Month: June 2016

Credit Bureau Reporting: New rules require more transparency and information management

The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), establishes rules for credit reporting agencies (CRAs) directing how consumer information must be reported. CRAs include agencies like the major credit bureaus, tenant screening companies and check verification services. The information used in consumer credit reports is used by third parties in making determinations about a consumer’s eligibility for credit, insurance rates, employment and housing.[i] The Furnisher Rules for information collection and use in connection with the FCRA is codified in a section of the Code of Federal Regulations (CFR), titled, Part 660 – Duties of Furnishers of Information to Consumer Reporting Agencies.[ii] The Furnisher Rules require CRAs to establish and implement reasonable policies and procedures for consumers to make direct disputes of information, as well as policies to ensure the accuracy and integrity of furnished information.

About the National Consumer Assistance Plan

The three major credit reporting bureaus, Equifax, Experian and TransUnion are participants in the National Consumer Assistance Plan, which is designed to improve the collection of complete and accurate consumer information, as well as to make the process of information collection and management transparent to consumers. The plan includes provisions for updates to the mandatory reporting requirements and procedures for collecting consumer data.

The plan impacts the organizations who furnish data to the credit bureaus, namely collection agencies, debt buyers and as well, those who are reporters of authorized user data. Some of the new rules under the plan take effect on June 15, 2016, and others are effective September 15, 2017.[iii] The plan rules and changes were provided to data furnishers in March to help in transitioning to the new requirements to accomplish accuracy and transparency goals in the best interests of consumers.

Examples of new requirements on credit bureaus

Collection agencies and debt buyers are required to implement data reporting changes before the effective dates as follows:

  1. Report the name of the Original Creditor and Creditor Classification Code – 06/15/2016
  2. Do not report a debt that did not arise from a contract or agreement to pay – 06/15/2016
  3. Report a full file monthly – 06/15/2016
  4. Do not report Medical Debt collection accounts less than 180 days old – 09/15/2017
  5. Report a delete for accounts that are being paid or were paid in full through insurance – 09/15/2017

Additionally, all data furnishers must report using the newly established minimum reporting requirements for consumer personally identifiable information before September 15, 2017, and as well before that date, all reporters of authorized user data must report the full date of birth for new authorized users on all accounts.

Click here for the link to the detailed grid of furnisher rules and effective dates.

The impact of the new rules on CRAs

Changes under the Plan rules should reduce the number of consumer complaints and lawsuits filed against CRAs. The new rules help direct the CRAs to be in compliance with the FCRA requirements. The more transparent process and accuracy measures can prevent the mistakes and credit reporting violations that cause harm to consumers, leading to litigation and FTC investigation and enforcement.

New rules and policy directives often draw critics and the National Consumer Assistance Plan is no exception. Critics of the plan suggest that the implementation of the rules by the CRAs may involve confusion and error in direction. The unintended consequences of new policies and rules often present challenges to organizations working to achieve compliance with rules. Some CRAs could refuse to comply with the rules or purposely make their own interpretations suiting their perceived best interests.

In the event you as a consumer, detect that a CRA such as a collection agency is violating the new rules and the FCRA, you may have a right to sue them and file a complaint with the FTC. The Zamparo Law Group is advocating for consumers whose information is not kept or recorded correctly as required by consumer laws.

As consumer laws change, the Zamparo Law Group publishes articles and resources to help consumers better understand the laws designed to protect them from harm. When the credit bureaus fail to follow the law, the Zamparo Law Group is there to help consumers fight for their rights and recover after harmful violations by the bureaus and other CRAs.

The Zamparo Law Group, P.C. is a consumer protection law and litigation firm, representing consumer plaintiffs. Zamparo Law Group in the northwest suburbs of Chicago sues and wins against the companies who refuse to follow the law.

To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our FacebookTwitter and LinkedIn pages. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.

 

[i] FTC website, FCRA’s Furnisher Rule: It’s all about accuracy and integrity.

[ii] CFR, Duties of Furnishers of Information to Consumer Reporting Agencies, Title 16 → Chapter I → Subchapter F → Part 660

[iii] Furnisher Data Reporting and Process Requirement Changes, To All Data Furnishers March 2016.

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Rite Aid wants TCPA (pre-recorded phone call) lawsuit dismissed

Rite Aid pharmacy patients were mad as Hell over pre-recorded phone calls they received on their cell phones, reminding them to get a flu shot for the upcoming influenza season. A law firm filed a punitive class action lawsuit against the major pharmacy chain, for violating the Telephone Consumer Protection Act (“TCPA”) for using the pre-recorded calls to promote the sale of flu shots to pharmacy consumers. Notice how different it sounds when you compare “notifying patients of a healthcare condition” versus “advertising flu shots to pharmacy consumers.” Rite Aid officials defend their actions, arguing they did nothing wrong, and are protected by exceptions to the TCPA law prohibiting automated and pre-recorded communications to cell phones. Whether the argument that an exception should apply to Rite Aid is a matter for a jury, and the outcome may influence how other healthcare pill and product vendors conduct their business.

What is the Telephone Consumer Protection Act?

The TCPA, passed by Congress in 1991 limits the use of automated dialing equipment, artificial and pre-recorded phone messages used in commerce, without prior written consent[i]. The TCPA also covers the use of text messages and fax machines. The TCPA specifically prohibits solicitors from calling people’s homes during certain hours, from calling people on the National Do Not Call Registry, from calling homes using pre-recorded or artificial recordings, for example. Violations of the TCPA may be worth $500 per violation when consumers and subscribers report and take action against companies and entities that ignore the TCPA.

When Rite Aid made pre-recorded phone calls to its customers, attorneys representing those customers, argue that Rite Aid violated the TCPA provisions prohibiting pre-recorded calls by using them to sell flu shots. Rite Aid representatives disagree, stating that even if the pre-recorded calls were used for a marketing purpose, they are shielded from TCPA liability under the healthcare-related exception, making the calls permissible and not against the law.

A Healthcare Rule exemption to the TCPA rules prohibiting pre-recorded phone solicitation

The Federal Communications Commission (FCC), the agency that created the TCPA rules, created an exception to the application of the rules against pre-recorded phone calls and the other covered activities, where they apply to the healthcare industry. Health care messages may be sent without prior written consent. To be covered, the “health care messages” must be consistent with the HIPAA. The only problem is that the HIPAA privacy rule does not specifically define, “health care messages.” Despite the lack of a clear definition of “health care messages” there are several accepted subjects of communication that fall within the Healthcare Rule exception.

Healthcare messages regarding patient appointments and examinations, hospital instructions, lab results, prescription notifications and instructions for home healthcare have been accepted as appropriate health care messages. These activities are either logistic or instructional and are based on current or recent healthcare services. These are not marketing messages. The issue before the federal court, regarding Rite Aid’s use of pre-recorded messages is whether the pre-recorded calls were related to or necessary for healthcare services, consistent with HIPAA, and whether the exemption for health care messages applies to a reminder to obtain a flu shot.

Do you think Rite Aid’s messages were health care messages, within the exemption?

In a recent news article about this case it is reported that Rite Aid responded to the lawsuit and argued, “that immunization reminders, such as the one at issue, are the precise healthcare messages to which the Healthcare Rule applies.[ii]

Rite Aid also argues that even though it believes consent was not required to place (what it is calling) a healthcare-related call, that it otherwise had consent because the people called had previously given the Rite Aid pharmacy their phone numbers and by signing for prescriptions when they had them filled, they were giving express written consent to being notified.

If the federal district (trial court level) court finds that Rite Aid acted beyond the Healthcare Rule exemption, there could be significant punitive fines in the class action lawsuit. The determinations as to what constitutes health care messages are tricky, and if you allow one type of communication, what will happen with others – for example, so long as there is a reasonable tie to health care, are other marketing calls to be allowed?

As the telecommunication laws catch up with technology, the Zamparo Law Group will keep following and writing article summaries to keep us all up to date so when we see something wrong, we can say something and report it to the proper agencies and authorities.

If you are the victim of a violation of a consumer rights law, such as the TCPA, take good notes and call the Zamparo Law Group for a case review to find out if you have a legal right to recovery of damages. The lawyers at the Zamparo Law Group are advocating for consumers like you!

The Zamparo Law Group, P.C. is a consumer protection law and litigation firm, representing consumer plaintiffs. Zamparo Law Group in the northwest suburbs of Chicago sues and wins against the companies who refuse to follow the law.

To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our FacebookTwitter and LinkedIn pages. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.

 

[i] Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227

[ii] Lexology, Is Rite Aid Immune from TCPA Liability? Jun. 8, 2016.

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The CFPB seeks new rules for payday lenders, protecting consumers from unfair lending

Nobody likes payday loan shops, unless they are the one who owns it and gets rich off the people they prey upon. Many years ago when people borrowed money from the mob, they got hurt if they didn’t pay. Today, some folks under water with payday loan shops might prefer physical injury over the incredible fees and charges they pay for the convenience of a short-term loan. The Consumer Financial Protection Bureau (CFPB) focuses its latest in a series of efforts to give relief to consumers who suffer from the after effects of payday loans. The proposed rulemaking follows a 2014 CFPB study of payday lending practices which highlighted the frequency in which borrowers we able to extend their repayments, repeatedly, and owed more money in fees than the principal amount they originally borrowed. Meanwhile, payday loan industry representatives speak out against the CFPB and its proposed new rules.

Is there a significant trap in the payday loan process? The CFPB reports suggests so.

The 2014 payday study, CFPB Data Point: Payday Lending, conducted by the CFPB Office of Research, notes that more than half of payday loans are due within two weeks of the issuing date, with an annual interest rate of approximately 390 percent; most of the consumers repeatedly extend their repayments, incurring more debt and owing more fees than they borrowed. In 80 percent of the auto title loans, where borrowers secure the loans by putting their vehicles on line, the borrowers have to extend the loans because they cannot afford to pay them. Half of all the loans are renewed and the borrowers are in loans more than “ten loans long.” Key findings of the report also state that the majority of monthly payday loan borrowers are government benefit recipients.

The people who can least afford high interests rates are already facing financial difficulties that lead them to payday loans. These borrowers may not have the credit rating or access to affordable loans that others may enjoy.

The CFPB assesses data regarding payday loans to better highlight the realities of higher risk lending. The opening language of the study states that the CFPB is focused on “providing an evidence-based perspective on consumer financial markets, consumer behavior, and regulations to inform the public discourse.”

The CFPB proposed rules set forth objectives in counteracting predatory payday lending practices.

There are two main loan categories considered in the proposed rules, loans shorter than 45 days and loans longer than 45 days, that have more than a 39 percent all-in annual percentage rate, and are either secured by the borrower’s vehicle or the payments are automatically deducted from their account or income. For both these loan categories, the new rules would require the lender to independently determine whether the borrower can afford to repay the loan.

Abusive and unfair short term and payday loan practices would also be identified under the proposed new rules. In addition to identifying bad practices, the rules would restrict lenders from loaning money to borrowers who already have outstanding loans. Additional restrictions would prevent lenders from making multiple payment attempts, trying to draw the payment from the borrower’s account, after two consecutive payments that declined when processed, and this saves already unable-to-pay borrowers from additional fees and charges from the payday lender.

Lenders say the rules would cripple their industry and block the access to money that borrowers need, often in emergencies.

The negative economic impact of the proposed new rules on payday lenders could be significant. Recent news articles noted, ““Thousands of lenders, especially small businesses, will be forced to shutter their doors, lay off employees, and leave communities that already have too few options for financial services,” said Dennis Shaul, the chief executive of the Community Financial Services Association of America, a trade group for payday lenders. According to the group’s website, “More than 19 million American households count a payday loan among their choice of short-term credit products.”[i]

With an average fee of $15 on every $100 borrowed, payday lenders have significant fees at stake and as lender experts suggest, the new CFPB rules run some payday lenders out of business. Those with financial interests in the outcome of the proposed new rules may be keeping a close eye on the presidential election, as the Democratic presidential candidates generally support stricter consumer finance rules and restrictions.

The Zamparo Law Group follows several rulemaking propositions and developments with the CFPB and will frequently share news that affects consumers, in particular, the development of rules for better practices in the short term and payday lending industry.

The Zamparo Law Group, P.C. is a consumer protection law and litigation firm, representing consumer plaintiffs. Zamparo Law Group in the northwest suburbs of Chicago sues and wins against the companies who refuse to follow the law.

To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our FacebookTwitter and LinkedIn pages. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.

 

[i] New York Times, Payday Loans’ Debt Spiral to Be Curtailed, By Stacy Cowley, Jun 2, 2016.

Image Source Payday Loan Giant May Go to Prison for Racketeering http://bit.ly/1UkqCV8

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