Just a few years ago, many in the collection industry were wringing their hands in frustration: the Douglass decision on innocuous information appearing in the windows of envelopes spawned hundreds of class action lawsuits; claims regarding the tax implications of settlements, voicemail message content and call frequency were on the rise; and, lawsuits with collection calls “scripted” by consumer attorneys were being filed nearly every day. Today, all of these issues are (mostly) in the past as debt collectors focus even more heavily on compliance and a number of positive Court decisions put to rest questionable legal theories upon which these FDCPA cases relied. However, it is only a matter of time before new theories arise.
In the latest episode of the Debt Collection Drill, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ explore how the FDCPA landscape shifted and identify ways in which collectors can avoid being caught in the inevitable next wave of FDCPA lawsuits.
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Consumer attorneys subjected debt collectors to a barrage of FDCPA lawsuits, especially in New York and New Jersey, on collection letters in 2017. This trend will continue, and likely accelerate, in 2018. Debt collectors hoping for relief from the Courts on the latest consumer attorney claims regarding collection letters may get some clarity in the near future. The Second Circuit Court of Appeals recently considered oral arguments on the issue of whether a debt collector must disclose when interest is not accruing on an account in the Taylor case. A decision is expected in the Taylor case within the next year. Also, a recent decision from New Jersey held that validation language in a collection letter that tracks verbatim the wording of the FDCPA somehow violates the FDCPA. An appeal to the Third Circuit Court of Appeals in that case is expected. In addition, the Third Circuit Court of Appeals recently issued an opinion on whether use of the word “settlement” in a collection letter violates the FDCPA.
In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ discuss these recent cases affecting debt collection letters and specific strategies that agencies can implement today.
Listen on InsideARM
Debt collectors that accept recurring payments over the phone know that Federal laws – specifically Regulation E, the Electronic Funds Transfer Act and the E-Sign Act – provide guidelines for consent and disclosures. insideARM first featured an article on those issues in January 2013:
Since that time, the CFPB issued guidance on these issues in November 2015, stating:
Regulation E may be satisfied if a consumer authorizes preauthorized EFTs by entering a code into their telephone keypad, or, Supervision concluded, the company records and retains the consumer’s oral authorization, provided in both cases the consumer intends to sign the record as required by the E-Sign Act.
The CFPB guidance follows common sense and tracks consumer expectations: if a consumer consents verbally to recurring payments, and the debt collector records and maintains that consent, the law is satisfied. Despite the clear CFPB directive allowing verbal consent for recurring payments, consumer attorneys continue to bring lawsuits against debt collectors asserting that verbal consent violates the law. In the absence of guidance from a Court of Appeals on the issue, the lawsuits against debt collectors – with uncertain outcomes in the Courts — will continue. Further, these lawsuits undermine the ability of both consumers and debt collectors to rely upon interpretations of the law from the CFPB.
In this episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ are joined by special guest Mike Etmund http://www.lawmoss.com/michael-t-etmund/ to discuss a recent case addressing whether verbal authorization for recurring payments is sufficient. Also discussed in this episode are newer cases on the Spokeo requirement that a Plaintiff must suffer a “concrete injury in fact” to maintain an FDCPA case and the status of the CFPB arbitration rule.
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Collection letters are the bane of our industry. Letters are expensive to send and – despite what a certain television pundit claims – studies prove that few consumers actually read collection letters. The CFPB, the FCC and other regulators pay little more than lip service to the urgent requests from consumer advocates to allow collectors communicate with consumers electronically, with States such as New York enacting Byzantine and unworkable rules to “allow” collectors to communicate with consumers via email. It is anticipated that the CFPB, in its upcoming notice of proposed debt collection communication rules, will adopt standards for electronic communications similar to the convoluted rules found in New York. Ultimately it is consumers that are harmed by these rules that disregard modern electronic communications in favor of antiquated collection letters. Further, consumer attorneys scrutinize collection letters, measuring the font size of disclosures and injecting tortured interpretations of plain language to find possible lawsuits (and potential paydays) against collection agencies diligently seeking to comply with the law.
In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman (http://www.lawmoss.com/john-rossman/) and Mike Poncin (http://www.lawmoss.com/michael-s-poncin/) discuss a new wave of lawsuits against debt collectors in California, which focus on the font size of certain disclosures, and New York, which centers on a misreading of Second Circuit case law.
Listen on InsideARM
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/