Source: https://rmaintl.org/rmai-update/rmai-update-may-2019/
Timestamp: 2019-11-21 17:25:33
Document Index: 41947915

Matched Legal Cases: ['§ 1692', '§ 1692', '§ 1692', '§ 1681', '§ 1681', '§ 1681', '§ 1', '§ 1346', '§ 2674']

﻿ RMAI Update May 2019 | Receivables Management Association International
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The release of the CFPB Debt Collection NPR made last week one of the most exciting weeks for the industry. The CFPB held a Town Hall meeting to provide both industry and consumer perspectives on the NPR. RMAI was activity involved in the CFPB Town Hall. Jan Stieger represented the industry. Marian Sangalang, Jim Mastriani and Don Maurice joined Jan in the closed door industry Roundtable with Director Kraninger and CFPB leadership. The Federal Committee met later in the week to strategize the best organization for RMAI’s comments, which will be due in mid-August. Components of the plan include a series of free webinars to discuss each section of the proposed rules and to gain member feedback, member surveys, and breaking down the rule into subsections which will be analyzed by committee members to determine potential issues, areas that additional clarification is needed, and a draft of potential comments.
Prior to the Town Hall, RMAI leadership was in DC conducting key meetings. Leadership met with the lead staff for all five of the FTC Commissioners. This meeting was primarily an introductory meeting, as four of the Commissioners have recently been appointed. Certification, FinancialLiteracy.Rocks, and RMAI’s interaction with FTC staff were the primary discussion points. Additional meetings were held with several members of Congress to discuss RMAI’s data and documentation legislation and to seek bipartisan sponsors.
Indiana HB 1136 – This bill will provide some much needed clarification to new court rules adopted by Indiana that are scheduled to take effect on January 1, 2020. The court rules have been interpreted by many as having the potential of requiring debt buyers to provide point of sale receipts when bringing a legal action. The debt buyer amendments, which were added to page 18 of the bill, clarify that if a signed contract or other writing evidencing the debtor’s agreement to the debt does not exist, a copy of a document provided to the debtor while the account was active is sufficient; which for a revolving credit account will include a copy of a charge-off statement or the most recent monthly statement recording a purchase transaction, a last payment, or a balance transfer. [RMAI retained an Indiana lobbyist who was instrumental in getting the RMAI text added to HB 1136. The Governor signed the bill into law last week.]
Maine HB 776 – This bill would deem any judgment or decree of any court based upon a consumer obligation “paid and satisfied” at the end of one year unless within that period the judgment creditor has commenced an enforcement action on the judgment or decree. [RMAI retained a high quality lobbyist who was able to convince the sponsor to push the bill to the 2020 legislative session to give the stakeholders an opportunity to negotiate during the off session.]
Massachusetts HB 205 – This bill would require passive debt buyers to be licensed as debt collectors in Massachusetts. Currently, third party collection agencies and active debt buyers are regulated and licensed by the Massachusetts Division of Banks while passive debt buyers are regulated by the Attorney General’s Office and not required to be licensed. This bill would also exempt debt buying companies from bonding requirements and allow affiliated companies to be licensed under a single license and subject to a single examination [RMAI has been advocating for uniformity and consistency in state licensing laws. Maintaining the Massachusetts bifurcated regulatory scheme does not make sense and adds to industry and consumer confusion. RMAI has retained a Massachusetts lobbyist to assist us in our efforts and anticipate a successful outcome.]
Massachusetts SB 578/HB 919 – This bill among other things would: (1) reduce the statute of limitations in an action for the collection of a consumer debt from six to four years to be measured from the earlier of the date of charge-off, placement for collection, or 180 days after the last regular payment; (2) prohibit payments made prior to the limitations period expiring from tolling the statute; (3) prohibit any attempt to collect a consumer debt once the statute of limitations has expired but would allow a debt collector to accept an unsolicited voluntary consumer payment on a debt; (4) extinguish judgments after five years unless the creditor takes action to enforce the judgment; and (5) reduce the percentage that is subject to wage garnishment. [RMAI has retained a lobbyist to oppose the bill in its current form. RMAI testified in opposition of this bill at a legislative hearing in Boston earlier this month]
New York AB 876/SB 2829 – This bill would require a new 307-word consumer disclosure, in addition to existing state and federal disclosures. Unique to the disclosure, would be a requirement to provide consumers the website address of the states’ Consumer Protection Division and Attorney General’s Office. [RMAI is seeking amendments through its lobbyist that would result in a shorter 125-word disclosure that directs consumers to a state-maintained website. RMAI has had two lobby days in New York so far in 2019 to raise our concerns on this and other legislation.]
New York AB 1119 & SB 1835 – This bill would establish a New York private right of action for improper debt collection practices. In New York, currently only the Attorney General and district attorneys can pursue improper debt collection actions. [RMAI is seeking amendments through its lobbyist which would establish a 45-day right to cure period before consumers could bring suit.]
New York AB 6909/SB 4827 – This bill called the “Consumer Credit Fairness Act” would: (1) reduce the statute of limitations from six to three years on consumer credit transactions; (2) “extinguish” the right to collect on consumer debt past the statute of limitations; (3) require the mailing of a notice by the court clerk after filing proof of service of the summons and complaint; (4) require specific data to be included in the complaint; and (5) require the provision of form affidavits. [RMAI has a New York lobbyist and is working closely with a coalition of industry lobbyists to fight this bill.]
Klein v. Credico Inc., No. 18-2776, 2019 U.S. App. LEXIS 11726 (8th Cir. Apr. 22, 2019)
In so ruling, the Court concluded that the debt collector’s use of the words “PROFESSIONAL DEBT COLLECTORS” and the initials of its “doing business as” name would not mislead or deceive an “unsophisticated consumer,” and the letter’s inclusion of a signature of an individual not registered to collect debts in Minnesota was irrelevant and did not violate section 15 U.S.C. § 1692f because the collection company and two other signatories were duly licensed to engage in debt collection activities in Minnesota.
In March 2017, a debt collection company mailed a consumer a collection letter under its licensed name, which appeared in the top right corner of the collection letter. Several lines below the name appeared the words “PROFESSIONAL DEBT COLLECTORS.” The debt collector also referred to itself in the letter as “CCB,” which are the initials of its licensed business name. The letter was signed by three individuals, one of whom was not registered to collect debts in Minnesota where the consumer received the collection letter.
The consumer filed suit alleging that the collection letter’s inclusion of the phrase “PROFESSIONAL DEBT COLLECTORS” and the “CCB” acronym, rather than the collector’s true name violated subsection § 1692e(14) of the FDCPA which prohibits the use of false, deceptive or misleading representations, including the use of any business, company or organization name other than the true name of the debt collector.
The collector moved to dismiss the complaint. The trial court granted the motion, concluding that the use of “PROFESSIONAL DEBT COLLECTORS” and “CCB” was not false or misleading when viewed through the eyes of an unsophisticated consumer, and was immaterial. The trial court further held that the inclusion of the signature of an individual who was not registered to collect debts in Minnesota did not violate the FDCPA.
On appeal, the Eighth Circuit held that the trial court correctly determined that an unsophisticated consumer would understand that these terms referenced the collector because “PROFESIONAL DEBT COLLECTORS” clearly described the debt collector and its d/b/a, and “CCB” is a commonsense abbreviation of the collector’s other registered name that it used in the collection letter. The Court further noted that the collection letter included the collector’s correct registered name and contact information and the balance due on the debt.
The court next considered whether the collection letter’s inclusion of an individual’s signature who was not licensed to engage in debt collection activities in Minnesota violated § 1692f(1) of the FDCPA because “Minnesota law requires all individual debt collectors to obtain licenses as a prerequisite to collecting consumer debts in Minnesota.”
The appellate court agreed with the trial court that the consumer failed to state a 1692f(1) claim because the other two signatories were registered to collect debt in Minnesota, as was the collector. Thus, the inclusion of the unregistered individual’s signature did not constitute an “unfair or unconscionable means to attempt to collect a debt.”
Radiance Capital Receivables Eighteen, LLC v. Concannon, No. 17-3447, 2019 U.S. App. LEXIS 9912 (8th Cir. Apr. 4, 2019)
The debt collector sued the guarantor in federal court to collect the amount owed from the consent judgment. At summary judgment the trial court determined that the debt collector had a valid assignment of the company’s debt. The trial court found that the guarantor’s guarantee was valid and that the borrower did not prove his fraud-in-factum defense. The trial court entered judgment against the guarantor for the full amount owing on the consent judgment and this appeal followed.
On appeal, the Eighth Circuit noted that it applied Missouri law in this diversity action and examined the guarantor’s argument that the trial court erred because the assignment of the debt from the FDIC to the entity was invalid. The trial court had little trouble rejecting this argument because under section 1821(d)(2)(A)(i) the FDIC is authorized to assume “all rights, titles, powers, and privileges of the insured depository institution.” The FDIC also has the ability under section 1821(d)(2)(K) to use a private entity to dispose of a depository institution’s assets. Thus, the trial court correctly found that the FDIC’s assignment of the debt to the entity was valid.
Generally, a principal is “responsible for his agent’s acts as long as the agent acts with actual or apparent authority.” Relevant here, implied authority “consists of those powers incidental and necessary to carry out the express authority.”
The Eighth Circuit found that the evidence showed that the guarantor gave his friend the “express authority to draft and execute all documents related to his involvement in” the company. Securing the guaranty to ensure the company’s “continued operations was incidental to that express grant of authority.”
Thus, the Eighth Circuit rejected the guarantor’s argument and found that the trial court did not err when it found that the friend acted with implied actual authority when he delivered the guaranty to the bank for the guarantor.
Finally, the Eighth Circuit examined the guarantor’s fraud in the factum defense. To prevail and to void the contract ab initio the guarantor had to prove “(1) that he signed a document in ignorance of its true character; and (2) that his act was due to misrepresentations or fraudulent conduct on the part of another party and not to his own negligence.” The guarantor claimed he did not understand what he was signing, and he would not have signed it if he had known what it was.
The Eighth Circuit once again rejected the guarantor’s argument that the trial court erred because he attended meetings with the bank after signing the guarantee and the guarantee itself was unambiguous. The record was “devoid of any evidence that [the friend] concealed or otherwise misrepresented the guaranty.” The record therefore supported the trial court’s conclusion that the guarantor understood the “true character” of the guaranty.
Thus, the court held the fraud in the factum defense failed because the guarantor was not deceived as to the type of document being signed or its terms.
Lamps Plus, Inc. v. Varela, 203 L.Ed.2d 636 (U.S. 2019)
The defendant company sold light fixtures and related products. In 2016, a hacker impersonating a company official tricked a company employee into disclosing tax information of approximately 1,300 employees, after which a fraudulent tax return was filed in the name of one of the employees (“plaintiff”).
The company moved to compel arbitration on an individual rather than classwide basis, and to dismiss the lawsuit. The district court granted the motion to compel arbitration and dismissed the plaintiff’s claims without prejudice, but rejected the company’s request for individual arbitration, and instead authorized arbitration on a classwide basis.
The Ninth Circuit affirmed. In so ruling, it acknowledged the U.S. Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), that prohibits forcing a party “to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so,” and that the plaintiff’s agreement “include[d] no express mention of class proceedings.” However, the Ninth Circuit reasoned that although the agreement did not expressly refer to class arbitration, it was not the “silence” contemplated in Stolt-Nielsen because there the parties had stipulated that their agreement was silent about class arbitration. Because there was no such stipulation in this case, the Ninth Circuit concluded that Stolt-Nielsen was not controlling.
The Ninth Circuit next determined that the agreement was ambiguous on the issue of class arbitration and followed California law to construe the ambiguity against the drafter, a rule that “applies with peculiar force in the case of a contract of adhesion” such as the one at issue.
Examining the parties’ agreement, the Supreme Court majority noted that the Ninth Circuit applied California law to conclude that the parties’ agreement was ambiguous on the availability of class arbitration, and therefore “[f]ollowing our normal practice, we defer to the Ninth Circuit’s interpretation and application of state law and thus accept that the agreement should be regarded as ambiguous.”
The Supreme Court concluded it cannot, noting that class arbitration is not only markedly different from the “traditional individualized arbitration” contemplated by the FAA, but also that it “undermines the most important benefits of that familiar form of arbitration. . . The statute therefore requires more than ambiguity to ensure that the parties actually agreed to arbitrate on a classwide basis.”
Relying on its reasoning in Stolt-Nielsen, the Supreme Court “held that courts may not infer consent to participate in class arbitration absent an affirmative ‘contractual basis for concluding that the party agreed to do so,’” and “[s]ilence is not enough.” The Court further explained “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice[] the principal advantage of arbitration.’”
The Supreme Court cautioned that “[c]ourts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis,” and the rule that ambiguity in a contract should be construed against the drafter “cannot substitute for the requisite affirmative ‘contractual basis for concluding that the part[ies] agreed to [class arbitration].’”
Robinson v. United States Dep’t of Educ., 917 F.3d 799 (4th Cir. 2019)
The U.S. Court of Appeals for the Fourth Circuit held that a trial court lacked jurisdiction over a claim for violation of the federal Fair Credit Reporting Act (FCRA) involving a student loan administered by the U.S. Department of Education because Congress did not waive sovereign immunity for suits under FCRA.
This appeal arose from the plaintiff’s claim that the government agency responsible for administering the federal student loan program violated FCRA.
The Fourth Circuit first noted that FCRA’s causes of action for willful and negligent violations apply to any “person.” 15 U.S.C. §§ 1681n-1681o. The statute itself defines “person” to include “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” 15 U.S.C. § 1681a(b).
The plaintiff argued that because the federal government is a “government,” and any “government” is a person, and as any “person” can be liable, the government agency can be liable for FCRA violations. The Fourth Circuit disagreed, explaining that the word “person” should not be interpreted on a blank state because there is a “longstanding interpretative presumption that ‘person’ does not include the sovereign.” Although § 1681a(b)’s definition of a “person” includes the term “government,” the Fourth Circuit observed that the federal government is ordinarily not considered to be a person under 1 U.S.C. § 1 (general definition of “person” throughout the United States Code).
The Fourth Circuit further observed that statutes waiving sovereign immunity are normally quite clear, citing the Little Tucker Act (28 U.S.C. § 1346(a)(2)) and the Federal Tort Claims Act (28 U.S.C. § 2674), both of which specifically describe claims against the United States. However, the definition section on which the plaintiff relied did not specifically mention the United States or the federal government. Instead, it described only liability against a “person.” This, as the Fourth Circuit explained, was “hardly evidence of an unequivocal intent to waive federal sovereign immunity in the same way as statutes that specifically describe actions against the United States.”
NPRM Endgame – The Debt Collection Rule RMAI Webinar Series
First Look at the Proposed FDCPA Rules (Recorded) – Monday, May 13, 2019
Proposed Validation Rules Through the Life Cycle of the Account – Tuesday, May 21, 2019
Out of Statute Proposals and Litigation – Thursday, June 6, 2019
Consumer Communications: Calls, Emails, Texts – Wednesday, June 12, 2019
(INSIDE CONTENT)
Sandia Resolutions Company, LLC
T&I Enterprises, LLC
Marko Galic, New Century Financial Services, Inc.
Steven Crawford, Real Time Resolutions, Inc
Luis Lopez, Dalty Acquisitions, Inc.
Tyler Peska, Credit Management Corp
Roy Reagin Jr, Crown Asset Management LLC
Daniel Schindler, Plaza Services LLC
American First Finance Originating Creditor TX
CDS Software Affiliate CA
HealPay Affiliate MI
Tag Process Service, Inc. Affiliate AZ
ZenResolve Associate Collection Agency AZ
Thank you to our May 2018 – May 15, 2019 legislative fund contributors!