When Collecting Debt Isn't Collecting Debt
Passive debt buyers are not debt collectors in the state of Massachusetts.
When did this happen?
Earlier this month! The Massachusetts Supreme Judicial Court -- and, specifically, Superior Court Justice Janet Sanders, ruled in Dorrian v. LVNV Funding, LLC, that, since passive debt buyers aren't debt collectors, they do not need to be registered as debt collectors in the state of Massachusetts.
Why not?
This is an "as it says on the tin!" situation: passive debt buyers buy debts, but do not then collect them. Since they're just literally collecting the debt, like my grandmother collected salt and pepper shakers, and not collecting debt, the way a debt collectors does, it made no sense in Judge Sanders's eyes to require them to be licensed.
But they're not literally collecting the debt the way your grandmother collected salt and pepper shakers?
Well, no, duh. But it's a semantical loophole: passive debt collectors buy the debt, and then can either send it to an actual debt collector for collecting, or bundle it up with other debts and sell it again. It's a rich tapestry.
What's the fallout from this?
Very little for the debt industry (except possible decreases in insurance premiums for passive debt buyers); quite a bit for consumer attorneys, who won't be able to use the lack of clarity in the law to sue.
You can read the full case here: Dorrian v. LVNV Funding, LLC
State Law Grid Now Entirely Online
The new, online Compliance Professionals Forum State Law Grid is now available (for members only). This new version is updated in real-time. Always get the most up-to-date version of the grid, which allows users to track all state collection laws by state. Find it here: State Law Grid
The grid is easy to navigate and sort thanks to the hard work insideARM web developer (and my person friend / pet care expert) Jeffrey Hearn. You can also download Excel versions of it at any point. (But a tech reminder: once you download a version of the grid, you just have the grid as it existed in that moment.)
We've also added the recent chart regarding Power of Attorney to the grid, too.
You can help make the grid better. If you find an error, or if you're aware of an update that I may not be aware of, you can always email me: mbevel@insidearm.com.
The final note: this grid is a benefit of membership. Please do not share with non-members.
"Scam Likely" Notifications Even More Likelier Now
Soon, landline caller IDs will start showing "SPAM?" on the display.
Land--?
Lines. Yes.
Everyone by now should be aware that most mobile phone carriers offer consumers protection from alleged robocalls by helpfully displaying "SCAM LIKELY" on a cell phone's caller ID. This has caused some problems for legitimate users of ATDSes; because the data on scams is self-reported by consumers, legitimate businesses can be labeled as potential scammers, even when they're not, and this is taking a toll on phone contacts.
And now it's spread to landlines.
Now it's spread to landlines. "Spam Alerts is automatically available now at no additional charge to all landline customers with Caller ID, whether they’re on copper or fiber," insideARM's Stephanie Eidelman writes.
What's to be done?
Industry groups like the Consumer Relations Consortium (CRC) and its Innovation Council have been devoting considerable time to understanding the landscape and developments as they occur.
We're in an exciting, but not in a necessarily good way, period of technological advancement. Consumer solutions like this are rushed to market without necessarily a full damage analysis.
And why would they do a full damage analysis? Consumers like the power of blocking calls, which makes carriers look great. It'll take a little longer -- and some pro-industry lobbying -- to get the full message back to regulators and corporations that legitimate business is being caught in the cross-fire.
More information about more of Verizon’s anti-robocall tools is available at www.verizon.com/robocalls.
Credit Counselors Not Protected by FDCPA
Can a collection agency be sued for an FDCPA violation by talking to a credit counselor? No! (But keep reading, it's not a definitive "no.")
The deets
A consumer, working with a credit counselor, called a collection agency (I.C. Systems) to discuss the consumer's credit report. There were items on there that the consumer felt should not be. So, after the plaintiff verified his information with the collector, and gave I.C. Systems permission to talk to his credit counselor, the counselor then asked, "Can the plaintiff dispute this account over the phone with you right now."
THIS SOUNDS LIKE A TRAP!
I hear you -- but it isn't, at least in this case. I mean, consumers have been known to use credit reporting questions to trap newer collectors into UDAAP violations. In this case, the consumer's account had already been recalled. I.C. Systems explained this, said that it couldn't be disputed because it had been recalled, and said it would be removed from the plaintiff's credit report within 30-60 days.
So, how did the suit come about?
The consumer tried to sue, basing it on "false, deceptive, or misleading representations" during the call.
What was false?
Great question. It has to do with the question about the dispute. The plaintiff really wanted to dispute the item on his credit report. The collection agency said, "You can't, because a of all the account had already been recalled; and then also, too, b: the account had a zero balance."
But all this was said to the credit counselor on that call.
And that made a difference?
That made a difference. We can't be 100% sure -- and I am not an attorney -- that if the consumer had had this conversation by himself with the collection agency, if the suit could have continued. It's generally not a great practice for a collector to offer credit reporting advice of any kind, or to answer definitively any question about credit reporting.
It's also likely, though not a given, that if the consumer and his credit counselor were on the phone together, but it was the consumer who asked those credit reporting questions, if that would have affected the outcome.
However, in this case, the consumer brought on a third party, his credit counselor, who asked the question about the credit reporting -- and communications with a third party, especially in a call initiated by the consumer, are not covered by the FDCPA. So, no violation.
Katie Neill writes, "One thing many, if not all, of the alleged baiting calls have in common is that the calls are initiated by someone other than the debt collector. Many of these calls have the consumer on the line to authorize a third party representative to speak with the debt collector, and then the consumer goes silent while the conversation continues. Many of these calls include someone asking, on behalf of the consumer, whether the account can be disputed over the phone or if the dispute needs to be in writing. There is now a strongly worded defense against such tactics."
You can read the full case here: Sandoval v. I.C. Systems, 17-CV-3755, 2018 WL 1582218 (E.D.N.Y. Mar. 29, 2018)
