Mulvaney Disturbed by His Power as CFPB Acting Director

Now that Richard Cordray has resigned as director of the CFPB, a battle for bureau has errupted. The current acting director, Mick Mulvaney, is startled by the power he has in the position. Find out more about more about the CFPB and other account receivables matters at CollectionAdvisor.com.

The position of director of the CFPB seems to be settled, at least for the time being. A federal judge has refused to block the President Trump-appointment of Mick Mulvaney as acting director of the CFPB. The CFPB’s website acknowledges Mulvaney as the acting director while the Cordray-appointed Leandra English currently holds the title of deputy director.

After Cordray recently resigned as director of the CFPB, a struggle for the vacancy erupted between English and Mulvaney. English filed suit against the Trump administration citing the 2010 Dodd-Frank Act lays out a succession plan for the director authorizing the deputy director to hold the position until a White House nominee is confirmed by the Senate. It has been suggested Cordray is likely poising himself to run for Governor of Ohio.

Mulvaney and the Trump administration have been vocal about their objection to the CFPB’s lack of accountability. At a press conference after his first day in the position, Mulvaney commented, “I’m just learning about the powers that I have as acting director. They would frighten most of you.”

“If you’ve really studied the constitutional nature of our government, if you’ve studied the way bureaucracy is supposed to work, it would both frighten and disturb you that this agency is as independent as it is,” Mulvaney added. “And it doesn’t surprise me, by the way, to the extent we are having a succession challenge as lodged by Ms. English. It isn’t surprising that that grows out of an agency that thinks it’s not accountable to anybody in the first place.”

In today's world of cyber tracking, the tracer has many data sources from which to choose. Tracers are being constantly bombarded with claims from various data brokers indicating they have the largest database or they are the most accurate and touting prices that are all over the place. The prices can range from $5.95 per month to $1,200 per month and “no hit… no charge” non-refundable social security searches for $150.

Let me start out by telling you that in all my many years of tracing, I have found no “golden bullet.” It just does not exist. I feel comfortable stating there is no one data site containing all the information required to locate everyone for which we search.

The professional must always track the databases they are using and make careful note of what data providers worked for certain geographical areas, what databases gave the best information when related to employment and which databases provided the best information for money spent. The data providers selected should have proprietary sources for obtaining data related to skip tracing, people searching, credit bureau header data, address searches, driver’s license search, address searches, telephone searches, reverse address search ability, reverse phone search ability, UCC fillings, civil and criminal records, secretary of state filings, bank searches, employment searches, stock and bond searches, property searches, asset searches, assessor’s office access, property deed searches, motor vehicle and DMV searches and the ability to batch process accounts when required.

As I stated earlier, there is no “golden bullet” so the process of selecting and building a bank of reliable data sources must fall on the shoulders of the tracer. As such, in this issue, I would like to provide you with some basic information and guidelines that you might use to locate and utilize valuable source streams of electronic stored data. We begin by understanding a few basic elements of searching for the searchers. All data brokers are not created equal and are not the same. Just because you pay more does not necessarily mean you get more. In many cases more data can hinder rather than help. Finally, any data from any source must be verified for authenticity.

As of 2017 there is an estimated 326,814,316 people in the United States. That is 4.34% of the total world population. It is also estimated that 82.9% of the US population is urban. The United States is comprised of approximately 3,535,111 square miles. From these numbers, we are able to see that each person has over a square mile in which they could be hiding. About 83 out of every 100 will be located in a metropolitan area. That enables the professional tracer to narrow their search and it also allows them to begin the process of categorizing the person that is being traced.

When beginning the tracing process, the first question I ask myself is a simple, “Where could they be?” I try to make this determination by looking at where they have been. I look at previous residences. Do I see urban residential dwellings, apartments, or parent’s homes? Are they addresses, streets and avenues or routes and boxes? This knowledge will assist me in choosing the databases I will use to locate the person.

I look at the person’s previous employment and ask myself: are the employment locations urban or rural, small business with no web presence or large businesses with a locatable website? Did the employment require licensing of any type, union membership or trade association membership?

I then try to determine if the person is moving alone or with a wife and a family. I learned long ago that knowledge is power in the tracing industry. The more knowledge I can obtain prior to the tracing process, the better chance I have at success.

With my information at hand I now am able to determine the databases I will use to search for my subject. I like to think I am knowledgeable enough that I am utilizing the current generation of data which is obtained from multiple sources and maintained through technology, which will allow me to gather and view scalable data obtained from multiple massive repositories at warp speed. I need for the data to be current and verifiable with actionable consumer data in an easy-to-massage and manipulate format.

I spoke with one data provider a while back who insured me their data was utilizing powerful analytics and was built around an evolving base that was constantly updating algorithms and linking technology. I spoke with another who laid claim to over 200 million consumers in their system, two-thirds of the United States population. The problem must have been I was looking for the one-third that was not in their database.

There are many mediocre data providers in our industry; there are a fair number of good data providers and there are a few great data providers. The bottom line is, always has been and always will be, the knowledge and skills of the professional tracer who has the natural ability to disseminate the data, separate what is good and bad, and solve the puzzle by putting the right pieces in the right spots.

Until next time… good luck and good hunting.

Ron Brown is a member of the National Association of Fraud Investigators and the author of “MANHUNT: The Book.” Contact him at rbrown2150@aol.com.

In June, the United States Supreme Court handed down its decision in Henson v. Santander Consumer USA, Inc., holding that entities who regularly purchase debts originated by someone else and then seek to collect those debts for their own account are not “debt collectors” subject to the FDCPA Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 198 L. Ed. 2d 177 (2017). Drafted by its newest Justice, Neil Gorsuch, the decision appears on its face to be a game-changing decision for creditors. Or is it?

The facts and issue before the Court were relatively simple: Santander purchased defaulted auto loans originated by CitiFinancial Auto after which Santander sought to collect raising the question of whether Santander was a debt collector and subject to the FDCPA. Gorsuch said no. Focusing on the statutory language, he noted the FDCPA applies to those who regularly collect debts owed to another, so its plain meaning was the FDCPA was focused on third-party collections. In broad language, Gorsuch wrote that definition of debt collector did not “suggest that we should care how a debt owner came to be a debt owner—whether the owner originated the debt or came by it only through a later purchase. All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for ‘another.’” Moreover, Gorsuch refused to countenance a counter-argument suggesting the FDCPA intentionally exempted loan originators, finding the Act was focused on the “present (not past) debt relationships.” Finally, Gorsuch noted even the definition of creditor excluded only assignees who sought to collect for another, meaning a buyer of defaulted debt is a creditor under the FDCPA.

I was frankly surprised by the broad nature of the ruling because based on the circumstances, the court could have split hairs to arrive at a way to prevent Santander, generally a loan originator, from FDCPA liability. In 2010, Santander acquired $3.2 billion of CitiFinancial Auto loan assets, some of which may have been loans in default. As such, Santander did not fall into the “traditional” definition of a debt buyer – it was not in the business of buying entirely defaulted debt.

Notwithstanding, decisions are already coming down in an effort to get around the decision. Just two weeks ago, in our federal district court, a judge held the servicer of a debt buyer (a wholly owned subsidiary of the debt buyer bearing the same name) was a “collection agency” because it collected on chargedoff debt for owners of debt – the debt buyer. In another case, the court made a point of finding the decision was narrow because it did not address the “principal purpose … is the collection of any debts.” The court reasoned because the debt buyer admitted its purpose was buying defaulted debts and collecting on them, they were debt collectors covered by the FDCPA.

In a ruling that has gotten less attention but one I believe has more impact upon us as lawyers was the unanimous Supreme Court decision in Kokesh v. S.E.C., 137 S. Ct. 1635, 198 L. Ed. 2d 86 (2017). In that case, the Supremes found the five-year limitations period applies when a government agency seeks disgorgement. This is potentially important as the CFPB has argued no statute of limitations applies to claims it brings in administrative enforcement actions, such as those suffered by Hanna and a host of other participants in our industry. Justice Sotomayor noted statutes of limitations are “vital to the welfare of society.” It is sad we need the Supreme Court to weigh in on such basic concept of justice but nonetheless a cause for hope.

All of us maintain policies and procedures, are subjected to audits and maintain the highest efforts to work with consumers. But it is important to note policies are developed in response to events, and circumstances to correct oversights or to put into black and white a practice you deem critical. In other words, at some point in the past, you did not have a policy in many instances for that specific item. Perhaps it wasn’t an issue then, but is now. Perhaps it was created in response to a perceived error. But the CFPB does not look at things that way. They want to reach back into the time when what you were doing was not improper (or in many instances never was) to extract a press release by living in the past. Kokesh stands for the proposition that such a manner of doing business helps no one, rights no wrongs nor makes anyone truly whole.

In Henson, Gorsuch noted “[d]isruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry.” I think that is a prescient comment, one regulators should take to heart: Get the truly bad actors but work with the good ones to make our system better and fairer for all participants. Do Henson and Kokesh solve all our problems? Absolutely not. However, do they seem to point to a more common sense approach to consumer protection? There, I think the answer is a firm yes.

Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA.