Windy City Hosts Heated Discussions of Litigation and Arbitration at FTC Roundtable
August 7, 2009
ACA International Executive Vice President and General Counsel Rozanne Andersen participated as a panelist on behalf of the credit, collection and debt-purchasing industries.
Video: Windy City Hosts Heated Discussions of Litigation and Arbitration at FTC Roundtable
The Federal Trade Commission (FTC) recently concluded a two-day event entitled “Protecting Consumers in Debt Collection Litigation and Arbitration: A Roundtable Discussion.” The event was co-hosted by and held at Northwestern University School of Law's Searle Center on Law, Regulation, and Economic Growth. ACA International's Executive Vice President and General Counsel Rozanne Andersen was selected as a panelist for the discussion to represent the interests of the credit, collection and debt-purchasing industries.
Serving on a panel with Andersen were representatives of the many affected parties involved in consumer litigation and arbitration, including judges, consumer advocates, consumer attorneys and creditor attorneys.
The first day was dedicated to litigation, and the topics included default judgments and process serving, statutes of limitations, prima facie collection cases and evidentiary burdens, garnishment, and a final session dedicated to best practices and productive change moving forward.
The day's proceedings started with a bang as participants representing the various interests verbally sparred on the issues of default judgments, why their frequency is so high, and whether the judicial process needs to be altered to increase favorability toward consumers. Thrown under the bus were process servers, who were criticized by many consumer advocates and attorneys for a lack of honesty responsible for many cases of default judgments. However, one judge, Susan Moiseev from the 46th District Court in suburban Detroit, suggested that sheriffs departments don't have a considerably better track record in cases in which they are called upon than do process servers.
Consumer advocates and attorneys generally held the opinion that increased regulation was needed for process servers, including the suggestion that process servers become subject to the Fair Debt Collection Practices Act (FDCPA). Andersen suggested the FDCPA was not the correct vehicle for such changes, and that a solution to the issue of inconsistencies and unreliability of process servers must come from the judiciary.
The need for improved account media maintenance surfaced several times throughout the course of the day, including when the subject turned to statutes of limitations issues and questions surrounding default dates. This area proved to provide one of the few areas of general consensus, and leaving the discussion, there is a sense that this is an area in which it appears industry representatives, consumer advocates, policymakers and the private sector can work together to reform the processes by which critical account information is stored and maintained.
Issues surrounding garnishment also provided fodder for heated discussions during one of the afternoon sessions. The major issue regarding garnishment involves the freezing of exempt funds and how to prevent exempt funds from being frozen by banks. Consumer representatives suggested that hard and fast Treasury regulations were required, and that there was a perverse incentive on behalf of banks to freeze accounts as frequently as possible, even with the possibility of freezing exempt funds, due to the increases in overdraft and other penalties accrue in many cases. Andersen offered an industry-driven solution in which financial institutions could provide separate accounts to parallel a consumer's existing account, so that there is clarity in where exempt funds are kept and where they are not. Such a solution could balance the needs of separation funds and cost covering by the financial institution by offering the service free of charge to consumers who also hold traditional accounts with the institution.
Finally, the day's program ended with a discussion that allowed participants to highlight the issues they saw critical moving forward.
Day two of the roundtable, aimed at issues surrounding arbitration, was diminished by to the recent suspension of consumer arbitration by the National Arbitration Forum and uncertainty about the future of arbitration proceedings. The discussion continued on the underlying premise that in some shape or form, consumer arbitration proceedings would continue.
Professor Christopher Drahozal of the University of Kansas School of Law set the stage for the discussion by providing a primer on consumer arbitration and how they operate under the Federal Arbitration Act.
Day two's discussion rapidly followed the pace and tone of the first day. Consumer advocates focused on what they saw as the inherent flaws of the National Arbitration Forum (NAF). One consumer attorney explained a conspiracy theory regarding improper arbitrator selection on the part of businesses through a scheme in which an arbitration entity would include arbitrators with strong consumer advocacy credentials, but forward the most important cases to arbitrators that consumer advocates charge are heavily biased toward business interests.
Consumer advocates didn't believe consumers were educated enough to know that they should open mail from arbitration entities, and thought that because so many companies included arbitration clauses in their contracts, consumers don't actually have a choice in whether they agree to arbitration.
Creditor attorneys and industry representatives focused on how the system can be improved in the wake of the halt in arbitration cases by the NAF, and also highlighted how arbitration, through its lower costs of time and money, is often times far more beneficial to consumers when structured correctly.
