On deck: The first email validation FDCPA case we’ve seen and what our experts think about it. Plus, a successful “Bona Fide Error” defense in an FDCPA case and more on balance billing practices. 

Compliance Weekly

» Forward Compliance Weekly to a friend.

Compliance alert: find new, easily trackable vulnerabilities in your website. (For Compliance Professionals Forum members only – click here to learn about membership.)


A Validation Notice is Not a Scavenger Hunt


Can a collection agency send a validation notice via email? The answer, of course, is always "it depends." But here's an example of how not to do it.

The deets

Med-1 Solutions thought it had the right idea: using a software application called SendItCertified, it sent a validation notice to a consumer. Well, kinda.

What Med-1 Solutions sent was an email with a link. The language in the email stated, "Please find your message attached." But there was no attachment, just that link. The link takes the consumer -- provided she's clicked it, even though all of us have been trained to be wary of links in emails from people whom we don't know -- to a site where they have to click several more things before finally getting to the validation notice.

As Ontario Systems’ Rozanne Andersen stated: "If a client asked me if they could send a validation notice to a consumer by way of a US first class mail scavenger hunt that required the consumer to take seven to eight steps to see their 1692g(a) notice, I would say, 'don’t do it.'"

What can you do?

Email shouldn't be shut out completely as part of an agency's exploration into other communication channels. But maybe the validation notice isn't the place to deploy this strategy. That should, at least for the moment, still be sent via a stamped envelope to the consumer.

The case: Lavallee v. Med-1 Solutions, LLC (Case No. 1-15-cv-1922, U.S.D.C., Southern District of Indiana)


4 Takeaways from the Aforementioned FDCPA Decision on Emailed Validation Notices

insideARM reached out to several industry experts for their thoughts on Lavallee v. Med-1 Solutions, LLC and sending validation notices via email. Here’s what they had to say…

1. Trends gonna trend

It shouldn’t surprise anyone that we are seeing FDCPA cases now involving email in consumer communication, says TrueAccord Chief Compliance Officer Tim Collins. “It is way too early to know how the courts and regulatory agencies will eventually come out on email but when the dust settles let's hope it is on the side of consumer preference.” 

This case “opens the door to further litigation against agencies that are trying to reach consumers using alternative channels that consumers have expressed as their preferences, knowing that they hate to be called and don’t open mail,” adds CSS Companies General Counsel Michael Kraft.

2. Tech isn’t a compliance workaround

“The case is simply a reminder that the use of technology does not change the compliance landscape,” says Barron & Newburger, P.C. Attorney Manny Newburger. “For tech-based collection companies with strong compliance programs this case should not present challenges.”

 “[I]f anything, the Court found that the debt collector's security precautions were too robust and perhaps unnecessary,” adds Moss & Barnett Attorney at Law John Rossman. “Common sense and consumer expectations dictate that if a consumer provides an email address to a creditor, that alone should be sufficient for a debt collector to email a validation notice to the consumer, with the subject line of the email referencing the creditor and information required by 1692g contained in the body of the email."

3. Guidance, por favor

“This case shows the need for some limited rules of engagement for agencies who are seeking to use very common forms of communication that consumers both desire and prefer,” says Kelly Knepper-Stephens, General Council & CCO, Stoneleigh Recovery Associates, LLC.

“[A]bsent guidance, creditors and their third-party agents are left in the dark on how to develop compliant communication strategies that will satisfy their consumers' preferences without running afoul of the law.” adds Ballard Spahr Attorney at Law Stefanie Jackman.

4. Don’t give up on email

“The worse thing about this decision is the negative effect it will have on the industry’s appetite to use email to communicate with consumers,” says Ontario Systems’ Rozanne Andersen. “The question is not can we email consumers. The question is, how do we do so in compliance with E -sign and the Fair Debt Collection Practices Act?”

 


It's All Been a Gorgeous Mistake

In a recent FDCPA lawsuit, a federal judge in Utah ruled that a collector’s actions involving attempts to collect a student loan fell within the “Bona Fide Error” defense in the FDCPA.

The deets

A consumer with student loan debt entered into a rehabilitation agreement with Van Ru, a collection agency, in the amount of $5 a month. The consumer later sued Van Ru stating, among other things, that he had been threatened with garnishment and incarceration. Oh, and, on top of all this, the collector falsely identified the firm on behalf of whom they were calling. The collector said they were ED, not that they were Van Ru calling on behalf of ED.

The saving graces

The claims of garnishment and incarceration were quickly tossed out because the calls were recorded and there was no evidence that any of that happened. As to the misidentification: that's the bona fide error. Yes, the collector made a mistake. But it wasn't malicious, and it was against a deeply documented set of policies and procedures.

What can you do?

We're examining two sides of the same coin here:

(1) Having explicit and workable policies and procedures -- policies and procedures you can demonstrate are active and in use by the whole company -- can be an incredible boost when you're being sued by a consumer attorney for, say, making an FDCPA-related error.

(2) On the other hand, having policies and procedures in place that are just sitting on a neglected shared-drive will get you in Dutch with the court.

You want a bona fide defense – a "good faith mistake" – in cases like this.

Review the decision to see how, exactly, Van Ru was able to demonstrate proof of actionable policies and procedures. In this case, documenting exactly how you're following the rules paid off.

The case: Berry v. Van Ru Credit, (Case No. 2:15-cv-150, U.S.D.C, District of Utah)

Title reference (seizure warning): here


Mo. Balance Billing Case Draws Political Fire

The billing practices of Missouri emergency rooms (ERs) run by EmCare (Envision Healthcare and its subsidiary EmCare Holdings, Inc.) are under the microscope, writes insideARM’s Berta Bustamante.

“Following a rash of consumer complaints and public reports supporting allegations that they gouged consumers and pressured doctors to order expensive, unneeded tests, ranking Senator Claire McCaskill has sent a strongly-worded letter to Christopher Holden, President and CEO of Envision, looking for answers.”

Read up on the story and, for background, check out our recent article on the state of state-by-state balance billing law.