On July 16th, InsideARM announced disturbing restrictions that could be placed on the debt collection industry as a result of the FTC’s $3.2 million consent order with a major debt collector. The article stated, “Importantly, the consent order apparently prohibits the use of the widely accepted Foti phone message in certain circumstances and also requires debt collectors to honor verbal cease requests and disputes.
In a podcast linked to the article, attorneys John Rossman, Chair of creditors remedies group, and Mike Poncin (Moss & Barnett) discuss the implications of the order and give ideas for future compliance. Listen to the clip or go to The Debt Collection Drill.
Summary of the Podcast with comments added:
There are three restrictions on future debt collection conduct/activities attached to the Consent Order that go beyond the FDCPA:
- Rejects the ACA Foti message under certain circumstances
- Requires honoring verbal “cease communications” requests in a variety of circumstances
- Requires investigating and responding to verbal disputes that exceed FDCPA requirements
I. Rejection of ACA’s Foti Message
The ACA Foti message was originally designed to leave a voice mail message that would not disclose confidential information to anyone other than the debtor.
The Consent Order states the caller must confirm:
- This is the debtor’s voice mail, that his/hers is the only name on the voice mail message
- The debtor is the only one who will hear the message
- The caller must not mention the name of the debtor, if the voice mail greeting message contains 2 or more first and last names
This restriction may not apply if:
- The Debt Collector has previously spoken to the debtor using that number
- The Zortman message is used without disclosing the name of the debtor: This is a debt collector with an important message. Please call…..
- There is an Affirmative Defense on Good-faith interpretation of an FDCP ruling
David Rudd, Sr. VP of Finance and Administration for IAT SmartDial, when asked to comment about the possible Foti restrictions, said, “It is becoming increasingly difficult to comply with all regulations, court rulings and consent decrees. While we certainly need to be mindful of this consent decree—even if it is not at this time a law—we can’t let it paralyze our collection strategies. Contacting debtors via the phone and even at times leaving a message is still a critical collection strategy. The ARM Industry needs to vigilantly watch for compliance issues and craft dialing strategies that fall within current regulatory mandates. It isn’t easy, but it can be done.
“While IAT develops effective compliance features, we frequently remind customers that no dialing solution can be compliance ‘guaranteed.’ Evolving industry regulations demand flexible dialing technology capable of changing with your unique compliance decisions. For instance, IAT messaging allows you to create a custom message and quickly change it if there’s a need.”
II. Honor Verbal “Cease Communications” Requests
- A verbal request/dispute must be treated as a written request/dispute; you must validate disputes received verbally
- Applies in several contexts: can depend on call volume, specifically if the message is an intent to annoy or harass or abuse the debtor and violates the FDCPA, as in when there have already been payment arrangements or other contacts.
Butch Cersonsky, of Cersonsky, Rosen & García, P.C., commented: “Honoring verbal cease and desist orders is no problem for us. If someone says ‘Don’t call me,’ or verbally disputes the debt, out of an abundance of caution we send our validation letter, which includes information from the original creditor, such as an affidavit of amount due and the original promissory note.”
III. Investigate and respond to all verbal disputes
- Must assess and consider info from original creditor (contracts, invoices, etc.), from skip tracers, in collection notes, obtained directly from the debtor (address/phone number updates, etc.)
- Raises concern regarding investigating verbal disputes prior to collection (to substantiate a claim)
- 2012 Consent Order states a debt collector can reasonably rely on initial information from the original creditor to substantiate the claim
- Debt collector may rely on info from original creditor even in the absence of some info that is inaccurate or outdated
Mr. Cersonsky added, “Common sense suggests the debt collector would want to accurately investigate the debt, and thus would use all sources necessary to properly respond to the dispute. However, if the debt collector does not have all information from a prior attempt to collect, that will require more work to find and access the prior information.”
He concluded, “A consent decree is not law, and should only apply to the party which signs the decree, but future rules and opinion letters may incorporate the requirements of this consent decree, and we don’t know how the new Consumer Protection Bureau will address these issues. More written communication and use of attorneys may be the result, because more restrictions seem to be put on collectors relying on the telephone. Time will tell.”
The NL sees this as a development that bears watching, in order to stay in compliance and avoid legal difficulties with debt collection calls. We will continue to provide information as it becomes available.
By Marti Lythgoe, NL Editor