Top Ten Debt Collections Issues in 2020
The American Financial Services Association on January 22 hosted the Top Ten Debt Collections Issues in 2020 webinar, with Kelly Knepper-Stephens, VP of Legal and Compliance, TrueAccord, Caren Enloe, Partner, Smith Debnam, and Ethan Ostroff, Partner, Troutman Sanders sharing insight into new and evolving trends. The presenters covered many issues; we’ve provided a short summary below.
The California Consumer Privacy Act (CCPA): Make sure that you double check the exemptions to the CCPA to ensure that you are relying on a full exemption, meaning that the exemption covers the data that you or your vendors are gathering about your customers. Additionally, make sure you create a policy about how a request for deletion under the CCPA will be processed, if at all, under other consumer protection statutes like the Telephone Consumer Protection Act (TCPA) (revocation of consent) or the Fair Debt Collection Practices Act (FDCPA) (cease and desist).
Emailing and the FDCPA: Communicating by email is a successful debt collection method that allows consumers to respond on their time. You can send an initial communication via email; be sure the validation notice is included in the body of the email, not hidden behind a secured link or otherwise password protected.
Debt Collection in the Supreme Court: The Supreme Court continues to be active in the debt collection space, deciding two cases in 2019. All eyes will be on the Supreme Court this year as it takes on the issue of whether the CFPB leadership structure is constitutional and if not, whether that specific provision of Dodd-Frank can be separated from the remainder of Dodd-Frank. The case, Seila Law LLC v. Consumer Financial Protection Bureau, is set for argument on March 3, 2020.
Repossession and the Automatic Stay: The receivables and finance industry should keep a close eye on the Supreme Court for its review of the automatic stay’s application to pre-petition repossessions. 2019 saw the split in circuits widen over this issue. In 2019, the Third Circuit holding that a creditor who refused to relinquish a car repossessed pre-petition was not subject to sanctions for their failure to voluntarily turn over possession post-petition because their refusal did not violate 11 U.S.C. § 362’s automatic stay. In re Denby-Peterson, 941 F.3d 115 (3rd Cir. 2019). The decision is inapposite to the 7th Circuit’s 2019 decision in City of Chicago v. Fulton, 926 F.3d 916 (7th Cir. 2019). The Supreme Court has granted cert. in City of Chicago and will hear the issue of whether a creditor has an affirmative obligation under 11 U.S.C. §362 to return property to the debtor or trustee immediately upon the filing of the bankruptcy petition.
Debt Collection Rules and their Implications for Creditors: In May, the Bureau released its proposed Debt Collection Rules. While the Bureau explicitly stated that the rules applied only to debt collectors as defined under the Fair Debt Collection Practices Act, portions of the rule suggested otherwise. Specifically, four provisions of the Rule (including the call frequency limitations and transfer of debt provisions) were propounded pursuant to Dodd-Frank’s UDAAP authority. Moreover, the Bureau left open the issue of whether “telephone calls in excess of the limit proposed in §1006.14(b)(2)(i) by creditors and others generally not covered by the FDCPA would constitute an unfair act or practice… if engaged in by those persons, rather than by an FDCPA-covered debt collector.” Debt Collection Practices (Regulation F), 84 Fed. Reg. 23274, FN 313 (May 21, 2009) (to be codified at 12 C.F.R. pt. 1006). In addition to the potential direct impacts, creditors should be preparing themselves for the indirect impacts of the Rule which will include additional vendor management requirements and additional expectations as to documentation and other information from their third-party vendors. A final rule is expected in 2020.
A recording of the webinar as well as contact information for the presenters is available in the AFSA Webinar Resource Center.
January 23rd, 2020 by Dan Bucherer