HOT TOPICS Date of Delinquency the Electronic Funds

HOT TOPICS: Date of Delinquency, the Electronic Funds Transfer Act and Appendix E of the Fair Credit Reporting Act JOHN H. BEDARD, JR. BEDARD LAW GROUP, P. C. jbedard@bedardlawgroup. com 678 -253 -1871 Bedardlawgroup. com DENNIS J. BARTON III THE BARTON LAW GROUP, LLC dbarton@bartonlawllc. com 636 -778 -9520 Bartonlawllc. com BARTON LAW GROUP

Legal Disclaimer Any content included in this presentation or discussed during this session (“Content”) is presented for educational and general reference purposes only. The Bedard Law Group, LLC, The Barton Law Group, LLC , John Bedard, and Dennis J. Barton III (collectively referred to as “BLG”) provide the Content as a courtesy to be used for informational purposes only. The Contents are not intended to serve as legal advice. BLG does not represent or warrant that the Content is accurate, complete or current for any specific or particular purpose or application. This information is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel. The BLG is the copyright owner of all session contents herein unless otherwise noted; contents are distributed by BLG with its sole permission. By using the Contents in any way, whether or not authorized, the user assumes all risk and hereby releases BLG from any liability associated with the Content. The views and opinions of BLG are solely those of BLG and not necessarily the view and opinions of anyone else. BARTON LAW GROUP

AGENDA Date of Delinquency B. Electronic Fund Transfer Act (and Regulation E) C. Appendix E of the FCRA A. BARTON LAW GROUP

Date of Delinquency A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action. BARTON LAW GROUP 4 © 2019 ACA International

Date of Delinquency Performing D 1 Cured Delinquency 1 Charge Off Delinquency 2 Furnished Placed For Collection Do. D 5 © 2019 ACA International . . . month and year of the commencement of the delinquency on the account that immediately preceded the action. BARTON LAW GROUP

Date of Delinquency Performing Partial Payment D 1 Cured Delinquency 1 Delinquency 2 Charged Off Placed for Collection Furnished Do. D 6 © 2019 ACA International . . . month and year of the commencement of the delinquency on the account that immediately preceded the action. BARTON LAW GROUP

Date of Delinquency: Rules of Construction Provided the consumer does not dispute, a furnisher complies with Do. D obligations if it does any one of the following: 1) Report the same Do. D as the creditor reported 2) If the creditor did not report, report the date obtained by following the furnisher’s reasonable procedures for obtaining the Do. D from the creditor or other reliable source, or 3) If (1) and (2) are not successful, report the date derived by following the furnisher’s reasonable procedures to ensure 7 © 2019 ACA International the date reported precedes the date on which the account is placed for collection, charged to profit or loss, or subjected to similar action BARTON LAW GROUP

Date of Delinquency Not proper to jump straight to 3, without first trying 1 and 2 No private right of action under FCRA False representation under FDCPA? See, Daley v. A & S Collection Assocs. , Inc. , 717 F. Supp. 2 d 1150 (D. Or. 2010) 8 © 2019 ACA International BARTON LAW GROUP

EFTA BARTON LAW GROUP

Electronic Funds Transfer Act Four sources for interpretation: 1. EFTA - 15 USC 1693 et seq. https: //www. fdic. gov/regulations/laws/rules/6500 -1350. html 2. CFPB Rules (Reg E) - 12 CFR 1005. 1 et seq. http: //www. consumerfinance. gov/eregulations/1005 3. Official Staff Interpretations, Appendix C to Reg E 4. Case Law BARTON LAW GROUP

Electronic Funds Transfer Act 1. Electronic transfer of funds to/from a consumer account; * 2. Initiated through phone, computer, or other electronic device; 3. To order, instruct, or authorize a financial institution to debit or credit an account. a) Direct withdrawals of funds; b) Transfers initiated by telephone; and c) Any debit card transaction. ** *Checking, savings, or other consumer asset account established primarily for personal, family, or household purposes. **Added by Regulation E. BARTON LAW GROUP

Electronic Funds Transfer Act Does not include: • checks, drafts, paper instruments even if made at an electronic terminal • check guarantee or authorization • Credit Cards – they are not “asset accounts” under the Act (no money transferred from one account to another). • certain transfers between financial institutions or businesses • securities and commodities transfers • certain automatic transfers by account-holding institution • certain telephone initiated transfers between consumers and financial institutions BARTON LAW GROUP

Electronic Funds Transfer Act • “Preauthorized Electronic Funds Transfer” = [a]n electronic fund transfer authorized in advance to recur at substantially regular intervals. • Electronic fund transfer using information from a check: o Check, draft, or similar paper instrument is used as a source of information to initiate a one-time electronic fund transfer from a consumer’s account. The consumer must authorize the transfer. o Authorization is obtained when consumer receives notice 10 days in advance of transfer. o Consumer must give written authorization and receive a copy (includes digital signature and security codes). BARTON LAW GROUP

Electronic Funds Transfer Act Civil Liability - 15 USC 1693 m(a) 1. Actual damages 2. Statutory damages (A) Individual action: $ 100 nor greater than $ 1, 000 (B) Case action: no minimum for class rep and lesser of $500, 000 or 1% net worth 3. Court costs and reasonable attorney’s fees ONE YEAR STATUTE OF LIMITATIONS BARTON LAW GROUP

Electronic Funds Transfer Act Three Defenses 1. Bona Fide Error 2. Good Faith Reliance 3. “I Made It Right” BARTON LAW GROUP

Electronic Funds Transfer Act Bona Fide Error - 15 USC 1693 m(c) No liability if defendant shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures that are reasonably adapted to avoid any such error. BARTON LAW GROUP

Electronic Funds Transfer Act Good Faith Reliance - 15 USC 1693 m(d) No civil liability under section 1693 m if: (1) Act/omission in good faith and in conformity with the CFPB’s rules, regulations, or interpretations, or (2) any failure to make disclosure in proper form if a financial institution utilized an appropriate model clause issued by the Bureau or the Federal Reserve Board (even if the rule, regulation, or interpretation changed after the act or omission). BARTON LAW GROUP

Electronic Funds Transfer Act “I Made It Right” Defense 15 USC 1693 m(e) No Liability if: 1. Notify consumer of a EFTA compliance failure; 2. Prior to the filing of a lawsuit; 3. Comply with EFTA’s requirements; 4. Makes adjustment to the consumer's account; and 5. Pays actual damages. BARTON LAW GROUP

Bad Faith/Harassment - 15 USC 1693 m(f) On a finding by the court that an unsuccessful action under this section was brought in bad faith or for purposes of harassment, the court shall award to the defendant attorney's fees reasonable in relation to the work expended and costs. BARTON LAW GROUP

APPENDIX E What? BARTON LAW GROUP

Dodd Frank BARTON LAW GROUP

Policies and Procedures – regarding accuracy and integrity Guidelines – must consider and incorporate guidelines in Appendix E Reviewing and Updating – must review/update to ensure effectiveness BARTON LAW GROUP

Section I: Nature, Scope, and Objectives of Policies and Procedures Section II: Objectives [of Policies and Procedures] Section III: Specific Components of Policies and Procedures BARTON LAW GROUP

Section I: Nature, Scope, and Objectives of Policies and Procedures P&P’s should be appropriate to the nature, size, complexity, and scope of the furnisher. Should consider: Type of business Nature and frequency of furnishing Technology used to furnish P&P’s should be reasonably designed to ensure data accuracy: Identity of proper consumer Reflects terms of and liability for accounts Reflects consumer performance on accounts BARTON LAW GROUP

Section I: Nature, Scope, and Objectives of Policies and Procedures P&P’s should be designed to ensure data integrity: Furnished information is substantiated by furnishers’ records (see consent orders on “substantiation”) Furnished in manner likely to minimize inaccuracy, including: Appropriate identifying information about the consumer Standardized and understandable form and time period Conduct reasonable investigations and take actions in response Properly updating accounts BARTON LAW GROUP

Section II: Establishing and Implementing Policies and Procedures Identify practices or activities that could compromise accuracy or integrity, such as: Reviewing existing furnishing practices, including technology and reporting frequency Reviewing historical records relating to accuracy, integrity, disputes Reviewing data/feedback from bureaus/eoscar, consumers, and furnisher’s staff Considering impact of practices on consumers BARTON LAW GROUP

Section II: Establishing and Implementing Policies and Procedures Evaluate effectiveness of existing policies and procedures Evaluate effectiveness of specific methods used to provide information to the CRAs BARTON LAW GROUP

Section III: Specific Components Of Policies and Procedures (P&P’s should address the following. Not comprehensive List – 13 items total) Record retention for “reasonable period of time” to substantiate disputed information Internal Controls regarding accuracy and integrity, *such as* Standard procedures for verifying random samples of furnished information Training staff to implement P&Ps Service provider oversight whose activities may affect accuracy or integrity BARTON LAW GROUP

Section III: Specific Components Of Policies and Procedures Prevention of re-aging, duplicative reporting, or similar problems affecting accuracy and integrity Conducting reasonable investigations of disputes Furnishing sufficient information to enable CRAs to identify the proper consumer Periodic evaluation of furnisher’s own practices, including dispute investigations, corrections of inaccurate information, other facts affecting accuracy and integrity BARTON LAW GROUP

BARTON LAW GROUP

HOT TOPICS: Date of Delinquency, the Electronic Funds Transfer Act and Appendix E of the Fair Credit Reporting Act JOHN H. BEDARD, JR. BEDARD LAW GROUP, P. C. jbedard@bedardlawgroup. com 678 -253 -1871 Bedardlawgroup. com DENNIS J. BARTON III THE BARTON LAW GROUP, LLC dbarton@bartonlawllc. com 636 -778 -9520 Bartonlawllc. com BARTON LAW GROUP