Navigating the debt collection industry can be challenging as legal trends as well as state and federal regulations continue to evolve. Despite the challenge, staying up to date on these critical issues is crucial to maintaining a compliant operation and reducing financial risk.
To help you keep up, we have put together some key takeaways from the insideARM Legal Advisory Board’s (LAB) recent webinar “ARM Industry Legal Trends to Know Now, Part 2” presented by the Consumer Relations Consortium (CRC). In the May 24, 2023, webinar, LAB members Jessica Klander of Bassford Remele, John Rossman of Moss & Barnett, and Jonathan Floyd of Troutman Pepper addressed the following issues:
- Litigation trends
- The most treacherous states for collections; and
- Standing isn't settled after Hunstein- where are we now?
You can watch the full webinar here but see below for some of the key points.
As always, neither the notes below nor any of the content in the webinar should be considered legal advice, and you should always consult your own counsel for legal advice.
FDCPA and FCRA Trends
Jessica Klander shared her insights on current legal trends, noting that FDCPA litigation has quieted down in the wake of Regulation F, but FCRA litigation is on the rise. These cases generally center on disputes and Jessica provided some helpful tips on the topic to avoid potential litigation based on the recent litigation trends:
- Be wary of simultaneous attempts to dispute the debt and ask that the collector cease communication.
- Be wary of validating the debt if a consumer has asked for it outside of the validation window while also asking for a cease in communication.
- Be aware of “Refusal to Pay” as opposed to a cease and desist. Many consumers are being advised to use this language to bait collectors into violations.
- Including a disclaimer of “This is not an attempt to collect a debt” in responsive letters without an “ask” to collect is not a solid and sure fire protection strategy.
The Most Treacherous States for Debt Collection
John Rossman discussed the most treacherous places for collections. He singled out New York City and Washington D.C. as two of the most difficult places to collect debt and provided the following insights and advice:
New York City
- Collectors are only allowed to make two calls per week per consumer.
- Consumer consent is required to email them.
- Collectors must identify the amount of the debt in every communication, so you essentially cannot leave a voicemail message.
- New York City has its own licensing requirement and regulator.
- The number of disclosures needed for the collection letter makes accuracy challenging.
District of Columbia
- Adequate documentation (copy of signed contract/application/other documents) within 15 days of a consumer request is required. Those collecting in DC should consider putting this in their client contracts.
- Collectors are only allowed to make four calls per week per consumer.
- The number of text messages/emails allowed is restricted to five. After five, you must get consumer consent again or wait until the next week
Standing isn't settled after Hunstein- where are we now?
Jonathan Floyd spoke about the circuit split that has developed on Article III standing since the final Hunstein decision came out. With courts still reaching different conclusions on what constitutes “concrete harm,” Jonathan clarified that:
- The 2nd, 5th, and 9th circuit have all held that conclusory allegations of loss or mental and emotional distress are not sufficient to confer Art. III standing.
- The 10th and 11th circuits have held that emotional injuries and other intangible harms are sufficient for Article III standing.
- The others are still undecided.
- A Washington Federal Court recently rejected the Hunstein Decision altogether.
In other words, when it comes to standing nothing is settled and this area of law is still devleoping.
Staying compliant in the debt collection industry can feel like a never-ending task with constantly changing laws and regulations. We appreciate the valuable insights provided by Jessica, John, and Jonathan.
You can watch the full webinar here.
For more info on the Legal Advisory Board click here.
About the Consumer Relations Consortium
The Consumer Relations Consortium (CRC) is a premier organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market. CRC is managed by The iA Institute.
About the Legal Advisory Board
The Legal Advisory Board (LAB) is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB is limited to ten law firms and is comprised of fourteen total attorneys. The 2023 members can be found here. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.