Presenting a 90-Minute Encore Presentation of the Webinar with Live, Interactive Q&A Consumer Debt Collection and New CFPB Regs, Enforcement and Litigation: Game Changers for the Industry Navigating New Paradigms for Debt Originators, Sellers, Collectors and Attorneys as Debt Collectors, Leveraging FDCPA Developments TUESDAY, OCTOBER 14, 2014 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Ronald L. Rubin, Partner, Hunton & Williams , Washington, D.C. David N. Anthony, Partner, Troutman Sanders , Richmond, Va. Angela E. Kleine, Morrison Foerster , San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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CFPB Debt Collection ANPR Ronald L. Rubin Partner, RRubin@hunton.com Hunton & Williams LLP
Debt Collection ANPR – November 2013 • CFPB seeks data and information to assist in developing proposed rules for debt collection • Final Regulations may take time – 12 to 18 months? • Asks for answers to 162 questions (questions grouped into eight substantive categories) • Comment period extended to February 28, 2014 – Submit comments – CFPB interprets silence as agreement! 5
Debt Collection ANPR – November 2013 (continued) • Expected Highlights – Persistent consumer protection problems/complaints – Updates needed due to technological developments since FDCPA – Original creditor (first party collection) – national standards 6
CFPB Top Debt Collection Issues/Concerns • UDAAP vs. FDCPA • Mistaken Collection Efforts – Quality of data – Obligations of debt seller 7
CFPB Top Debt Collection Issues/Concerns • Time Barred Debt – Deceptive statements – Required disclosures – Systems to ensure correct SOL information (how time-barred status is calculated and tracked) 8
CFPB Top Debt Collection Issues/Concerns (continued) • Documentation – When making calls; threatening litigation; suing – Having documents vs. ability to get documents – Agreements to pay debt, and amount owed (terms and conditions, account statements) – Chain of title – Affidavit language and execution 9
CFPB Top Debt Collection Issues/Concerns (continued) • Complaints/Dispute Resolution – Always high priority for CFPB – CFPB analyzes complaint data, looks for patterns – CFPB looks closely at responses to complaints; internal investigations; validation requests • Policies and Procedures – Impossible to be perfect 10
CFPB Top Debt Collection Issues/Concerns (continued) • FCRA/Credit Reporting – Steps taken to ensure accuracy and integrity of information reported to credit bureaus – Responses to disputes and adequacy of investigations – Reporting of accounts as disputed – Reporting of time barred debt 11
CFPB Top Debt Collection Issues/Concerns (continued) • Telephone Communications – Call frequency, time of day restrictions (especially across multiple accounts) – Honoring written and verbal do not call requests – Call recording and monitoring systems – Statements made to encourage payment (e.g., regarding credit score improvement) 12
CFPB Top Debt Collection Issues/Concerns (continued) • Payments – Payment application/crediting – Statements during repayment plans – Fees (e.g., “convenience fees”) – Offering settlement and repayment options 13
CFPB Top Debt Collection Issues/Concerns (continued) • Servicemembers/SCRA • Older Americans 14
Consumer Debt Collection and New CFPB Regs, Enforcement and Litigation Angela E. Kleine (415) 268-6214 akleine@mofo.com mofo.com
FTC Enforcement Actions • Joint FTC / CFPB authority • January 20, 2012 MOU • Information Sharing (including exam materials) • 7 Actions Emphasized in CFPB Annual Report CFPB’s 2013 Annual FDCPA Report 16 §§
FTC Enforcement Actions FTC v. Forensic Case Management Services, Inc. , No. 2:11-CV- 1. 07484 (C.D. Cal. Jan. 17, 2013) ($30 million judgment against debt collection firm and employees) U.S. v. Luebke Baker , No. 1:12-cv-1145 (C.D. Ill. May 22, 2012) 2. ($3.1 million settlement, re: collection of magazine subscription debts) FTC v. Goldman Schwartz , No. 4:13-cv-106 (S.D. Tex. Jan. 31, 3. 2013) (TRO and asset freeze against debt collector, re: alleged false statements, including threats to take legal action) FTC v. AMG Services, Inc. , No. 2:12-cv-536 (D. Nev. Apr. 2, 2012) 4. (TRO and asset freeze against lender) 17
FTC Enforcement Actions “Phantom Debt” Collection 5. FTC v. Broadway Global Master, Inc. , No. 2:12-cv-855 (E.D. Cal. Apr. 3, 2012) (ongoing) 6. FTC v. Pro Credit Group, LLC, et al. , No. 12-CV-586 (M.D. Fla. Mar. 19, 2012) (Sept. 11, 2013 Stipulated Final Judgments and Orders for Permanent Injunction) 7. FTC v. American Credit Crunchers , No. 12-CV-1028 (N.D. Ill. Oct. 10, 2012) (Oct. 23, 2012 Stipulated Final Judgment and Order for Permanent Injunction) 18
FDCPA Circuit Splits Key Definitions: FDCPA § 803 • “[C] reditor": “ any person who offers or extends credit creating a debt or to whom a debt is owed” • Exception: “any person” who “receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another .” • “[D] ebt collector”: “any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another . • Exception: Collection of “a debt” that (1) was originated by such person ” or (2) “was not in default at the time it was obtained by such person” • But, see the Bureau’s 2013 Guidance and ANPR 19
FDCPA Circuit Splits “Debt Collectors” • 9th Circuit • Foreclosure: [The bank] acquired the loan in default and later foreclosed. Held, it could be both a “creditor” and a “debt collector.” Schlegel v. Wells Fargo Bank, N.A. , 720 F. 3d 1204 (9th Cir. 2013). • Mods: Bank was both a “debt collector” and “engaged in debt collection activities when it offered the TPP .” Corvello v. Wells Fargo Bank, N.A. , 728 F. 3d 878 (9th Cir. 2013). • 11th Circuit • Reese : Law firm that sent dunning letters was a “debt collector” • Birster left open whether the servicer was a “debt collector” 20
FDCPA Circuit Splits “Debt Collectors” • 5th Cir.: “[ M]ortgage servicing companies” and “debt assignees” are not debt collectors, and therefore are not regulated by the FDCPA , “as long as the [mortgage] was not in default at the time it was assigned” by the originator .” Miller, et al. v. BAC Home Loans Servicing , 726 F.3d 717 (5th Cir. Aug. 13, 2013). • 6th Cir.: “[Servicer] obtained the . . . loan for servicing before default. Therefore, [servicer] is not a ‘debt collector .’” Glazer . 21
FDCPA Circuit Splits Enforcement of a Security Interest as "Debt Collection" • 6th Circuit rejected “[t]he view adopted by a majority of district courts . . . that mortgage foreclosure is not debt collection.” Glazer v. Chase Home Fin. LLC , 704 F.3d 453, 457 (6th Cir. 2013). • 11th Circuit: “The rule the . . . law firm asks us to adopt would exempt from the provisions of § 1692e any communication that attempts to enforce a security interest regardless of whether it also attempts to collect the underlying debt [in the note]. That rule would create a loophole in the FDCPA. A big one .” Reese v. Ellis, Painter, Ratterree & Adams , LLP, 678 F.3d 1211, 18-17 (11th Cir. 2012); Birster v. American Home Mortgage Servicing , 481 Fed.Appx. 579 (11th Cir. 2012) • CFPB amicus brief 22
FDCPA Circuit Splits Oral vs. Written Notice of Dispute • 4th Circuit: There is no “inherent writing requirement” for consumers to dispute the validity of a debt under the FDCPA. Clark v. Absolute Collection Service Inc. , No. 13-1151 (4th Cir. Jan. 29, 2014) • “ ACS asks that we disregard the statutory text to read into it words that are not there . . . . We decline to do so .” • Circuit Split: • Hooks v. Forman, Holt, Eliades & Ravin, LLC , 717 F.3d 282 (2d Cir. 2013); Camacho v. Bridgeport Fin. Inc. , 430 F.3d 1078 (9th Cir. 2005) (followed by the Fourth Circuit here). • Graziano v. Harrison , 950 F.2d 107 (3d Cir. 1991) (Section 1692g(a)(3) must be read to include a writing requirement). 23
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