On deck: two fresh FDCPA cases, collateral damage from the war on robocalls, state law updates and call opt-outs.

Compliance Weekly

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Thirty days or bust?

On August 30th, the Court of Appeals for the Third Circuit issued an opinion on an FDCPA suit, determining that a second collection letter sent to a consumer within thirty days of an initial letter “overshadowed and contradicted” the validation notice in the initial letter. 

The deets

The suit zeros in on two letters sent by the defendant, Certified Credit & Collection Bureau, to the plaintiff, Nava Laniado. No one disputes that the first letter contained the requisite 30-day validation notice. The plaintiff argues that the second letter contained language that overshadowed and contradicted the notice.

The court agreed, applying the least sophisticated debtor standard and arguing that the second letter does indeed overshadow and contradict the Validation Notice in the first.

Per the court, “The letter currently before us instructed Laniado to call either a toll-free telephone number or a 24-hour automated customer service number should there be any discrepancy. The least sophisticated debtor could reasonably believe there was a discrepancy if he or she ‘actually disputed the debt and its validity.’ ‘If so, this “please call” language basically instructed such a debtor to call . . . to dispute the debt itself. While he or she certainly could (and, in actuality, must) raise a debt dispute in writing, it is well established that a telephone call is not a legally effective alternative for disputing the debt.”

The case: Laniado v. Certified Credit & Collection Bureau, (Case No. 16-3430, U.S. Court of Appeals, Third District)

Should you make it easy for consumers to opt-out of calls?

One agency – a Compliance Professionals Forum member – now lets consumers opt out of ALL calls via a simple form on their website.

“We had probably a year of negotiation internally, as most Ops Executives are not willing to get rid of a phone number,” says the agency COO. “We decided to give the option as we felt none of these borrowers would pay because of the phone call. They might still pay due to other circumstances.”

Forum members: read the full interview, find out what the form looks like and how it’s working for the agency, right here

Mission Creeps

insideARM’s Tim Bauer takes a deep dive into the FCC’s and FTC’s efforts to fight the scourge of robocalls and predicts a host of unintended consequences for the call center and ARM industries.

Two reasons to be concerned

1. The FTC’s definition is much broader than the FCC’s and it’s clear that the regulator’s net is going to catch a much wider range of call types.

The FTC is uploading data on “unwanted calls reported by consumers,” a category of calls much broader than “robocalls,” Bauer notes, adding that “A quick review of any one of the daily lists will show that not all of these ‘unwanted calls’ are the same type of ‘robocalls’ under the FCC definition.  In fact, one of the ‘subject’ categories for these calls is ‘Debt Collection.’”

2. The FCC’s “Robocall Strike Force Plan” focuses on ways the carrier network and consumers can use to block calls. Specifically, it emphasizes how consumers can mark unwanted calls through network blocking and consumer call blocking tools. That gives consumers an awful lot of discretion over when and why apps and networks block calls.

Impacts already

Members of insideARM’s Compliance Professionals Forum are telling us that calls from legitimate businesses are being incorrectly blocked or labeled as “Possible Spam.” Right party connects are being negatively impacted. Who wants to answer a call from anyone that is labeled as “Possible Spam”? The Forum and insideARM have received anecdotal reports of right party connects down by 15-30%. And keep in mind, call blocking technology at the carrier level is not yet at 100% utilization. 

Right to Cure, Cali-style

A law firm attempting to collect a credit card debt misstated the principal and interest rate in communicating with a consumer – a mistake that resulted in FDCPA and California’s Rosenthal Fair Debt Collection Practices Act (RFDCPA) charges against it. Recently, the Ninth Circuit ruled that the misstatements are material. However, the court also granted summary judgment to the Defendant under the RFDCPA, pointing to the law’s 15-day “right to cure” provision.

The deets

Collecting a debt on behalf of Los Angeles County Credit Union, Anaya Law Group’s communication inadvertently added a spurious $3,000 to the principal and misstated the interest rate. The mistake itself amounted to a few errant key strokes. Nevertheless, the Ninth Circuit sez: oh yes, this is material.

A misstatement of principal and interest is material under the FDCPA, the court ruled, because such a misstatement “could have disadvantaged the least sophisticated debtor in responding to the complaint.”

BUT, on the RFDCPA claim, the court allowed that Anaya is entitled to a separate defense and affirmed a district court ruling of summary judgment to the defendants. Rosenthal’s “right to cure” provision shields collectors of civil liability so long as it fixes violations and notifies the debtor within 15 days of discovering said violation.

The case: Afewerki v. Anaya Law Group, (Case No. 15-56510) U.S. Court of Appeals, Ninth Circuit)

Recent state law round-up

New DC Licensing Rule: If you're collecting student loan debt in the District of Columbia, your agency will now need to be licensed.

New WV Consumer Contact Law: "Any communication with a consumer made more than three business days after the debt collector receives written notice from the consumer or his or her attorney that the consumer is represented by an attorney specifically with regard to the subject debt" is now a violation of WV SB 563

New Colorado Law: “Clarifying that the statute of limitations for private actions and actions by the administrator of the Act is 4 years”

Coming to Oregon in January 2018: Debt buyers (even passive debt buyers) operating in Oregon will need an Oregon collection agency license. What’s more…

  • Collectors will need to provide documents to consumers proving both the existence, and assignment, of the debt, with an itemized account balance, within 30 days of a consumer request;
  • If you're filing suit on purchased debt in Oregon, you will be required to include documentation to maintain cause of action;
  • You must give 30 days’ notice before changing the name of your company or its executive structure; and
  • Oregon collection agencies must maintain E&O insurance

Compliance Professionals Forum members: the Forum State Law Grid has just been updated. Get all the information you need on ALL industry-relevant state laws right here.

ARM-U is coming soon

The Fall semester of ARM-U, the virtual compliance conference / webinar series from insideARM and the Compliance Professionals Forum, runs November 14-15. We're getting the agenda together right now. In the meantime, save your seat now. Registration is free.