In the News 06/30/2015

Beau Runningen, owner and founder of the new debt collection platform Settle4Less, has been developing his site for many years.

An online platform that targets consumers with delinquent debt, Settle4Less recruits creditors, service providers and collections agencies to register in its database and utilize its signature “debt capture method.”

According to Runningen, the debt capture method creates a safe way for consumers to take charge of their debt by offering them the ability to pay what they can without contacting or negotiating with a collector. Consumers can accept a one-time “take it or leave it” amount and pay it off online. Debts covered on the site include credit card, loan, insurance, medical and utility bills. Runningen believes that his method will revolutionize the debt collection industry.

Settle4Less practices are not prohibited under the FDCPA, but it remains unseen how this method will affect the collections industry.

For more information, visit http://www.pr.com/press-release/625272.

In the News 06/23/2015

In the most recent ACA International Convention, seasoned attorneys presented on their experience defending against FDCPA claims involving allegations of emotional distress and interpreting “actual damages.”

The convention, which took place in Boston, promoted a legal education session called Shifting Sands: Court Interpretation of “Actual Damages” in an effort to engage active attorneys and experts on legal issues in a panel discussion on an increasingly common case faced by the credit and collection industry. Courts across the country have handed down disparate rulings regarding the emotional distress theory, and some jurisdictions have made is easier than others for plaintiffs to assert these claims.

For more information, visit http://www.acainternational.org/news-spotlight-on-legal-education-session-court-interpretations-of-actual-damages-36188.aspx.

In the News 06/16/2015

Unwanted calls and texts are the number one consumer complaint to the Federal Communication Commission (FCC). In an effort to address these complaints, FCC Chairman Tom Wheeler has created a proposal to shield consumers from unwanted automated calls, spamming text messages and telemarketing calls. If the proposal is adopted, it will close loopholes and strengthen the guidelines set forth in the Telephone Consumer Protection Act (TCPA).

The proposal is considered the most significant FCC consumer protection action since the establishment of the Do-Not-Call Registry by the FTC in 2003. It will be voted on at the Commission’s Open Meeting on June 18. If passed, this ruling will have a significant impact on the financial services industry, according to an article by attorney Maurice Wutscher. Businesses that call customers’ cell phones using an automated dialing system will need prior consent from the consumer.

It remains unseen how debt collection calls will be affected by the TCPA ruling.

For more information, you can view Chairman Wheeler’s Fact Sheet or visit http://www.lexology.com/library/detail.aspx?g=6eb753a3-10ea-4d84-bdab-99f5fc899d3a.

In the News 06/02/2015

In a 9-0 decision on Monday, the United States Supreme Court (SCOTUS) ruled that underwater homeowners, or homeowners who owe more on their mortgage than their house is worth, cannot get rid of their second mortgage by filing for bankruptcy. All nine justices agreed that filing for Chapter 7 bankruptcy protection does not allow for canceling a second mortgage.

The original case involved two Florida homeowners who argued that a second mortgage is paid after the first and is essentially worthless after filing bankruptcy. However, SCOTUS sided with lenders who fought to keep the second mortgage liens, such as home-equity loans, citing the constant shift in the property market in their decision. The justices agreed that when the value of real estate changes, the second mortgage could be paid off in full.

For more information, visit http://www.wsj.com/articles/supreme-court-underwater-homeowners-cant-void-second-mortgages-in-bankruptcy-1433173699.

In the News 05/05/2015

While the debt collection climate may be changing in West Virginia, nationally, lawsuits and sanctions abound in order to punish abusive collectors and protect consumers.

As the Consumer Financial Protection Bureau (CFPB) continues to sanction and regulate the industry, Ohad Samet, co-founder and CEO of the debt recovery company TrueAccord, recently made headlines for speaking out in defense of the CFPB. His message: regulations are good for everyone.

Samet believes that the CFPB’s rules will lead to invested infrastructure and automation to fulfill expected data consistency and disclosure requirements. He goes on to say that the debt collection industry has suffered from under-investment for years and that in the long term, both consumers and collectors will benefit from more regulation.

Other voices counter Samet’s statements by pointing out that legitimate collections’ companies are penalized by being forced to spend millions of dollars each year on compliance.

Read more here: http://www.americanbanker.com/bankthink/no-really-regulations-good-for-you-debt-collector-edition-weekly-wrap-1074128-1.html

What do you think? Do you think the debt collection industry is over- or under-regulated? Share your thoughts in the comment section.

In the News 04/14/2015: National Corrective Group (Continued)

In last week’s “In the News” post, we discussed the actions that are being taken by the Consumer Financial Protection Bureau (CFPB) against National Corrective Group for threatening consumers with criminal prosecution and jail time for writing bounced checks. If passed by the federal district court, the CFPB’s order will require the company to pay $50,000 in civil penalties.

If you’ve given any thought to it, you may be wondering how the CFPB decides on the penalties imposed on collectors who use abusive or deceptive practices. Why aren’t these debt collection companies shut down for tricking or bullying people out of their money?

While the actual fines are decided by federal court judges, the CFPB does suggest the amount they believe to be the appropriate penalty, and they have the power to oversee a company’s operations for as long as they see fit after the fact.

In the case of the National Corrective Group, we can postulate that shutting the company down may have been the punishment had their actions been the trained policies and procedures of the business. It is likely that the penalties requested by the CFPB are scaled to “fit the crime” because a few collectors went rogue out of a desire to make extra money.

However, Mats Jonsson, CEO of National Corrective Group, is named individually in the complaint as a defendant. Jonsson is the senior company executive in charge of the daily operations of its bad check diversion programs and continues to operate Victims Services, Inc. and American Justice Solutions, Inc.

The CFPB is still in its infancy, so investigation practices are relatively new. Still, determining how deep the corruption went remains difficult. How many people within the company were active in these deceitful practices and how many others knew about it? Were the deceptive practices parts of their trained policy? The CFPB uses these and other questions to determine the level of compliance and the appropriate sanctions.

Legal Jargon: The Language of Debt Collection

Every industry has its own lingo. Musicians talk about time signatures, sharps and flats, and computer programmers talk and type in code.

The debt collection industry is no different—debt collectors, lawyers, legal assistants and office personnel have their own language. While they’re typing up payment demand letters and using short hand in interoffice communications, these abbreviations and terms sometimes spill over into their phone calls and everyday speech.

While most debt collectors are trained to make their language as clear as possible to avoid confusing or alienating clients and debtors, sometimes technical terms find their way into the conversation.

 confused man reading at desk

Here we’ve provided a short list of common abbreviations, terms and legislation that might have you scratching your head:

Alphabet soup

Government agencies and legislation are commonly referred to as alphabet soup, because it seems that every entity is referred to in its abbreviated form. Here are some common abbreviations in the debt collection industry.

ARM— Accounts receivable management

CFBP— Consumer Financial Protection Bureau

CLLA— Commercial Law League of America

FTC— Federal Trade Commission

GARN— Garnishment

NARCA— National Association of Retail Collection Attorneys

PIF— Paid in full

POE— Place of Employment

SIF— Settled in full

Debt collection terms

Account scoring— Giving a numeric score to the probability of collecting on an account

Bad debt— A debt that is unlikely or cannot be recovered or paid

Skip— A consumer who is no longer at his/her last known place of address (i.e. they “skipped town”)

Skip trace— To institute a physical or electronic search for data on a skip, either a new address, phone number, POE or bank account

Legislation

Federal Debt Collection Practices Act (FDCPA) — Passed in 1996, the FDCPA amended the Consumer Credit Protection Act by prohibiting abusive practices by debt collectors such as harassment and other outlined unfair practices

Gramm-Leach-Bliley Act (GLBA) — Requires financial institutions to institute plans to protect the personal data of individuals

Health Insurance Portability and Accountability Act (HIPPA) — Protects the confidentiality and security of healthcare information

Servicemembers Civil Relief Act (SCRA) — Protects those entering, called to active duty or deployed service men and women from certain civil obligations, such as outstanding credit card debt so that can devote their full attention to duty and relive stress on their family members

Telephone Consumer Protection Act (TCPA) — Restricts telephone solicitations and the use of automated telephone equipment, limits the use of automatic dialing systems and outlines conditions for using autodialers by requiring identification and contact information of the caller

Time Barred Debt (TBD)— Under the FDCPA, there is a statute of limitations on how long a debt collector can sue to collect on a debt. After the statute is up, the debt is considered time-barred.

Unfair Deceptive Abusive Acts or Practices (UDAAP) — Protects consumers from unexpected increases in the rates charged on pre-existing credit card balances

Court lingo

Debt collection is directly tied to the court system, which means that collections employees must be well versed in relevant legal terms, documents and procedures as well. You can take look up a variety of legal definitions here.

Best business practices, Part I

Successful businesses are the result of a number of factors, but they can be summarized by two key elements:

  1. Great effort
  2. Successful formula

When partnering with a law firm, there is a need to feel and believe that great effort is expended on your important matters. But there is also a need to believe that a successful formula is in place so that this effort is spent wisely.

These efforts and formulas come together to form what is commonly known throughout most industries or professions as a business’s best practices.

Best-Practices

In a series of blog posts over the next several weeks, we will share some thoughts on the current “best practices” in the debt collection industry. These policies and procedures are considered to be both the best methods for maximizing collection while continuously maintaining the integrity of your business name. These practices include:

  • Disaster Recovery Plan
  • Vendor Management Plan
  • Skip Trace Waterfall Procedure
  • Employment Waterfall Procedure
  • Internal Auditing Procedure
  • Call Monitoring Procedure
  • Continuing Training Policy
  • Information Security Policy

And more!

In the weeks to come, we will take “great effort” to ensure that you understand the “successful formula” for impactful, professional debt collection. Stay tuned!

 

Was it something I said? Communicating with your collections attorney

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If you are placing accounts with a collections attorney for the first time, you might wonder how often you should be in contact with your attorney after placement.

Monthly?

Weekly?

To be clear, attorneys have a responsibility to keep clients reasonably informed about the status of their cases.   Attorneys also must communicate with clients when necessary to make important decisions, such as whether or not to accept settlements.

But what about all the communication that falls in the gray area?

What about those times when your law firm feels it has met the ethical standard of reasonable communication, but you don’t know when the next phone call or e-mail is coming?

Or whether you should be the one to pick up the phone and call?

Some people or companies send accounts to collections because they don’t want to worry about them at all and are quite content to never hear from their attorney, other than receiving the monthly remittance check (the amount the collections attorney has collected on your behalf).

On the other hand, some send accounts to collections because they feel wronged by someone.  Maybe it’s personal.  They want to know that their attorney is actively pursuing that account every day and every hour!

Clients of collection attorneys need to keep two things in mind:

  1. Collection attorneys are most effective when communicating with consumers, next most effective when working in the court system and not effective at all while communicating with the client – unless the client is passing along new and helpful information.

You should try to reach some understanding early on as to how often you will be notified of status updates.  If your attorney’s plan does not seem adequate you should say so at the outset of your relationship so there are no misunderstandings later on.

You should anticipate that most collection attorneys will advise you when important things happen and otherwise will briefly respond to occasional status requests and questions.

Otherwise, after most key events have transpired, you should understand that your attorney will be most interested in attempted collection and remitting to you.

  1. It is also helpful to discuss at the outset of the case your role in the relationship.

Most attorneys will be eager to hear from you when you have information about the whereabouts of your customers or their assets.  Your attorney will want know the limitations on settlements and when you absolutely want to be notified of events.  Aside from that, most attorneys will not seek out your opinion on collection strategies or court room arguments.

It is always appropriate to ask why your attorney is choosing one strategy over another.   You have every right to be informed on your case.

Just keep in mind that time is valuable for everyone – and time spent with you is time not spent working for you!

If you have questions about communications with your collections attorney or have cases you’d like to place with Atkins & Ogle Law Offices, LC, contact us!