RMAI Update August 2022

While there is little focus on Capitol Hill on the debt collection industry, RMAI remains vigilant as Congress comes back from their summer break for amendments in omnibus bills. Additionally, we have seen legislation introduced which would impact the industry, specifically HR 8334 which would expand the TCPA to cover text messaging.  However, in all likelihood, these bills will not pass.

All indications still predict the House will flip to Republican control in the 2022 midterm elections.  Under Republican control, all House Committees and Subcommittees will be chaired by Republicans.  With that in mind, RMAI was pleased to have Congressman Bryan Steil (R-WI) as the keynote speaker at this year’s Executive Summit.  His message resounded with our members as he discussed the structural issues with the CFPB whereby Congress has no control over their budget, the importance of understanding data, and business friendly proposals.

On the regulatory front, RMAI monitors the daily communications from the CFPB, whether they be press releases, blog posts, advisory opinions or transcripts of speeches.  Our lines of communication are open, and we look for all opportunities to educate CFPB staff on industry trends, the impact of proposed regulations, and what we are seeing now that Reg. F has been in effect for nearly one year.

RMAI monitors, tracks, and responds to legislative and regulatory activity in all 50 states as the need arises.  Backed by RMAI’s State Legislative Committee and a team of state lobbyists, RMAI educates legislators and regulators about the industry and the negative impacts or unintended consequences a bill would have on businesses and consumers. The State Legislative cycle essentially comes to an end on August 31^st when the California legislature adjourns. While several states may have fall session dates, they do not include bills that are on the RMAI tracking list. RMAI is currently tracking 36 bills in California. Here are some recent developments at the state level that might be of interest:

California SB 975 – This bill would prohibit a debt collector from collecting or attempting to collect a consumer debt if the consumer provides documentation to the debt collector that the debt, or any portion of the debt, is the result of economic abuse. The bill defines economic abuse to be when a person causes another person “to have impaired financial stability by maintaining control over the individual’s financial resources . . .” Sufficient documentation to determine the occurrence of economic abuse would include a copy of a protective order; a police report indicating the individual was a victim of domestic violence or elder abuse; a  Federal Trade Commission identity theft report; or documentation from a licensed medical professional, domestic violence counselor, a sexual assault counselor, licensed health care provider, attorney, social worker, or counselor stating that the debt was incurred as a result of economic abuse. [RMAI opposes this bill, as drafted, given the unqualified background of some of the individuals who can determine the existence of economic abuse and that it does not provide a judgment against the perpetrator of the economic abuse. There are similar bills that were introduced in Florida and Illinois that RMAI supports given appropriate protections contained in those bills. RMAI and an industry coalition is in active negotiations with the author of the bill and amendments are expected.]

California SB 1200 – This bill would reduce the post-judgment interest rate from 10% to 5% if the judgment is on a claim related to personal debt or personal credit. The bill would also permit a single 5-year renewal of a judgment at the expiration of a 10-year judgment. [RMAI worked with our California lobbyist and an industry coalition to amend this bill. We were successful in changing the interest rate from the initial 3% sought by the bill author to 5% and permitting a 5-year renewal of a judgment rather than an outright prohibition. As a result of these amendments, RMAI has changed its position on the bill from oppose to neutral.] 

California SB 1477 – This bill would increase the disposable earnings that are exempt from wage garnishment by increasing the minimum wage multiplier to approximately 80x (California uses a convoluted formula). This would effectively exempt incomes under $70,000 from wage garnishment. This bill would also set the maximum amount of disposable earnings of a judgment debtor that is subject to levy at 10% of the amount by which the individual’s disposable earnings for a given week exceed 80 times the state minimum hourly wage. [RMAI is working with our California lobbyist and an industry coalition to fight this bill. Higher wage multipliers are becoming a priority issue for consumer advocates]

Massachusetts SB 2858 – This bill among other things: (1) increases the garnishment exemption from 50x state minimum wage to 65x state minimum wage; (2) once the consumer exceeds the exemption threshold, the bill limits garnishment to 10% of the income above the threshold; (3) reduces the statute of limitations in an action for the collection of a consumer debt from six to four years; (4) prohibits the revival of a debt that is beyond the statute of limitations through the making of a payment; and (5) reduces the time allowed to take action to enforce a judgment from 20 to 10 years but allows renewing the judgment for an additional 10 years. If passed, the bill would take effect on September 1, 2023. [RMAI has been opposing this bill since 2014 when it was first introduced. After eight years of negotiations and countless amendments, RMAI and the consumer advocates agreed to amendments that would have removed RMAI’s opposition to the bill; however, the legislative session ended on July 31^st before the language had an opportunity to be adopted.]

Third Circuit Adopts a “Reasonable Reader” Standard to Assess FCRA Claim
Bibbs v Trans Union LLC, 2022 U.S. App. LEXIS 21819 [3d Cir Aug. 8, 2022, Nos. 21-1350, 21-1527, 21-1530

In consolidated cases, the plaintiffs defaulted on student loans after which their lenders closed the accounts and transferred them to other lenders.  Thus, at that point, they owed nothing to the original lenders.  However, the plaintiffs subsequently reviewed their credit reports which contained a negative pay status notification: “˃Account 120 Days Past Due Date˂.”

The plaintiffs’ attorney disputed the accuracy of the reports directly with the credit reporting agency (“CRA”), stating: “The following accounts have a balance of $0 with a late status. This is simply incorrect. If my client owes them no money and has no payments that are needed, then it is impossible for their current status to be listed as late.”

The CRA conducted an investigation and found that the disputed information was accurate, following which the plaintiffs filed suit alleging the CRA violated the Fair Credit Reporting Act (“FCRA”) by issuing inaccurate or misleading credit reports.  The trial court granted the CRA’s motion for judgment on the pleadings, finding that the credit reports were not inaccurate and would not be confusing to a “reasonable creditor.”  The plaintiffs appealed.

On appeal, the U.S. Court of Appeals for the Third Circuit first addressed whether the trial court was correct in employing a “reasonable creditor” standard.  The CRA argued that was the correct standard because “reasonable creditors would think the Pay Status notations were only ‘historical’ and, as a result, would never base ‘adverse’ decisions on that data.”  On the other hand, the plaintiffs argued that “while it is unclear as to whom the ‘reasonable creditor’ describes, the FCRA does not limit report access only to individuals and entities sophisticated in the art of reading credit reports.”

The Court noted that “the term ‘creditor’ broadly encompasses both sophisticated and unsophisticated individuals and entities alike, [and] the term ‘reasonable creditor’ does not accurately reflect the intent of the FCRA . . . Therefore, the reasonable reader standard runs the gamut to include sophisticated entities like banks and less sophisticated individuals such as local landlords.”

Having set its standard, the Court found that the credit reports were accurate since they contained “multiple conspicuous statements reflecting that the accounts are closed and [plaintiffs] have no financial obligations to their previous creditors. These statements are not in conflict with the Pay Status notations, because a reasonable interpretation of the reports in their entirety is that the Pay Status of a closed account is historical information.”

Accordingly, the Court affirmed the ruling of the trial court.

Tenth Circuit Nixes “Least Sophisticated Consumer” Standard
Tavernaro v. Pioneer Credit Recovery, Inc., No. 20-3219, 2022 U.S. App. LEXIS 21914 (10th Cir. Aug. 8, 2022)

A consumer defaulted on a student loan which was then sold to another creditor.  The new creditor hired a collection agency to attempt to collect the debt, which it did by sending the consumer’s employer a letter with an Order of Withholding from Earnings (“OWE”).”

The letter from the collection agency had the creditor’s logo on the first page and identified the creditor as the holder of the of the debt.  The letter included the § 1692e(11) “mini-Miranda” and explained that the collection agency, identified by name, was “assisting [the creditor] with administrative activities associated with this administrative wage garnishment.”  The letter directed payments to be made to the collection agency.

The consumer filed suit alleging the collection agency violated the Fair Debt Collection Practices Act (“FDCPA”) by having “deceptively sent the letter ‘to appear as though it were sent by [the creditor].”  Specifically, the consumer claimed the FDCPA was violated by the collection agency’s: 1) use of false representations or deceptive means to collect a debt, § 1692e(10); and 2) failure to use its “true name,” § 1692e(14).

The trial court dismissed the claim, concluding the consumer failed to allege “how knowledge of who mailed the OWE was material  to his, his employer’s, or to the least sophisticated consumer’s response.”  Since the letter was not misleading, it could not be unfair or unconscionable.  The consumer appealed.

On appeal, the U.S. Court of Appeals for the Tenth Circuit noted that to support an alleged violation of § 1692e, “(1) a consumer must demonstrate materiality, and (2) materiality means that a reasonable consumer would be frustrated in his ability to intelligently respond to the debt collection effort.”

The Court explained that although “material” is not found in the text of the statute, it nevertheless construed the statute “to require materiality based on the language and obvious function of the statute,” and supported that position based on the same construction in other circuits.

The Court next considered which standard should be used to measure materiality: “Is it from the perspective of a hypothetical ‘unsophisticated consumer’ or from that of a ‘reasonable consumer?’”  The Court described cases addressing both standards, as well as those supporting “the so-called imaginary ‘least sophisticated consumer’” standard, which it described as requiring a “review [of] collection notices from the perspective of a consumer less sophisticated than anyone else.”  Ultimately, the Court settled on the reasonable consumer standard:

These cases fail to persuade us that Congress intended for the application of the least sophisticated consumer standard. Rather than presume Congress intended for the application of a specific standard that is not mentioned in the statute’s text, we infer Congress operationalized its intent to protect debtors in other ways and under traditional standards. . . Using the reasonable consumer to assess materiality is consistent with other consumer protection laws and provides courts and litigants with a comparable and familiar standard. And it is sufficiently protective of consumers, whether sophisticated or not.

Applying that standard, the Court affirmed the trial court’s dismissal since the letter, read as a whole, would not materially mislead a reasonable consumer.

Eleventh Circuit Vacates $35 Million TCPA Class Settlement
Drazen v. Pinto, No. 21-10199, 2022 U.S. App. LEXIS 20766 (11th Cir. July 27, 2022)

The named plaintiff filed a putative class action alleging that the defendant violated the TCPA when it allegedly called and texted consumers “solely to market its services and products through a prohibited automatic telephone dialing system.”  See 47 U.S.C. § 227(a)(1), (b)(1)(A).

The action was consolidated with two other similar actions against the same defendant pending in other trial courts in other circuits.  In addition, because Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1273 (11th Cir. 2019), requires that the named plaintiffs must have standing, and under Salcedo v. Hanna, 936 F.3d 1163, 1172 (11th Cir. 2019), a single unwanted text message does not give rise to Article III standing, one of the named plaintiffs in one of the consolidated actions who had only received a single text message was removed.

After considering the briefing of the parties, the trial court held that “even though some of the included class members would not have a viable claim in the Eleventh Circuit, they do have a viable claim in their respective Circuit [because of a circuit split]. Thus, [the defendant] is entitled to settle those claims in this class action although this Court would find them meritless had they been brought individually in the Eleventh Circuit.”  In other words, the trial court “allowed text-message only recipients to remain in the class, even though they lacked Article III standing under” Eleventh Circuit case law.

The trial court approved certification of the class for purposes of settlement in accordance with the proposed $35 million settlement agreement after conducting a Rule 23(a) analysis for numerosity, commonality, typicality, and adequacy, and a  Fed. R. Civ. P. 23(b)(3) analysis for predominance, although the Eleventh Circuit noted that it did not also conduct an analysis of the Rule 23(e)(2) factors, which is mandatory when “a class [is] proposed to be certified for purposes of settlement.”

A settlement class member objected to the class settlement, and then appealed challenging various aspects of the class settlement not relating to Article III standing.  Even though the issue was not briefed by the parties, the Eleventh Circuit held that “the class definition does not meet Article III standing requirements,” and vacated the final approval of the settlement and remanded “to give the parties an opportunity to revise the class definition.”

On appeal, the Eleventh Circuit first examined recent relevant rulings from the Supreme Court of the United States.

Under Frank v. Gaos, 139 S. Ct. 1041 (2019), Article III’s standing requirements “extend[] to court approval of proposed class action settlements.”  The Eleventh Circuit stated that “from Gaos, we take the following: even at the settlement stage of a class action, we must assure ourselves that we have Article III standing at every stage of the litigation.”

Under TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), “1) To satisfy the concrete injury requirement for standing, a plaintiff alleging a statutory violation must demonstrate that history and the judgment of Congress support a conclusion that there is Article III standing; [and] 2) Every class member must have Article III standing in order to recover individual damages.”

In addition, in the Eleventh Circuit, “a plaintiff has not suffered a concrete injury for Article III standing purposes when she has received a single unwanted text message.”  Salcedo v. Hanna, 936 F.3d 1163, 1172 (11th Cir. 2019).  However, at least in the Ninth Circuit, “a single unwanted text message is sufficient to establish a concrete injury for Article III standing purposes.”  Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037, 1043 (9th Cir. 2017).

Combining these various rulings together, the Eleventh Circuit held that “when a class seeks certification for the sole purpose of a damages settlement under Rule 23(e), the class definition must be limited to those individuals who have Article III standing.”

The Eleventh Circuit then took issue with the trial court’s conclusion “that unnamed plaintiffs with no standing in our circuit may be entertained as part of the nationwide class because they might have standing in another circuit,” ruling that “[t]he case the trial court cites for this proposition, In re Deepwater Horizon, 739 F.3d 790, 807 (5th Cir. 2014),] says nothing of the sort.”  Contrary to the trial court’s ruling, the Eleventh Circuit held that “[n]owhere does that case suggest that we check Article III standing at the door when dealing with a class action.”

Turning next to the settlement class definition, the Court noted that “the universe of plaintiffs under this definition includes any individual who received a text message or phone call on their cellphone from [the defendant] in the specified period.  As discussed above, under Salcedo, we have said that a single unwanted text message is not sufficient to meet the concrete injury requirement for standing.  So, the class definition cannot stand to the extent that it allows standing for individuals who received a single text message from [the defendant].  Otherwise, individuals without standing would be receiving what is effectively damages in violation of TransUnion.”

According to the Eleventh Circuit, “[t]he more difficult question is whether individuals who have received a single cellphone call also have standing.”

The Court previously held that “cell phone calls may involve less of an intrusion than calls to a home phone.”  See Salcedo, 936 F.3d at 1170.  Similarly, in Glasser v. Hilton Grand Vacations Company, LLC, 948 F.3d 1301, 1306 (11th Cir. 2020), the Court held that “receipt of more than one unwanted telemarketing call” was sufficient to meet the “concrete injury” requirement for Article III standing. However, the Eleventh Circuit has not yet decided “whether a single phone call to a cellphone was a concrete injury for Article III standing purposes.”

“We have a problem here,” the Eleventh Circuit stated, and explained:

“Unwanted” in Cordoba had a specific meaning — individuals who were called after asking not to be called.  “Unwanted” in the context of the statute at issue in our case and in Glasser refers to the fact that individuals, though never asking not to be called, were called by allegedly prohibited means under the TCPA — automatic telephone dialing systems.  So, to us, the standing analysis in Cordoba and the standing analysis in Glasser and our case may not necessarily be the same.  In Cordoba, people asked not to be called — period.  In Glasser and in our case, the individuals are not complaining about the fact they were called.  They are complaining about the fact that the automatic telephone dialing system did the calling.  In other words, the injury is not the call but rather the dialing system used, and it is not clear that [the defendant]’s compliance with the statute would have prevented the plaintiffs from being called.”

Therefore, the Eleventh Circuit ruled that “[b]ecause we have not received briefing on whether a single cellphone call is sufficient to meet the concrete injury requirement for Article III standing and because TransUnion has clarified that courts must look to history to find a common-law analogue for statutory harms, we think the best course is to vacate the class certification and settlement and remand in order to give the parties an opportunity to redefine the class with the benefit of TransUnion and its common-law analogue analysis.”

Executive Summit Silent Auction Success!
The in-person Executive Summit 2022 Silent Auction closed on August 3rd, and we are proud to say that it was a big success, with a lot of competition among the attendees! The silent auction brought in $17,725, which will go directly to RMAI’s Legislative Fund for the state and federal advocacy described in the state and federal updates in this newsletter. RMAI truly appreciates all the support from its members!

If you missed the silent auction, contribute to the Legislative Fund by donating here. We will add your company name to our list of Legislative Fund contributors on the RMAI website and in RMAI publications.

Chief Compliance Officer Webinar Series (CCO Series)
Register for RMAI’s six-part webinar series, which began May 26th and ends on November 1st and focuses on updates and changes in the compliance world since the implementation of Regulation F. Topics include Credit Reporting, Letters, Communication Restrictions, Vendor Oversight, Text Message/SMS, and Payments. While this series is designed for chief compliance officers, the content is beneficial for anyone working in or wanting to learn more about these topic areas.

REGISTER for the Entire CCO Webinar Series: $299 for members (Recordings provided for webinars that have already occurred); or for Individual Webinars: $64 per webinar for members

• Credit Reporting – May 26th REGISTER for the Recording
• Letters – June 23rd REGISTER for the Recording
• Communication Restrictions – July 26th REGISTER for the Recording
• Vendor Oversight – September 15th REGISTER
• Text Message/SMS – October 13th REGISTER
• Payments – November 1st REGISTER

Click here for more information on individual webinars.

Monthly Webinars – Free for Members
Register now for our August 30th webinar, Trending in 2022: Bankruptcy Litigation. Our panel, which includes a United States Bankruptcy Court Judge, a Chapter 13 Trustee, and other members of the industry, will provide an update on the latest bankruptcy filing statistics and projections.

If you missed our August 9th webinar, you can still watch the recording: The Building Blocks of Reputation Management.

Contact Shannon Parod at [email protected] or (916) 482-2590 with any questions.

Congratulations to our new and renewed Certified Receivables Compliance Professionals (CRCP)!

CRCP – New
Michael Adams, Cavalry Portfolio Services
Joshua Borer, Abrahamsen Gindin
Debra Ciskey, Consumer Adjustment Company, Inc.
James Magnusun, Frontline Asset Strategies
Mark Thomkins, Tare Financial Services

CRCP – Renewals
Julie Brown, CoverPoint Partners
Elizabeth Haug – Poser Investments
Jake Jones, Resurgent Holdings
Anthony Kuhns, Convergence Acquisitions
Christy Maier, SCJ Commercial Financial Services
Leo Stawiarski, LCS Capital
Sean Williams, Williams, Rush & Associates

Did You Attend the Executive Summit?
If you attended the 2022 Executive Summit and attended any education sessions, make sure you fill out your Continuing Education Credit Form so you can apply those credits to new or renewal certification. If you did not get a form at the Executive Summit, complete and return this Continuing Education Credit Form.

Please email your forms to [email protected] if you did not give them to a staff person at the Executive Summit, and we will keep on file for you.

Education at the D.C. Regional Event
If you are still in need of in-person education credits to earn or renew your CRCP designation, we will have 5.5 credits available at the Washington. D.C. Regional Event. Register for the Advocacy Program early to ensure you will be in attendance for the education portion of this event. Learn more about the D.C. Regional Event.

View all certified businesses and vendors.
View all certified individuals.
View educational requirements for certified individuals.

For questions about certification, contact RMAI at (916) 482-2462 or email [email protected].

RMAI’s leadership cultivates relationships within the receivables management industry to expand business opportunities for members.

RMAI 2022 Washington D.C. Regional Event | September 26-27, 2022

Applications due for the RMAI Diversity Equity Inclusion (DEI) 2023 Annual Conference Scholarship | October 14, 2022

Please note, the RMAI offices will be closed September 5th, in observance of Labor Day.

Thank you to our August 2021 – August 12,  2022 Legislative Fund Contributors!

Diamond $25,000

Cavalry Investments, LLC

Crown Asset Management, LLC

Financial Recovery Services, Inc.

First Financial Portfolio Services, LLC (FFAM360)

Midland Credit Management

Portfolio Recovery Associates, LLC

Resurgent Holdings, LLC

Titanium $15,000

National Credit Adjusters, LLC

Platinum $10,000

Blitt and Gaines, P.C.

Cascade Capital, LLC

InvestiNet, LLC

Second Round, LP

Unifund CCR LLC

Gold $7,500

Miller and Steeno, P.C.

Pressler, Felt and Warshaw, LLP

Rausch Sturm, LLP

Superlative RM

Silver $5,000

AscensionPoint Recovery Services, LLC

CKS Financial

Digital Recognition Network

FMA Alliance, Ltd

Halsted Financial Services, LLC

Klima, Peters, & Daly, P.A.

T&I Enterprises, LLC

Tromberg, Morris & Poulin, PLLC

Velo Law Office

Bronze $2,500

Absolute Resolutions Corp.

Couch Lambert

DebtNext Software, LLC

Investment Retrievers, Inc.

Ragan & Ragan

RAzOR Capital, LLC

Resurgence Capital, LLC

SAM, Inc. – Solutions for Account Management

Security Credit Services, LLC

Weltman, Weinberg & Reis Co., L.P.A.

Brass $1,000

Andreu, Palma, Lavin & Solis, PLLC

Bayview Solutions, LLC

Complete Credit Solutions, Inc.

FLOCK Specialty Finance

Gordon, Aylworth & Tami, P.C.

Hunt & Henriques

Kino Financial Co., LLC

Levy & Associates, LLC

Maxwell & Graves Solutions, LLC

Quantum3 Group, LLC

Simmonds & Narita, LLC

Slovin & Associates

Synergetic Communication, Inc.

The Cadle Company

Tobin & Marohn

VeriFacts, Inc.

Vertican Technologies, Inc.

Other

Accelerated Data Systems

Acctorp International, Inc.

Action Collection Agencies, Inc.

Advancial Federal Credit Union

Aldridge Pite Haan, LLP

Alliance Data

Alliant Capital Management LLC

Arko Consulting LLC

ARM Compliance Business Solutions

Atlas Acquisitions

Attunely Inc.

Autovest, LLC

Ballard Spahr, LLP

Beam Software

Business and Professional Collection Service, Inc.

Butler & Associates, P.A.

C&E Acquisition Group, LLC/ Diverse Funding Associates

Capio

Capital Collection Management, LLC

Capital Link Management, LLC

Client Services Incorporated

CMS Services

Commercial Credit Group Inc.

Complete Credit Solutions, Inc.

Comtronic Systems, LLC

Conficio Capital, Inc.

Converging Capital, LLC

Convoke, Inc.

Cornerstone Support, Inc.

Credit Control, LLC

Credit Management Corporation

Credit Corp Solutions, Inc.

CSS Impact!

Debt Recovery Solutions, LLC

Delev & Associates, LLC

Dyck-O’Neal, Inc.

Dynamic Recovery Solutions

Equabli

Experian

Finvi

First American Acceptance Co., LLC

First Solutions Debt Management, LLC

FMS, Inc.

G. Reynolds Sims & Associates, P.C.

Gaskell & Giovannini, LLC

Genesis Recovery Services

Guglielmo & Associates, PLLC

Harvest Strategy Group, Inc.

Indiana Receivables, Inc.

Interim Capital Group, Inc.

International Debt Buying Consultants, LLC

Invenio Financial, a Phillips & Cohen Associates Company

Jefferson Capital Systems, LLC

Jormandy

Keith D. Weiner & Associates Co., LPA

Kelly Knepper -Stephens

Kirschenbaum & Phillips, P.C.

Law Offices of Steven Cohen, LLC

Lockhart, Morris & Montgomery, Inc.

Malone Frost Martin PLLC

MauriceWutscher LLP

Metronome Financial LLC

Monarch Recovery Management, Inc.

National Debt Holdings, LLC

National Loan Exchange NLEX

National Recovery Associates, Inc.

National Recovery Solutions, LLC

Nationwide Recovery Systems

NCB Management Services, Inc.

Nelson & Kennard

NRA Group, LLC

PCI Group Inc.

Phin Solutions, LLC

Portnoy Schneck, L.L.C.

Poser Investments, Inc.

Premier Forty Financial, LLC

Premium Asset Recovery Corp (PARC)

Pro Forma Inc

Provana, LLC

ProVest LLC

Quall Cardot, LLP

RAS LaVrar LLC

Repay

Resource Management Services, Inc.

RevSpring

Robinson, Hoover & Fudge, PLLC

Scott & Associates, PC

Sentry Credit, Inc.

SMS Financial, LLC

State Collection Services, Inc.

Stone, Higgs & Drexler

Suttell & Hammer

Synchrony Financial

Tag Process Service, Inc.

Tate & Kirlin

Techno Brain BPO ITES Limited

TransUnion

Troy Capital, LLC

USASF Servicing

Vargo & Janson, P.C.

Velocity Portfolio Group, Inc.

Venable LLP

VoApps

Zenarate, Inc