Impact to Credit and Collections The Strauss Decision: Impact to Credit and Collections

Speaker Bios Dale Golden Mike Frost Attorney, Golden Scaz Gagain, PLLC Dale is the managing member of Golden Scaz Gagain in Tampa, Florida, and has defended creditors, debt collectors, and debt buyers in more than 1,000 consumer cases in various state and federal courts over the past 20 years. In June, Dale received ACA International’s Judicial Advocacy Award. Mike Frost Chief Compliance, Sales Officer & General Counsel Mike joined CBE in 2004. Mike manages compliance policy and a team of professionals including legal, quality assurance, regulatory compliance, legislative affairs, litigation defense, corporate governance and enterprise risk. Mike is a trusted industry expert, serving in leadership roles and as a speaker for many associations. Chad

Risk Impact

FDCPA & TCPA Litigation Cost Trend 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TCPA Litigation 14 16 39 354 830 1,102 1,904 2,558 3,710 3,914 4,671 FDCPA Litigation 4,316 6,140 9,403 11,151 12,237 11,342 10,391 10,071 11,697 10,498 10,551 Actual # of Claims Projected # of Claims Cost of TCPA claims estimated at $7,000 per claim & cost of FDCPA estimated at $2,000 per claim Proprietary Information of CBE Companies, Inc.

Post-Strauss Risk Impact Since the Strauss ruling, CBE has experienced significant reduction in TCPA claims presented by plaintiff’s counsel (PC). TCPA claims have reduced 40% in comparison to the prior 6 month average. TCPA claims since the Strauss ruling have reduced by 54% in comparison to prior 5 month average. Confidential & Proprietary

Overview of MCA Dialing

Manual Clicker Application (MCA) 3 Hurdles to Compliance Approach Random/Sequential Number Generation “Future Capacity” Human Intervention Human “clicks” to generate the call, no “queue” is built to initiate calls throughout the day Predictive Algorithm Command Center manages pacing, agent availability and other key performance indicators manually and prior to human intervention, not post-human intervention Phone server does not have capacity to dial randomly or sequentially and would need complete rebuild to quality as an ATDS Mike Confidential & Proprietary

Clicker Process Overview 1 Scheduler runs during night processing and account workflow determines the numbers to call for the next day. 2 Authorized cell phone numbers are separated from land line numbers. CRM 3 Number is dialed/initiated by a human agent that clicks number to pass through the phone line. (no predictive algorithm; no capacity) 4 PBX connects call. MCA 6 CRM is updated with call disposition data. 5 Agents are connected to calls when the attempts are connected. User User User Confidential & Proprietary

Litigation Climate post-FCC order Higher claim volume Larger and more aggressive plaintiff’s bar Operate under the assumption that all call centers utilize automatic dialing equipment when calling consumers Plaintiffs are emboldened by the FCC’s expansive definition of ATDS High volume shops will threaten TCPA with no intent to litigate in an attempt to gain leverage in advancing other frivolous claims Shark effect We are confident our solution is compliant The only way to stem the tide was to take a stand and fight Dan Proprietary Information of CBE Companies, Inc.

Overview of Case Dale

Strauss v. CBE Group Facts of the case Non-debtor files suit alleging CBE violated TCPA/FDCPA by placing calls to cellphone from April 2014 through September 2014 According to CBE’s account notes, number was provided by creditor Verizon and initially was identified as landline CBE acknowledges first two calls were placed using Noble’s Predictive Dialer – Serves offer of judgment for $2,500 Dale Proprietary Information of CBE Companies, Inc.

Strauss v. CBE Group Evidence from discovery CBE’s corporate representative testifies all calls other than initial two were placed using CBE’s Manual Clicker Application (MCA) MCA calls initiated by “point and click” performed by CBE employee Noble and later, LiveVox provided “pass-through” connectivity to telephone network Dale Proprietary Information of CBE Companies, Inc.

Strauss v. CBE Group Plaintiff hires Hansen Jeffrey Hansen has issued expert opinions in other CBE TCPA cases Hansen admits that MCA is not an ATDS under TCPA Hansen admits that MCA connected through combined Livevox is not ATDS under TCPA Hansen conflates Noble Predictive Dialer and Noble pass-through and opines that MCA connected through Noble Dialer is ATDS under TCPA LiveVox is voluntarily dismissed from the case by Plaintiff (no judicial decision is therefore rendered in Strauss v. CBE Group that applies to LiveVox equipment) Dale Proprietary Information of CBE Companies, Inc.

Strauss v. CBE Group CBE wins summary judgment “There appears to be no disagreement that the MCA, by itself, lacks the capacity to predictively dial.” “CBE has presented substantial evidence that human intervention is essential at the point and time that the number is dialed using the MCA and that the Noble equipment used does not have the functionalities required to classify it as a predictive dialer.” Hansen’s “report merely assumes that CBE was using the same Noble Dialing Equipment to make all calls to plaintiff and switching that equipment between ‘predictive and manual mode’’’ Dale Proprietary Information of CBE Companies, Inc.

Q&A Mike

Thank You! Lindy