RMAI Update March 2022

Amidst the war in Ukraine, runaway inflation, and the lack of a federal budget, Congress is preoccupied! FDCPA legislation seems to be on the back burner, although we continue to see legislation introduced that would affect the industry. We believe that Congress will not act on these individual pieces of legislation. Nonetheless, K&L Gates, RMAI’s federal legislative/regulatory counsel, will continue to monitor activities on Capitol Hill for possible amendments into major pieces of legislation. RMAI will focus our Capitol Hill resources this year on education. To that end, RMAI leadership is currently in Washington, D.C. meeting with key congressional offices providing industry education, the important role the industry plays in the credit ecosystem, and the value of the RMAI Receivables Management Certification Program.

On the regulatory front, the CFPB has been very busy with recent press releases relating to medical debt, auto loans and repossessions, and mortgage loans. We anticipate the CFPB will continue to be active, particularly in the enforcement arena. To date, we have not seen or heard of any activities related to further debt collection rulemaking.

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. RMAI is currently tracking more than 300 bills at the state level. Here are some recent developments at the state level that might be of interest:

California SB 1200 – This bill would reduce the post-judgment interest rate from 10 to 3 percent if the judgment is on a claim related to personal debt or personal credit. The bill would also prohibit the renewal of a 10-year judgment for another 10 years, except in instances where a lien was created. [RMAI is working with our California lobbyist and an industry coalition to fight this bill.]

California SB 1477 – This bill would increase the disposable earnings that are exempt from wage garnishment by increasing the minimum wage multiplier from 40x to 80x. This would effectively exempt incomes over $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.]

District of Columbia B 348 – The bill would make permanent a number of provisions related to D.C.’s debt collection laws, including: (1) expanding the prohibitions on deceptive behavior; (2) prohibiting debt collectors from making more than three phone calls to a consumer in seven days; (3) requiring debt collectors to have complete documentation related to the consumer debt being collected; (4) requiring debt collectors to provide extensive data and documents to the consumer within 15 days of a written request; (5) requiring lengthy consumer notices informing consumers of their rights; (6) requiring debt collectors who enter into a payment schedule or settlement to provide a written copy of the schedule or agreement; (7) adding specific requirements for a debt collector when initiating a cause of action against a consumer for consumer debt; and (8) increasing damages that can be awarded to a consumer for violation of the act. [RMAI retained a D.C. lobbyist to advocate on behalf of the industry. The DC City Council heard public testimony from RMAI and other industry participants on Monday, November 29, 2021, on the adoption of a permanent law based on the text contained in temporary bill # 348. RMAI and an industry coalition were successful in amending the emergency and temporary bills by: (a) adding exemptions to the call cap limitation, (b) eliminating pre-charge-off itemization of credit card debt; (c) eliminating the requirement for 24 months of statements; (d) eliminating unsolicited mailing requirements foisted upon debt collectors involving sensitive consumer data; (e) eliminating a requirement that the “original account number” be in the bill of sale; (f) eliminating mandatory punitive damages; and (g) eliminating a “per violation” penalty. More work needs to be done on the “permanent” bill. RMAI and a coalition of associations, debt collectors, and creditors are seeking an additional 25 amendments to the permanent statutory language. More to come!]

Seventh Circuit Finds FCRA Dispute Investigation was Reasonable in ID Theft Case
Woods v. LVNV Funding, LLC, No. 21-1981, 2022 U.S. App. LEXIS 5298 (7th Cir. Feb. 28, 2022)

An airline credit card was opened in Plaintiff’s name and used to make a single purchase.   Plaintiff was unaware of the purchase until after the debt had been acquired by a debt buyer and he began receiving letters from a collection agency.

Plaintiff disputed the debt multiple times with the collection agency and the airline, completed an FTC Identity Theft Report and filed a police report.  Initially, the airline replied with letters stating the debt was owed by Plaintiff.  The letters were provided to the police, who included in their report that the airline “had completed an investigation and … determined that it was in fact him [Plaintiff].”  The collection agency sent Plaintiff verification of the debt and proceeded to report it to a credit reporting agency, as disputed.

Finally, Plaintiff reported the dispute directly with the CRAs, providing a copy of the police report.  The CRAs notified the collection agency of the dispute, with a copy of the police report, and the collection agency, after reviewing the dispute and its account information, notified the CRAs that the debt did, in fact, belong to Plaintiff.

Plaintiff filed suit against the debt buyer and collection agency alleging: 1) violation of the Fair Debt Collection Practices Act (“FDCPA”) by “using “false representation[s] or deceptive means to collect or attempt to collect any debt” because the letters were literally false; and 2) violation of the Fair Credit Reporting Act (“FCRA”) by failing to conduct a reasonable investigation in the fraud claims.

The trial court granted summary judgment in favor of debt buyer and collection agency, finding: 1) on the FDCPA claim, Plaintiff  “had not met the threshold burden of showing that the airline ticket was a consumer debt” since the flight could have been for a busines purpose, and regardless, “an unsophisticated consumer would not have been deceived by the  letters.”; and 2) on the FCRA claim, the reasonableness of the debt collector’s investigation was “beyond question.”  Plaintiff appealed.

The U.S. Court of Appeals for the Seventh Circuit first considered the FDCPA claim and agreed with Plaintiff that because of the nature of the purchase (a one-way ticket), “a reasonable jury could conclude that the odds that the purchase was made for consumer purposes were better than a coin flip.”

Nevertheless, the Court explained that “literal falsity” is not the correct standard.  Rather, “[i]f a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA—even if it is false in some technical sense.”  Here, Plaintiff failed to explain why the collection letters were misleading, and “the unsophisticated consumer would have known the letters were sent in error—just as [Plaintiff] did here.”

Regarding the FCRA claim, the Court noted that upon receiving notice of the dispute from the CRAs, the collection agency had “a statutory obligation to “conduct an investigation with respect to the disputed information” under 15 U.S.C. § 1681s-2(b)(1)(A).  Further, the investigation “must be ‘reasonable’ – pro forma inquiries will not do,” and “the reasonableness of a furnisher’s investigation ‘is a factual question normally reserved for trial’ unless the defendant’s procedures were reasonable beyond question.’”

In this case, the Court could not say that the collection agency’s investigation was unreasonable since all the agency had before it was its account information and a police report stating the airline had determined the Plaintiff to be the debtor.  Additionally, Plaintiff failed to respond to the collection agency’s requests for additional information, some of which may have resolved the matter.

Thus, the Court affirmed the judgment of the trial court but warned: “But a word to the wise: this opinion is no license for furnishers to offload their § 1681s-2(b)(1)(A) investigation obligations to consumers by spamming them with requests for additional information. Instead, like all questions of reasonableness, our conclusions depend on the totality of the circumstances in the case before us.”

Auto Lender Agrees to $5.5 Million Settlement for Failure to Provide Compliant Deficiency Notices
In the Matter of Santander Consumer USA Inc., Massachusetts Superior Court, Dept. of the Trial Court, Civ. No 2284CV00377 (Feb. 18, 2022)

An auto lender recently agreed to pay millions of dollars to resolve allegations made by the Massachusetts Office of the Attorney General that it failed to provide compliant deficiency notices following the repossession of automobiles from consumers within the Commonwealth.

The lender agreed to pay more than $5.5 million to end an investigation by the Attorney General that it failed to provide post-repossession deficiency notices that were based on the fair market value of the auctioned vehicles.

This settlement follows the record-breaking settlement between another lender and the Commonwealth of Massachusetts where that lender agreed to pay $27 million to resolve similar allegations it failed to provide deficiency notices based on a vehicle’s fair market value.

These settlements are effectuated by the Massachusetts Supreme Judicial Court’s groundbreaking decision in Williams v. Am. Honda Finance Corp., 479 Mass. 656 (2018), where the SJC held auto lenders “must expressly describe the deficiency as the difference between the amount owed on the loan and the fair market value of the vehicle, not the difference between the amount owed and the sale proceeds.”

Significantly, it is now settled law that the holding in Williams applies retroactively, meaning it applies to all notices sent before it was decided. See, e.g., Dellorusso v. PNC Bank, N.A., 98 Mass. App. 84 (2020).

As the court noted in Dellorusso, there is “no compelling reason why [a lender] should enjoy more favorable treatment in exchange for the risk it took than American Honda Finance Corporation [], merely because American Honda’s case was decided first.”

The settlement amounts were so substantial because a violation of Mass. Gen. Laws c. 255B, § 20B, the statute regulating post-repossession procedures/notices, constitutes an unfair trade practice in violation of Mass. Gen. Laws c. 93A (the Massachusetts unfair and deceptive trade practices act), exposing lenders to treble damages.

This settlement is another reminder that auto lenders doing business in Massachusetts must make sure their post-repossession notices comply with Williams and reference the fair market value of the repossessed vehicle, not the price obtained at auction.

Eighth Circuit Finds No Art. III Standing in Case Involving Garnishment Communication with Represented Consumer
Ojogwu v. Rodenburg Law Firm, No. 20-2879, 2022 U.S. App. LEXIS 3914 (8th Cir. Feb. 14, 2022)

In Minnesota, a creditor may issue a garnishment summons to any third party “at any time after entry of a money judgment in [a] civil action.” Minn. Stat. § 571.71(3). The statute further provides that a copy of the garnishment summons, copies of other papers served on the third-party garnishee, and the applicable garnishment disclosure form “must be served by mail at the last known mailing address of the debtor not later than five days after the service is made upon the garnishee.” § 571.72.

In this case, a collection law firm mailed the statutorily required garnishment documents to the consumer, knowing at the time that the consumer disputed the debt and was represented by counsel.

The consumer filed a lawsuit against the law firm alleging it had violated 15 U.S.C. § 1692c(a)(2) of the Fair Debt Collection Practices Act (“FDCPA”) which, in the absence of the consumer’s consent of the express permission of a court, generally prohibits a debt collector from communicating directly with the consumer “if the debt collector knows the consumer is represented by an attorney . . .”

The trial court held, in part, that the law firm’s “compliance with Minnesota law requiring that debtors be directly served did not excuse it from [FDCPA] liability because state garnishment and default judgment law and rules are not the ‘express permission of a court of competent jurisdiction.’”  The trial court entered judgment in favor of the consumer pursuant to a damage stipulation, and the law firm appealed.

On appeal, the Eighth Circuit considered the issue of Article III standing, which had not been addressed by the trial court.

The Court explained, quoting TransUnion LLC v. Ramirez, 141 S. Ct.  2190 (2021), that the consumer had “the burden of proving Article III standing by showing (i) that he suffered an injury in fact that [was] concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” Further, “a concrete and particularized inquiry is required even when Congress creates a private cause of action, as it did in the FDCPA.”

The Court found that the injuries alleged by the consumer (“fear of answering the telephone, nervousness, restlessness, irritability, amongst other negative emotions’) amounted to “intangible injuries . . . insufficient to establish concrete injury in fact.”

Further, the mailing of the mailing of the garnishment summons to the consumer was a benefit  rather than a detriment to the consumer because it gave “him timely notice and an opportunity to claim an exemption or satisfy the garnishment in a way that does not disturb his relations with the financial institution garnishee.”

Concluding that the trial court lacked Article III Standing, the judgment was vacated, and the case remanded for dismissal of the complaint.  However, leave was granted to file supplemental briefs on the issue of standing.

PA Dist. Court Finds FDCPA Complaint for Alleged Transmission of Consumer Data to Vendor States a Claim
Khimmat v. Weltman, Weinberg & Reis Co., LPA, No. 2:21-cv-02944-JDW, 2022 U.S. Dist. LEXIS 21076 (E.D. Pa. Feb. 7, 2022)

The U.S. District Court for the Eastern District of Pennsylvania on February 7 handed down a decision finding that the mere use of a letter vendor is sufficient to allege a violation of 15 U.S.C. § 1692c(b) of the Fair Debt Collection Practices Act by transmitting information to the letter vendor.

The Court determined that the transmission of information to a letter vendor is a “communication,” and that the communication is “in connection with the collection of any debt” within the meaning of § 1692c(b).

In denying the defendant’s motion for judgment on the pleadings, the Court rejected an argument that the letter vendor was exempt from § 1692c(b)’s coverage because it served as the defendant’s “agent.”

First, the Court noted that Congress did not exempt any agents other than those specifically listed in § 1692c(b). Next, the Court explained that even if agents were exempt, there was no evidence showing that the defendant directed or had control over the vendor’s printing or mailing activities, an essential element of an agency relationship.

The Court also rejected an argument grounded in the First Amendment, finding that the government had a substantial interest in limiting disclosure of a consumer’s status as a debtor and that it proportionally advanced that interest through § 1692c(b).

Similarly, the Court was not persuaded by the apparent approval of the use of letter vendors by the CFPB and the FTC. Instead, the Court explained that the CFPB and the FTC “have not addressed the use of letter vendors in any legally significant way.”

The Court did, however, note that the parties can address the issue of standing if it turns out that the letter vendor merely processed, and did not read, consumer information; but at the pleadings stage the Court inferred from the complaint that the vendor read the plaintiff’s information.

2022 Annual Conference Silent Auction Was a Success!
Thank you to all of our silent auction bidders at the Annual Conference! The auction was another successful event, raising more than $16,000 for RMAI’s Legislative Fund. Also thank you to the donors of the 51 items available for bid to help support RMAI’s future advocacy efforts.

Never Donated Before?
If you haven’t donated to RMAI’s Legislative Fund before, 2022 is your year. With hot legislative topics including bank and wage garnishment, privacy laws, medical and student loan debt, and economic abuse, RMAI will need your support. Take a look at our infographic from 2021 which shows where the donations go.

If you’d like to start contributing to the Legislative Fund, you can donate here. We will add your company name to our list of contributors on our website.

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 here.

2022 Webinar Lineup

The Education Committee is working on our 2022 monthly webinar lineup. Webinars to look out for in March and April are:

• Getting Ready for the Amended Safeguard Rule – Today, March 15th at 11:30am PT/2:30pm ET
• ICYMI: While You Were Buried in Reg F – April TBD at 9:00am PT/12:00pm ET
• Best Practices and Considerations for an Effective Estate Recovery Strategy – April TBD at 9:00am PT/12:00pm ET

Sponsor a Webinar

With planning underway for our monthly webinars, sponsorships will be available. If you are interested in sponsoring a webinar, the cost is $750. Here is our webinar sponsorship flyer which details all the benefits you receive as a sponsor. View Webinar Sponsorship Flyer

Contact Shannon Parod at [email protected] or 916.482.2590 with any questions.

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

CRCP – New
Natalie Bonaparte Servera – Island Portfolio Services
Alexander Cancilla – Audubon Solutions
Amanda Gazos – Bayview Solutions
David Genovese – Recovery Management Solutions
Owen Grace – Absolute Resolutions Corp.
Tara Hey – TrueAccord
Michele Jefferson – Klima, Peters, & Daly
Cynthia Jeffrey – Keith D. Weiner & Associates
Helen Kyungeun Lee – NDL Consultants
Tom Larkin – Tate & Kirlin
Michael Lewis – Keith D. Weiner & Associates
Tanya Lupien – Absolute Resolutions Corp.
Clement Ndegwa – NCB Management Services
Brittan Robinson – Stone, Higgs & Drexler
Sooin Yoon – NDL Consultants

CRCP – Renewals
Celeste Anderson – Equifax
Brian Becker – Scott & Associates
Andrew Blady – Spring Oaks Capital
LaDonna Bohling – Contract Callers
Mike Boyle – C&E Acquisition/Diverse Funding Associates
Patricia Druckman – Pharus Funding
J. Duke Edwards – J. Duke Edward P.C.
Tim Elizarrarz – Scott & Associates
Miles Fisher – Genesis Recovery Services
Rodney Giove – Metacorp
Jeff Hasenmiller – D&A Services
Renee Hulett – Recovery Management Solutions
James Kiley – Investment Retrievers
Charles Natkins – Formerly with Oliphant (self-employed)
Lori Patnode – National Credit Adjusters
Stephanie Schenking – Crown Asset Management
Zach Schwartz – Debt Recovery Solutions
Anne Thomas – Cavalry Investments
David VanDerHeyden – VanDerHeyden Law Firm
Sara Woggerman – ARM Compliance Business Solution
Greg Woodford – Absolute Resolutions Corp.

CRB – New
D & A Services, LLC
Keith D. Weiner & Associates
National Credit Adjusters, LLC

CRB – Renewals
Orion Portfolio Services
TrueAccord

Submit Your Education Credit Forms and Become Individually Certified
If you attended education sessions at the Annual Conference, you can apply those education credits to the 24 credit requirement for individual certification.

Send your education credit forms or CLE credit forms to Shannon Parod, [email protected], and she will keep them on file until you are ready to submit your application to become a Certified Receivables Compliance Professional (CRCP). This designation is good for two (2) years.

Take the Next Step and Get Your Business Certified
If an individual from your company has already earned the CRCP designation, now is the time to take the next step and get your business certified too. Business certification requires your company to be in compliance with various standards that either meet or exceed state and federal regulations. Review the 7 Steps to Earn the Certified Receivables Business (CRB) Designation to get started.

Affiliate Members Can Get Certified Too!
If you are an Affiliate Member with RMAI, you can get your business certified through our Certified Receivables Vendor (CRV) program. RMAI offers two (2) types of vendor certification: General Vendor Certification and Broker Certification. Review the 7 Steps to Earn the Certified Receivables Vendor (CRV) Designation to get started.

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

For questions about certification, contact Shannon Parod direct at 916-482-2590 or email [email protected].

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

RMAI 2022 Executive Summit | August 2-4, 2022

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

Thank you to our March 2021 – March 2022 Legislative Fund Contributors!

Diamond $25,000

Cavalry Investments, LLC

Crown Asset Management, LLC

Financial Recovery Services, Inc.

Portfolio Recovery Associates, LLC

Resurgent Holdings, LLC

Titanium $15,000

Velocity Portfolio Group, Inc.

Platinum $10,000

Midland Credit Management

National Credit Adjusters

Unifund CCR LLC

Gold $7,500

EverChain

Silver $5,000

Digital Recognition Network

National Loan Exchange

NCB Management Services, Inc.

Pharus Funding, LLC

Superlative RM

Bronze $2,500

Absolute Resolutions Corp.

Investment Retrievers, Inc.

RAzOR Capital, LLC

Resurgence Capital, LLC

SAM, Inc. – Solutions for Account Management

Security Credit Services, LLC

Spire Recovery Solutions, LLC

Synergetic Communication, inc.

Brass $1,000

Bayview Solutions, LLC

Complete Credit Solutions, Inc.

FLOCK Specialty Finance

Halsted Financial Services, LLC

Hunt & Henriques

Invenio Financial, a Phillips & Cohen Associates Company

Kino Financial Co., LLC

Levy & Associates, LLC

Malone Frost Martin PLLC

Simmonds & Narita, LLP
T&I Enterprises, LLC

The Cadle Company

Tobin & Marohn

VeriFacts, 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

Andreu, Palma, Lavin & Solis, PLLC

Arko Consulting LLC

ARM Compliance Business Solutions

Atlas Acquisitions

Attunely Inc.

Autovest, LLC

Ballard Spahr, LLP

Beam Software

Blitt & Gaines, P.C.

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

Cascade Capital, 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.

Couch Lambert

Credit Control, LLC

Credit Corp Solutions, Inc.

Credit Management Corporation

CSS Impact!

Debt Recovery Solutions, LLC

Dyck-O’Neal, Inc.

Dynamic Recovery Solutions

Equabli

Experian

Finvi

First Financial Portfolio Services, LLC (FFAM360)

First American Acceptance Co., LLC

First Solutions Debt Management, LLC

FMS, Inc.

FocusOne, 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

Jefferson Capital Systems, LLC

Jormandy

Keith D. Weiner & Associates Co., LPA

Kelly Knepper -Stephens

Kirschenbaum & Phillips, P.C.

Klima, Peters, & Daly, P.A.

Law Offices of Steven Cohen, LLC

Lockhart, Morris & Montgomery, Inc.

MauriceWutscher LLP

Metronome Financial LLC

Monarch Recovery Management, Inc.

National Debt Holdings, LLC

National Recovery Associates, Inc.

National Recovery Solutions, LLC

Nationwide Recovery Systems

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)

Pressler, Felt and Warshaw, LLP

Pro Forma Inc

Provana, LLC

ProVest LLC

Quall Cardot, LLP

Quantum3 Group

RAS LaVrar LLC

Rausch, Sturm, LP

Repay

Resource Management Services, Inc.

RevSpring

RIP Medical Debt

Scott & Associates, PC

Sentry Credit, Inc.

Slovin & Associates

SMS Financial, LLC

State Collection Services, Inc.

Stone, Higgs & Drexler

Suttell & Hammer

Synchrony Financial

Tag Process Service, Inc.

Techno Brain BPO ITES Limited

TransUnion

Troy Capital, LLC

USASF Servicing

Vargo & Janson, P.C.

Velo Law Office

Venable LLP

VoApps

Zenarate, Inc