NCHER Knowledge Symposium November 9 2012 John L Culhane Jr Partner Consumer Financial Services Group 2158648535 culhaneballardspahrcom Use of Credit Reports for Employment Employer must provide prior written disclosure slightly different rules for applications by mail te ID: 783706
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Slide1
Some FCRA Issues to Take off the TableNCHER Knowledge Symposium November 9, 2012
John L. Culhane, Jr., Partner
Consumer Financial Services Group
215.864.8535
culhane@ballardspahr.com
Slide2Use of Credit Reports for EmploymentEmployer must provide prior written disclosure (slightly different rules for applications by mail, telephone, email or similar means)
Employer must obtain employee’s prior written authorization (slightly different rules for applications by mail, telephone, email or other similar means)Employer must give notice prior to taking adverse action and must provide a copy of the report at the same time
Slide3Summary of Consumer RightsEmployer must provide the Summary of Consumer Rights at the same time (prior to adverse action)New Summary required as of January 1, 2013
New Summary reflects enhanced role of CFPBRequires replacing information for FTC (agency name, address and URL) with information for CFPBRequires new chart with a more extensive list of regulators
Slide4DisputesMust conduct an investigation with respect to the disputed informationMust review all relevant information provided by the consumer (or the consumer reporting agency)
Must complete the investigation within specified time limitsMust report the results of the investigation to the consumer (or the consumer reporting agency)
Must correct any inaccuracy
Slide5Reporting Disputed InformationMay not furnish disputed information without noting that it is disputedProblem for one or more institutions (per Supervisory Highlights)
Part of American Express Settlement (although this probably involves the interplay of the FCBA and FCRA)TRAP FOR THE UNWARY – Just because you disagree, doesn’t mean there was (is) no dispute
Slide6Student Loan Bankruptcy Update
NCHER
Knowledge
Symposium
Kelly
Lipinski
McGlinchey Stafford PLLC
216.378.4969
klipinski@mcglinchey.com
November 9,
2012
Slide7Congressional Report on Student Loan
Department
of Education and Consumer Financial Protection Bureau
Report, August 2012
Statistical
data from industry
Anecdotal
data from industry, consumers, and general
public
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Slide8Congressional Report on Student Loans
Source: Consumer Financial Protection Bureau, Private Education Loan Report, Table 15 (August 29, 2012).
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Slide9Congressional Report on Student Loans
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Slide10Consumer Protection Issues
Report
concludes that
private education loans are
treated very differently in bankruptcy proceedings compared to other consumer debt.
Bankruptcy
protection for
loans emerging from 2005 standard, which
is that all loans made for a qualified
education expense
are exempt
from
discharge in
bankruptcy.
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Slide11Consumer Protection IssuesResearch indicates the amendments to the Bankruptcy Code has not resulted in a decrease in the cost of credit or increase in the access to credit, which
raises questions of whether the amendments make sense today.
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Slide12Public PolicyConsider public policy issues as student loans are treated the same as:Child Support
AlimonyTax LiensClaims arising from wrongful conduct (i.e., DUI and battery).
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Slide13Public Policy Are student loans more like tax liens or car loans?If Congress concludes the 2005 amendments
have not met policy goals, it would be prudent to modify the Bankruptcy Code in light of the impact on young borrowers in a challenging labor
market.
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Slide14Dischargability
The
presumption is that student loans are not
dischargeable
in bankruptcy. 11 U.S.C. § 523.
However
, the debt may be discharged upon a finding of undue hardship under the
Brunner
standard
.
The First and Eighth Circuits have adopted the “totality of circumstances” test.
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Slide15DischargabilityThe debt may be discharged upon a finding of undue hardship
under the Brunner standard:The debtor cannot maintain, based on current income and
expenses,
a “minimal” standard of living for herself and her dependents if forced to repay the loans;
That additional circumstances exist indicating that this state of affairs is likely to persist for a
significant
portion of the repayment period of the student
loans; and
The debtor has made a good-faith effort to repay the loan.
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Slide16Misrepresenting Bankruptcy Status
Easterling
v. Collecto, Inc
.
, 692 F.3d 229 (2nd Cir. 2012)
Collecto
had a contract with the
Department of Education to
collect overdue loans.
Upon
a finding the borrower
seeks bankruptcy
protection,
Collecto would assign the
debt to its internal department to determine whether the debt was
discharged.
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Slide17Misrepresenting Bankruptcy Status
If the debt
had
not been discharged, Collecto would send a letter with the following statement:
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Slide18Misrepresenting Bankruptcy Status
Court analyzed the
letters and statement
using the
“least
sophisticated consumer
standard”.
Are Collecto’s collection
letters open to more than one reasonable interpretation, one of which is inaccurate?
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Slide19Misrepresenting Bankruptcy Status
Collecto violated
the federal Fair Debt Collection Practices Act when it sent the consumer a letter that stated her student loans were
“ineligible
for bankruptcy
discharge”
and therefore the account
“must
be
resolved”.
The least
sophisticated consumer would interpret the letters to mean discharge is wholly unavailable
.
Such a statement is “false, misleading, or deceptive”.
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Slide20Successful Discharge
In
re Bene
,
474 B.R. 56 (Bank. W.D. N.Y. 2012).
The
court
previously
held, on
multiple occasions,
that a
decision
to
“stay poor”
after
bankruptcy,
despite high-paying
options,
does not satisfy the
Brunner
test.
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Slide21Successful Discharge -
Bene
Entered
college
at 25
and
borrowed
approximately $17,000, but left college without a degree to care for ailing parents.
Worked
on an assembly line for over 25 years and tried to pay down debt, but when laid off, she owed $56,000
.
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Slide22Successful Discharge - Bene
The
first two interests:
federally-guaranteed
loan program to make education available to persons
without
wealth or creditworthiness and the forgiveness of debt to enable a
“fresh start”.
Court considers a third interest: the William D. Ford Program, which enables debtors to “satisfy”, not “repay”, debt after long period of affordable payments.
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Slide23Successful Discharge - Bene
Although Brunner remains strong, after the 1987’s test is satisfied, the court will look to the “totality of the circumstances”.The flexibility of Ford program must be reconciled with Brunner test.
Also consistent because growth of options for “satisfaction” of debt.
Outstanding balance was discharged, but holding likely to have limited value due to unique facts.
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Slide24Successful DischargeAckley v. Sallie Mae Student Loans (In re Ackley), 463 B.R. 146 (D. Me. 2011).Court granted a discharge of approximately $460,000 of student loans.
Using “totality of circumstance” test, age and medical issues demonstrated an undue hardship.
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Slide25Questions
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Slide26NCHER Knowledge SymposiumLegal Updates and TCPA IssuesNovember 9, 2012
Lawrence A. LaskeyV.P., General CounselWindham Professionals
Slide27Absent “Consent” TCPA ProhibitsUsing auto-dialers to call cell phones
Leaving automated messages on landlinesLeaving automated messages on cell phones (including texts)
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide28Landlines: “Special Rules”Written consent for telemarketing
Commercial/non-solicitation calls“Wrong party” calls
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide29What Constitutes “Consent”?Need for affirmative actionLimited to the context
Providing the number“Downstream” consent?Limited to debt collection?
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide30How Is Consent Obtained?Clearly, and in writingOrallyGiven in connection with existing debt
When must it have been given?To whom?
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide31Who Must Consent?Who has authority?Cell phone subscriber
Others?“Wrong party” calls?Transferred numbers“consent” by non-subscriber“Unintended or incidental”
recipient
Just plain wrong number
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide32Revocation of ConsentWritten or oral?Can it be revoked?
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide33Hobbs Act“Exclusive” jurisdiction FCC Declaratory RulingFCC orders raised as a defense
“Read the whole statute”Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide34Automatic Telephone Dialing System“Equipment which has
the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers”
Capacity of the equipment, without regard to actual use
Focus on lack of human intervention in the dialing process = all
predictive dialers
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide35Cell ConsentNumbers provided to creditorsAffirmative consent to dialer calls/messaging
Navigating the Sea of Change 2012 NCHER Knowledge Symposium
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Slide36Consider…Revisit the “is it a dialer” issue?Include express consent in documents
Downstream transfersPolicy, script and training for oral consentsCheck “propriety” of consent?
Include a revocation process
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