DALLAS – Advancements in skiptracing technology have prompted state and federal regulators to step up oversight, and new and proposed legislation are top of mind for recovery and repossession executives, panelists said at the ALS Resolvion Innovations in Recovery conference Thursday.

On a federal level, recent developments include the Consumer Financial Protection Bureau’s proposed Rule of Seven (which would limit call frequency rules for debt collection) and uncertainty surrounding the Fair Debt Collection Practices Act. The proposed changes to the federal legislation increases the hurdles for collectors in an unprecedented way.

“Those of you who have skiptraced – and know how many accounts you might be working – already have in the back of your head how difficult rules like this can be,” said Bryan Geist, a training specialist at Masterqueue, a web-based software solution that automates the skiptracing and collection process. “The amount of time that gets wasted on that far exceeds anything we would have seen in the past,” he said.

And that’s just federal legislation. State regulators, too, have stepped up skiptracing enforcement, which presents another hurdle for collectors, since legislation varies from state to state, Geist said. Below is a list of state-specific call regulations:

Massachusetts

• 2 call attempts per week to debtor/co-signor
• 2 calls per 7 days to home address of persons living with the debtor who are not the debtor or co-signor
• 3 calls per year to persons living in Massachusetts who are not the debtor/co-signor and who do not live with the debtor/co-signor

New Hampshire

• 1 call per 30 days to a spouse

West Virginia

• 30 calls per week to any phone number
• 10 contacts maximum per week

Washington

• 3 contacts per week / 2 contacts on mobile device

Geist advised skiptracers and collectors to review the regulations regularly. “Figure out, ‘Are we keeping track of these,’ and ‘Does compliance care?’” Geist advised. “What happens if we violate these — the other side being you just get slapped with a multi-million dollar fine if you ever get audited.”

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Asbury Automotive has “amended and reinstated” its five-year, $1.45 billion syndicated senior credit facility, the company announced on Wednesday.

The syndicated facility will offer a $1.04 billion new-vehicle revolving floorplan facility, a $250 million revolving credit facility, and a $160 million used-vehicle floorplan facility.

American Honda Finance Corp., BMW Financial Services, Mercedes-Benz Financial Services, Nissan Motor Acceptance Corp. and Toyota Financial Services are part of the new credit facility, along with Bank of America, JPMorgan Chase, Mass Mutual Asset Finance, Santander Bank, SunTrust Bank, U.S. Bank and Wells Fargo.

The maturity date was extended to September 2024 from July 2021 and offers the option of expansion to $1.63 billion.

In addition, interest rates on all facilities were reduced from their previous rates. The new-vehicle floorplan rate is one-month Libor plus 110 basis points; the used-vehicle floorplan rate is one-month Libor plus 140 basis points, and the revolving credit facility will have interest in the range of Libor plus 100 to 200 basis points.

Duluth, Ga.-based Asbury Automotive operates 87 dealerships in nine states.

Join us for Auto Finance Summit 2019, October 28-30 at the Bellagio Las Vegas. The summit continues to bring together the best and brightest executives in auto lending and leasing for unparalleled networking and education. Register now at www.autofinancesummit.com. 

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Starting January 2020, financial institutions will need to keep their data security procedures in check as California’s new consumer protection act goes into effect.

The legislation gives California consumers the “private right of action,” or the ability to sue companies, if their personal information is the subject of a data breach resulting from a business’s failure to “implement and maintain reasonable security procedures and practices appropriate to the nature of the information.”

What do “reasonable security procedures” look like and what are the consequences of failing to keep up such standards? AFE spoke with Scott Hyman, a lawyer and data protection officer at Orange Country, Calif.-based law firm Severson & Werson, to find out. Below are two issues lenders should know about the California Consumer Privacy Act.

What “reasonable” means

The CCPA will require businesses to “implement and maintain reasonable security procedures and practices appropriate to the nature of the information,” which relates to the kind of data businesses may have, Hyman explained. “If a lender has very sensitive information about consumers,” such as Social Security Numbers or financial information, “one could argue that language would require higher levels of security procedures,” he said.

The first requirement is having policies and procedures in place, Hyman stated. After that, “we have some guidelines that we have seen from the way the [Federal Trade Commission] has looked at reasonableness, the way that the courts have treated reasonable policies and procedures in other California data protection statutes,” he said, noting that it can often depend on what the industry standard is.

In fact, a cybersecurity breach can still happen, Hyman said, notwithstanding the fact that you have reasonable security procedures adapted to avoid the breach. “Case law has demonstrated that the mere fact of the breach itself doesn’t mean that your procedures were unreasonable,” he said.

The CCPA requires the California Attorney General to issue guidelines to interpret the legislation. “We don’t know if the AG will do that before the CCPA becomes effective Jan. 1,” Hyman said.

Liability on a per-victim basis

The potential liability for failing to implement and maintain reasonable cybersecurity practices and procedures “is staggering,” Hyman said. Businesses nailed by the CCPA can expect to pay from $100 to $750 per data breach victim, and class actions are permitted. “The plaintiff’s class action bar are calling this ‘the new TCPA,’” he added.

In addition to the private right of action, individuals don’t have to prove compensable damage or loss resulting from the hypothetical data breach, as has been the case in previous data breach litigation predating the CCPA, Hyman said.

“The thing that courts struggled with in regards to consumer breach litigation was the absence of damages – whether someone whose data was the subject of a hypothetical data breach had suffered any compensable loss,” he said. “The CCPA changes that because it has this statutory provision that does not require proof of actual damages.”

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A former dealer for Pompano Beach, Fla.-based Champion Porsche has pled guilty to a fraud scheme racking up $3 million. 

The fraudster, Shiraaz Sookralli, pled guilty to conspiracy to commit mail fraud and wire fraud. He is scheduled for sentencing on Nov. 14 and faces a maximum sentence of 20 years in prison, according to the U.S. Attorney’s Office of the Southern District of Florida. 

To facilitate the scheme, Sookralli would sell non-existent exotic Porsche models and did so with 30 customers. He’d require buyers to provide deposits in the form of wire transfers, bank checks and cash that he later deposited into his shell company’s bank account. Sookralli opened the shell company in 2017 with a name similar to the Champion Porsche dealership for which he worked in order to trick buyers, according to the Department of Justice’s press release. 

On top of that, Sookralli leveraged a title as “vice president of marketing” for Champion Porsche to ramp up his credibility. He would tell buyers they’d receive a “yet-to-be-built” Porsche vehicle and provided customers with  falsely signed and fraudulent purchase orders and fake vehicle build sheets showing the specifications of the customers’ vehicle. Champion Porsche did not authorize Sookralli to conduct these transactions.

Since the scheme has been uncovered, Champion Porsche has contacted his victims and began its cooperation with the criminal investigation, the DOJ noted. All of Sookralli’s victims with valid claims were made whole by Champion.

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