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…
Speaking as an invited guest to a conference of the Mortgage Bankers Association yesterday in Orlando, Steven Antonakes, deputy director of the Consumer Financial Services Bureau, told the industry group he was “deeply disappointed” by their lack of progress in improving the mortgage servicing industry. Noting that “too many [mortgage] customers continue to receive erratic and unacceptable treatment,” Antonakes added that “[t]his kind of continued sloppiness is difficult to comprehend and not acceptable.” Pointing to the bureau’s new mortgage rules, which became effective Jan. 10, Antonakes warned the mortgage servicers “it is time for the paper chase to end.” The CFPB’s…
The Fourth Circuit has joined the Second and Ninth circuits to hold that the Fair Debt Collection Practices Act does not require consumers to dispute debts in writing. (Clark v. Absolute Collection Serv., 2014 U.S. App. LEXIS 1939 (4th Cir. Jan. 31, 2014)). In a short per curiam opinion on Jan. 31, the Fourth Circuit adopted the reasoning of the Second and Ninth circuits and held that 15 USC 1692g(a)(3) permits a consumer to dispute the validity of a debt orally based on a plain reading of the statute. Citing Hooks v. Forman, Hold, Eliades & Ravin, LLC, 717 F.3d…
2013 brought some significant developments to consumer financial services law. It began early with a favorable Fair Debt Collection Practices Act decision from the U.S. Supreme Court, followed by several interesting Telephone Consumer Protection Act decisions. But what really set the year apart was the activity we saw from federal regulators. Here’s my list of some of the most significant developments from around the country, which will likely impact 2014. U.S. Supreme Court The year began with the Supreme Court’s decision in Marx v. General Revenue. The Supreme Court held that a plaintiff who is unsuccessful in a claim brought under…
The comment period for the Advance Notice of Proposed Rulemaking concerning the Fair Debt Collection Practices Act has been extended to February 28. Several organizations, including the National Association of Retail Collection Attorneys, had made requests for the extension. We will be presenting a free webinar on the “Repositories” questions posed in the ANPR on January 22. You can find out more about the webinar and how to register here.
I’ll be heading to Park City, Utah this weekend for the Winter Meeting of the American Bar Association’s Consumer Financial Services Committee. The focus of the CFSC is on all things in consumer financial services law — payment systems, deposit accounts, fair lending and yes, debt collection. This meeting is going to feature several panel discussions with officials from the Consumer Financial Protection Bureau and the Federal Trade Commission along with well-known consumer advocates all discussing issues surrounding debt collection. Enforcement actions, the recent ANPR, TCPA litigation and CFPB regulation of attorneys are among the topics we’ll cover. As always, this…
The Consumer Financial Protection Bureau announced today it is seeking comment from the public about debt collection practices as the bureau considers new rules designed to protect consumers “without imposing unnecessary burdens” on the industry, according to the CFPB. The CFPB is gathering information from all sources — consumers, advocates and industry representatives — on a range of issues, including the accuracy of information used by debt collectors, how informed consumers are about their rights, and the methods collectors use to recover their debts. Regarding information accuracy, the CFPB is seeking comments about whether collectors have the correct person, the correct amount and the correct documentation when collecting a debt. The bureau also wants to…
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…
Changes to the systems by which banks and other entities (also known as “furnishers”) supply credit reporting agencies with consumer credit information prompted a Bulletin yesterday from the Consumer Financial Protection Bureau emphasizing the greater role it sees documents playing in the consumer credit dispute process. In announcing its expectation that furnishers review “all relevant information” when responding to consumer disputes, the CFPB reiterates what is already required by FCRA’s section 1681s-2(b). When responding to a consumer’s dispute concerning information furnished by it to a credit reporting agency, a furnisher is required, among other things, to “review all relevant information provided by the CRA . . .”…
A federal judge in Pennsylvania has ruled that the Telephone Consumer Protection Act does not apply to debt-collection calls, even calls made to cellular telephones. A copy of the decision is available here. Noting that Congress enacted the TCPA to address telemarketing, the decision relied upon a portion of the Eleventh Circuit Court of Appeals’ decision in Meadows v. Franklin[ref]414 F. App’x 230, 235 (11th Cir. 2011)[/ref] which stated, “the [Federal Communications Commission] has determined that all debt-collection circumstances are excluded from the TCPA’s coverage.” The decision is certainly in the minority as nearly all courts examining the issue have determined that debt-collection calls made…
Earlier this month, a Judge in the Eastern District of New York granted summary judgment to a defendant on technical e(11) violations finding that “his grievance is not merely meritless, it is frivolous.”[1] In his decision, the Judge reiterated an observation that he had made seven years ago describing a rising tide of FDCPA complaints brought by a “cottage industry” of “professional plaintiffs” who file suits for violations of the FDCPA.[2] In this case, the Plaintiff called the Defendant’s office and heard a recorded message identifying the Defendant as a debt collector and informing the Plaintiff that its communications were attempts…
Yesterday, the Third Circuit Court of Appeals held that the Telephone Consumer Protection Act (47 U.S.C. § 227) allows a consumer to revoke her prior express consent to be called using an autodialer or prerecorded voice. In its decision, Gager v. Dell Financial Services, the Circuit Court reversed a district court’s earlier finding that once a consumer provided consent to receive autodialed or prerecorded calls, a consumer cannot later revoke the consent. Persons using autodialer technology or prerecorded messages are required by the TCPA to obtain the “called party’s” “prior express consent” before making their calls. While some types of calls…