At a glanceFriday, July 17, 2020

Collection Industry News At A Glance - July 17, 2020
Friday July 17, 2020
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Remote Oversight Training – July Sale from RMS

Resource Management Services, Inc. offers a July special on Collection Oversight Training.  Just in time for Consumer Financial Protection Week!  Just because you can't visit right now, doesn't mean you can't continue education and oversight.  Learn about Compliance Management Systems, Policies and Procedures and Third Party Collection Oversight with our special remote learning options.   The CFPB indicated that, even remotely - they will continue to promote their "culture of compliance" and maintain enforcement efforts. Collections was one of the five key areas mentioned in their recent webinar.  Learn tips and techniques for effective oversight - learn remotely, and get ideas for remote reviews.  Save 50% now, in honor of Consumer Financial Protection Week!  Use code: CFPW50

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Fraudulent Out-Of-State Debt Collectors Banned in North Dakota

BISMARCK, ND – Attorney General Wayne Stenehjem has issued three Cease & Desist Orders against fraudulent business operators who violated the state’s consumer fraud and debt collection laws. These out-of-state unlicensed debt collectors made harassing calls to North Dakota residents and used false statements, deceptive practices and even threats in their attempts to extort money.

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Attorney General James Renews Suspension of State Debt Collection for Fourth Time as Coronavirus Continues to Impact New Yorkers’ Wallets

NEW YORK – New York Attorney General Letitia James today announced that the state will tomorrow again renew, for the fourth time, an order to halt the collection of medical and student debt owed to the state of New York that has been specifically referred to the Office of the Attorney General (OAG) for collection for an additional 30-day period. In response to continuing financial impairments resulting from the spread of the coronavirus disease 2019 (COVID-19), the OAG will renew orders again tomorrow, Friday, July 17, 2020 through Saturday, August 15, 2020.

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Big banks expose huge divide between Main Street and Wall Street

New York (CNN Business)The stark divide between Main Street and Wall Street is on display in the shifting fortunes of America’s big banks. Goldman Sachs and Morgan Stanley are minting money despite the turmoil in the real economy. These Wall Street-focused banks reported blockbuster second-quarter results by capitalizing on sizzling markets and bustling trading activity.

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Companies and executives that allegedly bilked student-loan borrowers out of $15.6 million will pay $103,000 in penalties

As consumers across the country worry about how they’ll afford next month’s bills amid the coronavirus pandemic, executives accused of bilking student-loan borrowers out of roughly $15.6 million are receiving leniency because of their financial circumstances. 

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Americans are rapidly shrinking their credit card debt during the pandemic

New York (CNN Business) Americans’ credit card debt is shrinking rapidly during the coronavirus recession. That’s a sharp contrast with the last two economic downturns. The amount of consumer revolving credit, which is mostly credit cards, plunged by another $24 billion in May, the Federal Reserve said Wednesday. This costly form of debt is down more than $100 billion since hitting a record high in February and is now below $1 trillion for the first time in nearly three years.

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FTC returning $16 million to consumers duped into paying for bogus debt relief services

The Federal Trade Commission just got something of a victory in a years-long investigation involving companies that promised to help people lower payments and get out of debt - for a big up-front fee.

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CFPB launches investigation of Quicken Loans real estate affiliate

Quicken Loans, the nation’s largest mortgage lender, said the Consumer Financial Protection Bureau is investigating its real estate affiliate for potential violations of the Real Estate Settlement Procedures Act.

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Making Them Pay: Supreme Court To Consider FTC’s Restitution Authority

On July 9, 2020, the U.S. Supreme Court announced that it would review the Federal Trade Commission’s authority to seek restitution in federal court for consumers who have been harmed by fraud and other misconduct in the marketplace. Just three weeks after the Court upheld the SEC’s authority to seek disgorgement of profits in civil enforcement proceedings, the Court agreed to take up a circuit split regarding the FTC’s authority to seek monetary relief under the Federal Trade Commission Act (the “Act”). Depending on the outcome, the Court’s decision could severely limit what the FTC considers one of its “most important and effective enforcement tools”1—upending its enforcement strategy in both consumer protection and competition cases.

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Convoke Launches Latest Software Update

ARLINGTON, Va.July 16, 2020 /PRNewswire/ — Convoke, a leader in SaaS solutions for the debt collection market, today announced the most recent software update to its debt collections compliance and management hub. Each year, Convoke develops and releases several updates to its platform to support its clients’ evolving needs.

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FTC, Florida Attorney General Obtain Court Order Temporarily Halting Bogus Orlando-Based Credit Card Interest Rate Reduction Operation

At the request of the Federal Trade Commission and the Florida Office of the Attorney General, a federal court has temporarily halted an alleged sham credit card interest rate reduction operation that often targeted financially distressed consumers and older adults.

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CFPB files lawsuit against Chicago-based Townstone Financial for alleged discriminatory lending practices

The Consumer Financial Protection Bureau (CFBP) on Wednesday filed a lawsuit against Townstone Financial Inc., a Chicago-based nonbank retail-mortgage creditor. CFPB’s complaint alleges that Townstone violated the Equal Credit Opportunity Act (ECOA) and Regulation B by engaging in discriminatory mortgage-lending practices and that those violations also constituted violations of the CFPA, the Consumer Financial Protection Act.  

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Attorney General Becerra Files Suit Against Secretary DeVos and U.S. Department of Education for Unlawfully Repealing Critical “Borrower Defense” Regulations

SACRAMENTO – California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey today led a coalition of 23 attorneys general in a lawsuit against Secretary of Education Betsy DeVos and the U.S. Department of Education (ED) challenging their action to unlawfully repeal and replace the 2016 “borrower defense” regulations. These Obama-era regulations established critical protections for student-borrowers who have been misled or defrauded by predatory schools by providing them an efficient pathway to get relief from their federal student loans, and creating robust deterrents for schools that engage in predatory conduct.

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Microsoft warns of critical Windows DNS Server vulnerability that’s ‘wormable’

Microsoft is warning of a 17-year-old critical Windows DNS Server vulnerability that the company has classified as “wormable.” Such a flaw could allow attackers to create special malware that remotely executes code on Windows servers and creates malicious DNS queries that could even eventually lead to a company’s infrastructure being breached.

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US banks warn of much more economic pain ahead

London (CNN Business)The biggest US banks are setting aside billions of dollars to deal with toxic loans as support from the government falls off in the months ahead, a sign that some of the worst economic damage from the pandemic is still to come. What’s happening: JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) said Tuesday that they earmarked nearly $28 billion to cover credit losses last quarter, wiping out a huge chunk of profits made between April and June.

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CFPB Publishes Blog Post On Providing Adverse Action Notices When Using Artificial Intelligence/Machine Learning Models

The CFPB recently published a blog post titled, “Innovation spotlight: Providing adverse action notices when using AI/ML models.”   The blog post primarily recycles information from the Bureau’s annual fair lending report issued in May 2020.  The Bureau indicates that artificial intelligence (AI) and a subset of AI, machine learning (ML), is an area of innovation that it is monitoring.

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Financially Fit? Comparing the credit records of young servicemembers and civilians

Financial well-being, including credit history, is an important consideration in an individual’s ability to join the military as well as his or her ability to maintain a security clearance and continue in military service. This report uses a representative sample of young servicemembers’ credit reports to show how their credit histories evolve from the time they turn 18 until their mid-twenties. It also compares servicemembers to a cohort of same-age civilians.

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Major banks are hauling in ‘big fees’ from debt and equity underwriting during the coronavirus crisis

Cash might be king during a crisis. But for top investment banks helping the Federal Reserve do “whatever it takes” to keep credit flowing during the pandemic, the ace in the hole has been capital markets fees. Take JPMorgan, Chase & Co. JPM, +1.00%, which recorded a chart-busting $33.8 billion of revenue for the second-quarter on Tuesday, despite the coronavirus recession, and a 54% jump in investment banking fees from a year ago.

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Wells Fargo buys $14B of delinquent mortgages tied to pandemic

Wells Fargo has purchased $14 billion of delinquent government-backed mortgages this month, leading the pack among servicers beginning to feel the balance-sheet pinch of the coronavirus pandemic.

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Phillips & Cohen Associates Adds No-Cost Opportunity Scrub℠ To Its Debt Settlement Solutions Platform

Wilmington, DE – July 2020 – Phillips & Cohen Associates, Ltd. (PCA) is excited to announce a critical enhancement to its Debt Settlement Solutions Platform with Opportunity Scrub℠. The newly branded, no-cost feature helps creditors and debt buyers identify, evaluate and optimize debt settlement account value within their portfolios. Known globally for its award-winning decedent debt and estate servicing, Phillips & Cohen Associates has been a leader in the US debt settlement arena for over 20 years. In line with its ongoing commitment to innovate in this growing industry segment, Phillips & Cohen Associates has created one of the nation’s largest repositories for identifying consumers engaged in a debt settlement program. Opportunity Scrub℠ will quickly and securely enable clients to scrub up to 50 million of their accounts at no cost to identify the true impact of the debt settlement segment of their portfolios.

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More Than 50% of Debt Collection Agencies Thrived Under COVID-19

SUNNYVALE, Calif.July 14, 2020 /PRNewswire/ -- Over half the collection agencies surveyed not only thrived during the pandemic, but actually outperformed their pre-pandemic metrics in a nationwide survey conducted by Prodigal Technologies, Inc.

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FTC Sends More Than $16 Million in Refunds to Victims of Bogus Debt Relief Operation

The Federal Trade Commission is sending more than $16 million to individuals who lost money to a debt relief scam that targeted tens of thousands of consumers facing financial difficulty.

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VA Partially Suspends Debt Collections on Veterans Through End of Year

The Department of Veterans Affairs has announced the partial suspension of debt collections against veterans through the end of the year to provide financial relief during the COVID-19 pandemic. In a June 10 news release, the VA said it was suspending all actions against veterans to the end of 2020 where responsibility for the collection of money owed has passed from the VA to the Treasury Department.

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‘We Still Face Much Uncertainty’: Pandemic Hammers Big Banks

The dramatic collapse of the U.S. economy from the coronavirus is pummeling America's largest banks. Wells Fargo lost $2.4 billion in the second quarter — its first quarterly loss since 2008 during the financial crisis — and said it expects to cut its dividend. Citigroup saw its profit drop 73% in the quarter.

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Banks earnings reflect massive hit from coronavirus, but show importance of regulations

Rock-bottom interest rates and preparations for a spike in loan defaults are hitting big banks, which are widely expected to turn in the worst quarterly numbers since the financial crisis this week. JPMorgan Chase, the nation's biggest bank in terms of assets, was the first major lender to report its latest earnings early on Tuesday, setting aside $8.9 billion for expected losses but posting better-than-expected income of $4.69 billion.

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RMAI Applauds CFPB Consumer Financial Protection Week

July 13, 2020: On July 14, 2020 through July 17, 2020, the Consumer Financial Protection Bureau (CFPB or Bureau) will host a series of events in connection with its launch of Consumer Financial Protection Week. The week’s events focus on how the Bureau protects consumers in the financial marketplace, issues consumers confront, as well as how consumers can communicate to the Bureau any issues that they may have with a financial services provider.

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Maybe the FTC Can’t Take That to the Bank: The Supreme Court’s Decision in Liu v. SEC and Its Implications for the FTC’s Ability to Seek Equitable Monetary Relief

On July 9, 2020, the U.S. Supreme Court granted petitions for certiorari in FTC v. Credit Bureau Center and AMG Capital Management, LLC v. FTC, cases that question the Federal Trade Commission’s authority to demand equitable monetary relief such as restitution and disgorgement under Section 13(b) of the FTC Act, which expressly authorizes courts to issue “injunction[s]”  without express reference to equitable monetary relief. The Court’s decision in these cases will have sweeping ramifications for the FTC, which has referred to its efforts to obtain disgorgement under Section 13(b) of the FTC Act as “a cornerstone of the FTC’s enforcement program for more than 30 years.”[1]

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Consumer Financial Protection Week

A week of virtual events on July 14–17, 2020, will focus on how the Bureau is protecting consumers in the financial marketplace.  Events will cover the issues consumers are confronting, as well how consumers can communicate to the Bureau any issues that they may have with a financial services provider

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Companies are taking on another $1 trillion in debt

London (CNN Business)Powered by ultra-low interest rates, corporate borrowing was already at an-all time high before the pandemic. Now, as cash-strapped companies frantically try to shore up their balance sheets, debts are expected to get even bigger. What’s happening: Corporate debt is poised to soar to a new record in 2020, Janus Henderson said in a report Monday. The asset manager, which analyzed 900 companies from around the world, said net borrowing could increase by as much as $1 trillion this year over 2019, when it surged to $8.3 trillion.

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CFPB Study Shows Financial Product Could Help Consumers Build Credit

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (Bureau) today released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one, and could help improve the credit scores of those with no current outstanding debt. 

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Verifacts, LLC. Volunteers at Sauk Valley Foodbank

VeriFacts, LLC recently volunteered at the Sauk Valley Foodbank in Sterling, IL to help feed hundreds of local families who are facing food insecurity.  While VeriFacts has been tackling the challenges of being a small business during the COVID-19 pandemic, food banks have been battling not just the increased demand for meals, but also a drop in the number of volunteers. To support families from the local community who are also hurting during these times, the VeriFacts team volunteered at the Sauk Valley Foodbank to package 300 boxes of food.

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FTC Launches New Online Tool for Exploring Military Consumer Data

The Federal Trade Commission launched a new tool that explores data about problems military consumers may experience in the marketplace. For the first time, data about reports the FTC has received from active duty service members and veterans will be available online in an interactive dashboard at data.

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OCC Tells Banks Not To Hide Under The Cover Of COVID

The nation’s banks hoping to use COVID-19 as an excuse to shutter branches or get permanent concessions from regulators better think again, the Financial Times reported. Brian Brooks, Acting Comptroller of the Currency, an independent agency within the U.S. Department of Treasury, told the newspaper he was not prepared to revisit the fundamentals of bank regulations as a result of the pandemic.  He said rules governing branch closures will stay and bank executives should not expect temporary waivers to continue indefinitely.

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DCS2020 September 15-17, 2020 – Cancelled

Resource Management Services, Inc. announces the cancellation of the Debt Connection Symposium & Expo originally scheduled for September 15-17, 2020 at the Red Rock Hotel.  

Our next event is the Collection and Recovery Solutions 2021 conference at the Four Seasons in Las Vegas, to be held May 12-14, 2021.  More details will follow later in the year.

SBA says there’s no more money for emergency loan advances to small businesses

Small businesses that still need a shot of quick cash to help them through the coronavirus pandemic can no longer count on the loan advance program from the Small Business Administration. The coveted program, which provided immediate relief to businesses that applied for an emergency loan from the SBA, is officially out of money, the agency said this weekend. The SBA says it provided $20 billion in advance funds—the full amount allocated by Congress—to almost 6 million businesses employing 30.5 million people. The money was doled out in advances of $1,000 per employee, up to $10,000 per business.

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Prepare for Artificial Intelligence to Produce Less Wizardry

EARLY LAST YEAR, a large European supermarket chain deployed artificial intelligence to predict what customers would buy each day at different stores, to help keep shelves stocked while reducing costly spoilage of goods. The company already used purchasing data and a simple statistical method to predict sales. With deep learning, a technique that has helped produce spectacular AI advances in recent years—as well as additional data, including local weather, traffic conditions, and competitors’ actions—the company cut the number of errors by three-quarters. It was precisely the kind of high-impact, cost-saving effect that people expect from AI. But there was a huge catch: The new algorithm required so much computation that the company chose not to use it.

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How Growing Businesses Should Tackle Cybersecurity Challenges

When we think about the most public cyber attacks and data breaches, we generally associate them with large enterprises. The truth is cyber attacks are not limited by company size. A significant cyber attack can happen to any company, in any industry and of any size.

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