Category Archives: Breaking News

Breakdown of NYC DCA FAQs and Reporting Requirements for New LEP Rule

Last week, the New York City Department of Consumer Affairs (DCA) provided some clarity to debt collectors on its newly-enacted Limited English Proficiency Rule (LEP Rule). DCA issued an FAQ document and a form for the annual reporting requirement for the LEP Rule, and also announced yet another extension of its grace period for enforcement, which now runs through October 1, 2020. In this article, you’ll find a summary of the three-page, thirteen-question long document.

Applicability

  • The LEP Rule applies to anyone who is required to obtain a Debt Collection Agency license in NYC.
  • When asked if the LEP Rule applies to creditors, DCA says “yes, no, and maybe” depending on the functions of the creditor’s actions and other statutory litmus tests (citations can be found in the FAQ document).
  • The LEP Rule does not apply to litigation activities that can only be performed by a licensed attorney, such as filing a lawsuit or requesting an income execution.

Annual reporting requirement

The annual report form is a lot less convoluted than many speculated when the rule was first issued. The reporting form can be found here, and only requires collectors to keep a month-by-month log of the:

  • Number of NYC consumer accounts on which the agency collected or attempted to collect a debt in a language other than English; and
  • Number of employees who collected or attempted to collect a debt from NYC consumers in a language other than English.

These are aggregate numbers, the report form does not call for an account-by-account or consumer-by-consumer log.

Agencies need to maintain the annual report but don’t need to send it to DCA on an annual basis. DCA only wants to see it if they request it.

Specifics on requesting language preference

We’ll briefly summarize this in bullet points:

  • Language preference must be solicited for each consumer from whom the agency attempts to collect. This means that if there are multiple consumers on the account, then a language preference must be solicited from each.
  • The request for language preference can come after the consumer verifies his identity and after the debt collector provides required disclosures (e.g., Mini-Miranda).
  • Once a debt collector has obtained and recorded the language preference—or exhausted reasonable attempts to do so—they need not make the request again in subsequent communications. Debt collectors may not infer a language preference.
  • If a consumer declines to provide a language preference, the agency may record the non-response to satisfy its obligation.

Validation letter and website requirements

The FAQs seem to imply that a debt collector must list the language access services it provides in its validation letter to consumers and on its publicly-accessible websites. This includes if the agency has the option for a consumer to speak with a multilingual company representative, to receive collection letters in the preferred language, and to list the languages in which the debt collector provides language access services.

There does not seem to be a requirement to provide specific language access services. A debt collector may provide some, but not all, services so long as this is clearly and conspicuously articulated in the validation letter and on the website. For example, just because a debt collector provides a multilingual representative for consumers to speak with on the phone, that does not mean that the debt collector must also provide written communications in that language.

If a collector does not provide language access services, then it must state so in the validation letter.

While it is not explicitly specified, there does not seem to be a requirement for agencies to request a language preference in the validation letter or on its websites.

What, exactly, are language access services?

DCA provides examples of language access services, including but not limited to:

  • Collection letters in a language other than English
  • Customer service representatives who speak in a language other than English
  • A translation service for the collector’s website
  • A service that interprets phone conversations in real-time.

Article by Katie Grzechnik Neill

Insurance company, debt collector review Dade City woman’s 4-year-old hospital bill

DADE CITY, Fla. (WFLA) – Carolyn Matinzi turned to Better Call Behnken for help with a 4-year-old hospital bill that her insurance company claimed it already paid.

Days after her call to Consumer Investigator Shannon Behnken, she says Humana Insurance called her to say they are sending additional payment proof to the debt collector.

“I am so happy that something finally appears to be happening,” Matinzi said. “Thank you so much.”

Matinzi says Humana told her it could still take weeks for a full resolution.

Matinzi turned to Better Call Behnken for help after receiving bills from a debt collection company that is threatening to send the debt to credit bureaus. Letters turned into phone calls, and she says the callers are getting aggressive.

Here’s the problem: The bills for two amounts that total $3,624 from a hospital visit in 2016. Matinzi’s insurance company, Humana, has provided documentation that clearly shows the bills were paid in full by Humana.

Matinzi has provided that information to the debt company, Healthcare Revenue Recovery Group, but no one there acknowledges the information and the bills keep coming.

Investigative Reporter Shannon Behnken reached out to Advent and Humana. A spokesperson for Advent said the company reviewed this matter and discovered this hospital has never billed Matinzi. Advent purchased the hospital in 2018 and did not acquire the hospital’s debt.

Matinzi says a Human representative told her that they reached the debt collection company and received confirmation that they will be reviewing the proof of payment and will likely discharge the debt.

Article by Shannon Behnken

U.S. Supreme Court bolsters law banning ‘robocalls’

WASHINGTON (Reuters) – The U.S. Supreme Court on Monday upheld and strengthened a law banning the broadly unpopular but ubiquitous telemarketing practice known as robocalls, striking down an exemption to the measure that had allowed automated calls for collection of certain money owed to the government.

FILE PHOTO: A man walks past the U.S. Supreme Court building in Washington, U.S., June 25, 2020. REUTERS/Al Drago/File Photo

The court’s 7-2 ruling, written by conservative Justice Brett Kavanaugh, was a defeat for political and polling organizations seeking to use autodial technology to contact the cellphones of potential voters. They had argued that the robocall ban under the Telephone Consumer Protection Act of 1991 violated free speech rights under the U.S. Constitution’s First Amendment.

Kavanaugh wrote that the exemption for government debt collection, added to the law in 2015, violated the First Amendment because it favored government speech over political speech by private entities without sufficient justification.

With few exceptions, autodialed calls to cellphones are illegal in the United States unless a person has given prior consent.

The groups wanted the ban on robocalls to cellphones struck down entirely, saying the law violated the First Amendment. The U.S. Federal Communications Commission had urged the court to uphold both the autodial ban and the government debt exemption.

“Americans passionately disagree about many things. But they are largely united in their disdain for robocalls. The federal government receives a staggering number of complaints about robocalls – 3.7 million complaints in 2019 alone. The states likewise field a constant barrage of complaints,” Kavanaugh wrote.

Despite the ban, the volume of automated calls has surged in recent years, with Americans receiving 58.5 billion robocalls last year, an increase of 22% from 2018, according to YouMail, a company that provides a service to block automated calls.

The amendment to the law had allowed robocalls made to collect debts owed to or guaranteed by the federal government, including many student loan and mortgage debts.

Article by Jan Wolfe

Federally-Backed Debt Collection Exception Not The Supreme Court’s Cup Of T(CPA)

Barr v. Am. Ass’n of Political Consultants, Inc., 2020 WL 3633780, 591 U.S. __ (2020).[1]

Earlier this month, the Supreme Court held, in a fractured decision yielding multiple concurring or dissenting opinions, that the 2015 government-debt exception to the Telephone Consumer Protection Act (the TCPA) permitting robocalls to cellphones solely to collect a debt owed to or guaranteed by the United States violated the First Amendment, affirming the Fourth Circuit’s decision. Id. at *2. Applying traditional severability principles, seven Justices concluded that, rather than invalidate the entire TCPA, the 2015 government-debt exception must be severed from the remainder of the statute. Id. The bottom line: the government-debt exception is gone; the rest of the TCPA remains.

Questions Before the Supreme Court

  • Is the government debt exception to the robocall ban to cell phones unconstitutional? YES
  • Is the exemption a content-based restriction requiring strict scrutiny? YES
  • If so, is severing the exemption from the TCPA the appropriate remedy? YES

Reasoning

The initial question before the Court in its First Amendment analysis was whether the robocall restriction, with the government-debt exception, is content-based. Id. at *5. The Court answered in the affirmative because the law favored speech made for collecting government debt over political and other speech. Id. at *5. The Court rejected the government’s arguments that the TCPA drew distinctions based on speakers rather than content, that the legality of a robocall depends on whether a caller is engaged in a particular economic activity, not its content, and that if the TCPA is content-based, so are debt collection statutes. Id. Applying Reed, the Court reasoned that, because the government-debt exception is content-based, it is subject to strict scrutiny. Id. at *6 (citing Reed v. Town of Gilbert, 576 U. S. 155, 163 (2015)). The Government conceded that it could not satisfy strict scrutiny to justify the differentiation between government-debt collection speech and other categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, commercial advertising, etc., and the Court agreed. Id.

Having concluded that the 2015 government-debt exception created an unconstitutional exception to the TCPA, the Court was left to decide whether to invalidate the entire statute, or instead to invalidate and sever the 2015 government-debt exception. Id. at *6. In its analysis, the Court rejected plaintiffs’ broader argument that the entire TCPA is unconstitutional. Plaintiffs argued that, because Congress was willing to carve out an exception for government debt, its credibility regarding an interest in privacy was undermined. Id. at *6–7. The Court reasoned, however, that “Congress’s continuing broad prohibition of robocalls amply demonstrates Congress’s continuing interest in consumer privacy.” Id. at *7.

The Court ultimately determined that it must invalidate the 2015 government-debt exception and sever that exception from the remainder of the statute. Id. at *11. The Court relied on the text of the Communications Act’s severability clause and the presumption of severability. Id. The majority disregarded Justice Gorsuch’s suggestion that the decision provided “no relief” to plaintiffs, reasoning that invalidating and severing the government-debt exception properly addressed the unequal treatment underlying plaintiffs’ claim. Id. at *13. The Court noted that Justice Gorsuch’s remedy would result in harm to “tens of millions of consumers who would be bombarded every day with nonstop robocalls notwithstanding Congress’s clear prohibition of those robocalls.” Id.

Justice Sotomayor concurred in the judgment, yet reasoned that strict scrutiny should not apply to all content-based distinctions. Id. at *14. However, she concluded that the government-debt exception still failed intermediate scrutiny because it is not “narrowly tailored to serve a significant governmental interest.” Id.

Justice Breyer, with whom Justices Ginsburg and Kagan joined, concurred in the judgment with respect to severability and dissented in part. Id. at *14. Justice Breyer disagreed that the exception violates the First Amendment. Id. He reasoned that strict scrutiny was inappropriate and that intermediate scrutiny should apply. Id. at *15. Justice Breyer reasoned that not all content-based distinctions are subject to strict scrutiny regardless of context or practical effect. Id. at *19. He did agree, however, with Justice Kavanaugh’s conclusion that the provision is severable. Id.

Justice Gorsuch, with whom Justice Thomas joined in part, concurred in the judgment in part and dissented in part. Justice Gorsuch agreed with Justice Kavanaugh that the government-debt exception violates the First Amendment. Id. at *19–20. However, he disagreed as to why and the remedial consequences. Id. at *20. Justice Gorsuch agreed that the exception is a content-based restriction that fails strict scrutiny, but reasoned that plaintiffs are entitled to an injunction precluding TCPA enforcement against them. Id. at *21.

Takeaways

Alleged TCPA violations are the basis of an increasing number of lawsuits each year, and the statute appears to be here to stay.

Because the TCPA is heavily litigated and lacks a statutory limitation or cap on the amount of damages that can be awarded for each violation, it can lead to tens of millions of dollars in potential exposure. Therefore, companies seeking to reduce their exposure to TCPA litigation should consult a legal professional for advice on compliance and mitigation of litigation risk.

Morrison & Foerster has advised extensively on TCPA disputes and represented numerous Fortune 500 companies in TCPA litigation. Follow Morrison & Foerster’s Class Dismissed blog to stay informed on TCPA developments.

Article By : Tiffany Cheung, Tiffani Figueroa and Anastasiya Menshikova

Changes to the Fair Debt Collection Practices Act could affect lenders

For creditors, getting through to customers who have defaulted on their loans or credit products is key to staying profitable.

Leaders at the American Financial Services Association are concerned that amendments to the Fair Debt Collection Practices Act proposed by the Consumer Financial Protection Bureau last year could limit how often auto lenders are able to seek repayment via phone calls. If that happens, consumers would be more likely to have late payments lead to vehicle repossession, AFSA contends.

Auto lenders should keep these possible changes on their radar and consult with legal experts in the event this change is implemented as proposed.

Celia Winslow, senior vice president of AFSA, told Automotive News that while the CFPB does not have jurisdiction over creditors, it is meaningful that the bureau included in its proposed amendments mention of its authority around UDAAP violations — short for unfair, deceptive or abusive acts or practices. That could allow other regulators to limit the number of calls creditors can make to customers.

“When creditors call consumers, they want to make sure they have the consent that they need, and they’re calling their customers for a particular reason,” Winslow said. “You want to pay your debts so your car doesn’t get repossessed.”

Changes to the rule would, among other things, limit third-party debt collectors to seven telephone calls per week. Once the bank reaches the customer, the third-party debt collector must wait at least a week before calling the consumer again. While lenders aren’t third-party debt collectors, AFSA leaders are worried the association’s members could end up being similarly restricted.

And in a study published in late 2019, AFSA concluded that when phone calls to customers are restricted, not all customers are reached in time to make payments on delinquent accounts. That means there would be a higher chance of vehicle repossessions in such cases. It requires at least 30 attempts to reach up to 20 percent of borrowers in a given month, AFSA found. And approximately 11 percent of borrowers require more than 49 telephone attempts before they’re reached.

The U.S. vehicle financing business is a $1.25 trillion industry, AFSA notes. According to credit bureau Experian, 2.25 percent of total auto loan and lease debt is 30 days delinquent, and 0.75 percent is more than 60 days delinquent.

Auto lenders and other creditors should keep these possible changes in mind when refining their collection procedures. While potential implementation of the changes is down the road, following federal guidelines on how to contact customers is key to staying compliant and avoiding unnecessary lawsuits.

By JACKIE CHARNIGA