CFPB Files Amicus Brief in FDCPA case

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On Thursday of last week the Consumer Financial Protection Bureau (CFPB), jointly with the Federal Trade Commission (FTC), filed an amicus brief with the U.S. Court of Appeals for the Third Circuit in Bock v. Pressler & Pressler, LLP. In the case a U.S. district court previously ruled that a debt collection law firm violated the Fair Debt Collection Practices Act (FDCPA) by filing a complaint without “meaningful attorney involvement.”

The filing is hardly surprising given the CFPB position in the ongoing litigation involving the Georgia law firm Frederick J Hanna & Associates P.C.

The CFPB argues that the facts in Pressler are undisputed:  The law firm utilizes a computer system to manage its files, a lawyer in the firm conducts an automated review of files for potential litigation, and computer records show that the attorney spent 4 seconds reviewing the computer records for this particular file.  The CFPB’s positon:

Under any conceivable standard, four seconds is not enough to become meaningfully involved and form a professional judgment about the appropriate action to take. For that reason, Pressler’s representation that an attorney had done so was deceptive and violated the FDCPA.

The law firm’s position is that the lengthy review process set up through their computer system and subsequent attorney review is sufficient attorney involvement.

The arguments raised in the brief are basically the same arguments the Bureau has raised in the aforementioned Hanna litigation, but applied to the specific facts of Pressler. They are:

Filing a Debt-Collection Lawsuit Without Meaningful Attorney Involvement Violates the FDCPA.

a) The FDCPA prohibits attorney debt collectors from making misrepresentations in litigation.
b) Filing a debt-collection lawsuit without meaningful attorney review unlawfully misrepresents the attorney’s involvement in the case.
c) The Pressler attorney’s four-second review did not constitute meaningful attorney involvement.

  • Setting up a review process does not excuse the attorney from exercising professional judgment.
  • No Attorney exercised professional judgment in the case.

d) The Constitution does not prevent the FDCPA from barring misrepresentations that attorneys make in debt-collection litigation.

  • Attorney debt collectors have no First Amendment right to make misrepresentations in debt-collection litigation.
  • Federalism principles do not preclude Congress from regulating attorney debt collectors’ litigation conduct.


insideARM Perspective

This case is another example of the potential rules of the road in the future for collection attorneys.  Anticipated rulemaking from the CFPB is likely to address these same issues.

It should be noted that the case involves debt that was sold – twice – before the litigation was commenced. Debt buying has proven to be a particularly vexing issue for the CFPB. The account in question was sold initially by HSBC to a debt buyer, then from the first debt buyer to Pressler’s debt buyer client.

The issue for collection attorneys going forward will be: What level of inquiry is required to pursue litigation on purchased debt? Will the level of scrutiny be higher on debt that is re-sold?  Finally, will the same level of scrutiny be required for attorneys who work directly for the original creditor?

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Posted in CFPB, Collection Law Firms, Collection Laws and Regulations, Debt Buying, Debt Collection, FDCPA, Featured Post .

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  • avatar denise-densmore says:

    I’m so very sorry but I just have to think that a re-sold debt case is going to take more than four seconds or even four minutes to review. Speaking solely as a layperson, I think Pressler and Pressler will be deserving of whatever they have coming as a result of this action against them.

  • avatar nascar says:

    “The filing is hardly surprising given the CFPB position in the ongoing litigation involving the Georgia law firm Frederick J Hanna & Associates P.C.”

    Does this mean that disagrees with the CFPB and supports Hanna?

    “Under any conceivable standard, four seconds is not enough to become meaningfully involved and form a professional judgment about the appropriate action to take.”

    Does disagree with this statement? Is four seconds long enough to become meaningfully involved and form a professional judgment about the appropriate action to take?

    Will once again miss an opportunity to step to the plate and show those outside the ARM industry that you’re willing to recognize and call out the unlawful practices of unscrupulous law-breakers like Hanna and Pressler. Is doing right simply not profitable enough?

  • avatar Linda Almonte says:

    Very well said. I get asked all the time how is it a nationwide of professionals and attorneys all start intentionally committing multiple crimes and fraud and a whole long list. I have actually spent a lot of time defending the industry not bashing but also pointing out that look at the damage not only to consumers but the reputations and confidence in financial companies first and third party that wasn’t millions of people just a few here and there that have caused massive damage. I often use analogies of look at everything in the news with police when the majority go to work everyday to only do their jobs and the right thing, but there are always those few that create an image for all from law enforcement, to teachers, bankers, even clergy. The only thing that has changed that I have seen and has caused it to continue to grow and get worse is the complete lack of accountability from all sides and levels. We can’t have an industry constantly standing up and defending companies and people whether they were in the right or wrong loses all credibility and confidence in the industry as a whole. Where years ago me and only a few others accidently ended up high profile whistleblowers we didn’t do anything that we hadn’t hundreds of times before or that most of the people on this site has done. It’s just that it used to be called doing your job and the consequesnses would be if you did break the law or a number of issues. But from 2009 till now instead of fixing a few issues that many occured accidently with the sudden increase in inventories and everything it became the culture to instead defend every practice, action, person and case right or wrong. The worst possible reaction. It has just grown and grown and more layers to dig under to fix. The latest talk now in DC and with regulators is that it is the culture and lack of leadership in this industry and how to fix that with all kinds of strange ideas from people that obviously never worked a day in this industry. A few weeks ago at the whistleblower summit in DC there was a lot of talk on this subject. Which the whole industry should really get up to speed on all of the new whistleblower and employment laws now including compliance and audit professionals, contractors, no more confidentiality agreements, gag orders, protective orders or telling employees they can’t take and show evidence from work, file whistleblower cases while still working and talking to regulators confidentially without informing the employers and not only this industry just about all industries. And they can remain anomonys and a lot of options I never had. I started noticing a few years ago those of us labeled “high profile whistleblowers” that came from consumer banking, third parties and so on and not investment banking there are a lot of similarities and statistically considering there aren’t that many of us and we ended up meeting through GAP seems where all high profile whistleblowers eventually land as we got to know eachother we learned a lot. None of us knew eachother before but we had all had at one point in the US or Global worked for comanies at the time with the same leadership training, management performance programs, and other extensive training in regulatory compliance, risk operations etc. Basically we all worked in places with the culture that now everyone is trying to create. Maybe we don’t need to create it but only bring it back. Also, nearly every “whistleblower” from the financial industries had at one time scene or known of co-workers arrested or indicted for things like I saw two hauled out in cuffs for 80k in fraud that now woulnd’t even be noticed or considered as so small don’t bother. I knew of a co-worker at GE that worked on an M&A due diligence with my group that was indicted from what I heard told a family member what company working on and that it was going to go through then back to normal work hours. That family member told something ridiculous like hair dresser who told son who then bet against the stock and he is serving prison time. One of my former co-workers at GE and WaMu that most on this site probably know or know of and respect and she trained me she managed litigation at GE for years and saw them self report fraud or an issue early on and FBI in there catch it early and hold people accountable. Those of us labeled whistleblowers in reality didn’t know we were being whistleblowers most thought no choice do what this moron is telling you to do and go to jail or be fired and then tortured in all kinds of creative ways that also is over. The worst for me is seeing these orders after orders come out mostly because fines were paid and practices continued to even expanded and the leaders of the industry putting all the effort into excuses and false promises and spending more time on looking for loopholes than just fixing it. At this conference the group now nicknamed “the rogue bankers” we apparently broke the whistleblower code we didn’t know there was one. We didn’t only say what was the issue or broken but the solutions too. Well we were the solutions people it was natural. Funny three of us that had never met or heard of eachother cases before had been asked some of the same questions in early interviews and had the same answers that shocked the interviewers and whistleblower attorneys and organizations. That was we all were worried we damaged the banks or stocks or made it worse by now we hear all the time from bankers and third parties they would have always did the same thing until they saw what was done to us and these are some of the most reputable and respected people in the industry. Us financial whistleblowers unlike other industries first we are dealing with the TBTF’s which all roads lead back to it seems but there isn’t a part that can be recalled and go on with our lives we see it and have to live it everyday with everyone we know and understand it too well. First thing as Elizabeth Warren has been saying no more fines low enough to just pay and go back to business as usual from now on there will be no profit on these practices already known or should be known. The industry banks and third parties the blame game is over there is no more of that as in the recent orders but the sides need to start holding eachother accountable too. If this industry is going to survive without some major crashes the solutions need to be put into place and executed and not promises or fantasy bill of rights for consumers or whining about frivolous lawsuits. I gotta tell you some of those arguments have people that review the so called frivolous consumer suits and question the intelligence and mental stability of the person arguing it. And I realize that now even more than when working I probably see more cases everything from individual to class action, AG and regulatory cases than almost anyone. And desperate consumers and consumer attorneys, employees on the verge of nervous breakdowns etc have tracked me down in all kinds of odd ways in multiple states. I have learned when they go to those lengths they are usually telling the truth and have a lot of evidence and some have driven 1000 miles to land on my doorstep or even a hotel I was at to bring me all of that evidence as a desperate last hope. Consumer attorneys are getting really good at identifying what is what and understanding it and regulators who used to say me and others spoke a foreign language of acronyms sound like us. There needs to be real solutions going forward with proper controls and A CLEAN UP OF EVERYTHING WE ALL KNOW IS USELESS DATA. Is there going to be some initial losses yes and every day that goes by that grows. When I read the latest order I will put a link below to me I said so we are now full circle back to 2009 and the solutions are already written up and ready to turn on a ot of systems already paid for and the requirements built with all of the compliance controls just sitting on servers at multiple banks that provides not only the banks solutions but also all of the third parties. You know I would bet that if you took about 20 of us that have been in various banks and third parties and really know this stuff in a conference room for three days no blaming or excuses nothing just roadmapping industry wide solutions that are realistically executable in a reasonable time frame and a plan we could do it and have it better and retain profitability just by doing it right minus losses from stuff that shouldn’t be there to begin with. And shock all the regulators and AG’s. Including leadership and performance management models not only based on numbers but quality and compliance and rebuilding the culture that many of us had at one time. I would be willing to help and I know others that you all know and respect that are retired now or in other industries that would jump in and help make it happen. But I would say the small fines, promises to change or fix things, cooperation agreements etc are coming to an end. Especially when prosecutors are seeking out whistleblowers with questions on how to prosecute these items with it not being rocket science. You tell me if you were a prosecutor and chosing which cases to take to trial would you choose complex securities tied in with mortgages and everything or credit card debt. Not many jurors never had a credit card or received a collection letter or call. Remember when a lot of us had the right culture we were mostly self regulated and regulated ourselves better than all the audits and investigations. Here is an example from 2004 when I took a job and moved along with a team most of us came from GE Cap all default operations from collections to loss mit, banko, thid parties, litigation, reo, fpi, foreclosure etc. Shut down the old operations sites re-engineered hundreds of processes opened up in a new site all new employees and training and this was the result oh and in the middle of being hit by four hurricanes and evacuated off and on. Plus created internal compliance team and audit process and brought into over 98% in compliance with internal accounts and those with third parties. I personally trained everyone a light version of six sigma that I customized for collections and call centers those employees are your front lines they know more than any of us. We had contests and rewards for escalating items to us, asking questions giving ideas etc and they were happy with their jobs. How often does collections get the highest employee satisfaction and customer satisfaction rates plus increase in profitability and compliance. Establish real internal escalation or even risk and issue reporting processes that don’t retaliate against employees at any level. With some of the whistleblower changes like the SEC Whistleblower Program applying to all areas of the financial industry and awards of fines from all related agencies like the OCC, CFPB and AG’s your employees don’t have to report internally or keep quiet and can file online in minutes. If they are right and you retaliated in any way even changing their jobs or hours sending to internal shrinks (can’t believe that one forget zombie debt now zombie bankers with the scripts they are giving them) anything you have to hire them back double pay for their time missed and any normal loss of medical bonuses, pensions etc. plus pay their attorney fees and the time it takes to explain this industry to an employment attorney is a lot of billable hours. Plus punitive damages for all kinds of things like telling employees they are not alowed to associate with any former employees, ordering to take down linkedin or facebook, telling employees they can’t talk to any private attorney, law enforcement or regulator even as a current employee with or without your knowledge. I see that getting ugly very fast but probably short lived because what executive wants to be knowingly doing illegal practices and having their employees do them and hope that employee loves them enough that they wouldn’t retire off their crimes and treatment. I am sure you all have SOX Plus One training and plans especially it applies to nearly every employee in the industry and is laid out in simple laymens terms and readily available online with a lot of employement attorneys more than willing to explain. I will be not one person on this site could read Sox Plus One and personally know of numerous violations. And the blackballing is not the best strategy it leaves the employee no other employment option than consulting on how to win the cases against the industry and speaking events educating the world, writing books or series in multiple publications. Here is my sample of one department in 2004 and a link to the latest updated orders for one bank but expected to be industry wide . And Fred pay attention and think before you continue to act and how much do your current and former employees love you? Just remember me and others with my level of experience and knowledge could be subpeoned to testify at any time and ask around some others that made that mistake. There is no incentive or reason for us to suddenly get amnesia or lose iq points.

    Participated as part of the team to transition of Default Business Processes from x to x
     Created multiple large scale systems projects to increase call center agent productivity, collections effectiveness, and reduce credit losses.
     Provide Six Sigma methodology expert assistance as mentor or coach to project consultants, coordinators, business owners and/or project teams.
     Assessed, recommended and promoted approaches for applying Six Sigma methodologies and techniques to large scale and multiple projects.
     Interviewed vendors and completed RFP’s
     Process and System Improvements identified and implemented at the new call center site resulted in:
     Net Recoveries were $2.4M or 17% over plan
     Net Losses were $15.0M or 34% under plan
     YTD expenses were 41% under plan.
     $28M collection on pre-charged off accounts that were deemed uncollectible.
     Employee satisfaction surveys 20% higher than overall company results.

  • avatar Newb Collector says:

    While i agree meaningful involvement is something for attorneys to consider, I think that there is a lot of danger here that could be set out by those who may be unscrupulous as well. Consider this. The facts in the case are talking about the amount of time a file was open on the attorneys computer. Fair enough.

    With the ability to multitask on a computer, here is a hypothetical scenario:

    CFPB sets standard of 4 hours of Attorney review is significan for meaningful attorney review.
    Attorney comes in in the mornin, looks at a list of accounts that need to be “reviewed,” pull up account A on his computer, then proceeds to do other things such as have a cup of coffee, share in the latest office gossip, read law books or the newspaper, or engages in the favorite activity of some federal employees and watches porn. Four hours later, the Attorney closes the account and opens up the account. Computer record shows that he had the account open for four hours, which is the CFPB standard, yet he was doing anything but reviewing the account.

    Agsint, I’m not saying that this would happen, but unless the courts start putting keystroking software and remotely monitor every computer, there would be no way to prevent it from happening.

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