HOT TOPICS: Date of Delinquency, the Electronic Funds Transfer Act and Appendix E of the Fair Credit Reporting Act JOHN H. BEDARD, JR. BEDARD LAW GROUP, P.C. jbedard@bedardlawgroup.com 678-253-1871 Bedardlawgroup.com   DENNIS J. BARTON III THE BARTON LAW GROUP,LLC dbarton@bartonlawllc.com 636-778-9520 Bartonlawllc.com Dennis J. Barton III Managing Attorney The Barton Law Group, LLC dbarton@bartonlawllc.com 314-306-4417   JOHN H. BEDARD, JR. BEDARD LAW GROUP, P.C. jbedard@bedardlawgroup.com 678-253-1871 Bedardlawgroup.com

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Electronic Fund Transfer Act (and Regulation E) AGENDA Date of Delinquency Electronic Fund Transfer Act (and Regulation E) Appendix E of the FCRA

Date of Delinquency A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action. ©2019 ACA International

Date of Delinquency DoD Performing Delinquency 1 D1 Cured Delinquency 2 Charge Off Placed For Collection Furnished DoD ©2019 ACA International . . .month and year of the commencement of the delinquency on the account that immediately preceded the action.

Date of Delinquency DoD Performing Delinquency 1 D1 Cured Delinquency 2 Partial Payment Placed for Collection Charged Off Furnished DoD ©2019 ACA International . . .month and year of the commencement of the delinquency on the account that immediately preceded the action.

Date of Delinquency: Rules of Construction Provided the consumer does not dispute, a furnisher complies with DoD obligations if it does any one of the following: Report the same DoD as the creditor reported If the creditor did not report, report the date obtained by following the furnisher’s reasonable procedures for obtaining the DoD from the creditor or other reliable source, or If (1) and (2) are not successful, report the date derived by following the furnisher’s reasonable procedures to ensure the date reported precedes the date on which the account is placed for collection, charged to profit or loss, or subjected to similar action ©2019 ACA International

Date of Delinquency Not proper to jump straight to 3, without first trying 1 and 2 No private right of action under FCRA False representation under FDCPA? See, Daley v. A & S Collection Assocs., Inc., 717 F. Supp. 2d 1150 (D. Or. 2010) ©2019 ACA International

EFTA

Electronic Funds Transfer Act Four sources for interpretation: EFTA - 15 USC 1693 et seq. https://www.fdic.gov/regulations/laws/rules/6500-1350.html CFPB Rules (Reg E) - 12 CFR 1005.1 et seq. http://www.consumerfinance.gov/eregulations/1005 Official Staff Interpretations, Appendix C to Reg E Case Law

Electronic Funds Transfer Act Electronic transfer of funds to/from a consumer account;* Initiated through phone, computer, or other electronic device; To order, instruct, or authorize a financial institution to debit or credit an account. Direct withdrawals of funds; Transfers initiated by telephone; and Any debit card transaction.** *Checking, savings, or other consumer asset account established primarily for personal, family, or household purposes. **Added by Regulation E.

Electronic Funds Transfer Act Does not include: checks, drafts, paper instruments even if made at an electronic terminal check guarantee or authorization Credit Cards – they are not “asset accounts” under the Act (no money transferred from one account to another). certain transfers between financial institutions or businesses securities and commodities transfers certain automatic transfers by account-holding institution certain telephone initiated transfers between consumers and financial institutions

Electronic Funds Transfer Act “Preauthorized Electronic Funds Transfer” = [a]n electronic fund transfer authorized in advance to recur at substantially regular intervals. Electronic fund transfer using information from a check: Check, draft, or similar paper instrument is used as a source of information to initiate a one-time electronic fund transfer from a consumer’s account. The consumer must authorize the transfer. Authorization is obtained when consumer receives notice 10 days in advance of transfer. Consumer must give written authorization and receive a copy (includes digital signature and security codes).

ONE YEAR STATUTE OF LIMITATIONS Electronic Funds Transfer Act Civil Liability - 15 USC 1693m(a) Actual damages Statutory damages (A) Individual action: $ 100 nor greater than $ 1,000 (B) Case action: no minimum for class rep and lesser of $500,000 or 1% net worth Court costs and reasonable attorney’s fees ONE YEAR STATUTE OF LIMITATIONS

Electronic Funds Transfer Act Three Defenses Bona Fide Error Good Faith Reliance “I Made It Right”

Electronic Funds Transfer Act Bona Fide Error - 15 USC 1693m(c) No liability if defendant shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures that are reasonably adapted to avoid any such error.

Electronic Funds Transfer Act Good Faith Reliance - 15 USC 1693m(d) No civil liability under section 1693m if: (1) Act/omission in good faith and in conformity with the CFPB’s rules, regulations, or interpretations, or (2) any failure to make disclosure in proper form if a financial institution utilized an appropriate model clause issued by the Bureau or the Federal Reserve Board (even if the rule, regulation, or interpretation changed after the act or omission).

Electronic Funds Transfer Act “I Made It Right” Defense 15 USC 1693m(e) No Liability if: Notify consumer of a EFTA compliance failure; Prior to the filing of a lawsuit; Comply with EFTA’s requirements; Makes adjustment to the consumer's account; and Pays actual damages.

Bad Faith/Harassment - 15 USC 1693m(f) On a finding by the court that an unsuccessful action under this section was brought in bad faith or for purposes of harassment, the court shall award to the defendant attorney's fees reasonable in relation to the work expended and costs.

APPENDIX E What?

Dodd Frank

Policies and Procedures – regarding accuracy and integrity Guidelines – must consider and incorporate guidelines in Appendix E Reviewing and Updating – must review/update to ensure effectiveness

Section I: Nature, Scope, and Objectives of Policies and Procedures Section II: Objectives [of Policies and Procedures] Section III: Specific Components of Policies and Procedures

Section I: Nature, Scope, and Objectives of Policies and Procedures P&P’s should be appropriate to the nature, size, complexity, and scope of the furnisher. Should consider: Type of business Nature and frequency of furnishing Technology used to furnish P&P’s should be reasonably designed to ensure data accuracy: Identity of proper consumer Reflects terms of and liability for accounts Reflects consumer performance on accounts

Section I: Nature, Scope, and Objectives of Policies and Procedures P&P’s should be designed to ensure data integrity: Furnished information is substantiated by furnishers’ records (see consent orders on “substantiation”) Furnished in manner likely to minimize inaccuracy, including: Appropriate identifying information about the consumer Standardized and understandable form and time period Conduct reasonable investigations and take actions in response Properly updating accounts

Section II: Establishing and Implementing Policies and Procedures Identify practices or activities that could compromise accuracy or integrity, such as: Reviewing existing furnishing practices, including technology and reporting frequency Reviewing historical records relating to accuracy, integrity, disputes Reviewing data/feedback from bureaus/eoscar, consumers, and furnisher’s staff Considering impact of practices on consumers

Section II: Establishing and Implementing Policies and Procedures Evaluate effectiveness of existing policies and procedures Evaluate effectiveness of specific methods used to provide information to the CRAs

Section III: Specific Components Of Policies and Procedures (P&P’s should address the following. Not comprehensive List – 13 items total) Record retention for “reasonable period of time” to substantiate disputed information Internal Controls regarding accuracy and integrity, *such as* Standard procedures for verifying random samples of furnished information Training staff to implement P&Ps Service provider oversight whose activities may affect accuracy or integrity

Section III: Specific Components Of Policies and Procedures Prevention of re-aging, duplicative reporting, or similar problems affecting accuracy and integrity Conducting reasonable investigations of disputes Furnishing sufficient information to enable CRAs to identify the proper consumer Periodic evaluation of furnisher’s own practices, including dispute investigations, corrections of inaccurate information, other facts affecting accuracy and integrity

HOT TOPICS: Date of Delinquency, the Electronic Funds Transfer Act and Appendix E of the Fair Credit Reporting Act JOHN H. BEDARD, JR. BEDARD LAW GROUP, P.C. jbedard@bedardlawgroup.com 678-253-1871 Bedardlawgroup.com   DENNIS J. BARTON III THE BARTON LAW GROUP,LLC dbarton@bartonlawllc.com 636-778-9520 Bartonlawllc.com Dennis J. Barton III Managing Attorney The Barton Law Group, LLC dbarton@bartonlawllc.com 314-306-4417   JOHN H. BEDARD, JR. BEDARD LAW GROUP, P.C. jbedard@bedardlawgroup.com 678-253-1871 Bedardlawgroup.com