The Debt Collection Drill

Debt collectors that accept recurring payments over the phone know that Federal laws – specifically Regulation E, the Electronic Funds Transfer Act and the E-Sign Act – provide guidelines for consent and disclosures.  insideARM first featured an article on those issues in January 2013:

Since that time, the CFPB issued guidance on these issues in November 2015, stating: 

Regulation E may be satisfied if a consumer authorizes preauthorized EFTs by entering a code into their telephone keypad, or, Supervision concluded, the company records and retains the consumer’s oral authorization, provided in both cases the consumer intends to sign the record as required by the E-Sign Act.

The CFPB guidance follows common sense and tracks consumer expectations: if a consumer consents verbally to recurring payments, and the debt collector records and maintains that consent, the law is satisfied.  Despite the clear CFPB directive allowing verbal consent for recurring payments, consumer attorneys continue to bring lawsuits against debt collectors asserting that verbal consent violates the law.  In the absence of guidance from a Court of Appeals on the issue, the lawsuits against debt collectors – with uncertain outcomes in the Courts -- will continue.  Further, these lawsuits undermine the ability of both consumers and debt collectors to rely upon interpretations of the law from the CFPB.  

In this episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin are joined by special guest Mike Etmund to discuss a recent case  addressing whether verbal authorization for recurring payments is sufficient.  Also discussed in this episode are newer cases on the Spokeo requirement that a Plaintiff must suffer a “concrete injury in fact” to maintain an FDCPA case and the status of the CFPB arbitration rule.

Direct download: TDCD_ep67_a.mp3
Category:general -- posted at: 4:45pm CDT

Collection letters are the bane of our industry. Letters are expensive to send and - despite what a certain television pundit claims - studies prove that few consumers actually read collection letters. The CFPB, the FCC and other regulators pay little more than lip service to the urgent requests from consumer advocates to allow collectors communicate with consumers electronically, with States such as New York enacting Byzantine and unworkable rules to "allow" collectors to communicate with consumers via email. It is anticipated that the CFPB, in its upcoming notice of proposed debt collection communication rules, will adopt standards for electronic communications similar to the convoluted rules found in New York. Ultimately it is consumers that are harmed by these rules that disregard modern electronic communications in favor of antiquated collection letters. Further, consumer attorneys scrutinize collection letters, measuring the font size of disclosures and injecting tortured interpretations of plain language to find possible lawsuits (and potential paydays) against collection agencies diligently seeking to comply with the law.

In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin discuss a new wave of lawsuits against debt collectors in California, which focus on the font size of certain disclosures, and New York, which centers on a misreading of Second Circuit case law.

Direct download: TDCD_ep66_a.mp3
Category:general -- posted at: 10:59am CDT

First party and early-out servicing provides an enhanced customer service experience and greater responsiveness for consumers.  These qualities make first party and early-out servicing beneficial for creditors as well as consumers.  However, as the prevalence of this type of servicing increases, consumer attorneys and regulators seek to find ways to apply traditional debt collection laws and statutes to first party and early-out servicing. 

 In the latest episode of the Debt Collection Drill, Moss & Barnett attorneys John Rossman, Mike Poncin and Dave Cherner discuss risks for first party and early out servicing arising from the FTC DeMayo Opinion, discuss specific State licensing and disclosure requirements (24 States and jurisdictions may require early-out servicers to obtain a collection agency license) and also address possible CFPB rulemaking to modify the definition of default, as determined by meetings that Mr. Rossman and Mr. Cherner have attended with the CFPB through the Consumer Relations Consortium

Direct download: TDCD_ep65_a.mp3
Category:general -- posted at: 12:12pm CDT

The use of “scripts” by consumers to bait telephone debt collectors into alleged FDCPA violations is a calculated strategy dating back more than 10 years. Typically a consumer obtains such a script from a consumer attorney or from a website. The consumer will then make an inbound call to a debt collector and read certain questions off of the script, seeking to maneuver the debt collector to make a statement that facially violates the FDCPA. These scripts usually include vague, leading questions about interest or credit reporting. If the debt collector takes the bait; and makes an unintended mistake, a consumer attorney will sue or send a demand letter to the collection agency shortly after the call. Most collection agencies have in place specific training for collectors to identify and avoid such baiting, focusing on the common scripts and the certain States or geographic areas where such baiting most often occurs.

In the latest episode of The Debt Collection Drill, Attorneys John Rossman ( and Mike Poncin ( discuss a new baiting strategy by consumers that is resulting in a substantial number of claims and specific strategies for avoiding liability.

Direct download: TDCD_ep64a.mp3
Category:general -- posted at: 12:20pm CDT

The issue of debt collectors assessing interest on accounts was contentious and extensively litigated over the past decade. Courts, regulators and consumer advocates are uniformly opposed to debt collectors assessing interest except in specific circumstances. The Second Circuit Court of Appeals decision in Avila in 2016 further placed a requirement on debt collectors to disclose in a validation notice when interest is accruing on an account, similar to the requirements in the Seventh Circuit. Avila was not, however, the end of the discussion on disclosing that interest is accruing on an account; rather, it was the beginning a new line of cases. Consumer attorneys are now filing and threatening dozens cases (mostly in New York) asserting that if interest is not accruing on an account, the debt collector must disclose that interest is not accruing.  Presently there are two reported decisions holding that a debt collector is not required to disclose when interest is not accruing and more decisions are pending. 

 In the latest episode of the Debt Collection Drill podcast, Attorneys John Rossman ( and Mike Poncin ( are joined by Attorney Dave Cherner ( to discuss this recent spate of lawsuits and strategies for avoiding liability. The attorneys also discuss the recent addition of Mr. Cherner to the Moss & Barnett team and options for agencies to outsource their chief compliance officer needs.

Direct download: TDCD_ep63b.mp3
Category:general -- posted at: 1:20pm CDT

Debt collection is clearly one of the most heavily regulated industries in the United States. Federal, State and local regulators place onerous, duplicative and often confusing requirements on companies seeking to collect debts.  Further, when collection agencies comply with the myriad of laws, many face lawsuits from consumer attorneys claiming that the attempts at compliance somehow violate the law. 

In the this episode of the Debt Collection Drill, Attorney John Rossman and Mike Poncin discuss two recent, reported decisions where one collection agency – Financial Recovery Services, Inc. -- successfully defeated claims that its plain compliance with State and Federal regulations somehow violated the FDCPA. 

Brian Bowers, the President of Financial Recovery Services, Inc., commented on one of these recent FDCPA victories by his company: 

Financial Recovery Services was delighted to obtain the successful decision on the motion to dismiss in the Everett case in the Southern District of Indiana.  Over the years, we have grown weary of the frivolous nature of such cases and we decided to take a stand several years ago and fight more of these ridiculous cases that are brought against our industry.  Too often these cases are driven by the aggressive pursuit of consumer plaintiff attorney’s fees and not by what is fair, reasonable, and just for society in general.  In the past several years, we have successfully disposed of over 23% of cases filed against us by either winning them with motions to dismiss or motions for summary judgment.  We are proud to have taken a stand for everyone in the industry and we hope that we see more organizations take a stand against the frivolous nature of some of these types of cases.

Direct download: TDCD_ep62.mp3
Category:general -- posted at: 2:00pm CDT