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    1. 1. Are You Ready for This? Changes in Laws andRegulations and How They May Affect You _________________ <ul><li>Carolyn Holder, New Mexico Student Loan </li></ul><ul><li>Guarantee Corporation </li></ul><ul><li>Lawrence A. Laskey, Esq., Van Ru Credit Corporation </li></ul><ul><li>Sheldon Repp, NCHELP </li></ul>
    2. 2. Are You Ready for This? Changes in LawsRegulations and How They May Affect You. _________________ <ul><li>Carolyn Holder, Moderator </li></ul><ul><li>Compliance Officer/Assistant Director </li></ul><ul><li>New Mexico Student Loan Guarantee Corporation </li></ul>
    3. 3. Preparing for “ Telemarketing” Calls Lawrence A. Laskey V.P., Counsel Van Ru Credit Corporation
    4. 4. Who’s Calling? <ul><li>Federal Regulations </li></ul><ul><ul><li>Telemarketing practices </li></ul></ul><ul><ul><li>Use of technology </li></ul></ul><ul><li>Privacy concerns </li></ul><ul><li>New or “revised” </li></ul><ul><ul><li>Rules </li></ul></ul><ul><ul><li>Definitions </li></ul></ul><ul><ul><li>Applications </li></ul></ul>
    5. 5. Federal Regulations <ul><li>Telephone Consumer Protection Act </li></ul><ul><li>Telemarketing And Consumer Fraud and Abuse Prevention Act </li></ul><ul><li>New regulations </li></ul>
    6. 6. Federal Regulations <ul><li>Telemarketing abuses </li></ul><ul><li>Privacy concerns </li></ul><ul><li>More prevalent use of technology </li></ul><ul><li>Increased “invasion “ of privacy </li></ul><ul><li>Current rules ineffective </li></ul>
    7. 7. Federal Trade Commission <ul><li>Disclosure/misrepresentation/abuses </li></ul><ul><li>“Practices that impact privacy” </li></ul><ul><ul><li>Predictive dialers </li></ul></ul><ul><ul><li>ADAD (recorded messages) </li></ul></ul><ul><ul><li>ANI </li></ul></ul>
    8. 8. “The Answer” <ul><li>National “Do Not Call” </li></ul><ul><li>Call abandonment </li></ul><ul><li>Call ring rules </li></ul><ul><li>Transmission of Caller ID </li></ul>
    9. 9. Federal Communications Commission <ul><li>Broader jurisdiction than FTC </li></ul><ul><li>Co-oversight of National DNC registry </li></ul><ul><li>Primarily addresses use of technology </li></ul><ul><ul><li>Dialers </li></ul></ul><ul><ul><li>ADAD </li></ul></ul><ul><li>ADAD privacy concern </li></ul><ul><ul><li>“Telephone solicitation” </li></ul></ul><ul><ul><li>“Unsolicited advertisement” </li></ul></ul>
    10. 10. Enforcement <ul><li>Federal </li></ul><ul><li>Individual </li></ul><ul><li>States </li></ul><ul><li>Actions so far… </li></ul>
    11. 11. “Telemarketing” or “Solicitation/Advertisement”? <ul><li>Not debt collection </li></ul><ul><ul><li>Not made to induce purchase </li></ul></ul><ul><ul><li>Includes no advertisement or solicitation </li></ul></ul><ul><li>Consolidation </li></ul><ul><li>Should be excluded? </li></ul><ul><ul><li>Part of debt collection </li></ul></ul><ul><ul><li>Assist borrower/identify options </li></ul></ul><ul><ul><li>Qualification for federal programs </li></ul></ul>
    12. 12. However, “telemarketing” or “solicitation” includes…. <ul><li>“Set up” calls </li></ul><ul><li>Debt consolidation </li></ul><ul><li>Up-selling </li></ul><ul><li>Dual purpose ADAD calls </li></ul><ul><li>“Unsolicited advertisements” </li></ul>
    13. 13. …and consider Policy <ul><li>Guaranty of the new loan </li></ul><ul><li>Broad reading to promote privacy </li></ul><ul><li>Exceptions reflect privacy/business balance </li></ul><ul><li>Limits are on “commercial speech” </li></ul><ul><ul><li>Not prohibited, just limited </li></ul></ul><ul><ul><li>Less protection </li></ul></ul><ul><ul><li>“Reasonable fit” between goals and means </li></ul></ul>
    14. 14. Default Collections; Is Perception “Reality”? <ul><li>“Normally” clearly not “telemarketing” or “solicitation” </li></ul><ul><li>Last efforts before subrogation </li></ul><ul><ul><li>Consolidation </li></ul></ul><ul><ul><li>Dialer campaigns </li></ul></ul><ul><ul><li>Unique queues/work groups </li></ul></ul><ul><ul><li>Use of messaging </li></ul></ul>
    15. 15. Default Collections; Is Perception “Reality”? <ul><li>Application/impact of the rules </li></ul><ul><li>Borrower (and FTC/FCC?) perception </li></ul><ul><li>Awareness </li></ul><ul><li>Revised approach/training/monitor </li></ul><ul><li>Statutory/regulatory response? </li></ul>
    16. 16. National ‘Do Not Call” <ul><li>Register promptly (w/in 30 days) </li></ul><ul><li>Good for 5 years </li></ul><ul><li>Compliance “safe harbor” </li></ul>
    17. 17. National DNC “Exceptions” <ul><li>Express consent </li></ul><ul><ul><li>Provide for it in loan documents </li></ul></ul><ul><ul><li>FTC: “inbound calls in response to direct mail” </li></ul></ul><ul><ul><ul><li>Email (FDCPA issue) </li></ul></ul></ul><ul><ul><ul><li>Truthful in all “material” terms </li></ul></ul></ul><ul><ul><ul><li>Same as the talk off </li></ul></ul></ul><ul><li>Established relationship </li></ul>
    18. 18. “Established Relationship” <ul><li>Originated with FCC </li></ul><ul><li>FTC: limits needed (FCC concurs) </li></ul><ul><ul><li>Financial transaction w/in 18 months </li></ul></ul><ul><ul><li>Inquiry/application w/in 3 months </li></ul></ul><ul><li>Assumption: relationship lapses/terminates </li></ul><ul><li>Theory: Consumer “expects to be called” </li></ul>
    19. 19. Established (FFELP) Relationship <ul><li>When do you have </li></ul><ul><ul><li>Financial transaction between the parties </li></ul></ul><ul><ul><li>Voluntary two –way communication </li></ul></ul><ul><li>Consider: </li></ul><ul><ul><li>Guarantee </li></ul></ul><ul><ul><li>Claim payment </li></ul></ul><ul><ul><li>Borrower payment (or offset?) </li></ul></ul>
    20. 20. Call Abandonment <ul><li>Not “new” given FTC “prompt disclosure” rules </li></ul><ul><li>“ Inevitable side effect” of predictive dialers </li></ul><ul><li>Privacy protection </li></ul><ul><ul><li>Dead air </li></ul></ul><ul><ul><li>Hang-ups </li></ul></ul><ul><ul><li>Ability to make DNC request </li></ul></ul><ul><ul><li>Ability to enforce </li></ul></ul>
    21. 21. Call Abandonment <ul><li>3% maximum abandonment </li></ul><ul><li>“Abandoned” = no live operator w/in 2 seconds </li></ul><ul><li>Recorded message w/in 2 seconds </li></ul><ul><li>Record keeping </li></ul><ul><li>Impacts dialer rates, staffing, costs </li></ul>
    22. 22. Caller ID <ul><li>Limit privacy intrusions </li></ul><ul><li>Enable enforcement </li></ul><ul><li>Creates FDCPA issues </li></ul><ul><li>Creates practical contact issues </li></ul>
    23. 23. FCC “Telemarketing” Rules <ul><li>Several in common with FTC </li></ul><ul><li>Unique: Use of messaging to “residential lines” </li></ul><ul><ul><li>“ Telephone solicitation” </li></ul></ul><ul><ul><li>“ Unsolicited advertisement” </li></ul></ul><ul><ul><li>5 second line release </li></ul></ul><ul><li>Established business relationship </li></ul>
    24. 24. Additional FCC Rules <ul><li>Dialer or messaging calls to … </li></ul><ul><ul><li>Emergency numbers </li></ul></ul><ul><ul><li>Cell phones </li></ul></ul><ul><ul><li>Q: what is a “cell phone”? </li></ul></ul><ul><li>New “definition” of autodialers </li></ul><ul><ul><li>Dialing is principal feature </li></ul></ul><ul><ul><li>Less use of random numbers </li></ul></ul><ul><ul><li>Intent: address automated calls to certain numbers </li></ul></ul>
    25. 25. So, Who’s Calling? <ul><li>Privacy concerns a driving force </li></ul><ul><li>Activities potentially viewed (may be?) “telemarketing” or “soliciting” </li></ul><ul><li>EBR” exception is narrow </li></ul>
    26. 26. So, Who’s Calling? <ul><li>Enforcement priority/consumer perception </li></ul><ul><li>Other “old” rules may now apply </li></ul><ul><li>States are involved, with own rules </li></ul><ul><li>Awareness </li></ul><ul><li>Compliance/Response </li></ul>
    27. 27. QUESTIONS? <ul><li>THANK YOU! </li></ul>
    28. 28. Are You Ready for This? Changes in LawsRegulations and How They May Affect You. _________________ <ul><li>Sheldon Repp </li></ul><ul><li>NCHELP </li></ul>
    29. 29. Fair and Accurate Credit Transactions Act of 2003 _____ Shelly Repp General Counsel NCHELP
    30. 30. <ul><li>“ National uniformity is essential because it ensures that lenders have consistent information about consumers throughout the country that can be used to make fair and equitable credit decisions on highly competitive prices and terms” </li></ul><ul><li>Joe Belew, CBA (7/9/03) </li></ul><ul><li>Identity theft tops list of consumer complaints for 4 th year in a row </li></ul><ul><li>FTC (1/22/04) </li></ul>
    31. 31. Amends Fair Credit Reporting Act (FCRA) <ul><li>Key Provisions </li></ul><ul><ul><li>National uniformity </li></ul></ul><ul><ul><li>Creates new body of federal identity theft law </li></ul></ul><ul><ul><li>Additional credit reporting protections </li></ul></ul><ul><ul><li>Restrictions on affiliate sharing </li></ul></ul>
    32. 32. Identity Theft Provisions <ul><li>Creates a national fraud alert system </li></ul><ul><li>Consumers can request consumer reporting agencies (CRA’s) to place fraud alert in file </li></ul><ul><li>Good for 90 days (initial alert) or 7 years (extended alert) if accompanied by an identity theft report </li></ul>
    33. 33. Identity Theft Provisions <ul><li>No user of consumer report with fraud alert may extend credit without utilizing reasonable procedures to verify identity </li></ul><ul><li>FTC directed to define what constitutes proof of identity </li></ul>
    34. 34. Identity Theft Provisions <ul><li>Consumers may request CRA’s to block reporting of information resulting from identity theft </li></ul><ul><li>CRA’s must notify provider of information (who must prevent repollution) </li></ul><ul><li>Debt collectors who are notified that a debt may be fraudulent must notify the creditor </li></ul>
    35. 35. Identity Theft Provisions <ul><li>Most applicable to PLUS and alternative loans </li></ul>
    36. 36. Credit Reporting Protections <ul><li>Consumers are entitled to one free credit report each year </li></ul><ul><li>CRA’s also obligated to provide credit score information </li></ul>
    37. 37. Credit Reporting Protections <ul><li>Lenders must inform customers if they have or will report negative information to a CRA. May be a one-time notice. </li></ul><ul><li>Application to student loan delinquency reporting </li></ul>
    38. 38. Credit Reporting Protections <ul><li>A financial institution that grants credit based in whole or in part on a consumer report on terms less favorable than those available to substantial proportion of the institution’s borrowers must notify the customer. </li></ul>
    39. 39. Restrictions on Affiliate Sharing <ul><li>Consumers are given the ability to opt-out of the use of personal information for marketing purposes. Opt-outs are good for 5 years. </li></ul><ul><li>Some exceptions apply, including situations where the affiliate also has a customer relationship with the affiliate </li></ul>
    40. 40. Restrictions on Affiliate Sharing <ul><li>Opt-out notice may be consolidated with other notices (e.g. GLB notices) </li></ul><ul><li>Financial regulators to issue regulations </li></ul>
    41. 41. National Uniformity <ul><li>Full and permanent reauthorization of the previous national uniformity (i.e. federal pre-emption) provisions </li></ul><ul><li>Pre-emption extended to certain new provisions (e.g. identity theft and affiliate sharing provisions) </li></ul>
    42. 42. Questions? Shelly Repp General Counsel NCHELP [email_address]
    43. 43. THANK YOU! _________________ <ul><li>Carolyn Holder </li></ul><ul><li>Lawrence A. Laskey, Esq. </li></ul><ul><li>Sheldon Repp </li></ul>

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