RMAI Update December 2018

/RMAI Update December 2018
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RMAI leadership spent three productive days in DC in early December reaffirming relationships with key regulators, and meeting the new Director of Consumer Protection at the FTC, Andrew Smith.  On Capitol Hill, several meetings were held with business friendly Democrats to build a coalition in support of RMAI’s proposed legislative initiatives which would delineate data and documentation standards and provide the industry a Right to Cure.

Meeting with the BCFP rulemaking team, we were pleased to hear their intentions and attention to the modernization of consumer communications via electronic media.  We also learned that the current timeline to release the proposed debt collection rule remains March 2019, followed by a comment period (of probably 90 days).  Historically, once the comment period ends, the final rule is published in approximately nine months – meaning the industry should have a final debt collection rule in Spring, 2020.


RMAI is gearing up for a busy 2019 state legislative session. However, here is one noteworthy bill that may see some movement before January:

District of Columbia Bill B22-0572 – This bill would reduce the availability of wage garnishment as an option for collections through increased exemptions and lower garnishment rates. The bill would also require prescribed consumer notices informing consumers of their rights prior to garnishing wages. [This bill was heard in the Judiciary & Public Safety Committee on June 7th. A bill amendment is anticipated this month.]

If you are interested in obtaining a copy of the RMA state tracking list, please contact David Reid at dreid@rmassociation.org.

December 2018 Squibs

 7th Cir. Holds Attorney’s Fees and Emotional Distress Not ‘Actual Damages’ for RESPA QWR Claim

Moore v. Wells Fargo Bank, N.A., No. 18-1564, 2018 U.S. App. LEXIS 31534 (7th Cir. 2018)

The U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court’s finding that a mortgage servicer did not violate the federal Real Estate Settlement Procedures Act (RESPA) or Wisconsin law because the borrower could not prove that the servicer’s alleged failure to completely respond to a “qualified written request” (QWR) caused any actual damages, notwithstanding the alleged attorney’s fees incurred in reviewing the servicer’s response and the borrower’s alleged emotional distress.

In so ruling, the Seventh Circuit held that “RESPA was not intended to give people who cannot pay their mortgages the means to engage in burdensome fishing expeditions in the hope of somehow passing the blame for their foreclosure onto the mortgage servicers in state court.”

The Seventh Circuit also held that the non-borrower spouse lacked standing to sue under RESPA and Wisconsin law.

The Seventh Circuit explained that even assuming some aspects of the servicer’s response were incomplete and may have violated RESPA, the husband did not provide any evidence to show that his alleged injuries — “out of pocket expenses and emotional distress” — were triggered by the servicer’s failure to comply with section 2605(e)(2).

Attorney’s fees to review the response could not be a cost incurred as a result of an alleged violation.  As the Seventh Circuit explained, if attorney’s fees constitute actual damages under RESPA, this would render section 12 U.S.C. § 2605(f)(3) (prevailing plaintiffs can collect attorney fees) superfluous.

A copy of the opinion can be accessed here:  Link to Opinion.

SD Calif. Dismisses Data Security Breach Class Action Against Mortgage Company

Razuki v. Caliber Home Loans, Inc., No. 17cv1718-LAB (WVG), 2018 U.S. Dist. LEXIS 196070 (S.D. Cal. 2018)

The U.S. District Court for the Southern District of California recently dismissed a consumer’s putative class action lawsuit against a mortgage lending and servicing company for purported damages sustained as a result of a security breach wherein his personal information was compromised, and the hackers attempted to open credit cards in his name.

A consumer, on behalf of himself and others similarly situated, sued a mortgage lender and servicer after its customer database was hacked, and confidential customer information, such as social security numbers, was compromised. The consumer claimed that he suffered monetary and emotional distress damages as a result of a cybercriminal’s attempts to open credit cards in his name, as a result of the mortgage company’s inadequate security and failure to timely notify its customers of the breach.

The consumer filed suit against the mortgage company in the Superior Court of California, San Diego County, alleging causes of action for: (i) negligence; (ii) violation(s) of California Constitution (Art. I, § I); (iii) violation(s) of the California Customer Records Act (Civ. Code § 1798.80); (iv) violation(s) of the California Consumers Legal Remedies Act (Cal. Civ. Code § 1750), and; (v) violation(s) of the California Unfair Competition Law (Cal. Bus. & Prof. Code § 17200).

The mortgage company removed the action to United States District Court for the Southern District of California and moved to dismiss the consumer’s complaint for lack of standing and failure to state a claim.

The Court found the alleged negligence damages “too conclusory and vague to satisfy the pleading standard,” even though the consumer could allege the necessary elements for Article III standing.

Similarly, the Court also found the allegation the consumer “overpaid [the mortgage company] for financial services during or after the breach” as too vague because the consumer failed to “provide any information to show that he paid a premium for [the mortgage company] to provide reasonable and adequate security measures.”

The consumer also argued that the mortgage company’s breach of data violated his right to privacy under the California Constitution.  However, Court found the loss of personal data through insufficient security failed to constitute “a serious invasion of privacy” that is “an egregious breach of the social norms underlying the privacy right” necessary to meet the standard of actionable conduct under the California Constitution.

Next, the Court considered the consumer’s claims that the mortgage company failed to comply with the Customer Records Act (CRA), Civ. Code § 1798.80, which requires businesses to protect customers’ personal information by maintaining “reasonable security procedures” to notify affected customers of a breach “without unreasonable delay.”  The Court dismissed this claim noting that although the CRA requires businesses to notify customers of a data breach “in the most expedient time possible and without reasonable delay,” courts have required plaintiffs to “show that the delay in notification led to incremental harm,” which the consumer failed to do.  The Court further explained that the consumer “could have identified what made [the mortgage company’s] security measures unreasonable by comparison to what other companies are doing, but simply knowing of higher-quality security measures is not sufficient to state a claim.”

The consumer’s claims under the Consumers Legal Remedies Act (CLRA) asserted that the mortgage company violated various provisions of Cal. Civ. Code § 1770(a)’s ban on unfair business practices that result “in the sale or lease of goods or services to any consumer.”

The Court, however, agreed with the mortgage company’s argument that home loans do not qualify as “the sale of a service” under the CLRA, citing California Supreme Court authority.

Finally, the consumer claimed that the mortgage company violated California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, by failing to provide sufficient security for his data.  The Court dismissed the claim because a UCL plaintiff must suffer “an `injury in fact’ and `lost money or property as a result of such unfair competition.’”  Although the consumer argued that he met this element because funds were withdrawn without his consent, the Court noted the consumer’s bank quickly reversed the transaction, and therefore the consumer suffered no “injury in fact,” as required.

A copy of the opinion can be accessed here:  Link to Opinion.

2nd Cir. Holds No FDCPA Violation for Failure to Disclose Whether Fees or Interest Continues to Accrue

Derosa v. CAC Fin. Corp., 740 F. App’x 742 (2d Cir. 2018)

In an unpublished ruling, the U.S. Court of Appeals for the Second Circuit held that a debt collector that was not seeking post-default interest and fees did not violate the FDCPA by failing to state in its letter whether fees and interest were accruing.

A debt collector sent a letter to a consumer requesting that she contact the debt collector to resolve a credit card debt.  The letter listed the amount due on the account but did not indicate “whether interest and fees continued to accrue while the account was in collection.”

The consumer sued the debt collector alleging that the letter violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., because the failure to indicate whether interest and fees continued to accrue was a “deceptive or misleading collection notice.”  The trial court granted the debt collector’s motion for summary judgment and the consumer appealed.

Initially, the Second Circuit observed that it previously decided in Taylor v. Financial Recovery Services, Inc., 886 F.3d 212 (2d Cir. 2018), that collection notices that do not state whether interest and fees continue to accrue on a debt do not violate the FDCPA “per se.”  Specifically, if a debt is not accruing any interest and fees, then, “a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning” of the FDCPA.

The remaining issue involved if the borrower created a genuine dispute of material fact regarding whether the debt collector continued to charge interest and fees on the account after acquiring the debt sufficient to defeat summary judgment.

In support of its motion for summary judgment, the debt collector submitted a declaration that it did not charge interest or fees to the account.  The debt collector also introduced two letters into evidence, one of which the borrower did not dispute receiving, which showed that the amount the borrower owed on the debt did not change over time.

In response, the borrower introduced her declaration stating that her account had previously “accrued interest on any balances carried, and late fees on any late or missed payments,” and the generic credit card agreement, which allowed the creditor, if it chose to do so, to collect interest and fees after default.

The Second Circuit found that the borrower’s evidence failed to create a genuine dispute of material fact because whether the account accrued interest and fees when the original creditor administered the account does not establish whether the debt collector continued to attempt to collect interest and fees after it acquired the debt. The borrower’s speculation that the debt collector continued the original creditor’s practice failed to defeat summary judgment against the specific evidence present here that the debt collector did not continue to collect fees and interest after the assignment of the debt.

Thus, the Second Circuit determined that the borrower failed to demonstrate a genuine dispute of material fact regarding whether the debt collector continued to charge interest and fees on the account after acquiring the debt.

A copy of the opinion can be accessed here:  Link to Opinion.

Third Circuit Finds Aspects of Collection Letter Susceptible to Multiple Interpretations

Knight v. Midland Credit Mgmt., No. 17-3786, 2018 U.S. App. LEXIS 31706 (3d Cir. Nov. 8, 2018)

A debt collector sent a letter to a consumer stating: “We can’t change the past, but we can help with your future.”  The letter contained three payment options that were described as “discounts,” though one was merely a payment plan for the full balance.  The letter advised “[i]f you pay your full balance, we will report your account as Paid in Full. If you pay less than your full balance, we will report your account as Paid in Full for less than the full balance.”

The consumer filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania alleging the letter was false, deceptive, and misleading in violation of § 1692e of the federal Fair Debt Collection Practices Act.  The trial court granted the debt collector’s motion to dismiss after determining the letter was not confusing or misleading.

On appeal before the U.S. Court of Appeals for the Third Circuit, the consumer argued the phrase “We can’t change the past, but we can help with your future” was a false and deceptive promise of financial benefit because it could be interpreted to mean, inaccurately, that reporting a payment to a credit reporting agency would improve her credit score.  While the court noted that “might not be the most appropriate reading of the Letter,” it agreed it could be so read by the least-sophisticated consumer.

The consumer also contended the letter was false, deceptive, and misleading because it was unclear whether “we will report your account” meant it would be reported to the original creditor, the credit reporting agencies or both.  The court did not find this interpretation to be “bizarre of idiosyncratic,” particularly given the prominent listing of the of the original creditor in the letter.

The court also agreed with the consumer that “the letter could be misleading as to when a debtor’s account will be reported as ‘Paid in Full’ or ‘Paid in Full for less than the full balance’ because all three of the options were described as “discounts.”  Thus, a least sophisticated consumer could reasonably believe the payment plan option was, instead, a settlement option.

Finally, the consumer argued using “Paid in Full” in conjunction with “Paid in Full for less than the full balance” was misleading.  The court again sided with the consumer, explaining that without clarifying language it was unclear that the reporting statuses were different, especially considering the capitalization of “Paid in Full” used in both phrases.

A copy of the decision can be accessed here: Link to Opinion.

Need re-certification credits? Working toward becoming a Certified Receivables Compliance Professional (CRCP)? Want the latest information in the Chief Compliance Officer world? RMAI has all this and more with live monthly and pre-recorded webinars.

UPCOMING WEBINARS

  • Industry Hot Topics – A Year in Review – December TBD 2018

RECORDED WEBINARS: Did you miss a live webinar? All recorded monthly webinars are FREE to our members. Special series and select required courses for certification are paid at member rate.

CURRENT ISSUES IN DEBT BUYING (RE-CERTIFICATION ONLY): In addition to the two (2) hour education session at the Annual Conference and Executive Summit, RMAI has identified the following recorded webinars which qualify for one (1) to one and a half (1.5) credits out of the four (4) credits of Current Issues in Debt Buying required for re-certification. Click to register.

Congratulations to our new and renewed companies and individuals!

New Companies

General Collections Co.

Renewed Companies

Federal Pacific Credit Co LLC

Ophrys, LLC

Renewed Individuals

Dennis Hammond, President, Resource Management Services, Inc.

Jeremy Poehler, President, National Debt Holdings, LLC

Marian Sangalang, Vice President, The Bureaus, Inc.

Laura White, Chief Compliance Officer, Portfolio Recovery Associates, LLC

View all certified companies and certified individuals on our website.

For help with certification, contact Michelle Wren at (916) 482-2462 or mwren@rmassociation.org.

Welcome new RMAI members!
The RMAI membership continues to grow. Welcome to our newest members:
Akerly Law PLLC – Associate Law Firm
Attunely, Inc. – Affiliate
Bank of North Dakota – Originating Creditor
Capital One – Originating Creditor
CBE Group, Inc. – Associate Collection Agency
Central Portfolio Control, Inc – Associate Collection Agency
Central Research, Inc. – Associate Collection Agency
Cloudberry Solutions – Affiliate
Copliant LLC – Affiliate
Geist Holding, Inc. – Affiliate
Imagined.Cloud LLC – Affiliate
NPC, Inc. – Affiliate
Recovery Management Solutions LLC – Associate Collection Agency
Social Finance – Originating Creditor
Swipebox – Affiliate

Read more about these members and other members on the Member Search page

Two weeks left to renew your 2019 membership!
Avoid paying the $100 late fee and renew by December 31, 2018.

  • Does your AP department know that DBA is now RMAI, the Receivables Management Association International?
    If not, let them know we can send a new W-9 for your 2019 renewal to be paid.
  • Has your company moved?
    If so, please contact bsouza@rmassociation.org with your new mail address.
  • Do you work remotely and haven’t see your renewal?
    Chances are your renewal invoice was mailed to the corporate office.

HR Spotlight Brought to You by the RMA & Insperity Partnership:
5 trusty tips for hiring candidates you can’t afford

RMA works hard to open new markets and promote the industry at various conferences and events—look for us at these events.

2018 National Creditors Bar Association | October 3-6

California Association of Collectors, Inc. (CAC) is offering RMA members the CAC member rate to attend their Annual Conference Expo. Register Here and use promo code (RMACAC2018) | October 8-9

  • CAC is an RMA Authorized Education Provider and will accept education from their conferences and webinars for RMA’s Certified Receivables Compliance Professional (CRCP).

Lend360 | October 8-10
As a special courtesy, Lend360 is offering an exclusive registration discount of $600 off the current registration rate to RMA members. For the special rate, please use code: RMA360

2018 Compliance Forum | October 16-18

The RMAI Annual Conference is a must attend event for the receivables management industry.  February 5-7 2019 in Las Vegas @ the Aria Resort and Hotel.  We have a fantastic lineup of education and networking events.  Get industry insights, legal updates, connect with originating creditors and industry professionals.  Visit rmassociation.org/ac19 for more information.

Contribute Now

Thank you November 2017- November 2018 Legislative Fund contributors. Your support allows us to influence threatening legislation, while also promoting and preserving the best interests of our members. Make your contribution today!

Diamond ($25,000)

Certified Debt Buyer
Portfolio Recovery Associates, LLC

Titanium ($15,000)

Certified Debt Buyer
Cavalry Investments, LLC

Associate Collection Agency
Financial Recovery Services, Inc.

Platinum ($10,000)

Certified Debt Buyer
Encore Capital Group

Gold ($7,500)

Silver ($5,000)

Certified Debt Buyer
CKS Financial
Crown Asset Management, LLC
Jefferson Capital Group
JH Capital Group
Velocity Portfolio Group

Bronze ($2,500)

Certified Debt Buyer
Absolute Resolutions Corp.
Galaxy Asset Management, LLC
Integras Capital Recovery LLC
RAzOR Capital
Second Round, LP
Security Credit Services, LLC
The Bureaus, Inc.
Associate Collections Agency
Credit Control, LLC
Glass Mountain Capital, LLC

Affiliate
Cornerstone Support
National Loan Exchange NLEX

Brass ($1,000)

Certified Collection Agency
First Financial Asset Management, Inc. FFAM360

Certified Debt Buyer
Credit Management Corporation
Gemini Capital Group, LLC
HS Financial Group
Resurgence Capital, LLC
The Cadle Company

Certified Broker
DebtTrader

Affiliate
CMS Services
Convoke, Inc.
Digital Recognition Network
FLOCK Specialty Finance
TrueAccord
Resource Management Services, Inc.
RNN Group, Inc.
Vertican Technologies, Inc.

Associate Debt Buyer
Balbec Capital
Phoenix Asset Group, LLC
U.S. Equities Corp

Associate Law Firm
Andreu, Palma, Lavin & Solis, PLLC
Delev & Associates, LLC
Mullooly, Jeffrey, Rooney & Flynn, LLP
Simmonds & Narita, LLP
Tobin & Marohn
Winn Law Group, APC

Other

Certified Debt Buyer
Acctcorp International, Inc.
Capio Partners
Capital Alliance Financial, LLC
Cascade Capital, LLC
Collins Asset Group
Converging Capital, LLC
Debt Recovery Solutions, LLC
Federal Pacific Credit Company, LLC
Icon Equities, LLC
Indiana Receivables, Inc.
Investment Retrievers, Inc.
NCB Management Services, Inc.
PCA Acquisitions V, LLC
Pharus Funding, LLC
Portfolio Group Investors, LLC
Poser Investments, Inc.
Quantum3 Group, LLC
Stoneleigh Recovery Associates
Unifund CCR LLC
United Debt Holdings
West Bay Recovery, Inc.

Certified Collection Agency
Frontline Asset Strategies, LLC

Certified Law Firm
Dobberstein Law Firm, LLC
G. Reynolds Sims & Associates, P.C.
Halsted Financial Services, LLC
Law Offices of Daniel C. Consuegra, P.L.
Law Offices of Steven Cohen, LLC

 Affiliate
Accelerated Data Systems
Attunely, Inc.
CenterPoint Legal Solutions, LLC
ComplyARM, Inc.
Comtronic Systems, LLC
Debt Sales Partners
Diversified Consultants, Inc.
Equifax, Inc.
Harvest Strategy Group, Inc.
Metronome Financial, LLC
MRS BPO, LLC
ProVest LLC
SAM, Inc. – Solutions for Account Management
Troy Capital, LLC
VeriFacts, Inc.
VoApps

Associate Collection Agency
Adams London & Weiss, LLC
Apple Recovery, LLC
Capital Collection Management, LLC
Lockhart, Morris & Montgomery, Inc.
Radius Global Solutions
SIMM Associates, Inc.
Tate & Kirlin Associates, Inc.
Viking Client Services, Inc.

 

Associate Debt Buyer
ABC Collections, LLC
Allen & Durrant Corp.
Alliance Credit Services, Inc.
Atlas Acquisitions
Emergent Business Group Inc.
Fair Collections & Outsourcing, Inc.
Genesis Recovery Services
National Recovery Solutions, LLC
PerSolve, LLC
RIP Medical Debt
Universal Fidelity LLC
Western States Financial Management, LLC

Associate Law Firm
Brownstein Hyatt Farber Schreck, LLP
Butler & Associates, P.A.
Hinshaw & Culbertson
Hudson Cook, LLP
Hunt & Henriques
Keith. D. Weiner & Associates, LPA
Kirschenbaum & Phillips, P.C.
London & London
Malone Akerly Martin PLLC
Maurice Wutscher LLP
Pressler, Felt and Warshaw, LLP
Rausch, Sturm, Israel, Enerson & Hornik, LLC
Schachter Portnoy, LLC, Attorneys at Law
Slovin & Associates
Sonnek & Goldblatt, Ltd.
Spencer Fane LLP
Vargo & Janson, P.C.
Venable, LLP

Individual(s) and/or Non-member(s)
Central Portfolio Control, Inc.
Court Appearance Professionals
David Reid
Greenberg Advisors, LLC

2018-12-17T13:02:12+00:00 December 17, 2018|RMA Update|