Chad was invited to speak at the Western Student Financial Services Conference at Portland State University on July 28th, 2014. The subject of his first session was bankruptcy and the analysis on whether or not certain debts on campus qualify as “student loans” pursuant to the United States Bankruptcy Code, and steps schools can take to better protect their debts from discharge. His other session focused on legal hot topics, including a discussion focusing on the current legal issues facing the collection industry and the impact those issues have on the higher education community.
Effective June, 6, 2014, debt collection entities collecting debt in West Virginia will need to update their collection letters to comply with new notice requirements when pursuing debts that are beyond the statute of limitations, including informing the consumer that the creditor or collector cannot sue to collect the debt. This is a trend that follows Connecticut (similar requirement became effective earlier this year & case law from the 7th Circuit that impacts the collection of debts past their applicable statutes of limitations).
Debt collectors pursuing debts that are beyond the statute of limitations in West Virginia need to make modifications to collection notices to comply with recent changes to the West Virginia Code. The bill (2014 H. B. 436) created a new text disclosure under W. Va. Code § 46A-2-128(f) that is required when debts are beyond the applicable statute of limitations.
The law requires that a debt collector seeking to collect on a debt beyond the statute of limitations for filing a legal action must inform the consumer that the creditor or collector cannot sue to collect the debt and disclose whether the debt can still be reported to a consumer reporting agency. The required disclosure reads as follows:
[When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c]
“The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid.”
[When collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c]
“The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies.”
The notice must be provided in the initial written communication when the debt is beyond the statute of limitations. Debt collection entities collecting debts in West Virginia should act immediately to comply with this new requirement.
On May 13, 2014, the Consumer Financial Protection Bureau (“CFPB”) released a Proposed Rule Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act. Many financial institutions currently mail printed copies of the annual GLBA privacy notices to their customers, but have expressed concern that this practice causes information overload for consumers and unnecessary expense. In response to such concerns, the CFPB is proposing to allow financial institutions that do not engage in certain types of information-sharing activities to stop mailing an annual disclosure if they post the annual notices on their websites and meet certain other conditions.
The Proposed Rule would apply to various types of financial institutions that provide consumer financial products and services, and the CFPB is currently encouraging comments on the proposal through June 12, 2014. At this time, there is no clear date that the Proposed Rule might go into effect. The CFPB is expected to announce updates after the June 12, 2014 deadline for submission of comments.
Summary of the Proposed Rule
Specifically, the proposal would allow financial institutions to use the proposed alternative delivery method for annual privacy notices if the conditions below are met. Covered financial institutions should analyze if they meet each of these criteria, and therefore may qualify to use the alternative delivery method if/when the Proposed Rule goes into effect.
- the financial institution does not share the customer’s nonpublic personal information with nonaffiliated third parties in a manner that triggers GLBA opt-out rights;
- the financial institution does not include on its annual privacy notice an opt-out notice under section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act (FCRA);
- the financial institution’s annual privacy notice is not the only notice provided to satisfy the requirements of section 624 of the FCRA;
- the information included in the privacy notice has not changed since the customer received the previous notice; and
- the financial institution uses the model form provided in the GLBA’s implementing Regulation P. A financial institution would still be required to use the currently permitted delivery method if the institution, among other things, has changed its privacy practices or engages in information-sharing activities for which customers have a right to opt out.
Compliance Step 1: Annual Statements to Customers
To comply with the proposed rule (as currently proposed), a financial institution would need to insert a clear and conspicuous statement, at least once per year, on a notice or disclosure issued under any other provision of law, e.g. as an insert with a billing statement. The statement must include the following information for customers:
- the privacy notice is available on the company’s website;
- it will be mailed to customers who request it by calling a toll-free telephone number; and
- the privacy notice has not changed since the customer received the previous notice.
Compliance Step 2: The Alternative Delivery Method via Website Post
To comply with the proposed rule, the current model form would be continuously posted in a clear and conspicuous manner on a page of the financial institution’s website without requiring a login or similar steps to access the notice.
To assist customers with limited or no access to the internet, a company would have to mail annual notices promptly to customers who request them by phone.
To access the Proposed Rule, see the following link: https://www.federalregister.gov/articles/2014/05/13/2014-10713/amendment-to-the-annual-privacy-notice-requirement-under-the-gramm-leach-bliley-act-regulation-p#p-14
The North Carolina Dept. of Insurance (N.C. Dept. of Insurance oversees collection agencies) settles with agency for charging transaction fees:
In April 2014, the Commissioner of the North Carolina Department of Insurance (“NCDOI”) brought an action against a debt collector after receiving a complaint from a consumer about a $10.00 transaction fee. NCDOI discovered that the company collected $20,912.50 in such fees from North Carolina consumers, between June 1, 2010 and June 5, 2013, where the individual fees ranged from $5.00 to $10.00.
Rather than face an administrative hearing to determine whether charging the fees was in violation of state law, the collector voluntarily agreed to stop collecting transaction fees from North Carolina consumers and agreed to pay a civil penalty of $21,412.50 for the fees collected.
The collector also agreed to fully reimburse any North Carolina consumer who paid the company a processing fee between June 1, 2010, and June 5, 2013 upon receipt of written request from the consumer within one year of the settlement.
The NCDOI’s position on the application of N.C. Gen. Stat. Section 58-70-115(2) should cause collection agencies doing business in North Carolina to carefully analyze the assessment of any “collection fee” including fees assessed for processing certain types of payments.
If you would like more information on this settlement or its impact on your business, please contact the firm.
The Echols Firm, LLC is excited to announce that
Robbie Malone is now serving as “of counsel” to the firm. Robbie’s
significant trial experience and specific focus on the credit and collection
industry will strengthen the services provided by the firm and increase our
geographical reach. On top of its general business practice, the firm
remains focused on the needs of creditors, debt purchasers, and debt
collectors. You may find out more information on Robbie Malone by
clicking here: www.theecholsfirm.com/our-firm/robbie-malone/
Chad will lead a session on recent litigation on collection fee assessment.
Chad to speak at the Kansas Association of Student Financial Aid Administrators Conference Thursday April 24th
Chad will be discussing current issues and cases related to bankruptcy and student loans, how to protect institutions’ debt from discharge, the current legal status of the collection industry, and litigation and trends affecting the industry.
Chad is now a member of ACA International’s Judicial Committee. The purpose of the Judicial Committee is to establish, oversee and support the Association’s litigation support agenda.
Chad will be in Anaheim on March 9th and 10th presenting at the 2014 Student Financial Services Conference of the National Association of College and University Business Officers (NACUBO).
Topics will include:
- Bankruptcy and collection law changes and learning how institutions will need to adapt in order to comply
- Updates on what agencies, including the CFPB, have been up to and how they can affect collections
- Round table discussion on collections challenges and solutions
Webinar: Update on a Critical Development Regarding Collection Fees on Institutional Loans and Student Receivables
On January 2, 2014, the 11th Circuit Court of Appeals issued an opinion on the assessment of percentage based borrower paid collection fees on institutional loans and student receivables by Colleges and Universities.
Chad Echols, Outside General Counsel for Williams & Fudge, will discuss the Bradley v. Franklin Collection Services, Inc. ruling and how it will impact the current assessment of collection fees. Join us for a free webinar on Thursday, February 6, 2014 beginning at 2:30 to 3:30 PM EST to provide valuable information on the recent court case opinion.