NCHER SPRING CONVENTION Charleston, SC May 22, 2013 Larry Laskey, V.P. General Counsel Windham Professionals, Inc.

Verification of the Debt A more “active” role? “Knowing” when something is wrong? Creditor provision of documentation? PCA scrutiny? –Adequacy of documentation –Propriety of claims

Historical Perspective Cease collection and provide “verification” Requests within 30 days of validation notice. Amount demanded is what the creditor claims due. No “pre-collection” verification requirement

Historical Perspective: Potential Exposure “Misrepresenting” the debt Seeking sums not authorized “Reasonable” reliance on creditor –Demand and documents don’t match up –Repeated issues with creditor documentation

Historical Perspective: Providing Verification Most often, provision of debt documentation –Application/promissory note –Record of disbursement –Payment history Need not receive/maintain detailed debt files –Applications, etc. –Billing statements –Correspondence

Historical Perspective: Verification Does Not Require… Independent investigation of the debt Copies of specified debt documentation Client affidavits or other sworn statements Proof of collector’s right to collect (contract, license) Refer to creditor/litigation

State Requirements Massachusetts: creditor obligations to provide all signed documents and detailed account records New York City: original debt document and detailed itemization from original creditor, describing basis of payment obligation Nevada: “reasonably responsive” documents Washington: documentation of charges, original account number, last payment date

“New Rules”: Chicago Collecting from a Chicago resident “Verification” requires statement of account that –Itemizes original charge off balance components –Itemizes all post-charge off amounts –Identify and describe the basis for debtor’s obligation Initial proposal required verification to be included with the validation notice

“New Rules”: Massachusetts Loans –made by unlicensed entities –bearing interest in excess of 23% –“The Division urges Licensees to review all client contracts and debtor accounts….”

“New Rules”: Federal (?) FTC Debt Buying Study Borrowers need additional information Recommend FDCPA be amended: –Validation notices include debt itemization –Investigate disputes by reviewing creditor records Use of FTC Act Section 5 (unfair, deceptive acts/practices) to reach those not covered by FDCPA

“New Rules”: Federal (?) Asset Acceptance Consent Decree FTC Act Section 5 requires “reasonable basis” for amounts claimed due Investigate if –borrower disputes, orally or in writing, at any time –information is facially unreliable, materially inaccurate or missing

“New Rules”: Federal (?) When Is Information “Suspect”? Whatever calls accuracy or completeness into question –Does information support the claim? –Is supporting documentation unavailable? –History of the foregoing? Accounts disputed at “disproportionately high rates”

“New Rules”: Federal (?) Conducting an Investigation Substantiate the debt Evaluate reliability, accuracy, completeness, strength and credibility of information Consider nature and frequency of disputes

“New Rules”: Federal (?) FDIC/CFPB AMEX Settlement Creditor must maintain consumer agreements (including amendments) and documentation evidencing the debt and each transaction. Must provide documentation to consumer upon request made at any time

“New Rules”: Federal (?) FTC/CFPB Roundtable Data Integrity in Debt Collection What documentation/information currently is available? What information is needed to verify and substantiate the debt? What are the costs/benefits of providing consumers with additional disclosures –Regarding the debt –Regarding debt-related rights

Questions? Thank you!