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Posts published in “Compliance Management”

FTC’s Big Data Report Provides Recommendations, Raises Compliance Issues

The Federal Trade Commission has released a report examining the benefits, potential risks, and legality of the use of big data in business. Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues focuses on how big data is used after it is collected and how that information could result in discrimination against consumers. The primary goal of the report is to provide businesses with important information on the relevant laws to big data analytics, as well as guidelines on how to use big data effectively while remaining compliant and non-discriminatory, according to the FTC. “Big data’s role is…

Working with New York’s Latest Debt Collection Regulations

New York’s Department of Financial Services published regulations on Dec. 3, 2014, which would require debt collectors to make additional disclosures to consumers following initial communications, provide consumers who dispute charged-off debt with certain information, adopt procedures concerning the applicability of statutes of limitations, maintain certain records and provide written confirmation of settlements, among other things. The regulations (available here) are applicable to third-party debt collectors (those who collect debts owed to others) and debt-buyers. On Jan. 15, I’ll be discussing the regulations in a DBA International webinar Working with New York’s Latest Debt Collection Regulations (register here). In the meantime, here is a closer look at the regulations. Who…

FTC Lists Steps Debt Brokers Should Follow to Keep Data Secure

The Federal Trade Commission has posted seven steps debt brokers should follow to keep data secure on the Bureau of Consumer Protection’s Business Center Blog. This latest guidance comes after the FTC requested that a federal court order two debt brokers that exposed the personal information of more than 70,000 consumers online to notify the consumers and give them direction on how to protect themselves against fraud and identity theft. According to the FTC, two debt brokers violated the FTC Act when they placed the personal information of the consumers, including bank account and credit card numbers, birth dates, employment information and more, on a…

FDCPA Decision Challenges Lawyers

New Jersey lawyers, who file lawsuits to collect debts, face significant risk of lawsuits themselves from the very persons they sue on behalf of their clients. A June 30 decision by a New Jersey federal district court found a law firm violated the Fair Debt Collection Practices Act (FDCPA) because its attorneys did not spend sufficient time reviewing its pleadings or examining documents. Daniel Bock, Jr. allegedly had broken his promise to pay a debt and his creditor hired a New Jersey law firm to obtain payment. The firm sued to recover the debt and Bock soon after settled, paying…

CFPB Orders Realty Company to Pay $500,000 RESPA Fine

The Consumer Financial Protection Bureau has ordered RealtySouth, the largest real estate firm in Alabama, to pay a civil monetary penalty of $500,000 for mortgage disclosure violations. The CFPB has charged the company with illegally steering purchasers to use its affiliated company, TitleSouth LLC, for title and closing services. The penalty, along with other injunctive relief, are contained in a consent order under which RealtySouth neither admits nor denies the CFPB’s allegations. The CFPB says the company violated the Real Estate Settlement Procedures Act, when it encouraged its agents and in some cases required them to use TitleSouth in real estate…

FTC’s Recent Enforcement Action Sets New Debt Collection Standards

Auto lenders are in the cross-hairs of federal regulators. The Consumer Financial Protection Bureau recently announced it is drafting a larger nonbank participant rule for auto lenders. In the meantime, the Federal Trade Commission announced yesterday the filing of a stipulated order imposing a civil monetary penalty and injunctive relief against a subprime auto lender. Big Penalty, Restitution, Restrictions The Federal Trade Commission announced yesterday that Consumer Portfolio Services, Inc. will pay a civil monetary penalty of $5.5 million arising from its servicing and collection of consumer motor vehicle loans. In addition to the monetary penalty, the lender agreed to make certain changes to…

There’s Guidance in CFPB’s Supervisory Highlights Report

The Consumer Financial Protection Bureau’s May 22 Supervisory Highlights report offers a rare glimpse into the CFPB’s thoughts on its first two years of supervision of nonbank entities, particularly debt buyers and debt collectors. Although the report contains several of the bureau’s standard talking points (data integrity in debts sales, for example) it does reveal new issues that have drawn the regulator’s attention and new guidance on pre-existing areas of concern. Compliance Management Systems It’s hard to believe, but according to the bureau some credit reporting agencies had no compliance management systems in place. Where it found a CMS, there were several instances uncovered where neither…

CFPB Issues Report on Debt Collection – What Does it Reveal?

The Consumer Financial Protection Bureau released a report today outlining its efforts and objectives in regulating, supervising and enforcing against debt collectors. The report is available here.  Past CFPB reports have provided guidance on where the bureau might be headed in its regulation, supervision and enforcement efforts. This year’s report is no different. It notes the growth of medical and student loan debt collection. Expect more focus on these sectors right away. In addition the report examines: consumer complaints the CFPB and the Federal Trade Commission have received over the past year their enforcement activities the bureau’s supervision of debt collectors the bureau’s rulemaking,…

7th Circuit FDCPA Decision Sides with CFPB, FTC on Time Barred Debt

Earlier this week the Seventh Circuit Court of Appeals issued its opinion in the consolidated appeals of McMahon v. LVNV Funding, LLC and Delgado v. Capital Management Services, L.P., concerning the collection of time barred debt without the threat of litigation. The result is not good for the credit and collections industry, principally because it further confuses application of the Fair Debt Collections Practices Act across the nation. Background In both cases the debt collectors offered to settle the debts, without mention of a lawsuit or any legal action. Both suits claimed that the letters were false, deceptive and misleading, in violation…

CFPB Calls For Greater Data Integrity in Debt Collection

Recent remarks from Consumer Financial Protection Bureau Deputy Director Steven Antonakes indicate that the CFPB remains particularly interested in data integrity during debt collection. Speaking at the National Community Reinvestment Coalition Annual Conference in Washington yesterday, Antonakes said the bureau is “concerned that the accuracy of account information degrades as it passed on from the original creditor to debt collection firms or debt buyers.” Antonakes also suggested that improvements in data integrity will further the bureau’s efforts “to ensure that collectors are seeking to recover debts from the right person in the right amounts.” Concerns over data integrity are consistent with the bureau’s policy statement in its…

Lawyer and Non-Lawyer Supervision — A Lesson in Avoiding an Ethical Transgression

For several years my attorney ethics presentations and papers have emphasized that lawyer supervision and particularly non-lawyer supervision, in my experience, is an area of concern for attorneys who practice debt collection law. A recent opinion from New York’s Appellate Division, Second Department, concerning the conduct of a debt collection law firm provides an example of the harm that may result from less than robust supervision of attorneys and non-attorney staff. Attorneys who practice debt collection are probably the most “compliance-aware” branch of lawyers today. They are routinely subject to client audits of their practices’ operations and financial records. Some even have ISO…

Consent Order Has Broad Impact on Consumer Collections Industry

Yesterday JP Morgan Chase Bank, N.A. and certain of its affiliates entered into a sweeping consent order with the Office of the Comptroller of the Currency covering its practices for collecting debt, as well as the practices used by its third-party service providers, including lawyers. According to the consent order (available here), the bank, among other things: caused affidavits to be filed in court where the affiant did not have personal knowledge of the assertions made or had reviewed the relevant books and records; allowed the filing of “inaccurate sworn documents” that resulted in judgments with financial errors in favor of…