Welcome to May 2008 and happy Cinco de Mayo. As many of you already know SWR has grown into a new 5,000 square foot location in Dallas. We are very proud of our new office and even more proud of the fact that we could not have accomplished without you our customer. We have added three new collectors to our staff and they will be focusing primarily on our small balance accounts those with balances that are under $100.00. We feel like this will free up our more veteran collectors to concentrate on the accounts with larger balances. We feel that the additional saturation will increase our overall effectiveness which will put more money back on your bottom line.

Angela Sessions has been promoted to customer care coordinator and will be responsible for communicating with customers who have not place any new accounts in 60 days. Angela is a bright young lady and has a very bright future ahead of her. We are very proud of her and hope that she will continue to grow with our company for years to come. We have made it very easy to place new accounts and keep up with our collection attempts by logging on to our new website at www.swrecovery.com.

Well you are probably saying sure that is great Steven but what is the new address. Please update your records to reflect that we have moved to 15400 Knoll Trail Suite 300 Dallas Texas 75248. Our phone numbers did not change (thank goodness for the little things) but we have warped into the 21st century and have a new E-fax which is 214-619-0076. Don’t you just love technology?

I know you are tired of hearing this but the economic stimulus checks are being mailed out next week and this is like the second coming of income tax returns that most people use to pay off their bills with. So if it has been awhile since you placed any new accounts with us May could not be a better month to get back on tract with your placements.

Consumer Confidence Grim as Expectations Continue to Deteriorate
Published: April 14, 2008
.Pessimism among U.S. consumers continues to spread as Americans' sentiments concerning the future turn particularly gloomy, according to the most recent results of the RBC CASH Index.

The survey found that while consumer attitudes regarding current conditions and investments show signs of stabilizing, Americans' confidence in future personal financial conditions continues to weaken. As a result, the overall RBC CASH Index dropped to an all-time low this month since its inception in 2002 to 29.5, compared to 33.1 in March.

Highlights of the survey results include:

• Americans' gloomy outlook was evident in the RBC Expectations Index, which declined nearly seven points to -48.3, compared to -41.6 last month. While not as precipitous a decline as seen in the 34-point drop in March, the downturn in the index reinforces the overall pessimism consumers have regarding a quick economic recovery. The decline in the index is being driven by consumers' increasing negativity regarding expectations for personal finances. This month, one in five consumers (22 percent) believes their personal finances will be weaker six months from now, up from 15 percent in February.
• The RBC Current Conditions Index, at 54.6, held steady when compared to the 54.7 registered last month. Again this month, Americans' negative views of the current state of their local economy dramatically outweighed positive views, with four in 10 consumers (41 percent) rating their local economy as weak, while only 15 percent rate their local economy as strong. Attitudes toward the current state of personal finances remained unchanged in April, with 25 percent of consumers once again rating personal finances as strong, and 31 percent of consumers rating personal finances as weak.
• Consumers' overall opinions regarding investing also remained stable this month. The RBC Investment Index, which was at 56.7 in March, currently stands at 56.4, a record low since the index was created in 2002. Two-thirds of Americans (65 percent) believe the next 30 days will be a bad time to invest in the stock market, versus 67 percent last month. Consumers' lack in confidence in real estate investments also held steady this month, as six in 10 Americans (60 percent) report they believe the next month will be a bad time to invest in real estate, compared to 62 percent last month.
• Job security continued to erode this month, driven by an increase in personal job loss experience. The RBC Jobs Index reached its lowest level in four years in April and currently stands at 97.0, down from 99.2 last month. Four in 10 Americans (40 percent) reported job loss in their immediate circle this month, up from 36 percent in March.
  The entire RBC CASH Index report can be viewed at http://www.rbc.com/newsroom/rbc-cash-index.html.

Majority of Americans Think Economic Stimulus is a Short-Term Fix
Published: April 18, 2008
According to a recent poll, 25 percent of respondents indicated they plan to use their 2007 income tax return refund to help pay a debt, while 15 percent said they would invest the proceeds and 6 percent said they would use the refund for travel expenses.

More than half of Americans surveyed said the recently signed $152 billion federal economic stimulus package is a short-term solution for the troubled U.S. economy, according to an Experian Consumer Direct poll. Thirty-two percent feel the package will cause more Americans to reinvest in the economy.

Nineteen percent of respondents said they would use the economic stimulus check to pay off a debt, 16 percent said they would pay utility bills and 10 percent said they would apply the funds toward home repairs.

According to the results, 25 percent of respondents indicated they plan to use their 2007 income tax return refund to help pay a debt, while 15 percent said they would invest the proceeds and 6 percent said they would use the refund for travel expenses.

Other findings:

• Forty-one percent of consumers “strongly agree” that the economic stimulus package is not enough to help distressed homeowners.
• Twenty percent “disagree” that the stimulus package will harm the U.S. economy by increasing the federal deficit.
• Sixteen percent of those surveyed said the effect of the stimulus will lead to an increase in consumer spending.
• Of those who have not currently filed a 2007 tax return, 8 percent plan to file on April 15, while 4 percent plan to file for an extension.
• Sixty-three percent of those surveyed filed their tax return electronically, while 48 percent of those who have not yet filed plan to do so via the U.S. mail.
• Nine percent plan to use their tax refund toward home repairs.

National Credit Card Debt Increases in Fourth Quarter
Published: April 14, 2008
The national average for credit card debt per bankcard rose 4.81 percent from the previous quarter to $1,694, according to a TransUnion analysis of trends in the credit card lending industry during the fourth quarter of 2007.

The largest state average was in Alaska at $2,342, followed by Tennessee at $2,046 and Alabama at $1,996. The lowest average credit card debt was in Iowa at $1,272.

The steepest increases in average credit card debt over the previous quarter occurred in Florida (6.84 percent), Nevada (5.98 percent) and California (5.95 percent). Alaska actually experienced a drop in its average credit card debt (-2.01 percent) while Nebraska and District of Columbia's debt edged up slightly by 0.32 percent and 1.68 percent, respectively.

Credit card loan delinquency (the percentage of bankcard users 90 or more days past due) hit a national average of 1.36 percent in the fourth quarter, up 32.04 percent over the previous period. It was highest in Nevada at 1.95 percent, followed closely by Mississippi at 1.89 percent. The lowest levels of bankcard user delinquency rates were found in Utah (0.87 percent), North Dakota (0.92 percent) and Montana (0.92 percent).

At the consumer level, credit card debt and delinquency are correlated to the local cost of living and regional economic effects, particularly the continuing mortgage crisis. States with a higher concentration of consumers whose hybrid adjustable rate mortgages are resetting to higher annual percentage rates and as a result require greater monthly payments also include consumers who are relying more heavily on credit cards to finance daily purchases. As total debt service increases, many consumers who were previously at the limits of their liquidity are pushed into delinquency and default. The District of Columbia experienced the greatest quarter-to-quarter delinquency growth (48.9 percent), while Alaska's delinquency rate grew the least (8.1 percent) from the previous period.

The national 90-day bankcard user delinquency rate is expected to continue to rise throughout 2008 from a value of 1.36 percent in 2007 (quarter four) to 1.9 percent by year end. This is primarily due to anticipated deterioration in economic conditions throughout the country, combined with consequences of the mortgage crises. Nevada (1.93 percent) is anticipated to be the state that will experience the highest average delinquency rate in 2008, while Utah is forecasted to show the lowest level of delinquency among bankcard users.

This article is provided as a service of ACA's Creditors International Division.

FDCPA affords consumers thirty days to mail dispute
Published: April 15, 2008
The FDCPA gives the consumer the right to mail a notice of dispute within thirty days of receiving the validation notice. The notice does not need to be received in the debt collector’s office within thirty days.

The consumer contended although a debt collector's collection letter contained the validation language required by § 809(a), the language was overshadowed by the second paragraph in the letter. The paragraph stated, “[i]f your payment or notice of dispute is not received in this office within 30 days, we shall recommend further action…”

The consumer asserted the language created uncertainty in regards to the consumer's right to dispute a debt before payment, the starting date of the thirty-day period to dispute the debt, and the ending of the thirty-day period to dispute the debt. The district court granted summary judgment to the debt collector on the consumer's claims and ordered the consumer to pay attorney's fees and costs to the debt collector. The consumer appealed.

On appeal, the Second Circuit affirmed the decision of the district court to reject the consumer's assertions the language would confuse the least sophisticated consumer as to whether she had any right to dispute the debt before paying it and as to when the thirty-day dispute period began.

The Second Circuit determined the least sophisticated consumer would understand she had the option to submit a dispute rather than pay the debt, reasoning although the letter demanded payment, it also adequately explained on the front of the letter the recipient had the right to request verification of the debt. Moreover, the court concluded the validation language in the final three paragraphs of the letter cleared up any ambiguity created by the language of the second paragraph as to the starting date of the thirty-day period because the validation language stated the consumer had “30 days from receipt of this notice” to submit the notice of dispute.

However, the Second Circuit reversed the decision of the district court to dismiss the consumer's claim that the letter improperly stated the length of time the consumer had to dispute a debt, finding the letter falsely asserted a dispute must be received in the debt collector's office within thirty days.

Section 809 states a consumer has thirty days to “send” his dispute. The court reasoned the term “send” implied mail. Thus, under § 809(a) a consumer has thirty days from the date she receives the validation notice to mail the dispute to the debt collector. Contrary to the language in the debt collector's letter, the dispute does not need to be received by the debt collector's office within thirty days. Since the language in the debt collector's letter falsely asserted the consumer's dispute must be received within thirty days, rather than mailed within thirty days, the debt collector violated the FDCPA. The Second Circuit reversed the district court's decision to grant summary judgment to the debt collector.

Accordingly, the Second Circuit vacated the judgment of the district court, including the award of attorney's fees to the debt collector, and remanded the case for further proceedings. No. 06-3147-cv, 2008 WL 383060, --- F.3d --- (2d Cir. Feb. 14, 2008).

March's Top Compliance Question
Published: April 15, 2008
What message can a debt collector leave for the consumer or third party?

The top compliance question received by ACA's Compliance department in March concerned leaving voice mail messages for consumers and/or leaving messages with a third party, specifically in regards to Foti and similar court decisions.

As stated in previous months' Top Compliance Question article, several courts have concluded that a message left on a consumer's answering machine or voicemail constitutes a “communication” under the Fair Debt Collection Practices Act (FDCPA). In the opinions of these courts, the messages were required to include the mini-Miranda disclosure, as required by § 807(11) of the FDCPA. Additional information on related court decisions and compliance suggestions is available to members at E-Compliance, Doc. No. 429.

ACA's Compliance Department has received many questions from members concerned about how these recent court rulings impact leaving messages with a third party.

Under the FDCPA, a debt collector may contact a third party, such as the consumer's employer and coworkers, friends, neighbors, and relatives (excluding the consumer's spouse if allowed under state law), for the purpose of acquiring location information of a consumer, commonly referred to as skiptracing. This is the only reason a debt collector would have to contact a third party. The requirements for acquiring location information are set forth under § 804 of the FDCPA. Importantly, when contacting a third party, a debt collector is prohibited from disclosing the consumer's debt.

Foti v. NCO Fin. Sys., Inc., 424 F. Supp. 2d 643 (S.D. N.Y. 2006), and similar court decisions concerning leaving messages, focused on messages left at a consumer's residence. Leaving messages with a third party or for skiptracing purposes were not specifically addressed by these decisions. However, the practice of leaving messages with a third party has been addressed by other courts, as well as the Federal Trade Commission (FTC) Staff.

In an informal staff letter, the FTC staff asserted that asking neighbors to convey messages to the consumer was not permitted by the Act. Courts also have begun to question the practice of leaving messages with third parties. In one case, a collector called the consumer's neighbor and stated that he was calling regarding a “very important matter” and asked the neighbor to have the consumer call him. The court concluded the consumer's allegations that the debt collector had communicated with a third party in relation to the consumer's debt and that the communication was not for the purpose of obtaining location information, were sufficient to state a claim under the FDCPA. Moreover, several states specifically prohibit or place greater restrictions on obtaining location information through third parties. For instance, Wisconsin law prohibits a collector from enlisting the aid of a third party (not living with the consumer) to contact the debt collector.

When determining whether and what message to leave, the collector must balance the risk of a violation with the benefit. From a risk management perspective it is imperative the agency clearly document its policies and procedures for contacting and leaving messages for third parties. In light of the recent state and federal decisions, you should consult with your own attorney prior to leaving messages for third parties.