RMAI Update June 2024

On June 10, RMAI leadership met with Director Rohit Chopra of the Consumer Financial Protection Bureau (CFPB) in Washington, DC. RMAI was represented by RMAI Immediate Past President Anne Thomas, RMAI Board Member Kelly Knepper-Stephens, RMAI Past President Jim Mastriani, and RMAI Executive Director Mike Becker. Director Chopra and John McNamara attended on behalf of the CFPB. RMAI was able to promote the important role the Receivables Management Certification Program continues to play in setting the gold standard in the receivables management industry, advocate for more collaboration with the CFPB (especially in the rulemaking process), and discuss the CFPB’s Complaint Portal, medical debt, data brokers, credit repair companies, and much more.

Register for RMAI’s June 18 webinar at 12noon Eastern where you can hear from RMAI leadership on their meeting with Director Chopra, plus an update on other federal activity. The webinar is free for members ($64 for non-members) and is eligible for one (1) RMAI Education Credit.

On June 3, the CFPB issued a final rule to require certain nonbank companies that have entered into consent agreements to be entered into a CFPB registry. The rule also applies to nonbank companies that the CFPB has identified as having violated laws under their jurisdiction. The rule is effective on September 16, 2024, with registrations available beginning on October 16, 2024 pursuant to a tiered implementation. The final rule can be read here.

On June 11, the CFPB proposed a rule that would significantly change the treatment of medical debt in credit reporting. Among the changes, the proposed rule would remove medical debt from most credit reports and would prevent the consideration of medical debt in underwriting. Specifically, the proposed rule modifies Regulation V to prohibit lenders from factoring medical debt into credit eligibility assessments, except for specified exceptions related to income, benefits, and loan purpose. The regulation would establish a broad restriction on reporting agencies, preventing them from including medical debt details in credit reports, unless two conditions are met: (1) the reporting agency has reason to believe the creditor is not prohibited from obtaining or using the medical debt information under §1022 of Regulation V, and (2) the reporting agency is not otherwise prohibited from furnishing the credit report, including by state laws governing the treatment of medical debt in credit reports. Comments on the proposed rule are due August 12, 2024.

On the legislative front, Sen. Bill Hagerty (R-TN) introduced legislation (S. 4521) that would amend the Consumer Financial Protection Act of 2010 to subject the CFPB to the regular appropriations process. The funding of the CFPB was a focus of the recent Supreme Court case where it was argued that the Bureau’s funding violates the Constitution because it comes from the Federal Reserve and not the appropriations process.

Earlier this spring, U.S. Senator Maria Cantwell (D-WA) and U.S. Representative Cathy McMorris-Rodgers (R-WA) unveiled the American Privacy Rights Act, draft legislation that would establish national data privacy laws. A section-by-section can be found here. However, the draft legislation has had several challenges, including two separate letters outlining issues with the bill that were sent to Senator Cantwell and Representative McMorris-Rodgers – one from a variety of business organizations and another from a dozen law enforcement organizations.

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. In 2024, RMAI has so far retained lobbyists in the following states: California, Colorado, Connecticut, Maine, Michigan, New York, New York City, Oregon, and Rhode Island. RMAI has also provided a financial contribution to a Nevada coalition fighting two ballot initiatives and the North Carolina Creditors Bar who is fighting a medical debt bill. If you have an interest in volunteering in RMAI’s grassroots advocacy efforts, please contact RMAI General Counsel David Reid at (916) 779-2492 or [email protected]. The following is a sample of the legislative activity over the prior month that has direct impact on the industry:

California SB 1061 – This bill would prohibit a person from furnishing information regarding a medical debt to a consumer credit reporting agency and would make a medical debt void and unenforceable if information regarding the medical debt is furnished to a consumer credit reporting agency. The bill would broadly define medical debt to mean “a debt related to, in whole or in part, a transaction, account, or balance arising from a medical service, product, or device.” However, it would specifically exempt debt charged to a credit card unless the credit card is issued under an open-end or closed-end plan offered specifically for the payment of medical services, products, or devices, unless that plan allows for deferred interest purchases of a medical service, product, or device. A similar exemption is provided for loans secured by real property. [RMAI is seeking a narrower definition of “medical debt” that would tie it to medical debt directly owed to a person or facility licensed in California that provides medical services. RMAI is concerned that the current exemption for credit cards and real property are not broad enough.]

Colorado HB 1380 [Chapter 463] Effective: August 7, 2024 – This law will, among other things, prohibit a debt collector that is not a creditor or debt buyer to be the named plaintiff in a legal action or take any legal action on a debt against a consumer unless the debt collector: (1) ensures that the name of the original creditor or assignor and the name of the debt collector is included in the case caption of the complaint, in that order; and (2) has a complete and effective assignment, including complete settlement authority and authority to resolve the litigation. [RMAI was supportive of this legislation as it is consistent with industry best practices.]

Connecticut SB 123 [Chapter 77] Effective: January 1, 2025 – This law will require a claimant to suspend all collection activities that concern a debt identified by the debtor as coerced debt until the claimant has completed a review to determine the veracity of the allegation if the debtor provides the claimant with information and documentation, certified by the debtor, that includes the following: (1) an identification of the debt alleged to be coerced debt; (2) a description of the circumstances under which the coerced debt was incurred; (3) an attested to written statement by the debtor; (4) any information known by the debtor, including, but not limited to, any credit card number, and the individual in whose name such debt was incurred; (5) the identity of the individual whom the debtor alleges coerced the debtor into incurring such debt and contact information for such individual, if the debtor knows such contact information, unless the debtor signs a sworn statement that disclosing such information is likely to result in abuse to the debtor or any immediate family member of the debtor; (6) A telephone number that the claimant may use to contact the debtor to obtain additional information; and (7) any other documents the debtor deems appropriate to support the request. “Coerced debt” means any debt incurred in the name of a debtor who is a victim of domestic violence when such debt was incurred in response to any duress, intimidation, threat of force, force or undue influence used to specifically coerce the debtor into incurring such debt. [This law was negotiated over the last two years to ensure that appropriate safeguards were added to protect both the consumer and creditor.]

Connecticut SB 395 [Chapter 6] Effective: July 1, 2024 – This law prohibits the furnishing of medical debt to a credit rating agency for use in a credit report.  The law defines medical debt as “an obligation or alleged obligation of a consumer to pay any amount related to the receipt by the consumer of health care goods or health care services.” It also requires that a health care provider doing business in Connecticut include in any contract entered with a collection entity on and after July 1, 2024, for the purchase or collection of medical debt a provision that prohibits the furnishing of any portion of medical debt to a credit rating agency. The law makes any portion of a medical debt that is reported to a credit rating agency void. The law excludes from the definition of medical debt, debt charged to a credit card “unless the credit card is issued under an open-end or closed-end credit plan offered specifically for the payment of charges related to health care goods or health care services.” [RMAI was opposed to this legislation given the lack of a sufficient exemption for credit products, ambiguous wording within the text, and the voiding of debt for as much as an administrative error.]

Massachusetts HB 4429 – This bill would, among other things: (1) increase the garnishment exemption from 50x state minimum wage to 65x state minimum wage; (2) reduce the statute of limitations (SOL) in an action for the collection of a consumer debt from six to five years; (3) prohibit the revival of a debt that is beyond the statute of limitations through the making of a payment; and (4) reduce 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 January 1, 2025. [RMAI has been opposing this bill since 2014 when it was first introduced. After eight years of negotiations and countless amendments, RMAI, other industry participants, and consumer advocates agreed to amendments that resulted in a neutral position by the industry. Among items removed from the bill through RMAI’s efforts from its 2014 introduction: (a) 90x minimum wage garnishment exemption; (b) expungement of the debt once the SOL expires; (c) reducing the SOL from six to three years; (d) preventing the tolling of the SOL through a payment prior to the expiration of SOL; (e) reducing the enforcement of a judgment from 20 to 5 years with no renewal; (f) applying the bill’s provisions to real property; and (g) once the consumer exceeds the exemption threshold, only being able to garnish on income above the threshold.]

Michigan SB 408 – This bill would among other things: (1) increase the garnishment exemption from 30x federal minimum wage to 80x state minimum wage; (2) limit garnishment to 10% of earnings in excess of the garnishment exemption and then 15% of any earnings over $1,200; (3) create a wild card exemption up to $17,000; (4) eliminate all tax garnishments for judgments obtained pursuant to a “consumer debt”; (5) increase the homestead exemptions from $35,000 to $250,000 ($350,000 for seniors and those with disabilities); and (6) increase various property exemptions including for automobiles, household goods, tools of the trade, agricultural, etc. [RMAI and an industry coalition are vigorously opposing this bill. RMAI has retained a Michigan lobbyist. RMAI had in-person meetings with the bill sponsors and key legislators in October, followed by two virtual meetings with the Senate sponsor, to express our concerns. We recently received several amendments proposed by the sponsor which are currently under review.]

Rhode Island SB 2709, SB 2710, SB 2711 – These bills in their totality would ban the reporting of “medical debt” to credit bureaus, void all medical debts that are reported to a credit bureau, cap the interest on medical debt, and prohibit liens on real property. The bills have the support of the Rhode Island Leukemia and Lymphoma Society. [RMAI retained a Rhode Island lobbyist to advocate for a narrower definition of “medical debt” in all three bills as the definitions in the introduced versions were broad enough to include credit cards and other credit/loan instruments. There were no other industry participants that had a lobbyist in Rhode Island, so RMAI was the only voice for the broader industry. RMAI was successful at getting all three bills amended. The new definition of “medical debt” only applies to debt owed to a healthcare facility or healthcare professional.]

U.S. Supreme Court Holds CFPB’s Funding Mechanism is Constitutional
Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., Ltd., No. 22-448, 2024 U.S. LEXIS 2169 (May 16, 2024)

For the second time in four years, the Supreme Court rejected a constitutional attack on the Consumer Financial Protection Bureau’s authority, this time ruling that CFPB’s funding mechanism complies with the Constitution’s Appropriations Clause.

Unlike most other federal agencies, the Bureau does not ask Congress for funding. Instead, it obtains its funds by making a request to the Federal Reserve, and that request may not exceed 12% of the Federal Reserve’s “total operating expenses.”

The U.S.  Court of Appeals for the Fifth Circuit held this scheme violated the Appropriations Clause which grants Congress exclusive control over “the federal purse.” The Fifth Circuit reasoned Congress’ funding control is a necessary apparatus to the checks and balances between the three branches of the federal government. The Appropriations Clause prevents “the executive [branch] . . . from unilaterally spending funds,” by allowing Congress to retain control of the purse strings. The CFPB, in the end, holds the strings to the purse, not Congress, and so it is constitutionally defective, according to the Fifth Circuit’s opinion.

Justice Clarence Thomas, writing for the seven-justice majority, disagreed with the lower court, stating that “Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes. The statute that provides the Bureau’s funding meets these requirements. We therefore conclude that the Bureau’s funding mechanism does not violate the Appropriations Clause.”

Justice Thomas explained that “[b]ased on the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification, we conclude that appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the Appropriations Clause.”

Justice Samuel Alito delivered a dissent, joined by Justice Neil Gorsuch. The dissent criticized the majority opinion as undermining the checks and balances protection afforded by the Appropriations Clause, causing it to be nothing more than “a minor vestige.”

A concurring opinion was delivered by Justice Elena Kagan, which was joined by Justices Sonia Sotomayor, Brett Kavanaugh and Amy Coney Barrett. Justice Ketanji Brown Jackson filed a separate concurring opinion.

The CFPB issued a statement applauding the decision. “This ruling upholds the fact that the CFPB’s funding structure is not novel or unusual, but in fact an essential part of the nation’s financial regulatory system, providing stability and continuity for the agencies and the system as a whole. As we have done since our inception, the CFPB will continue carrying out the vital consumer protection work Congress charged us to perform for the American people.”

The Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), issued a press release stating: “Despite the setback from today’s ruling, Republicans will continue the fight to rein in the rogue CFPB. To be clear, this Supreme Court opinion yet again emphasizes that Congress has exclusive authority and discretion over federal agencies’ funding structures. The House must urgently take up Congressman Andy Barr’s CFPB Transparency and Accountability Reform Act. This commonsense legislation will fix the mistakes of Dodd-Frank which set the dangerous precedent of tapping the central bank to fund partisan political objectives. It’s past time the CFPB is held accountable to the American people through their elected representatives.”

Second Circuit Sides with Ninth, Third, and Eighth Circuits on ATDS Definition
Soliman v. Subway Franchisee Advert. Fund Tr., Ltd., 101 F.4th 176 (2d Cir. 2024)

A consumer received a marketing text message from a business and the consumer opted out of future text messages by responding “STOP.”  The consumer received an immediate response that she was unsubscribed, but nevertheless received another automated text message days later.  It was undisputed that the system did not generate telephone numbers, relying instead on a pre-existing list.

The consumer filed a lawsuit alleging the business violated the Telephone Consumer Protection Act (“TCPA”) by using an automated telephone dialing system (“ATDS”), and by using an “artificial or prerecorded voice.”  The trial court dismissed the claims, holding first “that the TCPA only bars the use of a dialing system that randomly or sequentially generates telephone

numbers, and not a system that relies on a stored list of pre-existing telephone numbers and only generates indexing or other coding numbers.”  Second, “that the TCPA’s prohibition on the use of an “artificial or prerecorded voice” did not apply to text messages.”  The consumer appealed.

The U.S. Court of Appeals for the Second Circuit began by explaining that the TCPA, 47 U.S.C. § 227(b)(1)(A)(iii), states:  “It shall be unlawful for any person . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service.”

Next, the Court recited the TCPA’s definition of an “automatic telephone dialing system,” which is “equipment which has the capacity– (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. §227(a)(1).

The consumer argued “that the definition includes a system that autodials numbers randomly drawn from a pre-existing list of telephone numbers.”

The Court disagreed, siding with the Ninth, Third, and Eighth Circuits that concluded “the TCPA covers only ATSDs that generate telephone numbers, that is, systems that do not rely on pre-existing lists of telephone numbers.”

The Court relied, in part, on Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), where the Supreme Court “held that to qualify as an automatic telephone dialing system, ‘a device must have the capacity either to store a telephone number using a random or sequential [number] generator or to produce a telephone number using a random or sequential number generator.’  Thus, ‘produce’ means creating the telephone number in the first place.”

The Court also disagreed with the consumer’s contention that a text message is the equivalent of an artificial or prerecorded voice.  “Common sense tells us that ‘voice’ — especially in the context of a statute regulating telephones — will ordinarily refer to a sound produced by a human being.”  The Court noted that other language in the TCPA also supported this conclusion.

Based on this, the Court affirmed the trial court’s decision dismissing the claims.

RMAI Legislative Fundraising Committee Outreach
The Legislative Fundraising Committee is working to ensure that RMAI can continue its advocacy efforts. Committee members have been conducting outreach to RMAI members, seeking donations to amplify the voice of the receivables industry. With new legislation being proposed that can impact your business, it is more important than ever to ensure that your voice is heard. The Legislative Fundraising Committee will continue to reach out to members, so keep an eye out for correspondence. Your donations make a difference, allowing RMAI to lobby on your behalf across the country.

If you would like to contribute to the Legislative Fund and be featured on our website, you can donate here. You can view a list of current Legislative Fund donors here.

About the Legislative Fund
RMAI actively monitors and responds to state and federal measures affecting how our members do business. Your contributions to the Legislative Fund extend the reach of RMAI’s advocacy across the country where and when needed. Read more about the Legislative Fund. You can see a list of current contributors on the right-side bar.

Upcoming Webinars

Register for our June 18^th webinar, An Update on RMAI’s Washington Efforts: From Capitol Hill to RMAI’s Meeting with Director Chopra, where our presenters will provide an update on recent activity on Capitol Hill. Hear updates on the privacy bill, CFPB funding legislation, and other congressional activities.

Register for our June 25^th webinar, Navigating Advocacy: Unveiling Key Resources and Myths in 3^rd Party Collections, sponsored by TransUnion, where members of RMAI’s Industry Research Working Group unveil their top reference materials and talking points crucial for advocating for the 3^rd Party Collections Industry.

Recorded Webinars

Recorded on May 22, you can register for Your Digital Collections Questions Answered.  In this webinar consent, delivery, unique issues with email/text messages Regulation F and E-Sign, litigation and complain rates, validation notices and agent concerns will be discussed.

Recorded on May 29, you can register for Transunion Sponsored Webinar: Strategies for Effectively Evaluating, Pricing, Winning, and Profiting from Potential Portfolios.  This webinar will focus on new methods, data elements, and strategies around using data to better predict potential liquidity of a portfolio, new data elements that can be considered, strategies to be able to evaluate more portfolios, and potential legal and segmentation strategies.

Recorded on June 11, you can register for New Guidance on Credit Reporting and Reasonable Investigations our presenters will explore emerging trends, compliance strategies, and the CFPB’s evolving expectations for credit furnishers.

Click here for more information on our live and recorded educational webinars. Contact Shannon Parod at [email protected] to find out more about sponsoring an RMAI.

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

CRCP New
Ross Enders, NCB Management Services
Ken Peck, Lockhart, Morris, Montgomery
Ali Taylor, Harvest Strategy Group

CRCP Renewals
Tracey Gibson, Viking Client Services
Rodney Giove, Metacorp
Clement Ndegwa
Mark Stelk, General Collection

CRB New
Williams, Rush & Associates

CRB Renewals
Dobberstein Law Firm
Interim Capital Group
Pharus Funding

Get Your In-Person Education Credits at the Executive Summit
RMAI is offering at least 12 in-person education credits at the Executive Summit, August 6-8, 2024 at the Hyatt Regency Tamaya. For those of you looking to either earn your required in-person education credits as the Chief Compliance Officer for your company’s business certification or you are looking to earn a large portion of your certification credits in one place, the Executive Summit is the perfect setting to accomplish your education needs. Register for the Executive Summit here.

For any additional certification needs, please see our resources below.

Certification Resources

• CRB Timeline
• 7 Steps to Certification – Business
• CRCP Timeline
• 7 Steps to Certification – Individual
• Sample Policies and Procedures for Debt Buyers
• Recorded Webinar – Starting or Continuing Your Certification Journey

For more information or to discuss the certification process in more detail, please contact Shannon Parod at [email protected] to set up a call.

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

Take Advantage of Educational Opportunities for You and Your Team

Remember, one of your benefits of membership with RMAI is complimentary and discounted registration for live and recorded webinars. Not only do these educational webinars advance your knowledge, but they are an excellent training resource for your team, and the credits count toward the Certified Receivables Compliance Professional (CRCP) designation. With the January 1, 2025, deadline to become certified fast approaching, there’s no better time to stack up your credits! Catch them live or watch the recording after, you can see all previously recorded webinars on our website here.

As an RMAI member, you also get a discount on sponsoring educational webinars. Showcase your company by sponsoring a webinar. Sponsorship gets you and your brand in front of a captive audience of our most engaged members for the live webinar as well as the following 12 months for the recorded webinar. You will also have the option to give a 2–3-minute pitch at the beginning of the live webinar to introduce your product. Contact Shannon Parod to sponsor a webinar!

Welcome, New Members!

• CASA Receivables Management, LLC. | FL
• Paragon BPO, LLC. | SC
• Knute Financial, LLC. | NY

For a complete list of RMAI members, login to check out the Member Directory.

2024 RMAI Executive Summit | August 6-8, 2024

Please note, the RMAI office will be closed July 4th, in observance of Independence Day.

Thank you to our June 10, 2023 through June 10, 2024 Legislative Fund Contributors!

Diamond
Cavalry Investments, LLC
Crown Asset Management, LLC
Portfolio Recovery Associates, LLC

Platinum
Cascade365 Family of Companies
EverChain
Unifund CCR, LLC

Silver
Blitt and Gaines, P.C.
FirstSource
National Credit Adjusters, LLC

Bronze
First Financial Portfolio Services, LLC dba FFAM360 Capital
InvestiNet, LLC
Security Credit Services, LLC
Superlative RM

Brass
AAA Lenders Inc
AACANet, Inc.
Acctcorp International, Inc.
Advancial Federal Credit Union
ARM Compliance Business Solutions LLC
Automated Collection Services Inc
Balbec Capital
Basham & Scott, LLC
Bayview Solutions, LLC
C & E Acquisition Group, LLC
Call Center Services International
CBE Companies
Central Portfolio Control, Inc
Collection Attorneys USA LLC
CompuMail Information Systems
ConServe
Cornerstone Licensing Services
Corporate Advisory Solutions, LLC
Credit Control, LLC
D & A Services, LLC
Debt Recovery Solutions, LLC
DebtNext Software, LLC
Exelero Corp.
FDR Alliance LLC
Financial Recovery Services, Inc.
FMA Alliance, Ltd
General Collection Co.
Genesis Recovery Services
Glass Mountain Capital, LLC
Grassy Sprain Group, Inc
Halsted Financial Services, LLC
Harvest Strategy Group, Inc.
Huntington Debt Holding LLC
Imagined.Cloud LLC
InDebted
Invenio Financial, a Phillips & Cohen Associates Company
Investment Retrievers, Inc.
Jefferson Capital Systems, LLC
Kino Financial Co., LLC
Lateral Technology
Law Office of James R. Vaughan, P.C.
Lockhart, Morris & Montgomery, Inc.
Moss & Barnett, P.A.
Mountain Peak Law Group, PC
Murray Law Firm, P.C.
National Debt Holdings, LLC
NCB Management Services, Inc.
Nelson & Kennard
PCI Group Inc.
Pharus Funding, LLC
Plaza Services
Pressler, Felt and Warshaw, LLP
Prodigal
Quall Cardot, LLP
Quantum3 Group, LLC
Repay Realtime Electronic Payments
Resource Management Services, Inc.
Revenue Assistance Corporation dba Revenue Group
RevSpring
Robinson Hoover & Fudge, PLLC
SAM – Solutions for Account Management
Shepherd Outsourcing, LLC
Slovin & Associates
SMS Financial, LLC
Stillman Law Office
Stone, Higgs & Drexler
Suttell & Hammer
TEC Services Group, Inc.
The Bureaus, Inc.
The Cadle Company
Tobin & Marohn
TriVerity, Inc.
Tromberg, Morris & Partners, PLLC
Troy Capital, LLC
TrueAccord
Universal Fidelity LP
Velocity Portfolio Group, Inc.
Vertican Technologies, Inc.
VoApps, Inc.

Other
Alliance Credit Services, Inc.
Barron & Newburger, P.C.
Burr & Forman LLP
CMS Services
Cohen & Cohen Law, LLC
Comtronic Systems, LLC
Connect International
Consuegra & Duffy, PLLC
Converging Capital, LLC
Convoke, Inc.
Equabli, Inc
Equifax, Inc.
Gaskell & Giovannini, LLC
Hinshaw & Culbertson
HS Financial Group, LLC
Martin Golden Lyons Watts Morgan PLLC
National Recovery Associates, Inc.
National Recovery Solutions, LLC
Orbita Capital Group, LLC
Palinode, LLC
POM Recoveries, Inc.
Poser Investments, Inc.
Receivables Management Association International
Roosen, Varchetti & Olivier, PLLC
Sandia Resolution Company, LLC
SCJ Commercial Financial Services
Sonnek & Goldblatt, Ltd.
The Oakes Law Firm, LLC
Vargo & Janson, P.C.
WebRecon LLC
Womble Bond Dickinson