Presentation on theme: "Compliance Review and State Law Update Dena Glaeser, Navient Michael Del Valle, Sessions Fishman Nathan & Israel."— Presentation transcript:
1Compliance Review and State Law Update Dena Glaeser, Navient Michael Del Valle, Sessions Fishman Nathan & Israel
2DisclaimerAny content included in this presentation or discussed during this session is presented for informational purposes only. The contents are not intended to serve as legal or other advice. We do not represent or warrant that the content is accurate, complete or current for any specific or particular purpose or application.This information is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.By using the contents in any way, whether or not authorized, the user assumes all risk and hereby releases all parties from any liability associated with the content.
5Consumer Complaints on the Rise» FTC and CFPB annual complaint volume has steadily increased, rising 80% from 91,000 in 2012 to 163,700 in 2013.Over 170,000 CFPB complaints have already been received as of August 2014.CFPB Consumer Response: A Snapshot of Complaints Received
6Consumer Complaints on the Rise» CFPB Consumer Response: A Snapshot of Complaints Received
7Litigation Hotspots»Sessions identifies jurisdictional trends and tailors the practice to meet the needs of the debt collection industry, giving the firm a national reputation as the largest practice area dedicated to protecting collection firms and debt buyers.
9The FDCPA» Call VolumeThe FDCPA prohibits “causing a telephone to ring … repeatedly … with intent to annoy, abuse, or harass[.]” 15 U.S.C. § 1692d(5).There is no bright line rule on how many calls is reasonable.Courts consider all circumstances including:Call volumePattern of callsNotice of wrong number or cease & desist request“Debt collectors do not necessarily engage in harassment by placing one or two unanswered calls a day in an unsuccessful effort to reach the debtor, if this effort is unaccompanied by any oppressive conduct (threatening messages).”Pugliese v. Prof'l Recovery Serv., Inc., 2010 WL (E.D. Mich. June 29, 2010) (quoting Saltzman v. I.C. Sys., Inc., , 2009 WL (E.D. Mich. Sept. 30, 2009) (quoting Millsap v. CCB Credit Services, Inc., No. 07–11915, slip op. at 8 (E.D. Mich. Sept. 30, 2008); see also Martin v. Select Portfolio Serving Holding Corp., 2008 WL , (S.D. Ohio, March 3, 2008).
10PASSED MUSTER TO DEFEAT MOTION TO DISMISS OR SUMMARY JUDGMENT The FDCPA» Call VolumePASSED MUSTER TO DEFEAT MOTION TO DISMISS OR SUMMARY JUDGMENT11 times over a period of 19 days, 2 calls on the same dayValentine v. Brock & Scott, PLLC, 2010 WL (D.S.C. Apr. 26, 2010)17 times in 30 daysBrown v. Hosto & Buchan, PLLC, 748 F. Supp. 2d 847, 852 (W.D. Tenn. 2010)9 calls in 30 daysCarr v. NCO Fin. Sys., Inc., 2011 WL (E.D. Pa. Dec. 20, 2011)101 calls in 59 daysBrandt v. I.C. Sys., Inc., 2010 WL (M.D. Fla. Feb. 19, 2010)200 calls in 19 months , many after oral C&D requestJoseph v. J.J. Mac Intyre Companies, LLC., 238 F.Supp.2d 1158, 1168 (N.D.Cal.2002)26 calls in 60 daysAkalwadi v. Risk Mgmt. Alternatives, Inc., 336 F.Supp.2d 492 (D.Md.2004)4 calls per day for 6 monthsPrewitt v. Wolpoff & Abramson, LLP, 2007 WL (W.D.N.Y. Mar. 19, 2007)54 calls to work in 6 months(17 in 1 month, 6 in 1 day)Sanchez v. Client Services, Inc., 520 F.Supp.2d 1149, 1160–61 (N.D.Cal.2007)67 calls in 6 months, manyafter written C&D requestKerwin v. Remittance Assistance Corp., 559 F. Supp. 2d 1117, 1125 (D. Nev. 2008)350 calls in 8 monthsPugliese v. Prof'l Recovery Serv., Inc., 2010 WL (E.D. Mich. June 29, 2010)We recommend: no more than 2 calls per day and always more than 2 hours apart.
12The FCRA» General Duties under FCRA: Correct and Update Tradeline InformationNotice of DisputeNotice of Closed AccountsNotice of Delinquent AccountsProvide Notice of Identity Theft InformationInvestigation of DisputesNotice of Results to Consumers15 U.S.C. § 1681s-2
13The FCRA» The Special “You Are In Trouble” Texas Rule The Texas Debt Collection Act (TDCA) requires a collector to respond to a consumer’s dispute in writing within 30 days from receipt of the dispute:Denying the inaccuracyAdmitting the inaccuracy; orStating that the debt collector has not had sufficient time to complete an investigation of the inaccuracy.
15The TCPA» What is an ATDS? An ATDS is “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1)Courts have interpreted that to include any system that has the present capacity to store or generate numbers, even if you don’t actually use those functions.Current TCPA- while no guarantees, some compliant technology options:LiveVox HCILiveVox Manual BlendTCN Manual Dial OnlyGlobal Connect Manual DialingBetterwrx Manual DialingRadius Cell Manager
16The TCPA» Scrub for Cell Phones Scrub for cell phones before you dial. The following are free search providers:Searchbug.comWhitepages.comCellrevealer.comPhonelookup.comVOIPs should be treated as cell phones to avoid potential liabilityRecent case law suggests VOIPs may be treated as cell phones under the TCPASee Lynn v. Monarch Recovery Mgmt., Inc., 953 F. Supp. 2d 612, 627 (D. Md. 2013), pending on appeal in the 3d Cir. Court of Appeals
17The TCPA» “Soppetize” the Number Autodialing old cell numbers is risky.Soppet – “called party” is the subscriber of the cell phoneSee Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 640 (7th Cir. 2012)Osorio – “called party” is the actual recipient of the calls, not the intended recipient.See Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014)Breslow – consent must come from subscriber of the cell number at the time of the callWe recommend: to minimize liability, manually dial until you confirm the debtor is still the current subscriber
18State Laws: Convenience Fees» While the FDCPA presents a separate risk, whether a convenience fee for processing payment by credit card is “permitted by law” depends on the state:ProhibitConvenience FeesMay Prohibit Convenience FeesDo Not Expressly ProhibitCaliforniaColoradoConnecticutFloridaIdahoIllinoisIndianaMarylandMassachusettsMinnesotaMississippiNevada (unless give special notice)New YorkNorth CarolinaOhioOklahomaPennsylvaniaSouth CarolinaTennesseeWashingtonWisconsinWyomingKansasMaineTexasUtahAlabamaAlaskaArizonaArkansasDelawareGeorgiaHawaiiIowaKentuckyLouisianaMichiganMissouriMontanaNebraskaNew HampshireNew JerseyNew MexicoNorth DakotaOregonRhode IslandSouth DakotaWest Virginia
19State Laws: Convenience Fees» March 26, 2013 – a debt buyer and debt collection law firm settled for $799,958 for convenience fees charged to pay by credit card, debit card, or check by phone. See FTC v. Security Credit Services, LLC, and Jacob Law Group, PLLC, 113-cv CC (N.D. Ga. Mar. 26, 2013).April 11, 2014 – receivables company ordered to pay a $21,000 civil penalty for collecting convenience fees to pay by credit card or check by phone.Pending: Court denied debt collector’s motion to dismiss an FDCPA case, holding that its $5 surcharge for payments via credit card may have violated the law. See Quinteros v. MBI Associates, Inc., 2014 WL (E.D.N.Y. Feb. 28, 2014)
20State Laws: Call Recording » State laws varyMust have nationwide program for nationwide complianceWe routinely survey the 50 states for statutory changes and litigation trends
21State Laws: Call Recording» Federal law requires that at least one party taking part in the call must be notified of the recording See 18 U.S.C. § 2511(2)(d)State laws vary, but generally:This means that in some states, it is illegal for the consumer to record the collector without consent.We recommend: debt collectors should always announce that the call is being recorded or monitored.all parties must consent to the recording or monitoringonly one party must consent to the recording or monitoringCaliforniaConnecticutFloridaHawaiiIllinoisMarylandMassachusettsMontanaNevadaNew HampshirePennsylvaniaPuerto RicoWashingtonAll other states
22State Regulations – New York New York’s Department of Financial Services regulations published December 3, 2014.New debt collector requirements relating to: additional disclosures to consumers following initial communications, new validation (substantiation) requirements, statute of limitation disclosure and procedure requirements, record keeping requirements, settlement procedures and procedures.Most requirements effective March 3, 2015.Section 1.2(b) (charge off debt initial disclosures) and section 1.4 (substantiation of charged off debt) effective August 30, 2015.
23New York – Concerns Types of Debt Covered Disclosures Applicable to All DebtDisclosures Applicable to Charged Off DebtTime Barred Debt Disclosure“Substantiation”Record RetentionPayment and Settlement Agreement RequirementsQuarterly AccountingSatisfaction of DebtCommunicationsSteep Penalties under NY Financial Services Law section $5,000 per offense.
24Recent NYS DFS Guidance The Regulations can be found at:The Department has published interpretations at