Better Business Bureau (BBB)

Requiring an employee or consumer to submit any dispute to binding arbitration as a condition of employment or purchase of a product or service is commonly referred to as “forced arbitration.”  Many times, the employee or consumer is required to waive their right to sue or to participate in a class action lawsuit.  Critics argue that these arbitration agreements disempower the middle class and some in Congress have taken notice.

Last Thursday, Congressman Jerrold Nadler (D-N.Y.) and Sen. Richard Blumenthal (D-Conn.) announced a package of bills at a press conference that could end the practice of forced arbitration.

“One of the systems that is truly rigged against consumers and workers and the American people is our current system of forced arbitration,” Blumenthal said while introducing the Forced Arbitration Injustice Repeal Act.  Under the bill, companies would no longer be able to enforce arbitration agreements in consumer, employment, civil rights, or antitrust disputes.  The Democrats also introduced the Ending Forced Arbitration of Sexual Harassment Act which would eliminate arbitration in disputes that involve sexual harassment.

According to Nadler, the goal of these proposals is to help workers and consumers obtain justice.  “All Americans deserve their day in court,” Nadler said.  “We make a mockery of this principle when we allow individuals to be forced to take their claims to private arbitration.”

These lawmakers aim to reverse the Supreme Court’s ruling in Epic Systems Corp. v. Lewis – that employers may require employees to settle collective disputes in individual arbitration, thereby barring them from banding together in class-action lawsuits against employers.  Justice Neil Gorsuch wrote the decision for the majority.  The ruling was a contentious 5-4 decision along party lines.

Blumenthal believes that the bills will pass because Democrats have a majority in the House of Representatives.  However, it is unclear whether these bills are dead-on-arrival in the Republican-controlled Senate.  Furthermore, it appears unlikely that President Trump will sign a bill reversing the decision written by his first nomination to the Supreme Court.  Therefore, it appears that, notwithstanding the present legislation, the enforceability of arbitration provisions is here to stay for the time being.

Troutman Sanders will continue to monitor and report on important developments involving the changing landscape of arbitration.

Join Troutman Sanders attorneys Shannon VanVleet Patterson and Sheila M. Pham for a complimentary webinar on August 10, 2017 from 3:00 – 4:00 p.m. ET.

On March 1, 2017, the revised Cybersecurity Requirements for Financial Services Companies adopted by the New York Department of Financial Services (“NY DFS”) became effective.  This regulation requires banks, insurance companies, and other financial services institutions to establish and maintain a cybersecurity program and to take other measures to protect against data breaches and cyber attacks. This action by the NY DFS is a significant development in the regulatory landscape for cybersecurity. Even financial institutions not subject to regulation by the NY DFS should be aware that this regulation may be the first in a series of incremental steps by state and federal banking regulators as they continue to consider ways to enhance protection of digital information and management of cyber risks.

Click here to receive the recording after the webinar.

The Better Business Bureau recently released data from 2014 regarding the number of complaints received pertaining to registered debt collection agencies.  The statistics show a sharp decrease in the number of complaints lodged against debt collection agencies.  This number is contrary to data released by the Consumer Financial Protection Bureau, which show an increase in consumer complaints year after year.

According to the BBB, debt collection agencies received 21,576 consumer complaints in 2014, which was an 11% decrease from 2013.  The BBB data shows that 82% of complaints received by collection agencies in 2014 were settled.  The BBB also reported more than three million inquiries into collection agencies in 2014 – the fourth highest amount out of all industries surveyed.  (Inquiries differ from complaints in that they present the opportunity to look at a business’s practices first rather than complaining about them later.)

These statistics demonstrate an interesting contrast between the statistics compiled by the CFPB and those provided by the BBB.  As we previously reported, they also diverge from the prevailing trend of lawsuits filed under the FDCPA.


Troutman Sanders’ lawyers, Bill Hurd and Siran Faulders, will be panelists for the ‘OLA Webinar: Do You Know Your BBB Rating?’ on Tuesday, March, 25 at 4 pm Eastern.

Topics for discussion

  • Learn why it is important to know, understand and improve your BBB rating
  • Understand how the BBB determines its ratings and what you can do to improve your rating
  • Learn about the differences between Ratings and Accreditation
  • Discuss the benefits of improved BBB ratings
  • Ask questions of attorneys and the EVP of Consumer Marketing at Selling Source who have first-hand experience with improving BBB ratings

Click here to register.

Click here to learn more about the Online Lenders Alliance.

A report issued by the Federal Trade Commission (FTC) and a bulletin issued by the Consumer Financial Protection Bureau (CFPB) both highlight the continued federal regulatory interest in endemic identity theft as well as the significant risk to businesses that fail to address complaints related to identity theft.CFPB_2tone_Horiz_RGB

The FTC’s Report on the Top Categories of Consumer Complaints
In a report issued on February 27, 2014, claims of identity theft lead the FTC’s annual list of consumer complaints.  Notably, identity theft has topped the FTC’s list of consumer complaints for the 14th year in a row.

The total number of complaints received in 2013 was down slightly from 2012 but remained significantly elevated from levels first seen in 2001, when fewer than 326,000 complaints were filed.  Several highlights from the FTC’s report include the following:

  • After identity theft, the top categories of complaints involved debt collection, banks and lenders, imposter scams, and telephone and mobile service.
  • More than half of the complaints received by the FTC were related to fraud.  Of those who complained of fraud, 44% claimed to have lost no money.
  • Victims of fraud were contacted most often by phone, followed by e-mail.
  • People ages 50 to 59 submitted the greatest number of fraud complaints. However, identity theft affected people in their 20s the most often.

The FTC’s report contains data complied both on a national level and on a state-by-state basis.

The FTC also explains that the report includes complaint data input into the “Consumer Sentinel Network,” an online database that includes complaints received from the FTC, state law enforcement organizations, federal agencies (including the CFPB), the offices of several state attorneys general, the Better Business Bureau (BBB) and several other non-governmental organizations. The data in the Consumer Sentinel Network is made available to more than 2,000 civil and criminal law enforcement agencies across the country for researching cases, identifying victims and finding potential targets.

Complaints involving identify theft for debt collection complaints accounted for the second highest number of complaints (10%).  These complaints included:

  • Repeated or continuous calls by debt collectors;
  • False representations of the amount or status of debt;
  • Failure to send required written notices of debt;
  • False threats of lawsuits made during the collection process;
  • Collectors’ use of profane language;
  • The caller’s failure to identify himself as a debt collector; and
  • Alleged violations of other provisions of the Fair Debt Collection Practices Act (FDCPA).

The Related Consumer Financial Protection Bureau Bulletin
On February 27, 2014, the CFPB renewed its warning to companies that report credit information that they must investigate consumer complaints thoroughly. The CFPB’s bulletin, which is aimed at so-called data furnishers, clarifies furnishers’ obligations to review and investigate any consumer complaints forwarded to them by credit reporting bureaus.  This bulletin followed up a CFPB bulletin issued on September 4, 2013, with a stated purpose to “‘specifically address furnishers’ obligations to ‘review all relevant information’ they receive in connection with disputes forwarded by CRAs.” In general, for disputes received by furnishers from CRAs, the CFPB stated in its prior bulletin that it expects each furnisher to comply with the FCRA by undertaking and maintaining the following processes:

  • Maintaining a system reasonably capable of receiving from CRAs information regarding disputes, including supporting documentation;
  • Conducting an investigation of the disputed information, including reviewing: (a) “all relevant information” forwarded by the CRA; and (b) the furnisher’s own information with respect to the dispute;
  • Reporting the results of the investigation to the CRA that sent the dispute;
  • Providing corrected information to every nationwide CRA that received the information if the information is inaccurate or incomplete; and
  • Modifying or deleting the disputed information, or permanently blocking the reporting of the information if the information is incomplete or inaccurate, or cannot be verified.

In its most recent bulletin, the CFPB warns that if the CFPB determines that a furnisher has engaged in any acts or practices that violate the FCRA or other federal consumer financial laws and regulations, “it will take appropriate supervisory and enforcement actions to address violations and seek all appropriate corrective measures, possibly including remediation of harm to consumers.”

Implications for Financial Services Companies
The FTC’s report highlights the continued prevalence of claims of identity theft, while the CFPB’s bulletin demonstrates the agency’s keen awareness and focus on the proper investigation of consumer disputes, which often involve claims of identity theft.  Issues of compliance with the FCRA are raised by both the FTC’s report and the CFPB’s bulletin, and both furnishers and consumer reporting agencies must be particularly aware of the sensitive nature of any consumer dispute alleging identity theft and the related problem of identity confusion, also referred to as “mixed files.”

Disputes involving identity theft present heightened risk due to the fact that they are: (a) widespread; (b) most prone to lead to regulatory complaints; (c)  a frequent trigger to litigation, where the prospect of substantial jury awards looms; and (d) subject to extensive regulation under the FCRA and associated state law.

This a reposting of the March 3, 2014 Troutman Sanders Advisory written by David N. AnthonyJohn C. LynchAlan D. WingfieldPaige S. FitzgeraldTim St. GeorgeVirginia Bell Flynn.