What Collectors Really Need to Know About the CFPB’s Proposed Rules

On July 28, 2016, the CFPB released an outline of its proposed rules regarding debt collection.  The outline is the next step in the first ever rulemaking in the nearly 40 year history of the FDCPA.  Attorneys John Rossman and Mike Poncin examine some of the highlights of the CFPB rulemaking outline in the latest episode of the Debt Collection Drill podcast. 

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FDCPA Victory in Class Action Letter Case:What It Means for the Industry

Debt collection letters continue provide an expansive target for FDCPA and related lawsuits due to the panoply of Federal and State disclosure requirements for such letters. Further, the Court cases interpreting these requirements are in constant flux and new decisions sometimes contradict previous rulings. In a rare win for the collection industry, a recent case out of the Eastern District of New York -In Re Krieger- rejected a consumer’s FDCPA claims brought in a putative class action and premised on language included in a collection letter.

In the latest episode of the Debt Collection Drill podcast, attorneys John Rossman and Mike Poncin discuss the Krieger decision and provide specific collection letter recommendations for debt collectors, emphasizing the need for collection letters to be reviewed by an independent attorney on an annual basis.

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Appellate Courts Hold Typical Collection Letters Violate FDCPA

Debt collectors and consumer advocates agree that collection letters do little (if anything) to truly inform consumers about their indebtedness. Very few consumers actually read collection letters. Further, the verbiage that debt collectors are required by law to include in each collection letter is so voluminous, confusing and often contradictory, any truly meaningful information is often obscured by the required verbiage.

The requirements for what debt collectors are required to provide in “snail mail” notices to consumers arises from a patchwork of Federal, State and local laws — as well as case law that often varies by jurisdiction — and many of the requirements are antiquated, dating back to the 1970s. Unfortunately, these dated and contradictory collection letter requirements continue to result in lawsuits and adverse Court decisions against debt collectors.

In the most recent episode of the Debt Collection Drill audio blog, attorneys John Rossman and Mike Poncin examine two recent cases decided by the Seventh Circuit Court of Appeals and the Second Circuit Court of Appeal, both of which found that typical collection letters violated the FDCPA. Below are links to those cases:

Janetos V Fulton Friedman & Gullace LLP

Avila V. Riexinger & Assoc LLP

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Get Sued If You Do . . . Get Sued If You Don’t: The Debt Collectors’ Conundrum

The interpretation of certain provisions of the FDCPA by consumer attorneys, Courts and regulators contain a number of “Catch-22” scenarios where a debt collector is potentially subject to lawsuits and regulatory actions regardless of what the collector does.

The latest iteration of this conundrum for debt collectors involves the disclosure of the tax consequences to a consumer for settling a collection account for less than the full balance.  Debt collectors are required by a number of financial institutions to include these so-called “1099C” disclosures in debt collection communications.  Unfortunately, the inclusion of these disclosures regarding tax consequences results in lawsuits against debt collectors.  Perhaps most frustrating for debt collectors is that such disclosures are truly intended to assist the consumer, yet are misconstrued as efforts to deceive or confuse.

In this episode of the Debt Collection Drill audio blog, Moss & Barnett attorneys John Rossman and Mike Poncin examine the case law regarding “1099C” tax consequence disclosures by debt collectors and provide practical advice for navigating these difficult issues with creditor clients while complying with the law.

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Debt Collectors Flooded with Mass-Produced Requests for Validation

Debt collectors routinely receive requests for validation from consumers. The FDCPA provides specific guidelines and requirements for how consumers may request validation and the method in which a debt collector must respond. Recently, a small number of entities began issuing thousands of form requests for validation to collection agencies on behalf of consumers in an apparent attempt to force debt collectors to close accounts rather than provide validation. Questions have arisen as to how debt collectors should respond to the massive volume of form requests for validation and whether these form requests raise issues of consumer protection that should be reviewed by regulators.

In this episode of the Debt Collection Drill podcast, attorneys John Rossman and Mike Poncin discuss the recent challenges with volume form requests for validation and discuss strategies for responding in accordance with the FDCPA, along with the nuances of New York and Texas law that may affect how agencies respond.

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