New Year’s Resolutions
- “I would like a peaceful year with no drama. And lots of money.” – Megan S.
- “I’d like to lose a little weight, become a portfolio manager, preserve my focus, maintain my energy and continue to grow.” – Eric E.
- “Personally, I’d like to get back on track with working out, meditating, and creating my own business. Professionally, our goals are to continue growing relationships with new clients, as well as train and develop collectors to aid us in said quest.” – Josh H.
New California Laws Effective as of New Year
With the new year comes new laws. Last summer, California Governor Jerry Brown signed three debt collection bills into law that officially went into effect Jan. 1, 2019. The three laws add requirements to time-barred debts, clarify the definition of a “student loan servicer,” and provide guidelines for collecting debts owed to public schools, according to ACA International’s Compliance Analyst Laura Dadd.
Bill A.B. 1526, concerning time-barred debts, amends 1788.14 and 337 of the California civil code. Debt collectors will now need to provide California consumers with a notice that they cannot be sued for time-barred debts, or debts that have passed the statute of limitations.
“Stoneleigh Recovery Associates already complies with the time-barred debt notice requirement. We do not qualify as a student loan servicer and do not collect debts for California public schools at this time. We are, however, aware of the law amendments and have updated our internal documents accordingly,” Director of Compliance Nikki Noyes said.
Bill A.B. 38 clarifies the previously overly broad definition of a “student loan servicer.” The original definition was: “any person engaged in the business of servicing student loans.” The amendment clarifies the definition by including that: “A ‘student loan servicer’ does not include a debt collector, as defined in Section 1788.2 of the Civil Code, whose student loan debt collection business, and business operations, involve collecting, or attempting to collect, on defaulted [federal] student loans … or private student loans, in default …” However, it’s important to note that debt collectors who also service non-defaulted loans are considered a student loan servicer.
Bill A.B. 1974, concerning the collection of debts owed to public schools, states that “[a] pupil or former pupil, unless emancipated at the time the debt is incurred, shall not owe or be billed for a debt owed to a public school or school district.” Under this new law, debt collectors are prevented from selling the debt and/or credit reporting these types of debts.
For more information, please visit acainternational.org.
As the director of compliance, my day-to-day job often consists of emails, internal monitoring, and internal and external audits to make sure our company is operating within the parameters of the law.
Recently, an employee brought to my attention a law firm that claims to be a debt relief agency that helps consumers file for bankruptcy. The company’s Interactive Voice Response (IVR) system requires the caller to choose whether they are a “creditor” or a “client,” but no one ever answers when the “creditor” option is selected. In hopes of speaking with a live person, I called again using the “client” option.
Of course, that line got an answer! I informed the representative where I was calling from and asked to speak to a manager, or an attorney on staff. They informed me there is no attorney on site, and managers would only be available to negotiate an account. I explained that I was not calling about one particular account, but rather trying to determine how to reach anyone so that our companies can agree on a communication method that works, since no one ever answers the creditor line. I was then informed that no manager or individual would be able to help me and all I could do was to hang up and try the “creditor” line again. I again tried to explain that method was a dead end and suggested that there may be a routing issue with their IVR system.
Our office has multiple accounts for which consumers have stated they are working with this company. If my fears are correct, this firm charges consumers for their services, with no intentions of actually negotiating with creditors or resolving their outstanding debt. This particular company has an F-rating from the Better Business Bureau and an average 1.5 stars on other online review sites. Most of the online reviews confirm my suspicions.
Malpractices such as these cripple the creditors/debt collectors from being able to assist the consumer to resolve the account. The FDCPA stipulates once a collector has knowledge that a consumer has attorney representation, we are only permitted to contact the attorney. These dubious practices are also likely to cause substantial injury to consumers; the injury is not reasonably avoidable by consumers; and such substantial injury is not outweighed by benefits to consumers; the act or practice misleads or is likely to mislead the consumer; the consumer’s interpretation is reasonable under the circumstances; and takes unreasonable advantage of a consumer’s lack of understanding of the material risks, costs, or conditions of the product or service; a consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or a consumer’s reasonable reliance on a covered person to act in his or her interests.
Our practice is when we attempted to contact the third party regarding an account for 30 days without a response, we attempt to contact the consumer and inform them we were not able to get a response from their representative.
If we were to immediately inform them of our lack of ability to contact their attorney, the attorney could then file an FDCPA lawsuit against our company for communicating with the consumer after notice of attorney representation. While this might earn the attorney some caselaw in their favor, it is more likely any suit would be settled out of court and the law firm would keep the majority of the settlement payment.
It is imperative that collection agencies are able to communicate with the third parties alleging they are assisting consumers to resolve their outstanding debt. And if that company or law firm is not willing to work with the creditor or collection agency, the consumer has a right to know.
The legal group in this instance seems to be preying on consumers who do not have the ability or knowledge to protect themselves. As a member of both the RMA audit committee and the Illinois Department of Financial Professional Regulation Collection Agency Board, I feel it is my ethical responsibility to notify the appropriate entities of “bad actors.” As such, I have written a letter to the Consumer Financial Protection Bureau, Federal Trade Commission, and applicable Attorney General offices.
During our fourth quarter, SRA donated to:
If you have an organization that you would like to consider for SRA’s Charity Thursdays, please contact Keanna Ringer at firstname.lastname@example.org.
RMA Annual Conference @ Las Vegas, NV (February 5-7, 2019)