Nicole and Joe spent the week in the great state of Minnesota at the bi-annual National Creditors’ Bar Association’s conference. Nicole spoke with NCBA Government Affairs Officer Nathan Willner giving an update as to the CFPB’s latest and greatest, including a summary of the new CFPB proposed debt collection rules that were released on May 8, 2019. Nicole also participate in NCBA’s first “CRED Talks”, a TED talk style presentation on those issues affecting collection attorneys. Joe rounded out the week with a discussion of the latest developments in TCPA litigation. The conference, as usual, was a valuable networking and education opportunity for those in the credit and collection industry.
On January 28th, the Federal Trade Commission (“FTC”) updated identitytheft.com with personalized information and tools for consumers to report and recover from identity theft. This change comes after consumers submitted 47% more identity fraud complaints to the FTC in 2015 than in 2014. As a result, the FTC has made a form letter available for victims to better communicate with debt collectors about debts incurred due to theft. Additionally, the FTC has recommended victims contact credit bureaus to block information on their credit reports in regards to any fraudulent debts. For more information about the FTC’s new identity theft tools, please contact Joseph Messer at 312-334-3440 or at email@example.com.
The Eleventh Circuit Court of Appeals recently reversed a district court’s decision to grant summary judgment in favor of a debt collector in a Telephone Consumer Protection Act (“TCPA”) case. In its decision, the Eleventh Circuit provided further clarification on the Act’s definitions of “prior express consent” and “called party” and stressed the importance of verifying cellular telephone ownership before contacting a person attempting to collect a debt.
In Osorio v. State Farm Bank, F.S.B., Clara Betancourt applied for a State Farm credit card and listed the cell phone number of her long-time partner Fredy Osorio in the application. Later Betancourt failed to make timely minimum payments on her credit card account. Subsequently, State Farm hired a debt collector to garnish the payments, who placed 327 autodialed calls over the six month period to Osorio’s cell phone number. Osorio filed a lawsuit claiming that even though Betancourt was his girlfriend, she did not have the authority to consent on his behalf to receive debt collection calls on his cell phone number. Moreover, if Betancourt had such authority, Plaintiff revoked that consent later during his telephone conversations with the debt collector.
The TCPA claims in this case were dismissed by the trial court, granting summary judgment in favor of State Farm. Osorio appealed and the Eleventh Circuit Court reversed the trial court’s decision.
Below are several takeaways from Eleventh Circuit decision:
- Prior express consent must come from the called party. The Eleventh Circuit addressed the meaning of the term “called party” and held that the term refers to the actual current subscriber of the cellular phone number. In this determination the Court sided with the Seventh Circuit’s decision in Soppet v. Enhanced Recovery Company, LLC. The Eleventh Circuit also agreed with the Seventh Circuit in that called party does not refer to the intended recipient of the phone call. The Eleventh Circuit stated: “…we believe this really means that Betancourt had no authority to consent in her own right to the debt-collection calls to [Osorio] because one can consent to a call only if one has the authority to do so, and only the subscriber (here, Osorio) can give such consent, either directly or through an authorized agent.”
- Prior express consent may be given by the agent of the called party. Even though the Court did state that one adult might authorize another to give consent to make calls to their cellular telephone number in some circumstances, the Court found that long-term relationship between Betancourt and Osorio was not sufficient to provide Betancourt an authority to give State Farm consent on behalf of Osorio to call his cell phone.
- Oral revocation of prior express consent by the called party is allowed. The Court noted that even though the Fair Debt Collections Practices Act (“FDCPA”) requires a consumer to notify the debt collector in writing if they do not wish to be contacted by the debt collector, the TCPA does not contain the same language. Also, the Eleventh Circuit agreed with the Third Circuit’s decision in Gager v. Dell Financial Services, LLC, which states: “in light of the TCPA’s purpose, any silence in the statute as to the right of revocation should be construed in favor of consumers.”
- TCPA violations can occur if a cell phone call has been placed- it is not necessary for a charge to incur. The Eleventh Circuit held that a TCPA violation still occurs even if the call placed was not charged: “To state the obvious, autodialed calls negatively affect residential privacy regardless of whether the called party pays for the call.” In support of its decision, the Court relied on the Act’s definition -- that it prohibits autodialed calls “to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any other service for which the called party is charged for the call.” The Court was convinced that the phrase regarding charges is related to the previous phrase and not to the whole definition.
In light of this decision, debt collectors should verify the current ownership of all cellular phone numbers they are currently calling or are intending to call. These actions will help protect debt collectors from TCPA liability risks that are related to calling shared cell phone numbers, recycled number or wrong telephone numbers. For more information you may contact Joe Messer at (312) 334-3440 or at firstname.lastname@example.org and Stephanie Strickler at (312) 334-3465 or at email@example.com.
Yesterday, the House Financial Services Committee approved six bills which will bring accountability, transparency and oversight to the Consumer Financial Protection Bureau (CFPB). The questions regarding the CFPB’s overall accountability were raised during the CFPB President’s presentation of the CFPB’s semi-annual report before the Financial Services Committee in September of this year which was discussed in a previous blog. The bills will reform the CFPB’s structure by replacing the CFPB director with a five-member bipartisan commission; promote greater transparency and accountability at the CFPB; prohibit the CFPB from collecting personal financial information about consumers without their prior consent; and other issues. Below is a brief summary of each bill.
H.R. 3519, the Bureau of Consumer Financial Protection Accountability and Transparency Act, subjects the CFPB to Congressional oversight through the regular appropriations process, thus promoting greater accountability and transparency.
H.R. 2446, the Responsible Consumer Financial Protection Regulations Act of 2013, replaces the CFPB’s single director with a bipartisan five-member commission appointed by the president. This commission will promote more stable and reasoned rule-making. Other federal agencies that are in charge of investor and consumer protection are led by multiple individuals, and this type of leadership is consistent with many federal banking regulators.
H.R. 2571, the Consumer Right to Financial Privacy Act of 2013, prohibits the CFPB from collecting personal financial information about consumers without their prior consent or knowledge. Since the CFPB collects confidential financial information on millions of Americans, this bill protects consumers’ private financial lives from intrusion by their government.
H.R. 3183, a bill to provide consumers with a free annual disclosure of information the Bureau of Consumer Financial Protection maintains on them. This bill was introduced when it was revealed that the CFPB collects millions of consumer’s private financial records. The disclosure will be provided annually to all consumers at no charge.
H.R. 3193, the Consumer Financial Protection Safety and Soundness Act of 2013, requires the CFPB to be considerate of soundness and safety of financial institutions in its rulemaking. The bill provides an oversight of CFPB rules and regulations that may undermine the soundness and safety of financial institutions.
H.R. 2385, the CFPB Pay Fairness Act of 2013, achieves pay parity for CFPB with comparable product regulatory agencies by setting the basic rates of pay for CFPB employees on the General Services scale. Currently, CFPB employees’ basic pay rates are set by the CFPB Director.
As said Chairman Jeb Hensarling (R-TX), “These are the modest, common-sense bills that bring a modicum of accountability and transparency to the CFPB.” To see the Memorandum of Committee on Financial Services that reflects a description of the bills, please click here.
For more information on these approved bills and their interpretation, please contact Joe Messer at firstname.lastname@example.org or by calling Joe at (312) 334-3476.
Joe Messer and Nicole Strickler of Messer Strickler, Ltd. will be presenting tomorrow, November 7th, 2013, at the ACA International’s Fall Forum. The topics of the presentations are as follows: “The Forgotten and Misunderstood: Avoiding Liability under State Laws Affecting Debt Collection”, and “Avoiding TCPA Traps in Health Care Collections.” Both Nicole Strickler and Joe Messer are seasoned speakers before the industry. Mr. Messer is a regular speaker at ACA International’s Conventions and Forums. He also often presents at the Illinois Collectors Association and has presented for NARCA (National Association of Retail Collection Attorneys), NAPBS (National Association of Professional Background Screeners) and Chicago Bar Association. Ms. Strickler has presented for NARCA, the National Council of Higher Education Loan Programs, and Illinois Collectors Association among others.