CURRENT MONTH (May 2019)
IRS Institutes New Data Analytics Protocol for LB&I
By Laurie B. Kazenoff, Esq., Moritt Hock & Hamroff LLP
It is no surprise, in light of tightened budgets and concerns about low staffing, that the Internal Revenue Service recently announced a development in how it will identify its biggest and most complex large corporations for purposes of compliance oversight. On May 15, the IRS’s Large Business and International Division (LB&I) began applying a new set of data analytics to identify a specific population of corporate taxpayers. The new Large Corporate Compliance (LCC) program replaces the Coordinated Industry Case (CIC) program. LCC employs automatic application of large case pointing criteria, such as gross assets and gross receipts, to determine the LCC population, specifically those taxpayers with returns posing the highest compliance risk. LCC is also working with LB&I agents and examiners who apply their expertise in compliance related matters. In the past, most of the review and analysis was done manually and on a localized basis. Automated pointing has made the selection process more objective and further improves LB&I’s ability to efficiently focus its resources.
CFPB Proposes Rules Interpreting Fair Debt Collection Practices Act
By Anastasia Caton, Hudson Cook, LLP
On May 7, 2019, the Consumer Financial Protection Bureau (“CFPB”) issued its long-awaited notice of proposed rulemaking on debt collection. The CFPB’s proposals interpret the federal Fair Debt Collection Practices Act (“FDCPA”) and apply only to persons who are “debt collectors” under the FDCPA (persons collecting debt owed or due another, or persons engaged in a business, the principal purpose of which is the collection of debt).
Among other things, the CFPB proposes: (1) a model, safe harbor debt validation notice; (2) a bright-line limit on telephone call frequency (seven call attempts per week to a person, unless and until the debt collector has a conversation with the person, and no more than one conversation per week with a person); (3) to expressly allow debt collectors to send text messages and emails to consumers, subject to certain restrictions and requirements; (4) a solution to the Foti voicemail dilemma; (5) to prohibit debt collectors from contacting consumers at their work email addresses (with certain exceptions) or via social media in a way that can be seen by third parties; (6) to prohibit debt collectors from suing or threatening to sue on time-barred debt; (7) to prohibit debt collectors from furnishing information about a consumer to a consumer reporting agency without first communicating with the consumer about the debt; and (8) to limit a debt collector from transferring a debt under certain circumstances, including when the debt has been paid or settled, discharged in bankruptcy, or an identity theft report has been filed in connection with the debt.
The CFPB will accept comments on the proposals until Monday, August 19, 2019.
Eleventh Circuit Splits from Other Circuits on Article III Standing Under Spokeo in Re-Issued Opinion
By Christopher P. Hahn, Maurice Wutscher LLP
The U.S. Court of Appeals for the Eleventh Circuit issued a new sua sponte opinion in Muransky v. Godiva Chocolatier, Inc. to vacate and replace its prior opinion affirming approval of a class action settlement against a retailer for alleged violation of the Fair and Accurate Credit Transactions Act (“FACTA”) for printing more digits of his credit card number on a receipt than permitted under the Act.
Departing from contrary opinions by other federal appellate courts, the Eleventh Circuit’s new opinion offers an updated analysis of the plaintiff-appellee consumer’s standing to bring the action under Spokeo on two separate grounds. First, the Eleventh Circuit considered Congress’s intent and the legislative history of the Credit and Debit Card Receipt Clarification Act of 2007, to conclude that the risk of identity theft suffered by the consumer was sufficiently concrete to confer standing to raise his FACTA claims. Separately, the Court held that the consumer’s heightened risk that information entrusted to the defendant retailer would become disclosed to the public bears a close enough relationship to the disclosure of confidential information actionable at common law for breach of confidence to satisfy Article III standing under Spokeo.
Sixth Circuit Bankruptcy Appellate Panel Holds Mortgage Lien Enforceable as to Interests of Non-Borrower Spouse Who Signed Mortgage, but not Note
By Christopher P. Hahn, Maurice Wutscher LLP
On May 8, 2019 in Rhiel v. Bank of N.Y. (In re Perry), the Bankruptcy Appellate Panel for the U.S. Court of Appeals for the Sixth Circuit affirmed a lower bankruptcy court’s ruling that a refinanced mortgage was enforceable as to the interests of both husband and wife, where the wife did not execute the note and was not defined as a “borrower” in the body of the mortgage, but nonetheless initialed and signed the mortgage document as a “borrower” in the signature block.
This case reinforces a mortgagee’s in rem rights to foreclosure against a non-obligor’s mortgaged interests, because the mortgage was not rendered invalid or unenforceable against the co-signor wife, who was not identified by name in the body of the mortgage which encumbered both her and her husband’s interests in the property.
CFPB Announces Regulatory Flexibility Review Plan and Review of 2019 Overdraft Rule
By Eric Mogilnicki and Lucy Bartholomew
On May 13, 2019 the CFPB released notices related to (i) the Bureau’s plan for conducting reviews of its regulations under the Regulatory Flexibility Act (“RFA”),and (ii) the RFA review of the 2009 Overdraft Rule:
- Plan for Reviews Under the Regulatory Flexibility Act: The RFA requires that government agencies review certain rules within ten years of publication to consider the impact of the rule on small businesses. The CFPB notice sets forth its approach to RFA reviews, which will include soliciting public comment and determining whether a rule is needed or should be amended. The Bureau will consider, among other things, the rule’s complexity, the continued need for the rule, and “the degree to which technology, economic conditions, or other factors have changed the relevant market” since the rule was published. The comment period on the Bureau’s RFA review plan ends 60 days after publication in the Federal Register.
- Overdraft Rule: In keeping with the ten-year review cycle, the Bureau released a notice of RFA review for the 2009 Overdraft Rule. The 2009 Overdraft Rule, which was issued by the Federal Reserve in 2009 before rulemaking responsibility was transferred to the CFPB in 2011, limits the ability of financial institutions to charge fees for ATM and debit card transactions that overdraft consumers’ accounts. In connection with this review, the Bureau is seeking public comment on the economic impact of the Overdraft Rule on small business entities. The comment period for this RFA review ends 45 days after publication of the notice in the Federal Register.
Director Kraninger Responds to Democratic Senators’ Questions Regarding Student Loan Servicers
By Eric Mogilnicki and Lucy Bartholomew
On May 16, 2019 Sen. Elizabeth Warren (D-Mass.) released an April 23, 2019 letter from CFPB Director Kathy Kraninger relating to ongoing concerns about student loans.
The Kraninger letter indicated that student loan servicers have refused to provide information requested by the Bureau related to the federal student loans based on a memorandum the Education Department sent to student loan servicers in December 2017 that directed student loan servicers to decline requests for information from third parties, citing federal privacy law.
Director Kraninger’s April 23 letter was sent in response to an April 3, 2019, letter from six Democratic Senators that raised questions regarding the Bureau’s supervision of student loan servicers. After releasing Director Kraninger’s April 23 response, Democratic Senators sent letters to the three largest federal student loan servicing companies expressing concern about their withholding of information and asking additional questions.
Director Kraninger’s letter to Senator Warren also mentions the Department of Education’s decision to terminate its Memorandum of Understanding with the Bureau in October 2017. Director Kraninger explained that she “wants to have the Private Education Loan Ombudsman in place to have [a] conversation and facilitate a productive working relationship going forward with the Department so that we can each carry out our responsibilities.”