With many of us struggling to cope with our new normal and conduct our business in accordance with all relevant COVID-19 policies, it has been more difficult than ever to keep up with the recent and relevant court cases affecting our industry. As the courts shifted their operations to accommodate our new normal, there was a pause in judgments. However, recently, many courts have begun to open back up for decisions including many Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) updates. In case you missed these relevant decisions, we here at Tag Process are ready to help get you up to speed on the recent court updates affecting our industry!
Payment Portal Cases
In a decision made in May of this year, a New Mexico court ruled that individual pages within a payment portal can be viewed as a whole. Thus if there are “good faith” errors on a payment processing page, there is now precedent for even the least sophisticated consumer to investigate the payments and site fully before bringing a case to bear for an error in a payment option. This allows our industry to rest a little easier without worrying about getting slammed with a lawsuit for possibly one incorrect page on a payment portal site as a whole.
It can’t all be good news, though. In April, a decision was reached regarding a consumer-facing web page counting as a communication method with a consumer and thus, for instance, if a debt is time-barred, it must be stated on the webpage for the consumer to see as well as making sure you’ve sent any validation letters prior to putting any information regarding any debt on a consumer-facing site. Essentially, various questionable terms in the FDCPA, in this instance, “communication” with a consumer includes a website as a medium. This broad interpretation is an important distinction and knowledge point for our industry moving forward in our methods of communication. Along these lines, it is important to ensure that your terms, conditions, and disclosures are listed on your site. Additionally, any consumer-facing site for payment must include any Americans with Disabilities Act compliance, your firm’s privacy practices, and a Miranda compliance portion as well, including a citation of the FDCPA compliant mini-Miranda. Listing a fuller Miranda than the commonly accepted FDCPA compliant one should be considered as objective evidence that you are using your website as an indirect means to collect a debt and opens a website to the interpretation of an indirect means to collect a debt.
Collection Letters and Overshadowing
March brought a decision in the Third Circuit stating that collectors needn’t respond in writing to a consumer’s dispute within 30 days: an oral response to a debt dispute is a permissible means of communicating with a consumer. This decision adds flexibility for those of us operating in the Third Circuit and an additional national precedent to FDCPA interpretation of consumer communication giving us some leniency in how we communicate with consumers.
In two additional decisions regarding collection letters, the Eastern District of New York ruled that moving to page two of a debt validation letter and by listing additional options as a means for a consumer to pay (for instance, a creditor using a third party payment method/software) was not too confusing for even the least sophisticated consumer to understand. Both of these collection letter decisions are interpretations of best practices that don’t by default create booby-trapped eggshells for sending out consumer notices. Whether you operate in this district of New York or not, having these case precedent decisions will help elsewhere as judgments are brought across the nation regarding collection letters.
Validation Letter Updates
Even in California, it was ruled this year that a debt validation notice can be sent via email to a consumer and comply with FDCPA regulations. However, the Consumer Financial Protection Bureau (CFPB) is certainly moving towards making email notifications explicitly worded in order to create less confusion and ability for all consumers to understand what the email is, why they are getting it, and that provides e-options directly to them for processing payments. Until these regulations officially come out though, one best practice to consider if you are sending validation notices by email is whether the consumer is receiving them. This aspect is certainly a gray area at the moment, with the inability to complete validation if it can be called into question whether the consumer has received the electronic communication.
Federal Communications Commission (FCC) TCPA Database as Safe Harbor
In an effort to assist both consumers and agencies, the FCC will roll out their Reassigned Number Database in 2021. The Reassigned Number Database is the FCC’s solution to the numerous consumer complaints of calls to reassigned numbers without having received prior consent as well as the hefty inadvertent charges businesses are incurring by calling a new owner of a number with prior consent regarding a collection call. Observing how this database will work in practice is obviously to be determined, but it does strike a balance between industry and consumer needs by providing the industry with updated records. The use of the database will cost, but utilizing it essentially will amount to having insurance for receiving a giant TCPA violation bill or class action suit. Given that in two recent court decisions, one in California and one in the 11th Circuit, TCPA regulations reaffirmed the requirement of consent to call, the FCC Database will theoretically provide a more helpful resource than not for our industry to maintain TCPA compliance. In further TCPA wins for our industry, a Florida District court overturned an earlier Florida ruling that a consumer can revoke contractual consent for calls regarding a debt.
Valid When Made
The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) ruled that any loan made by a valid financial institution is valid regarding interest rates for transferred accounts. Non-banks can still enforce the original interest rates and fees from the origination of the loan under these decisions from both the OCC and FDIC. Continuing, loan terms continue through sale; thus, even if a state had lower maximum interest rates than the originating bank, the original rate applies and extends to the buyer. These terms mitigate potential FDCPA liability for alleged misleading statements regarding debt and calculated interest and is a significant national decision affecting our industry.
Compliance is Key; Compliance is Tricky
To do our jobs anymore we must be ever vigilant to the myriad of decisions, rulings, and various updates throughout all courts in the nation, as courts and legislation are always making decisions that affect precedent elsewhere and the cost of noncompliance can be extremely great. I am truly grateful to the industry for providing the learning opportunities so that I can provide the best service to my clients.
This information is not legal advice and may not be used as legal advice. Information discussed or contained is not an explanation of the law and is presented for educational purposes only.