2020: What’s on the Horizon for the Debt Collection Industry

The debt collection industry is set to have a busy year adjusting to several “new normals” that are either already at its doorstep or are making their way over. Last year saw a lot of groundwork laid for new laws and regulations that will impact how debt collectors conduct business, and these new requirements will come to fruition in 2020. Below are five key items that 2020 has in store for the industry.

1. CCPA Implementation

Ready or not, the California Consumer Privacy Act (CCPA) is now in effect. The law aims to give consumers knowledge and control of their personal information: what data is collected, how companies use that data, and how to stop that use.

The CCPA came under criticism for how hastily the state legislature passed it and for the challenges it presents to implementation. California’s Attorney General (AG). who is tasked with enforcement of the new law, held several public forums both, both in early and late 2020 to receive public input on the CCPA and, more recently, on the AG’s proposed regulations. 

Companies have scrambled to do the best they could to prepare. Many pre-implementation efforts dominated much of 2019, including mapping out company data, setting up procedures for receiving and processing consumer requests, and trying to figure out what type of designation the company has per the CCPA’s complicated definitions. (For more information, or if your company is still struggling to figure out a way forward, watch our webinar on CCPA here.)

As of January 1, 2020, the law is in effect. The AG’s office is required to provide CCPA regulations by July 1 of this year. It will be an interesting year to see how consumers react to their new rights, whether companies’ procedures are sufficient to meet the CCPA’s purpose, and how the AG will move forward in regulating the law.

And let’s not forget that legislatures of several other states have pending consumer privacy laws as well. The National Conference of State Legislatures has a chart outlining what’s going on in each state.

2. CFPB Final Debt Collection Rules

The wait for the Consumer Financial Protection Bureau’s (CFPB) final rules for debt collection will finally be over. After a lot of research, several delays, congressional hearings, and busy comment periods to both the Advance Notice of Proposed Rulemaking (ANPRM) and the Notice of Proposed Rulemaking (NPRM), the final rules are set to be released in 2020. 

What will the final rules look like? Nobody but the CFPB knows for sure, but it’s predicted that they will largely resemble the NPRM. So what is the “new normal” under the new rules? 

• Debt collectors will have ground rules for communicating with consumers through digital channels.
• Strong consent management procedures will be required to take advantage of the rule’s digital communication allowance.
• Call caps will likely be a thing.
• Debt collectors will have some form of a safe harbor validation notice to use.

What’s left to be seen is how the courts will respond to the new rules. Courts are supposed to pay deference to regulatory rules under the Chevron doctrine, but there is some uncertainty. In a court decision last year, the U.S. Supreme Court upheld its prior decisions that held judicial deference should be given to regulatory agency interpretations of its own regulations but also stated that such deference is “sometimes appropriate and sometimes not.” Will courts consider portions of the rules ambiguous? Will oddball courts—such as the Third Circuit, which tends to go against the grain on many issues—find something to dig their teeth into? While all of this remains uncertain, the CFPB has probably thoroughly reviewed its rules to withstand such challenges.

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3. CFPB Time-Barred Debt Disclosure Supplemental NPRM

The CFPB hinted that we will see a supplemental NPRM for time-barred debt disclosures sometime early this year. Not only was a portion of the time-barred debt section of the NPRM left blank, but the CFPB has also conducted consumer surveys on such disclosures. Director Kathleen Kraninger said that the supplemental NPRM is coming “very early” in 2020, so that is probably right around the corner. 

4. Pending Pivotal Court Decisions

2020 will be the year that the industry sees some pivotal court decisions, and it’s going to be important to track what’s going on in the courts—iA’s Case Law Tracker is a great tool for this.

The U.S. Supreme Court is set to hear arguments (calendared for March 3, 2020) and issue a decision on the question of whether the CFPB’s structure is constitutional. The Seila case will specifically look at whether there is a violation of the separation of powers in the CFPB’s independent single-director agency structure and the for-cause only removal of the director. 

The Third Circuit Court of Appeals is likewise set to hear arguments and provide a decision on the written dispute requirement issue that plagued the debt collection industry. The Third Circuit said it will conduct an en banc review of Riccio v. Sentry Credit, Inc., as it is “controlled by a prior decision of the court which warrants reconsideration.” That prior decision is the Graziano v. Harrison, where the court arguably made the determination that all disputes under 1692g must be in writing. The en banc hearing is scheduled for February 19, 2020.

Editor’s Note: An en banc review is where a case is heard before all of the judges in the circuit court, rather than by a three-judge panel.

5. The Tide is Turning: Courts are Calling Out FDCPA Abuse by Consumers and Their Counsel

It also appears that the tide is turning in the courts on Fair Debt Collection Practices Act (FDCPA) cases as more and more judges begin to notice and call out plaintiffs’ and their counsel’s misuse of the FDCPA. Whether to defend an FDCPA case is a tough decision, especially considering that the one-sided attorney fees provision bars a debt collector’s recuperation of its defense fees and costs even if it prevails in the case. However, as more debt collectors choose to defend cases rather than settle right off the bat, more judges see just how hyper-technical and voluminous these lawsuits are. Some courts have flat-out said that the FDCPA is being misused as a debt evasion statute and to profit a cottage industry of plaintiffs attorneys. Examples from across the country include:

• Miller v. Trident Asset Mgmt. (D. Md. Dec 4, 2019)
• Campagna v. Client Services (E.D.N.Y. Dec. 3, 2019)
• Irvin v. National Credit & Collection (N.D. Ill. Sept. 17, 2019)
• Vougas v. Suttell and Hammer, PS (E.D. Wash. Sept 3, 2019)
• Garcia v. Miramed Revenue Grp, LLC (N.D. Ill. Aug. 16, 2019)

These are just a few examples of many other court decisions from the last couple of years that held similarly. 

Conclusion

2020 will be a busy year for the debt collection industry, but it will be one of progress. insideARM will continue to monitor all of the above items and keep you informed of many updates. 

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Want a tool that helps you keep up with all of the relevant industry case law? The iA Case Law Tracker can help you conduct incisive and quick legal research in less time than it takes to pour your morning cup of coffee.