RMAI Update October 2021

With Capitol Hill embroiled in debates regarding the debt ceiling, infrastructure, and budget funding issues, little time has been spent on receivables management industry related legislative proposals. We continue to closely monitor the omnibus bills watching for any industry related proposals that are added as amendments. To date, we have seen no attempt to include any of the many FDCPA pieces of legislation in larger bills.

On the regulatory front, Rohit Chopra was finally confirmed last month as the new CFPB Director. He has taken the reins, and we will watch for signals/messages that will indicate Director Chopra’s priorities.  We will also look to the CFPB Fall Regulatory Agenda for any proposed rulemaking affecting the industry. RMAI is reaching out to actively engage with the CFPB to provide education on the industry.

There is good news from the FCC as they have announced the comprehensive Reassigned Numbers Database (RND) will launch on November 1, 2021. This database will be a valuable tool to the receivables management industry as it will allow you, prior to calling a consumer on a cell phone, to determine whether a telephone number has been reassigned from the consumer you intend to reach, thus allowing you to avoid calling consumers you had no intention of reaching.  The RND will have six subscription tiers ranging from extra small to jumbo and offer one-month ($10 to $35,100), three-month ($30 to $105,300) and six-month ($60 to $210,600) subscription options. While these are interim fees, the FCC does intend to make usage fees permanent in January 2023.  Please click here to read the full FCC Public Notice regarding the RND and the interim usage fees.

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 about the industry and the negative impacts or unintended consequences a bill would have on businesses and consumers. In 2021, RMAI continued with its impressive track record of success. The following are some recent developments at the state legislative level that might be of interest:

California AB 1020 [Chapter 473 of the Laws of 2021] – This law takes effect on January 1, 2022. The law will primarily impact hospitals, collection agencies, and debt buying companies that collect or purchase patient debt. If you do not collect patient debt from hospitals, this law will not apply to your business. The law accomplishes two primary objectives: (1) to ensure hospitals make every effort to identify and accept third-party payments from insurance, charity, or government sources prior to attempting to collect unpaid debts and (2) to ensure collection agencies and debt buyers obtain substantive data and documentation from hospitals related to the debt prior to collection; inform consumers of their rights; and provide consumers with documentation of the debt upon request. [RMAI successfully obtained amendments that removed a ban on the sale of hospital debt to debt buyers that existed in earlier versions of the bill.]

California SB 531 [Chapter 455 of the Laws of 2021] – This law takes effect on July 1, 2022. The law primarily impacts collection agencies but will also indirectly impact originating creditors and debt buying companies who contract with collection agencies due to data sharing. The law will extend the data and documentation requirements that were adopted in the California Fair Debt Buying Practices Act in 2013 to the Rosenthal Fair Debt Collection Practices Act with one notable change – the FDBPA impacts “charged-off” debt whereas this law impacts “delinquent” debt. [RMAI successfully obtained amendments addressing several concerns which resulted in an exemption for debt buyers. RMAI did not want debt buyers subject to two strict liability statutes related to the same topic.]

New York SB 153 – This bill which is known as the “Consumer Credit Fairness Act” would: (1) reduce the statute of limitations from six to three years on consumer credit transactions; (2) prohibit the revival of a debt that is beyond the statute of limitations through the making of a payment; (3) require the mailing of a notice by the court clerk after filing proof of service of the summons and complaint; (4) require specific data to be included in the complaint; and (5) require the provision of form affidavits. [This bill has passed both houses of the State Legislature and the Governor is expected to sign the bill into law. RMAI had been actively opposing this bill since it was first introduced in 2009. After years of industry offers to negotiate the bill being rejected, the sponsors finally expressed a desire to discuss our concerns. After 13 months of negotiations, the industry was successful at: (1) removing language which would have expunged all debt at the expiration of the statute of limitations; (2) removing pre-charge-off itemization requirements on revolving lines of credit; (3) changing the point of reference on data and documents from origination to charge-off; (4) clarifying a provision of existing law, that some judges were misinterpreting, to make clear that creditors are not required to inform consumers when their accounts are sold in order for the successor parties in interest to be able to collect on those accounts; and (5) extending the effective date by six months to provide the industry time to adjust operational controls as well as accelerate any legal actions under existing law.]

New York SB 5724-A – This bill would set post-judgment interest at 2% per annum and would apply this interest rate retroactively to judgments entered prior to its effective date. [This bill has passed both houses and is awaiting the Governor’s signature. RMAI and a broad-based coalition is seeking chapter amendments to this bill that would remove the retroactive nature of the law. Realistically, obtaining a veto is unlikely given the politics of New York State.]

October 2021

7th Circuit Holds “Costs of Collection” Included “Fees on Fees”
Robbins v. Med-1 Sols., LLC, No. 20-1343, 2021 U.S. App. LEXIS 27547 (7th Cir. Sep. 14, 2021)

The U.S. Court of Appeals for the Seventh Circuit recently affirmed judgment in a debt collector’s favor against claims that its efforts to collect attorney’s fees incurred to collect a debt, including the fees incurred in collecting the attorney’s fees, violated the federal Fair Debt Collection Practices Act.

A consumer signed an agreement at the time medical services were rendered that provided she agreed to pay the “costs of collection, including attorney fees and interest” if she failed to timely make payment.  After the consumer defaulted on the debt, the provider hired a collection agency which filed a collection lawsuit in small claims court.

After initially disputing the debt, the consumer agreed that she owed the medical charges, and paid that amount in full, but refused to pay the debt collector’s attorney’s fees.  The debt collector offered to accept $375 to resolve the fee dispute, which the consumer rejected over warnings from the debt collector’s attorneys that prolonged litigation over the outstanding fees would result in her being liable for additional legal fees (“fees-on-fees”).

The court in the collection action eventually entered judgment in the debt collector’s favor, ordering the consumer to pay the debt collector $1,725 for its incurred attorney’s fees.  The consumer appealed the ruling.  The appeal initiated a de novo proceeding, and the debt collector filed a new complaint to recover the fee award.

Meanwhile, prior to the small claims judgment, the consumer separately sued the debt collector in federal court alleging that the debt collector’s attempts to collect attorney’s fees and fees-on-fees that were not contractually owed violated the FDCPA’s prohibitions against using “any false, deceptive, or misleading representation or means in connection with the collection of any debt” (§ 1692e) and the use of “unfair or unconscionable means to collect or attempt to collect any debt” (§ 1692f).

The federal trial court stayed the case to await the outcome of the state court fee proceeding, which was eventually dismissed with prejudice for failure to prosecute.

After the stay was lifted, the parties filed cross-motions for summary judgment.  The consumer advanced two arguments that would provide a basis for her FDCPA claim: 1) that res judicata effectively barred the debt collector from arguing that the agreement required the consumer to pay fees-on-fees (as a result of the dismissal of the debt collector’s re-filed state court action, and; 2) that the costs-of-collection provision in the agreement did not contractually obligate the consumer to pay fees-on-fees.

The federal trial court rejected these arguments and entered judgment in the debt collector’s favor.  The consumer timely appealed.

On appeal, the Seventh Circuit first reviewed the consumer’s res judicata argument, which is governed by Indiana’s preclusion doctrine.  Under Indiana law, res judicata, or claim preclusion, only “applies defensively; it is invoked by a defendant who seeks to prevent a plaintiff from asserting a claim that the plaintiff has previously litigated and lost.”  The court explained that “offensive claim preclusion,” as asserted by the consumer, “is nonexistent.”

The court also considered the potential merit of the consumer’s argument if it were reframed as issue preclusion, or collateral estoppel, which can be used offensively when the “plaintiff seeks to foreclose the defendant from litigating an issue the defendant has previously litigated unsuccessfully in an action with another party.”   The court determined that a reframed argument would also fail because “the Indiana Supreme Court has held that a dismissal for failure to prosecute [] does not have issue-preclusive effect because no issue was actually litigated.”

The Seventh Circuit next addressed the consumer’s claim that the agreement did not authorize the debt collector to collect fees-on-fees, and that the debt collector’s collection attempt was a false statement in violation of § 1692e and an unfair debt collection practice in violation of § 1692f.

The consumer argued that “costs of collection” should be limited only to the cost of collecting unpaid medical bills and attorney’s fees related to collection of the bills, while the debt collector argued the language should be interpreted more broadly, “to encompass all costs associated with collection, including the cost of collecting attorney’s fees.”

The Seventh Circuit concluded that the phrase “costs of collection” was comprehensive, and that reading it to exclude fees-on-fees would “not fully compensate [the hospital] for enforcing its rights,” contrary to Indiana law interpreting standard fee-shifting provisions.

Because the contractual language permitted the collection of fees-on-fees, the consumer’s collection attempts did not violate the FDCPA and the judgment in the debt collector’s favor was affirmed.

6th Circuit Reverses Ruling That 2015 TCPA Amendments Rendered Entire Act Unconstitutional
Lindenbaum v. Realgy, Ltd. Liab. Co., No. 20-4252, 2021 U.S. App. LEXIS 27159 (6th Cir. Sep. 9, 2021)

The Sixth Circuit recently reversed a trial court’s dismissal of a putative class action lawsuit alleging violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227(b) (“TCPA”).

The trial court dismissed the case on the basis that amendments to the TCPA in 2015 rendered the entire Act unconstitutional until the Supreme Court of the United States severed the 2015 amendments in Barr v. Am. Ass’n of Pol. Consultants, Inc., 140 S. Ct. 2335 (2020) (“AAPC”).  This would have made any alleged TCPA violation not actionable from the date of the amendments in 2015 until the SCOTUS severed the unconstitutional provisions in 2020.

In reversing the trial court’s ruling, the Sixth Circuit held that AAPC applied retroactively, and the TCPA was not invalidated by the 2015 unconstitutional amendments and before the date of the AAPC ruling.  In addition, the Sixth Circuit rejected the defendant’s First Amendment arguments based on the retroactive application of AAPC.

As you may recall, the TCPA prohibits many automated calls to cell phones and landlines.  In 2015, Congress amended the TCPA to allow robocalls if they were made “solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii), (b)(1)(B).

However, the Supreme Court of the United States held in AAPC, that “adding the exemption for government-debt robocalls would cause impermissible content discrimination” in violation of the First Amendment to the United States Constitution, and that “the exception was severable from the rest of the restriction, leaving the general prohibition intact.”

The plaintiff here received alleged non-consensual automated calls from the defendant in late 2019 and early 2020, and filed a putative class action lawsuit in federal court under the TCPA.  The defendant moved to dismiss for lack of subject matter jurisdiction.  The trial court granted the defendant’s motion.

The trial court held that “severability is a remedy that operates only prospectively,” and that the amended TCPA “was unconstitutional and therefore void for the period the exception was on the books” from 2015 to 2020.  Therefore, the trial court held, the TCPA “could not provide a basis for federal-question jurisdiction.”

The plaintiff appealed, and the United States intervened in support of the plaintiff to defend the TCPA.

On appeal, the Sixth Circuit first noted that the motion to dismiss for lack of subject matter jurisdiction should have been treated as a motion to dismiss for failure to state a claim.  The Sixth Circuit explained that a trial court has jurisdiction when “the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another.” Here, if the plaintiff’s “arguments about the continuing vitality of the [TCPA] from 2015 to 2020 are correct, she is entitled to relief.”

The Sixth Circuit then addressed the defendant’s arguments.

The defendant first argued that “severability is a remedy that fixes an unconstitutional statute, such that it can only apply prospectively.”  Because the SCOTUS ruling in AAPC severed the unconstitutional 2015 amendment from the TCPA, the defendant argued that the amended TCPA was wholly unconstitutional from the date of the amendments in 2015 until the SCOTUS severed the unconstitutional provisions in 2020.

The Sixth Circuit disagreed, holding that the SCOTUS in AAPC “recognized only that the Constitution had ‘automatically displace[d]’ the government-debt-collector exception from the start, then interpreted what the statute has always meant in its absence,” and that the SCOTUS’ “legal determination applies retroactively.”

The Court explained that, in order “to say what the law is,” courts “must exercise the negative power to disregard an unconstitutional enactment.” Then, “[a]fter disregarding unconstitutional enactments, we then determine what (if anything) the statute means in their absence — what is now called ‘severability’ analysis.”  However, the Sixth Circuit continued, “those steps are all part of explaining what the statute has meant continuously since the date when it became law and applying that meaning to the parties before us.”

Relevant here, the Sixth Circuit noted that “the Constitution itself displaces unconstitutional enactments: a legislative act contrary to the constitution is not law at all.”  Because the 2015 amendments were unconstitutional, and therefore “not law at all”, the Court concluded that the remainder of the TCPA stayed in full force as if the 2015 amendments were never enacted.

The defendant also argued that “if it can be held liable for the period from 2015 to 2020, but government-debt collectors who lacked fair notice of the unlawfulness of their actions cannot, it would recreate the same First Amendment violation the Court recognized in AAPC.”

The Sixth Circuit disagreed again, noting that “[w]hether a debt collector had fair notice that it faced punishment for making robocalls turns on whether it reasonably believed that the statute expressly permitted its conduct. That, in turn, will likely depend in part on whether the debt collector used robocalls to collect government debt or non-government debt.”

Because the defendant here was not collecting on government debt, which was the subject of now unconstitutional 2015 amendments, the Sixth Circuit held that “applying the speech-neutral fair-notice defense in the speech context does not transform it into a speech restriction.”

Accordingly, the Sixth Circuit reversed the trial court’s dismissal, and the case was remanded for further proceedings.

Support the Legislative Fund When You Renew Your Membership

Membership renewal invoices were emailed and mailed on October 1, and provide an easy opportunity to contribute to the RMAI Legislative Fund when you pay your renewal dues. RMAI membership ensures your voice is heard at both the state and federal level.  Your single RMAI membership gets you double the representation. Donate to the Legislative Fund at any time.

RMAI recently updated the Legislative Fund infographic which shows where donations have gone this year.  Every dollar goes to state and federal advocacy. 2021 has been another wild year for the receivables management industry. Thanks to our members, RMAI has been able to secure lobbyists to help fight unfavorable legislation in several states. Additionally, you can see which states are the most active as well as other RMAI state and federal advocacy efforts.

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.

WATCH WEBINARS

Register for RMAI’s next monthly webinar on October 20th, Current Trends in Bankruptcy Litigation. As a result of the pandemic, 2020 and 2021 have been marked by significant changes in the debt collection and purchasing industry.  Join our panel to explore the current trends of bankruptcy law and where that leaves the debt industry.  View our Live Webinar page on the RMAI website for future webinars.

View our Online Education selection and register for previously recorded webinars including the most recent webinar hosted on September 29th, A Word from our State Regulators – A look at where we have been and a view toward where we are going. As a NEW benefit, recorded monthly webinars are FREE to all employees of RMAI member companies. (Special series and select required courses for certification are offered at a discounted member rate.)

SPONSOR WEBINARS

Position yourself in front of RMAI members when you sponsor a webinar! View our Webinar Sponsorship Flyer for details and benefits. Contact Shannon Parod at sparod@rmaintl.org 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)!

CRCP – New
Crystal Duplay – Lawgix Lawyers
Claire Herman – Converging Capital, LLC
Marlon Manney – Lake Park Financial & Associates
Lisa McCormick – Converging Capital, LLC
Kenneth Rozicki – Alliant Capital  Management, LLC
David Warshaw – Pressler, Felt & Warshaw, LLP
Brian Williams – Crown Asset Management, LLC

CRCP – Renewals
David Reid – RMAI
David Hameroff – Kino Financial Co., LLC
Josh Sipera – Coastal Settlement Recovery, Inc.
Jim Mastriani – Velocity Portfolio Group
John Kirincic – eCast Settlement Corp.

CRB – New
Huntington Debt Holding, LLC
P & B Capital Group, LLC (Family of Companies)

CRB – Renewals
Dobberstein Law Firm, LLC
Federal Pacific Credit Co., LLC
Resurgent Holdings
Portfolio Recovery Associates, LLC

IS YOUR INDIVIDUAL OR BUSINESS CERTIFICATION RENEWAL COMING UP?

If you have received a notification that your individual or business certification is coming up for renewal this year, be sure you complete and submit all of the required information needed for renewal.

Complete your individual renewal application here.
Complete your CRB renewal application here.
Complete your CRV renewal application here.

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 CERT@rmaintl.org.

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

American Financial Services Association Annual Meeting | October 24-27, 2021

Veteran’s Day Holiday Observed | November 11, 2021 – RMAI Office Closed

Used Car Week | November 15-18, 2021 – Special Offer Below!

RMAI 2022 Annual Conference | February 7-10, 2022

RMAI 2022 Executive Summit | August 2-4, 2022

Join RMAI at Used Car Week 2021 in Las Vegas, NV. RMAI members receive a $250 discount by entering the code RMAI2021. Combining five different conferences, Used Car Week unites all corners of the used-car industry from remarketing to dealer-consignor relations and auto finance for four days to discuss current trends, forecasting for the future and prepping for the road ahead. Our Executive Director Jan Stieger will be participating in an association panel discussion. Register here and don’t forget to enter code RMAI2021!

Thank you to our October 2020 – October 14, 2021 Legislative Fund Contributors!

Diamond $25,000
Cavalry Investments, LLC

Crown Asset Management, LLC

Portfolio Recovery Associates, LLC

Resurgent Holdings, LLC

Titanium $15,000

Velocity Portfolio Group, Inc.

Platinum $10,000

C&E Acquisition Group, LLC/Diverse Funding Associates, LLC/DNF Associates

CKS Financial

Midland Credit Management

Nationalk Credit Adjusters

Unifund CCR LLC

Gold $7,500

Everchain

First Financial Portfolio Service, LLC

Silver $5,000

Collins Asset Group LLC

NCB Management Services, Inc.

Oliphant United, LLC

Pharus Funding, LLC

Superlative RM

U.S. Equities Corp.

Bronze $2,500

Absolute Resolutions Corp.

Central Portfolio Control, Inc.

Investment Retrievers, Inc.

National Loan Exchange, Inc.

RAzOR Capital, LLC

SAM, Inc. – Solutions for Account Management

Security Credit Services, LLC

Spire Recovery Solutions, LLC

Synergetic Communication, inc.

Brass $1,000

Andreu, Palma, Lavin & Solis, PLLC

Balbec Capital, LP

Bayview Solutions, LLC

Equifax, Inc.

Halsted Financial Services, LLC

Jefferson Capital Systems, LLC

Jormandy, LLC

Kino Financial Co., LLC

Resurgence Capital, LLC

Stenger & Stenger P.C.

Stephen L. Bruce & Associates

The Cadle Company

The Law Offices of Ronald S. Canter, LLC

TrueAccord

United Holding Group

VeriFacts, Inc.

Vertican Technologies, Inc

Other

Accelerated Data Systems

Acctorp International, Inc.

Action Collection Agencies, Inc.

Aldridge Pite Haan, LLP

Alliance Credit Services, Inc.

Alpha Recovery Corp.

Applied Innovation, Inc.

Arko Consulting LLC

Attunely Inc.

Ballard Spahr, LLP

Beam Software

Bloom & Associates, P.A.

Business and Professional Collection Service, Inc.

Butler & Associates, P.A.

Capio

Capital Collection Management, LLC

Cascade Capital, LLC

Central Research, Inc.

CMS Services

Collins Asset Group

Commercial Credit Group Inc.

Complete Credit Solutions

Comtronic Systems, LLC

Consuegra & Duffy, PLLC

Convergence Acquisitions, LLC

Converging Capital, LLC

Convoke, Inc.

Credit Control, LLC

Credit Management Corporation

CSS Impact!

D & A Services, LLC

D. Scott Carruthers, APLC

David Reid

Delev & Associates, LLC

Delta Outsource Group, Inc.

Dynamic Recovery Solutions

Faloni Law Group, LLC

Financial Recovery Services, Inc.

First Solutionis Debt Management, LLC

FLOCK Specialty Finance

FMS, Inc.

FocusOne, Inc.

Full Circle Financial Services, LLC

G. Reynolds Sims & Associates, P.C.

Gaskell & Giovannini, LLC

Genesis Recovery Services

Glass Mountain Capital, LLC

Guglielmo & Associates, PLLC

Hunt & Henriques

Indiana Receivables, Inc.

International Debt Buying Consultants, LLC

Invenio Financial, a Phillips & Cohen Associates Company

Keith D. Weiner & Associates Co., LPA

Kelly Knepper- Stephens

Kirschenbaum & Phillips, P.C.

Klima, Peters, & Daly, P.A.

Law Office of James R. Vaughan, P.C.

Law Offices of Steven Cohen, LLC

Lippman Recupero

Lockhart, Morris & Montgomery, Inc.

Logicoll, LLC

London & London

LTD Financial Services

Malone Frost Martin PLLC

Maurice Wutscher LLP

Mercantile Adjustment Bureau, LLC

Metronome Financial LLC

Monarch Recovery Management, Inc.

MRS BPO, LLC

Mullooly, Jeffrey, Rooney & Flynn, LP

National Check Resolution, Inc.

National Enterprise Systems, Inc.

National Recovery Associates

National Recovery Solutions

NDS, LLC

Nelson & Kennard

Neustar, Inc.

NRA Group, LLC

Ontario Systems, LLC

Orion Capital Solutions, LLC

Palinode, LLC

PCI Group, Inc.

PerSolve, LLC

Phin Solutions, Inc.Portnoy Schneck, L.L.C.

Poser Investments, Inc.

Premier Forty Financial, LLC

Pressler, Felt and Warshaw, LLP

Provana

ProVest

Quantum3 Group, LLC

Ras LaVrar

Rausch, Sturm, LP

Resource Management Services, Inc

RevSpring

RIP Medical Debt

Robinson Hoover & Fudge, PLLC

SCORE Statistical Consulting

Simmonds & Narita LLP

Slovin & Associates

Solutions by Text

Sonnek & Goldblatt, Ltd.

Stone, Higgs & Drexler

Superlative RM

Tobin & Marohn

Troy Capital, LLC

Universal Fidelity LP

US Mortgage Resolution, LLC

USI Solutions, Inc.

VanDerHeyden Law Office PA

Vargo & Janson, P.C.

Velo Law OfficeVenable LLP

Venandi Systems, LLCVerifacts, Inc.

Viking Client Services, Inc.

VoApps

Wipfli LLP