attorney John Rossman and Mike Poncin discuss two recent, reported decisions where one collection agency – Financial Recovery Services, Inc. — successfully defeated claims that its plain compliance with State and Federal regulations somehow violated the FDCPA.

Brian Bowers, the President of Financial Recovery Services, Inc., commented on one of these recent FDCPA victories by his company:

Financial Recovery Services was delighted to obtain the successful decision on the motion to dismiss in the Everett case in the Southern District of Indiana.  Over the years, we have grown weary of the frivolous nature of such cases and we decided to take a stand several years ago and fight more of these ridiculous cases that are brought against our industry.  Too often these cases are driven by the aggressive pursuit of consumer plaintiff attorney’s fees and not by what is fair, reasonable, and just for society in general.  In the past several years, we have successfully disposed of over 23% of cases filed against us by either winning them with motions to dismiss or motions for summary judgment.  We are proud to have taken a stand for everyone in the industry and we hope that we see more organizations take a stand against the frivolous nature of some of these types of cases.

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Should Debt Collectors Email Consumers?

The issue of whether debt collectors may email consumers is finally being given serious consideration by regulators.  A prescient article written by Rozanne Andersen in 2011 is the most comprehensive document on the topic of debt collection emails.  New York regulators took the next step toward opening up email to debt collection communication with the rules it published in 2015.  Earlier this year, the CFPB addressed the use of email for debt collection communications in several places in its Outline of Proposed Rules.

In the most recent episode of the Debt Collection Drill podcast, attorneys John Rossman and Mike Poncin discuss the current legal landscape regarding the use of email for debt collection communication and provide specific steps for collection agencies to begin the use of email to contact consumers.