RMA Update September 2018

/RMA Update September 2018
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With the California legislature adjourning on August 31st, the vast majority of the state legislatures are now adjourned for the year. Here are several noteworthy bills from the last month of activity:

California AB 38 – This bill would amend the California Student Loan Serving Act’s to narrow the definition of a “student loan servicer” to exclude debt collectors who are collecting on defaulted student loans.  [This bill passed the Assembly and Senate and is on the Governor’s desk awaiting signature.]

California AB 1526 – This bill would require collection agencies and originating creditors to provide a consumer notice when attempting to collect on a debt that is beyond the statute of limitations. The notice informs the consumer that they cannot sue them because of the age of their debt and indicates whether they are allowed or prohibited from reporting the debt to a credit bureau. Debt buyers are already required to provide this notice under the California Fair Debt Buying Practices Act. It also provides that when the statute of limitations has run, a debt collector is prohibited from bringing suit or initiating arbitration or other legal proceeding to collect the debt.  [This bill was signed into law on September 5, 2018.]

California SB 298 – This bill would exempt the first $1,200 dollars in a deposit account from a bank levies as a means to satisfy court-ordered judgments. [RMA and its California lobbyist worked with an industry coalition in opposition to this bill. This bill failed to pass both legislative chambers.]

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 markup is anticipated this month. RMA is working in a coalition effort to obtain amendments.]

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

9th Cir. Holds FDCPA Plaintiff Must Prove Defendant’s Net Worth

Tourgeman v. Nelson & Kennard, No. 16-56190, 2018 U.S. App. LEXIS 23101 (9th Cir. Aug. 20, 2018)

The U.S. Court of Appeals for the Ninth Circuit recently held that the plaintiff carries the burden of proving the debt collector’s net worth to obtain statutory damages in a class action under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq.

While the FDCPA is silent as to which party carries the burden of producing evidence at trial of the defendant’s net worth, the Court explained that sections 1692k(c) and 1692k(e) indicate that “Congress knew how to shift the burden of proof to the defendant, but chose not to do so regarding evidence of net worth.”  Therefore, the Court continued, the FDCPA’s “text and structure … makes evidence of net worth essential to a class statutory damages award; it is not an affirmative defense.”

Thus, the Ninth Circuit held that “[i]f a plaintiff seeks class statutory damages, it carries the burden of introducing such evidence at trial.”

A copy of the opinion in Tourgeman v. Nelson & Kennard is available at:  Link to Opinion.

7th Cir. Holds Field Servicing Company That Installed Door Hangers Not FDCPA ‘Debt Collector’

Schlaf v. Safeguard Prop., LLC, No. 17-2811, 2018 U.S. App. LEXIS 22281 (7th Cir. Aug. 10, 2018)

After plaintiff homeowners defaulted on a FHA-insured mortgage loan, the servicer contracted with a mortgage field servicing company to perform HUD-required “contact attempt inspections” and visit the property to determine its occupancy status and place a door hanger on an outside doorknob of the property.  The door hanger requested that the homeowners call the servicer at the number provided, which was that of the servicer.

The plaintiffs filed a lawsuit alleging the company violated the FDCPA by not including the initial disclosure requirements of 15 U.S.C. § 1692g and that the company violated section 1692e(11) which requires debt collectors to disclose in their initial communications that they are communicating with the debtor in an attempt to collect a debt.

On motion for summary judgment, the trial court held that the company was not a debt collector and therefore not subject to the FDCPA’s requirements and the plaintiffs appealed.

On appeal, the Seventh Circuit stated that “we cannot say that [the company] engages in direct debt collection simply by leaving a door hanger that asks the homeowner to call [the servicer].”

Moreover, the Court determined that the company was not an indirect debt collector, which it noted was “consistent with our interpretation of a separate, threshold requirement . . . that the communication being made was ‘in connection with’ debt collection.”

Because the company was “so far removed from [the servicer’s] actual debt-collection process . . . it cannot be said to have engaged in debt collection, even indirectly, under § 1692a(6).”  Instead, “[t]he principal purpose of the contact inspection is to assist [the servicer] in its FHA property preservation efforts, not its debt-collection efforts.”

A copy of the opinion in Schlaf v. Safeguard Property, LLC is available at:  Link to Opinion.

California Imposes SOL Notice Requirement on Debt Collectors; Bans Legal Action on ‘Time-Barred’ Debt

On Aug. 22, 2018, the California legislature passed Assembly Bill 1526, relating to the collection of debt that is beyond the statute of limitations for bringing legal action.

Since 2014, debt buyers collecting from California residents have been required by Cal Civ Code § 1788.52(d)(2) to provide one of two notices, as applicable, when a debt is “time-barred.”

The new legislation creates the same requirement for debt collectors, making it a violation for a debt collector to send a collection letter to a consumer on a time-barred debt without providing the debtor with one of the following written notices, depending on the age of the debt:

The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.

  • OR –

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”

The applicable notice must be included in the first written communication sent to the consumer after the debt becomes time-barred.

The new law also amends Cal. Civ. Proc. Code § 337, pertaining to the statute of limitations for written contracts and book accounts, by prohibiting the initiation of a legal action on time-barred debt, rather than requiring a consumer to raise it as an affirmative defense.  A similar prohibition currently exists for debt buyers under Cal Civ Code § 1788.56.

The legislation was approved by the Governor on September 5th, and will become effective Jan. 1, 2019.

 

7th Cir. Rejects FDCPA Claim That ‘May’ Meant ‘Will’

Dunbar v. Kohn Law Firm, S.C., Nos. 17-2134, 17-2165, 2018 U.S. App. LEXIS 19993 (7th Cir. July 19, 2018)

The U.S. Court of Appeals for the Seventh Circuit recently concluded that collection letters sent to consumers offering to settle their debt but warning them that the settlement “may have tax consequences” did not violate the federal Fair Debt Collection Practices Act (FDCPA).

The plaintiffs had argued that the letters were false and misleading because they were insolvent and, as such, would not have incurred any tax liability for any discharged debt.  The Seventh Circuit rejected the argument, concluding that the term “may” only meant there could be tax consequences, and it was possible insolvent debtors would become solvent before settling their debt, thus triggering potential tax consequences.

In so ruling, the Seventh Circuit determined the language was literally true and the use of “may” instead of “shall” was not likely to confuse even an unsophisticated consumer.  Accordingly, the Seventh Circuit affirmed the dismissal of the plaintiffs’ lawsuits for failure to state a claim.

A copy of the opinion in Amy Dunbar v. Kohn Law Firm, S.C. is available at:  Link to Opinion.

Illinois Passes Career Preservation and Student Loan Repayment Act

On Aug. 14, Gov. Bruce Rauner signed into law the Illinois Career Preservation and Student Loan Repayment Act.  The act moved through the legislature as Senate Bill 2439 and passed unanimously in the Senate and by a vote of 104-3 in the House.

The act provides that Illinois government agencies and boards can no longer deny, refuse to renew, suspend, revoke or take any other disciplinary action related to a person’s professional or occupational license because of a delinquency or default on a student loan guaranteed by the Illinois Student Assistance Commission or any other Illinois state agency.

The legislation was proposed by Illinois Attorney General Lisa Madigan, who was quoted as saying “[t]aking away debtors’ licenses punishes and prevents them from earning enough to live and make their loan payments. It is nonsensical.”

3rd Cir. Holds Debt Buyer Whose Principal Purpose is Collection of Any Debt is a ‘Debt Collector’ Regardless of Whether It Owns Debts It Collects

Tepper v. Amos Fin., LLC, No. 17-2851, 2018 U.S. App. LEXIS 21907 (3d Cir. Aug. 7, 2018)

With a tip of the cap to Popeye the Sailor Man, the U.S. Court of Appeals for the Third Circuit decided that a purchaser of defaulted debt can be a “debt collector” under the federal Fair Debt Collection Practices Act.

The borrowers acquired a home equity line of credit with a bank secured by a mortgage on their home. The bank was taken over by the FDIC and the loan was eventually sold to a debt buyer.  In its collections efforts, the debt buyer sent three letters that contained different balances owing, apparently because different interest rates were being assessed.  Ultimately, the debt buyer filed a foreclosure action.

The borrowers filed suit against the debt buyer alleging violations of the FDCPA.  They also argued that as a “debt collector” under the FDCPA, the debt buyer was in violation by not being registered as a foreign business in Pennsylvania. Of importance, the debt buyer argued it was a debt collector because, in Pennsylvania, collecting a debt is not considered “doing business” in the state.

Following the analysis of the U.S. Supreme Court in Henson v. Santander, the trial court noted an entity is a “debt collector” under the FDCPA if: 1) its “principal purpose” is the collection of debts; or 2) it “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

Because there was no dispute that the debt buyer’s sole activity was buying and collecting on debts, the trial court found it met the “principal purpose” definition of “debt collector.”

On appeal, the debt buyer took a different tack and argued it was not be a debt collector, to no avail.  The U.S. Court of Appeals for the Third Circuit noted the debt buyer’s previous admission made its principal purpose plain: “Asking if [the debt buyer] is a debt collector is thus akin to asking if Popeye is a sailor.  He’s no cowboy.”

The Court concluded by stating that “[the debt buyer] may be one tough gazookus* when it attempts to collect the defaulted debts it has purchased, but when its conduct crosses the lines prescribed by the FDCPA, it opens itself up to the Act’s penalties.”

A copy of the opinion in Tepper v. Amos Fin., LLC is available here:  Link to Opinion.

*(From the song I’m Popeye the Sailor Man: “I’m one tough Gazookus / Which hates all Palookas / Wot ain’t on the up and square / I biffs ’em and buffs ’em / An’ always out-roughs ’em / an’ none of ’em gits no-where.”)

Ohio Court of Appeals Rules Unsigned Credit Card Agreements Can Be Written Contracts

Unifund CCR Partners v. Piaser, 2018-Ohio-3016 (Ct. App.)

In a recent decision, the Ohio Court of Appeals considered the question whether, for the purpose of determining the applicable statute of limitations, an unsigned credit card agreement constituted a written or oral contract.

In Ohio, the statute of limitations is eight years for a written contract and six years for an oral contract. Ohio Rev. Code Ann. §§ 2305.06, 2305.07.

The Court noted that existing Ohio law was unclear on the written versus oral contract issue, and that previous decisions had determined only “that a consumer’s use of a credit card subjects him to a binding contract, which is governed by the terms of the agreement.”

The credit agreement in question provided that use of the card by the consumer would evidence acceptance of the terms of the agreement.  Explaining that parties can bind themselves to written contracts without providing physical signatures, the Court stated:

In the case of credit cards, a binding contract does not arise from signing anything, but rather is established by the act of using the credit card. It cannot be plausibly argued that the conscious decision to use the credit card is not a conscious agreement to accept the terms and conditions of the written Account Agreement. Only a lawyer could argue that the written Account Agreement is not a written contract.

A copy of the opinion in Unifund CCR Partners v. Piaser is available at:  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? RMA has all this and more with live monthly and pre-recorded webinars.

UPCOMING WEBINARS

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, RMA 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!

Renewed Companies
Crown Asset Management LLC
Mid Atlantic Portfolios, LLC
Peroutka, Miller, Klima & Peters, PA
Portfolio Recovery Associates

New Individuals
Joseph Kimsal, Chief Compliance Officer, NCB Management Services Inc
Stephanie Schenking, Audit and Compliance Advisor, Unifund CCR, LLC
Brandon Tumber, President, Midwest Recovery Systems, LLC

Renewed Individuals

Andrew Giovannini, Chief Compliance Officer, West Bay Recovery/Gaskell & Giovannini
Adam Parks, Chief Compliance Officer, Lismore Holdings, LP
Reynolds Sims, Attorney/Chief Compliance Officer, G. Reyonolds Sims & Associates

View all certified companies and certified individuals on our website.

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

Welcome new RMA members!

Actuate Law, LLC – Illinois – Associate Law Firm
Mirand Response Systems – Texas – Association Collection Agency
USASF Servicing, LLC – Georgia – Originating Creditor

The following RMA member was instrumental in recruiting the below new member.  Thank you for your effort!

Payment Brokers Group, LLC – Colorado – Affiliate
— recruited by Ben Vinci / Vinci Law Office, LLC

Encourage some of your non-member colleagues or vendors to join the RMA community!

Membership Renewal … It’s That Time of Year

Your 2019 RMA membership renewal statement will soon arrive in your office mailbox. Remember to renew your membership investment or before December 31, 2019 to avoid a late fee!

Moved? New Phone Number? Add/Remove Staff?

Let us know … you can now make updates to your membership from the comfort of your computer. In order to access the member’s only area of the RMA website, new member management system or register for events – you need to create a username and password.

INSTRUCTIONS

  1. Click this link: https://rmassociation.memberzone.com/CreateAccount?ccid=9576&email=
  2. Verify your email address
  3. Set a username/password

To update your company profile or personal profile:

INSTRUCTIONS
How to manage your company profile:  http://www.screencast.com/t/8HHFR9un8
How to update your personal profile: http://www.screencast.com/t/dOTxxuEu6MPL

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 RMA 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 rmaintl.org/ac19 for more information.

Contribute Now

Thank you July 2017- July 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

Platinum ($10,000)

Certified Debt Buyer
Encore Capital Group

Associate Collection Agency
Financial Recovery Services, Inc.

Gold ($7,500)

Certified Debt Buyer
Unifund CCR LLC

Silver ($5,000)

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

Associate Collection Agency
Credit Control, LLC

Bronze ($2,500)

Certified Debt Buyer
Absolute Resolutions Corp.
Galaxy Asset Management, LLC
Integras Capital Recovery LLC
RAzOR Capital
Security Credit Services, LLC
The Bureaus, Inc.

Certified Collections Agency
First Financial Asset Management, Inc. FFAM360

Affiliate
Cornerstone Support
EZ Messenger

Associate Collections Agency
Glass Mountain Capital, LLC

Associate Debt Buyer
U.S. Equities Corp

Brass ($1,000)

Certified Collection Agency
Halsted Financial Services, LLC

 Certified Debt Buyer
Collins Asset Group
HS Financial Group
Jormandy, LLC
Resurgence Capital , LLC
The Cadle Company

Certified Law Firm
Peroutka, Miller, Klima & Peters, P.A.

Affiliate
CMS Services
Digital Recognition Network
Resource Management Services, Inc.
RNN Group, Inc.
VeriFacts, Inc.

 Associate Debt Buyer
Balbec Capital
Western States Financial Management, LLC

Associate Law Firm
Andreu, Palma, Lavin & Solis, PLLC
Bedard Law Group, P.C.
Mullooly, Jeffrey, Rooney & Flynn, LLP
Simmonds & Narita, LLP
Tobin & Marohn
Vargo & Janson, P.C.

Individual / Non-members
Century Support Services, LLC
Dara Tarkowski

Other

Certified Broker
DebtTrader

 Certified Debt Buyer
Acctcorp International, Inc.
Autovest, LLC
Capital Alliance Financial, LLC
Cascade Capital, LLC
Cavalry Investments, LLC
Converging Capital, LLC
Credit Management Corporation
Debt Recovery Solutions, LLC
Gemini Capital Group, LLC
HS Financial Group, LLC
Icon Equities, LLC
Indiana Receivables, Inc.
Investment Retrievers, Inc.
NCB Management Services, Inc.
Pharus Funding, LLC
Poser Investments, Inc.
Quantum3 Group, LLC
Stoneleigh Recovery Associates
United Debt Holdings
West Bay Recovery, Inc.

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

 Affiliate
Accelerated Data Systems
Acumen Solutions Group
CenterPoint Legal Solutions, LLC
ComplyARM, Inc.
Comtronic Systems, LLC
Convoke, Inc.
Debt Sales Partners
Diversified Consultants, Inc.
Equifax, Inc.
FLOCK Specialty Finance
Harvest Strategy Group, Inc.
Metronome Financial, LLC
MicroBilt Corporation
MRS BPO, LLC
PCI Group Inc.
ProVest LLC
SAM, Inc. – Solutions for Account Management
TransUnion
Troy Capital, LLC
Vertican Technologies, Inc.
Y2Payment Systems, Inc.

Associate Collection Agency
Adams London & Weiss, LLC
Alpha Recovery Corp.
Apple Recovery, LLC
Crisis Consulting and Marketing
Diversified Consultants, Inc.
FMS, Inc.
Frontline Asset Strategies, LLC
Lockhart, Morris & Montgomery, Inc.
Midwest Recovery Systems, LLC
SIMM Associates, Inc.
Tate & Kirlin Associates, Inc.
Universal Fidelity LP

 Associate Debt Buyer
ABC Collections, LLC
Allen & Durrant Corp.
Alliance Credit Services, Inc.
Atlas Acquisitions
Convergence Acquisitions, LLC
Emergent Business Group Inc.
Fair Collections & Outsourcing, Inc.
Genesis Recovery Services
International Debt Buying Consultants, LLC dba Portfolio Management Group
National Recovery Solutions, LLC
PerSolve, LLC
Phoenix Asset Group, LLC
RIP Medical Debt
Universal Fidelity LLC

Associate Law Firm
Brownstein Hyatt Farber Schreck, LLP
Butler & Associates, P.A.
Delev & Associates, LLC
Harrington, Anderson & DeBlasio
Hinshaw & Culbertson
Hudson Cook, LLP
Hunt & Henriques
Keith. D. Weiner & Associates, LPA
Kirschenbaum & Phillips, P.C.
Malone Akerly Martin PLLC
Pressler and Pressler, LLP
Rausch, Sturm, Israel, Enerson & Hornik, LLC
Schachter Portnoy, LLC, Attorneys at Law
Slovin & Associates
Sonnek & Goldblatt, Ltd.
Spencer Fane LLP
The Law Offices of Ronald S. Canter
Venable, LLP
Winn Law Group, APC

Individual(s) and/or Non-member(s)
Central Portfolio Control, Inc.
Court Appearance Professionals
Dan Crowley/K & L Gates
David Reid
DRS Processing, LLC
Greenberg Advisors, LLC
Jan Stieger
Mike Colby

2019-01-30T12:45:22+00:00 September 13, 2018|RMAI Update|