New Federal Court of Appeals Rulings Favor Debt Collectors

Debt collectors were given clarity regarding two thorny FDCPA issues recently by decisions issued from the Seventh Circuit Court of Appeals.  In the case of Portalatin v. Blatt, the Court held that a consumer was entitled to a single recovery of an FDCPA statutory penalty rather than multiple recoveries for the same alleged violation from each Defendant.  This issue of Plaintiffs seeking to “stack” recoveries for the same alleged violations from multiple Defendant is now finally resolved in favor of the debt industry.  The Seventh Circuit also held in Dunbar v. Kohn that that sentence “This settlement may have tax consequences.” did not violate the FDCPA, thus joining the numerous other Court that held this language complies with the law.

In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin discuss the Portalatin and Dunbar decisions in addition to strategies for debt collectors to avoid FDCPA on debt collection communications regarding interest and out-of-statute disclosures.  Links to the Seventh Circuit Court of Appeals rulings in Portalatin and Dunbar can be found below.

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2018/D08-13/C:16-1578:J:Manion:aut:T:fnOp:N:2201521:S:0

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2018/D07-19/C:17-2134:J:Sykes:aut:T:fnOp:N:2189247:S:0

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New Consumer Strategy for Baiting FDCPA Violations And Use of Text Messages in Debt Collection

Consumers using scripts to bait debt collectors into FDCPA violations is certainly nothing new.  InsideARM has been publishing articles about this issue for years:
https://www.insidearm.com/news/00006606-five-signs-that-a-debtor-is-trying-to-ent/

While the practice of consumers baiting collectors into FDCPA violations is well-established, the specific techniques and scripts used continue to change and evolve.  A new script and technique for baiting collectors into FDCPA violations is sweeping across the country about which all debt collectors should be aware.

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 this latest call baiting strategy and provide specific steps debt collectors can take to avoid an FDCPA violation when faced with a consumer using this script.  Attorneys Rossman and Poncin also discuss the “new frontier” of debt collectors using text messages and how to potentially overcome the regulatory and legal hurdles with use of this technology.

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Verbal Authorization for Recurring Payments – Ask Yourself One Question: “Do I Feel Lucky?”

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:

https://www.insidearm.com/news/00003889-legal-headaches-of-check-by-phone-payment/

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.

http://files.consumerfinance.gov/f/201511_cfpb_compliance-bulletin-2015-06-requirements-for-consumer-authorizations-for-preauthorized-electronic-fund-transfers.pdf

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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New Collection Letter Lawsuits in California and New York: What Your Agency Needs to Know Now.

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.

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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/