The ARM industry is used to bad news and negative media attention. But this week, there were a couple articles run in prominent media that cast the industry in a positive light. The first was a nice local profile of a collection agency and the second featured a defense of private collectors on the Department of Education’s student loan collection contract.
Collection agencies, debt buyers and credit granters are often under siege, forced to defend against identical claims on multiple jurisdictional fronts, regardless of whether the claims are on behalf of an individual or a putative class. One strategy for consolidating the defense of identical claims is to file a motion with the U.S. Judicial Panel on Multidistrict Litigation (MDL) to transfer claims to a single venue.
The Consumer Financial Protection Bureau (CFPB) late last week released its fourth annual report to Congress detailing the regulator’s efforts to administer and enforce the Fair Debt Collection Practices Act (FDCPA). The report includes updates on supervision, enforcement, rulemaking, and complaints in the debt collection market, among other things.
The CFPB Monday announced an enforcement action against a nationwide debt collection operation and its CEO for using deceptive threats of criminal prosecution and jail time in the collection of debts stemming from bounced checks. The proposed order, to settle FDCPA and other charges, includes a $50,000 civil penalty.
A three-judge panel in the Eleventh Circuit Court of Appeals affirmed a lower court ruling granting summary judgment to a collection agency that used a bona fide error defense in case brought against it under the Fair Debt Collection Practices Act (FDCPA). The Circuit Court also upheld an award of certain costs to the defendant.
We can expect to hear more rhetoric from both sides in the ramp-up to the 2016 presidential elections. Democrats will want to focus the conversation on consumer protections — from reforms in debt collection to reforms in lending (specifically, yesterday’s story about payday lending). Republicans will focus largely on what they see as a regulatory body with no supervision, and will likely frame the conversation in terms of a need for smaller government.
The proposals under consideration would include two ways that lenders could extend short-term loans without causing borrowers to become trapped in debt. Lenders could either prevent debt traps at the outset of each loan, or they could protect against debt traps throughout the lending process. Specifically, all lenders making covered short-term loans would have to adhere to one of several requirements.
insideARM.com readers are growing increasingly nervous regarding the safety of the student loan debt collection market, according to two polls conducted over the past five months. Asking the exact same question at different times, respondents indicated that recent developments are driving the pessimism.
Many creditors’ rights attorneys are suspicious of a process where they perceive the rules of the hearing as subjective and inconsistent and where the appearance of bias is acceptable. So what can be done? If an amicable resolution is not reached, here are some strategies for consideration.
There has been a lot of litigation relating to envelopes recently, but section 1692f(8) of the FDCPA, which regulates collection envelopes, is not new. It has been a source of frustration for collectors for decades. Fortunately, some courts have recognized that a strict application of section 1692f(8) may lead to absurd results, and have held that “benign language” on an envelope does not violate the FDCPA. Unfortunately, the word “benign” can be VERY slippery.