Joseph Messer

FTC to Help Consumers Report and Recover from Identity Theft

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 jmesser@messerstrickler.com.

When a Creditor is a “Debt Collector” Under the FDCPA

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The Federal Trade Commission (“FTC”) recently released a statement that the meaning of “debt collector” may be more expansive under the Fair Debt Collection Practices Act (“FDCPA”) than previously thought. A “debt collector” is defined under the FDCPA as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” §803(6). With this definition, it has long been assumed that creditors who collect their own debts are not covered by the FDCPA. However, Section 803(6) goes on to say “the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.”

The FTC has asserted FDCPA claims against companies using other names to collect their own debts, characterizing them as “debt collectors” under the FDCPA. The FTC has issued a warning toremind creditors that the FDCPA can in fact apply to creditors who collect on their own behalf. Creditors should regularly review their policies to ensure their practices and procedures follow all applicable laws and regulations.

View the FTC’s Original Post Here

To learn more about the FTC’s warning and how to avoid FDCPA violations please contact Joseph Messer at 312-334-3440 or jmesser@messerstrickler.com.

“Ban the Box” Introduced to Congress

On September 10, 2015, a bill was introduced by Senator Cory Booker (D-NJ) and Representative Elijah Cummings (D-MD) marking the first time “ban the box” has been proposed at the federal level.  If passed, The Fair Chance Act would prevent federal agencies and contractors from inquiring about prospective employees’ criminal records before extending a formal job offer.  Once a job offer is presented, the employer may ask about an applicant’s criminal background and revoke the job offer based on the result of a criminal background check.  Law enforcement, national security agencies, and positions with access to classified information will be exempt from this proposed law. For more information about the proposed Fair Chance Act, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

 

Read More on “Ban the Box”

                Illinois Enacts “Ban the Box” Law Impacting Private Employers

                Private Employers May be Impacted by the “Ban the Box” Approach in 2014

                The “Ban the Box” Movement Continues                

               “Ban the Box” and Local Ordinances – What Employers Should Know

15 Million Consumers Impacted by Experian Reports Data Breach

From September 1, 2013 through September 16, 2015, consumers who applied for postpaid services or device financing through Experian’s client, T-Mobile USA, were notified of an unauthorized breach from which consumers’ names, dates of birth, addresses, Social Security numbers, and drivers’ license numbers were at risk.  Personal payment cards and bank accounts were not accessed during the breach.  The breach, which affected Experian North America’s business units – not its consumer credit bureau, impacted approximately 15 million consumers in the United States.  As a result, Experian is offering credit protection resources to those who were or may have been affected. It is critical for credit and collection agencies to be aware of the risks of data breaches and the practices that will prevent them.  Identity theft is the fastest growing consumer complaint as determined by the 2014 Consumer Complaint Survey Report by the Consumer Federation of America and North American Consumer Protection Investigators. Be sure to take preventative measures to protect both your company and the consumers you serve.

For more information regarding the Experian Reports data breach, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

CFPB to Curb Mandatory Arbitration in Bank Contracts

On October 7th, 2015, the Consumer Financial Protection Bureau (“CFPB”) is set to propose new regulations which would prohibit financial institutions from including arbitration clauses that revoke consumers’ rights to class-action litigation. Such clauses appear in a broad range of financial contracts including, but not limited to, those for credit cards, checking and deposit accounts, prepaid cards, money transfer services, home mortgages, and private student loans. Through this proposal, the CFPB hopes to shift more power to consumers but in doing so, it has sparked national debate as to whether consumers are actually helped or harmed by arbitration agreements. According to a March study conducted by the CFPB, mandatory arbitration clauses affect millions of consumers, of which only 7% were aware such clauses restrict their rights to sue in court. The CFPB hopes their findings will justify the pending regulations; Opponents of the proposed regulation maintain that consumer class actions often times do little to help consumers and impose huge costs to businesses.

For more information regarding the proposed regulations or about the CFPB generally, contact Joseph Messer at 312-334-3440 or jmesser@messerstrickler.com.

CLASS ACTION STATUS GRANTED AGAINST UBER TECHNOLOGIES

Judge Edward Chen of the Northern District Court of California recently certified a class action suit against Uber Technologies, Inc. which claims the service treated its drivers like employees rather than independent contractors. The plaintiffs in this case believe that since Uber controls much of the drivers’ experiences (i.e. setting fares, deciding when and why they can be terminated, etc.), drivers should be classified as employees and therefore be eligible for expense reimbursements for car repairs, tips, and insurance. The class action will not apply to drivers that waived their right to litigate, certain drivers who work for independent transportation companies and drivers outside the state of California.  If a ruling limiting the class to those employed in the state of California is successfully appealed, however, the class action could be applicable to drivers around the country.

For more information regarding the class action against Uber or employment law generally, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

Illinois Amends and Renews ICAA

On August 3, 2015, the Illinois governor approved and signed House Bill 3332  amending the Regulatory Sunset Act and Illinois Collection Agency Act (ICAA).  The Bill is effective immediately, and amends the Regulatory Sunset Act, to extend the repeal of the ICAA from January 1, 2016 to January 1, 2026 and makes several amendments to the ICAA.  Perhaps the most important amendment to the ICAA is the revised definition of “debtor” to include persons from whom a consumer or commercial debt is sought.  The amended ICAA also now requires collection agencies to state the name and address of the original creditor, if different than the current creditor in the validation notice, and refers only to collection agencies rather than debt collectors to clarify commercial collection agencies must be licensed in Illinois.  Additionally, the amended ICAA adds electronic mail and any other Internet communication to the types of interstate communications that are exempt from the licensing requirements, provided such communications are made by a foreign collection agency whose state not only requires a license but extends reciprocity to agencies licensed and located in Illinois. The civil penalty for acting as a collection agency without a license was also increased from a maximum of $5,000 to a maximum of $10,000.  The ICAA, as amended, also includes new provisions regarding the Department of Financial and Professional Regulation’s ability to issue cease and desists and to suspend the license of a licensed collection agency without a hearing if the continuance of the agency’s practice “would constitute an imminent danger to the public.”

For more information regarding the Illinois Collection Agency Act and/or collection agencies’ obligations under the Act, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

Seventh Circuit Holds Passive Debt Buyers Covered by ICAA Prior to 2013 Amendment

On July 21, 2015, the Seventh Circuit Court of Appeals ruled that passive debt buyers were covered by the Illinois Collection Agency Act (the “Act”) prior to the Act’s most recent revision in 2013 amending the Act to explicitly define debt buyers and state that debt buyers are subject to the Act’s licensing provision.  In Galvan v. NCO Portfolio Management, Inc., 2015 U.S. App. LEXIS 12551 (7th Cir. July 21, 2015), the question was raised as to whether the defendant -- a passive debt buyer -- was required to register as a debt collection agency from June 2006 – June 2011.  Relying on deposition testimony from a lawyer in the Illinois Department of Financial and Professional Regulation – the agency charged with enforcing the Act, the district court said “no.”  The Illinois Supreme Court, however, recently held otherwise in LVNV Funding, LLC v. Trice, 32 N.E.3d 553 (Ill. 2015) (“Trice II”).   In Trice II, the state’s highest court held that a passive debt buyer defendant qualified as a collection agency under the Act in two respects: (1) under subsection 3(b) as an “assignee” of the original creditor; and (2) under subsection 3(d) as an entity that “buys . . . indebtedness and engages in collecting the same.”  Said decision made it clear that passive debt buyers using third party collection agencies do indeed qualify as collection agencies and this was true even before the Act was amended in 2013. For more information about this case or the Illinois Collection Agency Act generally, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440. 

 

The "Ban the Box" Movement Continues

The “Ban the Box” movement is reaching new heights. Currently there are 25 Ban the Box bills in 19 states.  Further, advocates of the policy are urging President Obama to issue an executive order which would prevent most government and federal contractors from inquiring about a candidate’s criminal history. For security reasons, certain agencies, such as the Department of Homeland Security, would likely be exempted should this order be put into effect. Advocates argue that criminal background checks can counter the justice system’s goal of rehabilitation.  An estimated 70 million Americans have criminal backgrounds.  Many of those with criminal backgrounds are minorities, leading organizations such as the American Civil Liberties Union, the National Council of La Raza and the NAACP Legal Defense and Education Fund to support Ban the Box initiatives.

For more information about the “Ban the Box” ordinance, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

   

Read More on “Ban the Box”

                Illinois Enacts “Ban the Box” Law Impacting Private Employers

                Private Employers May be Impacted by the “Ban the Box” Approach in 2014

                “Ban the Box” and Local Ordinances – What Employers Should Know

Account Number on Envelope Not a FDCPA Violation

On March 17, Judge Milton I. Shadur, a Senior U.S. District Judge for the Northern District of Illinois, dismissed a Fair Debt Collection Practices Act (“FDCPA”) case, which alleged an account number on an envelope violated the statute, just one day after the complaint was filed. In Sampson v. MRS BPO, LLC, No. 15-C-2258, 2015 WL, the court held that revealing an indecipherable sequence of numbers and symbols on the outside of an envelope was not abusive and, therefore, could not violate the FDCPA. In his Opinion, Judge Shadur wrote, “It takes only a quick look at those two exhibits to see that the Complaint is a bad joke -- a joke because the claims are so patently absurd, and a bad one because $400 has been wasted on a filing fee.” The Court reasoned the public would need supernatural powers to determine the letter held inside the envelope was sent in an effort to collect a debt.

The attorney who represented Plaintiff is now facing sanctions for his conduct.

For more information regarding this case and what abusive behaviors the FDCPA covers, contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

Federal Court Determines Voicemail Message and Return Phone Call with an Unintended Recipient Not in Violation of FDCPA

A federal court in New York recently decided that a voicemail message stating that the call was from a debt collector where the voicemail message’s intended recipient was disclosed to a third party who returned the call was not a violation of the Fair Debt Collection Practices Act (“FDCPA”).  In Abraham Zweigenhaft v. Receivables Performance Management, LLC, RPM left the following voicemail message:  “We have an important message from RPM.  This is a call from a debt collector.  Please call 1(866) 212-7408.”  Mr. Zweigenhaft’s son heard the message and returned the call.  He then had the following conversation with the RPM representative: RPM: Thank you for calling Receivables Performance Management on a recorded line. This is Michelle how can I help you?

Caller: Hi how are you? I received a message to call you, and I am just trying to figure out who you are trying to reach.

RPM: Okay and your phone number please, area code first.

Caller: (718) 258-9010

RPM: And is this Abra?

Caller: Is this who?

RPM: Abra Zweigenhaft?

Caller: Nope. It's not.

RPM: Okay let me go ahead and take your phone number off the list. The last four digits again please. 9010 or 7032?

Caller: 9010

RPM: Okay I'll take it off the list. You have a nice day.

Caller: Thank you.

RPM: Uh huh, bye bye.

Zweigenhaft filed suit against RPM alleging that the content of the voicemail message and the phone call together conveyed information regarding the consumer’s debt to a third party, Zweigenhaft’s son, in violation of FDCPA § 1692c(b).  The United States Court for the Eastern District of New York disagreed that this was a violation.  The court recognized the statute’s conflicting provisions.  Debt collectors are required by the FDCPA to meaningfully identify themselves when calling a consumer, but doing so may inevitably convey information about a consumer’s debt, which if overheard by a third party gives rise to consumer arguments that the debt collector violated the FDCPA.  In finding that the communications did not violate the FDCPA, the court stated that if it were to find that the contact was a violation of the FDCPA “would place an undue restriction on an ethical debt collector in light of our society’s common use of communication technology.”

For more information on this topic, contact Joseph Messer at 312-334-3440 or at jmesser@messerstrickler.com or Stephanie Strickler at 312-334-3465 or at sstrickler@messerstrickler.com.

 

Protecting Your Financial Privacy: The Rights Afforded to You by the Gramm Leach Bliley Act

The Gramm LeachBliley Act (GLBA) also referred to as the Financial Services Modernization Act of 1999, was established to protect certain financial information of consumers in connection with the business practices offinancial institutions such as banks, credit unions, insurance companies. The GLBA creates three basic privacy rights for consumers: the right to a privacy notice, the right to stop financialinstitutions from sharing certain financial information by “opting-out”, and the right to be informed how the institution will protect the confidentiality and security of their information.

Consumers’ rights under the GLBA are limited. For example, The Act does not require financial institutions to specify exactly with whom and why they are sharing a consumer’s financial information with an affiliated company.  Rather, financial institutions are only required to provide consumers with a brief description of the categories of information that may be shared. Also, consumers may not have ability to “opt-out” to avoid information being shared within a company’s own “corporate family” or if the company needs the information to conduct normal business (i.e. attempting to prevent fraud, complying with a court order, etc.).

For more information regarding the GLBA contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

Eleventh Circuit Imposes Liability on Autodialed Calls and Defines TCPA Language

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:

  1. 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.”
  2. 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.
  3. 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.”
  4. 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 jmesser@messerstrickler.com and Stephanie Strickler at (312) 334-3465 or at sstrickler@messerstrickler.com.  

Proposed Legislation to Amend FDCPA Would Limit Courts’ Discretion in Awarding Costs in FDCPA Lawsuits

Last week, Rep. Matt Cartwright (D-Pa.) introduced the legislation to amend the Fair Debt Collection Practices Act (“FDCPA”) in reaction to the Supreme Court decision Marx v. General Revenue Corp.  In this decision the court ruled that regardless of whether an FDCPA lawsuit was brought in bad faith a prevailing debt collector could be awarded costs at the discretion of a district court.

Cartwright said: “Due to the Supreme Court’s unfortunate decision, consumers, particularly those who are economically vulnerable, may choose to forego legal action when subjected to abusive and illegal debt collection practices given the potential high costs of losing a suit.  My legislation would correct the Court’s decision and restore the original intent of the FDCPA.”

According to the new legislature, the FDCPA would be amended so that the costs would be only available to a winning defendant when the plaintiff brings a suit in bad faith or for the purpose of harassment.

Several consumer advocate organizations have endorsed the bill, including the National Association of Consumer Advocates and the American Association for Justice.  The bill has been referred to the House Financial Services Committee and Committee on the Judiciary.

For more information regarding the bill, FDCPA or debt collection laws you may contact Joseph Messer at (312) 334-3440 or at jmesser@messerstrickler.com

MESSER STRICKLER, LTD. SUCCESSFUL IN GETTING FCRA COMPLAINT DISMISSED WITH PREJUDICE

In a recent Fair Credit Reporting Act (“FCRA”) case, Mohammad Babar v. Screening Reports, Inc., the U.S. District Court for the District of New Jersey granted defendant, Screening Reports, Inc.’s, motion for judgment on the pleadings, dismissing plaintiff’s complaint with prejudice.   Joseph Messer & Katherine Olson of Messer Strickler, Ltd. represented Screening Reports, Inc., with the assistance of local counsel. 

In the lawsuit, plaintiff sought to recover from Screening Reports, Inc., for a willful violation of Section 1681e(b) of the FCRA, which provides that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”  To prove a willful violation of Section 1681e(b), a plaintiff must establish, among other things, that the defendant prepared a report which was inaccurate.  Plaintiff alleged that defendant inaccurately reported an “eviction record match” on his credit report.  Plaintiff admitted that he was involved in the eviction action but alleged that he was never evicted because the action was dismissed without prejudice. 

Screening Reports, Inc. moved pursuant to Federal Rule of Civil Procedure 12(c) for judgment on the pleadings arguing that it could not be found liable under Section 1681e(b) because it provided an accurate report.  The Court reviewed the report, which defendant had attached to its Answer to the Complaint, and found that judgment on the pleadings was warranted.  Specifically, the Court relied on the report’s decision detail, which required any and all eviction actions filed against the plaintiff in the past 84 months be reported.  Accordingly, the plaintiff need not have been actually evicted for an eviction action to appear on his report.  Importantly, the Court also found that the eviction action was captioned in the report as “DSM W/O PR 1-5-12.”   The Court held that with this caption, the report clarified that while an eviction proceeding was filed against plaintiff, it was dismissed without prejudice.   As the plaintiff admitted that the eviction action was filed against him and dismissed without prejudice, the report was accurate.  Because the report was accurate, Plaintiff could not establish a violation of § 1681e(b), and the Court dismissed the complaint with prejudice.

For more information on this case or assistance in defending an FCRA claim, contact Joseph Messer at (312) 334-3440 or Katherine Olson at (312) 334-3444.  

Joseph Messer and Nicole Strickler Appointed ACA International Sanctions Panel

In June 2013, ACA International, the Association of Credit and Collection Professionals, established a formal program to implement initiatives designed to protect the long term viability of the credit and collection industry. As a part of this program, ACA created a panel of experienced consumer law defense counsel coined the “Sanctions Panel Attorney Review Program”. The Panel will be charged with counseling, representing and assisting members of the industry in pursuing appropriate and available sanctions against both consumers and attorneys engaging in misconduct or unlawful litigation practices against ACA members.

Joseph Messer and Nicole Strickler of Messer Strickler, Ltd. were recently honored with appointment to this panel.  Ms. Strickler and Mr. Messer have earned national reputation for defending individual and class action lawsuits brought under the FDCPA, FCRA, TCPA and other federal and state consumer protection laws.  Mr. Messer and Ms. Strickler have been active members of the ACA for years, presenting at conferences and seminars, and participating in discussion panels. 

You may contact Joseph Messer (jmesser@messerstrickler.com or (312) 334-3440) or Nicole Strickler (nstrickler@messerstrickler.com or (312) 334-3442) with any questions relating to this new ACA initiative. 

Credit Reporting Agencies May Be Affected by SECURE Act Amendments to FCRA

Earlier this month, U.S. Senators Sherrod Brown (D-OH) and Brian Schatz (D-HI) held a news conference where they discussed their proposed legislation intended to protect consumers from inaccurate credit reports and credit scores.  The Senators’ legislation, Stop Errors in Credit Use and Reporting (SECURE) Act of 2014, will be introduced after Consumers Union releases a new report addressing credit report errors that affect 40 million of U.S. citizens. 

Under the Fair Credit Reporting Act (“FCRA”) (15 U.S.C. 1681 et seq.), credit reporting agencies (“CRAs”) are required to “Follow reasonable procedures to assure maximum possible accuracy” of information contained in credit reports.  Senators Brown and Schatz contend that many reports still contain many errors that can be prevented.  In fact, in a 2013 report the Federal Trade Commission (“FTC”) found that one in five consumers has an error on at least one of their credit reports.  Those errors were significant enough to impact the credit scores of half of those consumers.

Senator Schatz commented on the legislation: “Errors in a credit report can make the difference between whether someone can live the American Dream and buy a home or even get a job…  Our legislation will make credit reports more accurate, help people to correct any mistakes, give federal agencies more tools to enforce the law, and hold reporting agencies and data furnisher accountable for their mistakes.”

The SECURE Act proposes changes for credit reporting agencies intended to:

1)      Make credit reports more accurate from the beginning;

2)      Ensure that consumers are heard when they dispute information in their credit report;

3)      Provide consumers with a free, meaningful credit score once a year;

4)      Require CRAs and data furnishers to conduct meaningful investigations when consumers file disputes;

5)      Provide additional tools to agencies to adequately regulate and supervise creditreporting agencies; and

6)      Give consumers better legal tools to enforce their rights under the FCRA.

The SECURE Act would provide increased requirements on CRAs and data furnishers:

-          Requires CRAs to pass along documentation sent by consumers to data furnishers and requires data furnishers to consumer the documentation in their re-investigation;

-          Prevents CRAs from ignoring new or additional information provided by a consumer that is relevant to an on-going dispute;

-          Requires CRAs to gather report information on disputesand their resolution;

-          Directs the Consumer Financial Protection Bureau (“CFPB”) to establish minimum procedures that a CRA must follow to ensure maximum possible accuracy of consumer reports.

Among the amendments to the FCRA is section 612, where, among other changes, subsection (b) will be stricken and the following will be inserted:

(b)Free Disclosure After Notice of Adverse Action or Offer of Credit on Materially Less Favorable Terms.—

“(1) In general.—Not later than 14 days after the date on which a consumer reporting agency received a notification under subsection (a)(2) or (h)(6) or section 615, or from a debt collection agency affiliated with the consumer reporting agency, the consumer reporting agency shall make, without charge to the consumer, all disclosures required in accordance with the rules prescribed by the Bureau under section 609(h).

The SECURE Act is also intended to provide:

More disclosures to consumers:

1)      Provides consumers with access to meaningful credit scores free of charge annually; and

2)      Ensures that consumers get the information they need to understand their credit reports by enabling consumers to identify and correct errors on their report, understand how their credit report is being used and by whom, and see the same information that is used by lenders to deny a consumer credit or increase interest rates.

Legal redress:

1)      Holds CRAs accountable to the FTC for negligent violations of the FCRA; and

2)      Provides for injunctive relief as a remedy for consumers who sue CRAs under the FCRA.

Regulatory reforms:

1)      Creates a national registry of CRAs to provide consumers with opportunity to know which companies are collecting and disseminating information about them; and

2)      Directs the Government Accountability Office to conduct a study of existing public credit reporting systems and evaluate the feasibility, costs and benefits of creating a national credit reporting system in the U.S.

For more questions regarding the SECURE Act and the FCRA in general, you may contact Joseph Messer at (312) 334-3440, or at jmesser@messerstrickler.com.

$23 Million Judgment Against Owners of Debt Collection Agency

On March 26, 2014, the United States District Court for the Central District of California entered a Final Order for Permanent Injunction and Monetary Judgment in Federal Trade Commission v. Rincon Management Services, LLC et al. pursuant to a stipulation between the Federal Trade Commission (“FTC”) and the two principal owners of Rincon Management Services, LLC (“Rincon”), a California-based collection agency.  The Final Order entered judgment in the amount of $23,084,885 against the two principal owners as equitable monetary relief.   Furthermore, the Final Order permanently enjoined the two principal owners from engaging in debt collection activities; assisting others engaged in debt collection activities; misrepresenting or assisting others in misrepresenting any material fact concerning financial-related products and services; and advertising, marketing, promoting, offering for sale, selling, or assisting others engaged in the advertising, marketing, promoting, offering for sale, or selling, of any portfolio of consumer or commercial debt and any program that gathers, organizes, or stores consumer information relating to a debt or debt collection activities.  All money paid to the FTC pursuant to the Judgment is required to be used for equitable relief, including consumer redress. 

In October 2011, the FTC filed a complaint for permanent injunction and other equitable relief against Rincon and other companies associated with Rincon.  The complaint alleged that defendants violated the Federal Trade Commission Act (“FTCA”) and the Fair Debt Collection Practices Act (“FDCPA”) by making bogus threats that consumers had been sued or could be arrested.  The Complaint also alleged that the defendants violated the FTCA and FDCPA by calling consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers purportedly related to a lawsuit.  In most of the instances, the consumers did not even owe the debt the defendants were attempting to collect.  As Jessica Rich, the director of the FTC’s Bureau of Consumer Protection, commented: “These debt collectors focused on Spanish-speaking consumers and other people who were strapped for cash, and preyed on them by using abusive collection tactics in violation of federal law.”

As maintained in a recent FTC Press Release, the $23 million judgment will be suspended due to the defendants’ inability to pay.  However, certain personal assets defendants agreed to surrender and the $3 million in frozen funds held by the receiver as part of the FTC’s 2011 temporary restraining order will be exempt from the suspension.

The recent Judgment demonstrates the FTC’s commitment to suppressing illegal debt collection practices.  Notably, litigation still continues against several companies that were involved in Rincon’s illegal debt collection actions.

For more information on this lawsuit or on debt collection and fair debt collection statutes contact Joseph Messer at jmesser@messerstrickler.com or Katherine Olson at kolson@messerstrickler.com.  

New Disclosure Requirement for Out-of-Statute Debts in West Virginia

New changes to the West Virginia Code will require debt collectors to update any collection notices that will be sent to West Virginia consumers on out-of-statute debts (i.e., debts beyond the statute of limitations for filing a legal action for collection).  2014 H.B. 4360, a recently enacted bill, amends and reenacts §46A-2-128 of the Code of West Virginia relating to consumer credit protection, and specifically to unfair and unconscionable means to collect a debt.

Effective June 6, 2014, the new legislation will require debt collectors pursuing out-of-statute debts to inform consumers in their initial written communication that the creditor or collector cannot report the debt to the credit reporting agencies as unpaid and cannot sue for it.  Below is an excerpt with the required disclosure language (emphasis added):

(1)When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U.S.C. 1681c:

“The law limits how long you can be sued on a debt.  Because of the age of your debt, (INSERT OWNER NAME) cannot sue for it.  If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and

(2) When collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U.S.C. 1681c:

“The law limits how long you can be sued on a debt.  Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies.”

The bill also reinstates that no debt collector may use unfair or unconscionable means to collect or attempt to collect any debt.  Besides not including the necessary disclosures stated above, the following conduct will also violate §46A-2-128 of the Code of West Virginia:

-          Seeking or obtaining any written statement in any form that specifies that a consumer’s obligation is incurred for necessaries of life if this obligation was not incurred for such necessaries;

-          Seeking or obtaining any written statement in any form containing an affirmation of any obligation by a consumer who has been declared bankrupt, unless the nature and consequences of such affirmation are disclosed, as well as the fact that the consumer is not legally obligated to make such affirmation;

-          Collection or attempt to collect any interest or other charge, fee or expense incidental to the principal obligation unless they are authorized by the agreement creating the obligation and by statute;

-          Any communication with a consumer whenever they are appeared to be or are represented by an attorney unless the attorney fails to return calls or answer correspondence;

-          Collection or attempt to collect from the consumer debt collector’s fee or charge for services rendered (see restrictions in the 2014 H.B. 4360 bill).

For more information on this new legislation, the Code of West Virginia or fair debt collection statutes for other states, you may contact Joseph Messer at jmesser@messerstrickler.com or at (312) 334-3440 or Stephanie Strickler at sstrickler@messerstrickler.com or at (312) 334-3465.

FCC Clarifies TCPA: Prior Express Consent May Be Obtained by a Third Party

On March 27, 2014, the Federal Communication Commission (“FCC”) released a Declaratory Ruling in the matter of GroupMe, Inc./Skype Communications S.A.R.L petition to clarify the rules and regulations implementing the Telephone Consumer Protection Act (“TCPA”) of 1991.  This ruling relates to situations in which a consumer may give their express consent to receive calls to an intermediary rather than to the calling party itself.

According to its petition, GroupMe provides a free group text messaging service for groups of up to 50 members.  Those creating groups must be registered member with GroupMe, and in so doing agree to GroupMe’sTerms of Service (TOS).  The TOS contains a representation that all members being added to the group have consented to receiving text messages.

Considering the consumer protection policies and goals underlying the TCPA the FCC ruled: “We clarify that text-based social networks may send administrative texts confirming consumers’ interest in joining such groups without violating the TCPA because, when consumers give express consent to participate in the group, they are the types of expected and desired communications TCPA was not designed to prohibit, even when that consent is conveyed to the text-based social network by an intermediary (emphasis added).”  The FCC added that consumer’s prior express consent may be obtained through and conveyed by an intermediary, such as the group organizer using GroupMe’s service.

The FCC’s ruling is helpful clarification that prior express consent as required under the TCPA may in certain circumstances be obtained through a third party.  To learn more about the TCPA and its restrictions on debt collection industry, you may contact Joseph Messer at jmesser@messerstrickler.com or at (312) 334-3440.