Tuesday, January 5, 2021

Post-Discharge Credit Inquiries by Mortgage Servicer did not Violate FCRA

 By: Landon G. Van Winkle


A divided panel of the U.S. Court of Appeals for the Ninth Circuit recently held that a mortgage servicer had a permissible purpose for pulling the consumer reports of three borrowers for whom it serviced two mortgages even though the borrowers’ personal liability on the mortgages had been discharged in bankruptcy. Marino v. Ocwen Servicing, LLC, 978 F.3d 669 (9th Cir. 2020).  Specifically, the servicer was authorized to access the borrowers’ consumer reports in order to evaluate them for loss mitigation options, such as a loan modification, short sale, or deed-in-lieu of foreclosure. Id. at 675.

The borrowers each owned a home subject to a mortgage serviced by Ocwen Loan Servicing, LLC (“Ocwen”). The borrowers subsequently filed bankruptcy, and each received a discharge, which discharged their personal liability under their respective mortgages. Following the discharges, Ocwen obtained the borrower’s credit reports. The borrowers, eight in total, sued Ocwen in a putative class action, alleging that it willfully violated the FCRA by obtaining their consumer reports without a permissible purpose, in alleged violation of 15 U.S.C. § 1681b(f)(1).

The U.S. District Court for the District of Nevada granted Ocwen’s motion for summary judgment. In doing so, it relied on a prior unpublished decision from the Ninth Circuit, Vanamann v. Nationstar Mortgage, LLC, 775 F. App’x 260 (9th Cir. 2018). In Vanamann, the Ninth Circuit dealt with identical facts—a borrower whose personal liability on a mortgage that was discharged in a bankruptcy and a mortgage servicer who subsequently accessed the borrower’s credit report. Marino, 978 F.3d at 672 (citing Vanamann, 775 F. App’x at 262). There, the plaintiff alleged only a willful violation of the FCRA, requiring her to demonstrate that Nationstar “engaged in conduct ‘known to violate the [FCRA]’ or acted in ‘reckless disregard of [a] statutory duty.’” Vanamann, 775 F. App’x at 262 (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 56–57 (2007)). To prove reckless disregard, the plaintiff had to prove that Nationstar’s interpretation of the FCRA was objectively unreasonable. Id. Nationstar argued that it had a permissible purpose under § 1681b(a)(3)(A), which permits a consumer reporting agency to furnish a consumer report to a person which the agency has reason to believe “intends to use the information in connection with a credit transaction involving the consumer . . . or review or collection of an account of, the consumer . . . .” 15 U.S.C. § 1681b(a)(3)(A). The Ninth Circuit assumed that Nationstar lacked a permissible purpose under § 1681b, but nevertheless affirmed the dismissal of the plaintiff’s FCRA claim, because the plaintiff could not demonstrate that Nationstar’s conduct was known to violate the FCRA, or that its interpretation of § 1681b(a)(3)(A) was objectively unreasonable. Id. Crucially, the panel noted that the FCRA contained no provision “addressing bankruptcy discharges for Nationstar to interpret, much less interpret recklessly.” Vanamann, 775 F. App’x at 262. Based on the nearly identical facts at issue in Vanamann, the district court concluded that Ocwen could not have willfully violated the FCRA, and therefore granted its motion for summary judgment.

On appeal, the Ninth Circuit affirmed the district court and cited Vanamann approvingly. However, it followed a somewhat circuitous route in analyzing the case. Rather than follow the straightforward process in Vanamann, in which the panel assumed that Nationstar had violated the FCRA, but found that any such violation could not have been willful, the Marino majority instead made a point to address the “threshold question of whether the defendant violated the FCRA.” Marino, 978 F.3d at 671. Addressing this “threshold question” was important, according to the majority, in order to “prevent the law in this area from stagnating.” Id. The majority’s basis for this approach was its view that since a defendant in an FCRA case could “nearly always avoid liability so long as an appellate court ha[d] not already interpreted” the FCRA provision at issue, if the appellate courts simply continued to dispose of cases on the basis that there was no negligent or willful violation of the FCRA, then “the question of statutory interpretation will likely never be answered.” Id. at 673–74.

Therefore, the majority first examined whether Ocwen’s conduct violated § 1681b(f)(1). Ocwen argued that § 1681b(a)(3)(A) provided it with a permissible purpose, because it was using the borrowers’ credit reports to evaluate them for loss mitigation options. Id. at 675. The borrowers argued that because they had vacated and “surrendered” their homes prior to Ocwen’s credit inquiries, and because they had never expressed any interest in avoiding foreclosure, Ocwen lacked a permissible purpose. Id. at 675–76. In rejecting these arguments, the majority observed that nothing in § 1681b(a)(3)(A) required a consumer to affirmatively request a foreclosure alternative before a servicer could review the consumer’s account to determine his or her eligibility. Further, the discharge injunction in the U.S. Bankruptcy Code specifically excepts from its ambit “a secured creditor’s efforts to seek ‘periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien.’” Id. at 675 (quoting 11 U.S.C. § 524(j)(3)). Similarly, it was largely irrelevant whether the borrowers had vacated their homes prior to the credit inquiries at issue, since Ocwen “could have reasonably thought that even a debtor that moved out of his or her home might be interested in returning if Ocwen made a sufficiently attractive offer.” Id. at 676. The majority thus held that Ocwen articulated a permissible purpose to access the borrowers’ consumer reports under § 1681b(a)(3)(A). In dicta, however, the majority sought to cabin this holding somewhat when it opined that “[w]e imagine that if a consumer clearly informs the servicer or lender that he or she has no interest in avoiding foreclosure, then the servicer or lender might lack a permissible purpose for continuing to review the consumer’s credit.” Id. Then, in a single paragraph, the majority noted its “agreement with the district court that Ocwen did not willfully violate the FCRA.” Id. at 676.

Judge Bea concurred in the result and the reasoning of the majority regarding its conclusion that Ocwen did not willfully violate the FCRA. Id. at 676 (Bea, J., concurring). However, Judge Bea chided the majority for including “discussion of two matters not essential to the determination of this case.” Id. First, Judge Bea took issue with the majority’s analysis of whether Ocwen’s conduct violated the FCRA, an analysis which he noted was “not relevant to the decision of the case before us.” Id. Second, he took issue with the majority “imagin[ing] a hypothetical, which Plaintiffs did not plead nor prove, that the majority states may constitute a statutory violation of the FCRA.” Id. at 677. Judge Bea’s concern with the majority’s inclusion of a hypothetical FCRA violation appears particularly valid in the Ninth Circuit, where “dicta in panel opinions may become the binding law of the circuit.” Id. at 679 (citing United States v. Johnson, 256 F.3d 895, 947 (9th Cir. 2001)).

Mortgage servicers, at least in the Ninth Circuit, should take some comfort in the Court’s finding that such servicers retain a permissible purpose for accessing a borrower’s consumer report even after the borrower’s personal liability on the mortgage has been discharged, so long as the servicer intends to use the report to evaluate the borrower for loss mitigation options. However, mortgage servicers should remain wary of the limitations on this permissible purpose forecast by the Marino panel, and should consider adopting a policy to limit or modify future credit inquiries for loss mitigation accounts where the borrower unequivocally informs the servicer that he or she is not interested in pursuing loss mitigation options.

Landon Van Winkle is an associate at Smith Debnam and member of the firm's Consumer Financial Services Litigation and Bankruptcy sections.

Wednesday, December 30, 2020

Sixth Circuit Widens Split on Benign Language Exception


The Sixth Circuit recently weighed in on whether there is a “benign language” exception to Section 1692f(8) of the Fair Debt Collection Practices Act (the “FDCPA”).  In Donovan v. FirstCredit, Inc., No. 20-3485, 2020 U.S. App. LEXIS 39798 (6th Cir. Dec. 18, 2020), the Court joined the Third and Seventh Circuits in holding that Section 1692f(8)’s plain text unambiguously prohibits markings on envelopes other than those necessary for sending communications through the mail. 

In Donovan, the debt collector sent a letter with two glassine windows.  One of the windows revealed the consumer’s name and address. The other window revealed an empty checkbox followed by the phrase “Payment in full enclosed.”  Depending on how the letter was situated, this second window sometimes also revealed an additional empty checkbox followed by “I need to discuss this further.  My phone number is __________.”  Id. at *2-3.  The consumer filed suit alleging that the envelope created a risk that third parties would recognize that she was receiving mail from a debt collector and asserting, among other things, a violation of 15 U.S.C. § 1692f(8).  After pleadings closed, the district court granted the debt collector’s motion for judgment on the pleadings concluding that Section 1692f(8) should be read to include a “benign language” exception, relying upon 2004 decisions from the Fifth and Eighth Circuits.

On appeal, the Sixth Circuit reversed and sided with the more recent and contrary positions of the Third and Seventh Circuits.  See Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014); Preston v. Midland Credit Mgmt., Inc., 948 F. 3d 772 (7th Cir. 2020).  In doing so, the Court determined that the plain text of §1692f(8) forecloses a “benign language” exception because: (a) the section is unambiguous; and (b) a literal reading of the section does not lead to an absurd result. 

In determining that the section was unambiguous, the Court dismissed the Fifth Circuit’s rationale for applying a “benign language” exception. The Court noted that the canons of statutory construction refute the Fifth Circuit’s interpretation of §1692f(8) which would prohibit “marking on the outside of the envelope that are unfair or unconscionable, such as markings that would signal that it is a debt collection letter and tend to humiliate, threaten, or manipulate debtors.”  Goswami c. American Collections Enter., 377 F.3d 488, 493 (5th Cir. 2004).  The Court went on to state that the Fifth Circuit’s interpretation was unreasonable because §1692f(8)’s more specific provision takes precedence over the preface of §1692f and to read it otherwise, would violate the canon of surplusage. 

The Court likewise was dismissive of the debt collector’s argument (and by the same token, the rationale of the Eighth Circuit)  that a literal reading of §1692f(8) would lead to an absurd result.  The debt collector argued that a literal reading of §1692f(8) would lead to an absurd result because the provision simultaneously endorses the use of mail communications while prohibiting debt collectors from including language and symbols on their envelopes that are necessary for communicating by mail, including the consumer’s address. The Court disagreed and held that:

the provision's blanket prohibition is best understood as forbidding "any language or symbol" on the envelope other than "language or symbols to ensure the successful delivery of the communication," with a statutory carve-out for the debt collector's return address and its name (where the name does not indicate that the sender is a debt collector). 

Donovan, 2020 U.S. App. LEXIS 39798, at *15 (internal citations omitted).  The Court supported its rationale by looking to the stated purposes of the FDCPA.  The Court noted that “[p]rohibiting language and symbols on envelopes aside from what is required for efficient mail delivery furthers the ‘purpose of preventing embarrassment resulting from conspicuous language visible on an envelope that indicates that the contents of the envelope pertain to debt collection.’" Id. at *16 (internal citations omitted).

Donovan is the third circuit court in recent years to examine §1692f(8).  Each of these circuits has taken a restrictive view of the section - a trend the receivables industry should note and weigh when assessing the risks and conveniences of glassine envelopes, bar codes and the like.

Thursday, November 19, 2020

The Final Debt Collection Rule is Here and Focuses on Communication Methods – Here’s What You Need to Know


On October 30, 2020, the CFPB published its long awaited Final Debt Collection Rule (the “Rule”) which is intended to interpret the federal Fair Debt Collection Practices Act (the “FDCPA”) and clarify how new communication technologies can be used in compliance with the FDCPA.  As an unexpected twist, the CFPB has delayed publishing its final rules as to validation notices and time barred debt disclosures and has indicated that those provisions will be published in December. 

What’s Not Included in the Rule?

            The Rule leaves for another day the final versions of Sections 1006.26 (Collection of Time Barred Debt), 1006.34 (Notice of Validation of Debts) and the Safe Harbor Model Forms.  The proposed rule and supplemental proposed rule included new provisions as to time barred debt and validation notices.  These provisions are still under consideration by the CFPB and are anticipated to be published in December.  The final provisions are widely expected to include mandatory disclosures in addition to those already required by 15 U.S.C. §1692g(a).  Those additional mandatory disclosures are likely to include:

·         Disclosures as to time barred debt or debt that can be revived by payment; and

·         Additional validation information, including a tabular itemization of the amount of the debt from its itemization date and a response section which allows the consumer to dispute the debt by simply checking a prescribed number of boxes as to the basis of the dispute.

When Does the Rule Go Into Effect?

            The Rule will take effect  one year from its publication in the Federal Register.  As of the date this article was written, it has not yet been published.  It is therefore unlikely it will take effect until December 2021 or early 2022.

Who’s Covered?

            While the proposed rule provided some concern as to whether it would cover first party creditors, the final version of the Rule expressly states it applies only to “debt collectors” as that term is defined in the FDCPA.  First party creditors, however, need to be mindful of the CFPB’s warning that the Rule is not intended to address whether activities performed by entities not subject to the FDCPA would violate other statutes, including the unfair, deceptive or abusive act provisions found in the Dodd-Frank Act.  

What’s Included in the Rule?

            The bulk of the Rule addresses communications between the consumer and the debt collector.  The Rule expands significantly on the provisions of the FDCPA while attempting to clarify how debt collectors can use new communication technologies which were not in place when the FDCPA was enacted including email, voice mail and text messages.  Focusing on those communication technologies, the Rule establishes rules for engaging in communications with consumers and identifies certain policies and procedures that if implemented, would create safe harbors from FDCPA violations for debt collectors.  Of particular note, the Rule contains a robust Official Commentary which includes sample language for such things as opt out notices.  While the Rule will not take effect until some time towards the end of 2021 or early 2022, compliance departments should begin aligning their policies, procedures, letters and scripts with the Rule now in anticipation of its effective date.

            Attempts to Communicate vs. Communications

            Generally speaking, the Rule attempts to distinguish between attempts to communicate and actual communication. “Attempts to communicate” are any acts to initiate a communication about a debt and include leaving “limited contact messages.” 

            “Limited Content Messages” are a new concept introduced by the Rule in its definitional section (1006.1) and are intended to provide a safe way for debt collectors to leave non-substantive messages for a consumer requesting a return call while not inadvertently disclosing the debt to third parties.  The Rule and its Comments make clear that Limited Content Messages are not communications regarding a debt.  To qualify as a Limited Content Message, the message must be left by voice mail and only contain the specified limited content set forth explicitly in Section 1006.1(j). Those familiar with the proposed rule should note that while the proposed rule allowed for limited content messages via text message and orally, the final version of the Rule does not.  Similarly, while the proposed rule included the identification of the consumer as an allowed component of the Limited Content Message, the Rule as finalized does not.  Instead, a Limited Content Message can only include: (a) a business name for the debt collector that does not indicate that the debt collector is in the debt collection business; (b) a request that the consumer reply to the message; (c) the name or names of one or more natural persons whom the consumer can contact; (d) a telephone number or numbers the consumer can use to reply to the debt collector; and (e) certain very limited and specified optional content.  Communications are distinguished as they convey information regarding a debt.

Time and Place

          With the advent of new technologies, preventing communications at a time and place which is known or should be known to be inconvenient has become challenging for debt collectors.  The Rule attempts to address these challenges in Section 1006.6 and its Official Comments.  Section 1006.6 provides that an inconvenient time for communication with the consumer is before 8:00 AM and 9:00 PM local time at the consumer’s location.  The Official Comments further clarify that if the debt collector has ambiguous information as to the consumer’s location, then in the absence of information to the contrary, the debt collector may assume a time that is convenient in all time zones at which the debt collector’s information indicates the consumer may be located.  The Official Comments additionally attempt to provide debt collectors with guidance in circumstances in which the debt collector needs additional clarity or information from the consumer by allowing the debt collector to ask follow-up questions regarding a convenient time and place.  Additionally, the Rule makes clear that no particular words are necessary for a consumer to indicate a time and place are inconvenient.

          Use of Electronic Communications and a Safe Harbor

          The Rule allows for the use of email and text message communications and sets forth procedures which provide the debt collector with a safe harbor if followed.  Specifically, Section 1006(d)(4) allows for email communications to the consumer: first, by allowing the use of an email address the consumer has either used to communicate with the debt collector (and has not subsequently opted out) or the consumer has provided prior express consent to use and second, by allowing an email address used previously by the creditor or a prior debt collector subject to certain limitations and conditions.  Section 1006(d)(5) allows for text messaging subject to similar conditions.  Section 1006.6 further requires debt collectors allow consumers to opt out of electronic communications and further requires debt collectors provide a clear and conspicuous statement describing a “reasonable and simple method” for opting out.  The CFPB has indicated that it is currently finalizing provisions that will require debt collectors to provide consumers with, among other things, a reasonable and simple method to opt out of electronic communications and to control the time, place and medium for communications.  Presumably, these provisions will be included in the December supplement to the Rule.

            Frequency and a Safe Harbor

          Section 1692d(5) of the FDCPA prohibits a debt collector from causing a telephone to ring and from engaging a person in telephone conversations repeatedly or continuously with the intent to annoy, abuse, or harass.  As compared to the proposed rule, the final rule is more restrictive.  Section 1006.14 establishes a bright line by placing numeric limitations on the placing of telephone calls.  In its final version, the Rule creates presumptions of compliance and violation.  Generally, and subject to certain very limited exceptions, a debt collector is presumed to have violated the provision if: (a) it places telephone calls to a particular person in connection with a particular debt more than seven times within seven consecutive days; or (b) after having had a telephone conversation with a particular person regarding a particular debt, makes a call within seven days of that conversation.  The converse is also true.  The debt collector is presumed to have complied if it stays within the call frequency limitations.

            It should be noted that the exceptions presented in the final version of the Rule are more limited than those that were originally proposed. In particular, the Rule clarifies that any prior consent provided by a consumer for follow up communications expires within seven days of being provided.

            Unfair or Unconscionable Means

          Section 1006.22 interprets and implements Section 1692f of the FDCPA which contains a non-exhaustive list of unfair or unconscionable means to collect a debt.  Section 1006.22 adds new prohibitions on communications using certain media.  Section 1006.22(f)(3) prohibits communicating or attempting to communicate with a consumer using an email address that the debt collector knows is provided to the consumer by his employer unless the consumer provided the email address to the debt collector or a prior debt collector and the consumer has not subsequently opted out.

What’s Next?

            As with any rulemaking, it’s not over until the fat lady sings.  Depending upon the final outcome of the 2020 election, Congress may consider legislative proposals to walk back certain provisions of the Rule and potentially, overturn the Rule using the Congressional Review Act if the Democrats seize control of both the House and the Senate.  It remains to be seen how the continued effects of the pandemic will impact any legislative effort to circumvent the Rule.

            Additionally, there is more to come from the CFPB.  In December, the CFPB plans to release the remainder of the Rule, this time focusing on disclosures.  Additionally, the CFPB is looking at additional interventions, including the debt collector’s obligations to substantiate debts.  In any event, compliance departments should begin carefully reviewing the Rule and its Official Comments and aligning their policies, procedures, media content and scripts to conform with the Rule and take advantage of the safe harbors contained within the Rule. 

Friday, May 1, 2020

Sixth Circuit Examines Who is a Debt Collector for Purposes of FDCPA Section 1692(f)(6)

By Anna Claire Turpin

The Sixth Circuit Court of Appeals recently explored the limitations of Section 1692(f)(6) and held that a property preservation and maintenance company was not a debt collector for purposes of that section.  The opinion highlights the importance that principal purpose and timing have on this limited provision of the FDCPA. Thompson v. Five Bros. Mortg. Co., 2020 U.S. App. LEXIS 2881  (6th Cir. Jan. 27, 2020).

In Thompson, the consumer alleged that Defendant, a property preservation and maintenance company, violated 15 U.S.C. §1692f(6) by dispossessing her of her personal property when there was no legal right to possession.  Central to the court’s determination was whether the defendant was a debt collector for the limited purposes set forth in Section 1692(f)(6).  More specifically, the “central inquiry … is whether the principal purpose of Five Brothers’ business is the enforcement of security interests.”  Thompson, 2020 U.S. App. LEXIS, 2881 at *5.

The facts, as pleaded by the plaintiff, became integral to the Court’s reasoning and emphasize the importance that careful pleading and timing can play in FDCPA cases. Plaintiff, a consumer, defaulted on the mortgage for her home. The mortgagee, the bank, pursued a nonjudicial foreclosure of the property. Pursuant to state law, the bank held a sheriff’s sale at which it purchased the property, leaving a deficiency. The plaintiff failed to redeem the property during the statutory redemption period. After the redemption period ended and title passed to the bank, the defendant, a property-preservation and maintenance company that was hired by the bank, entered the property for the first time.  The defendant attempted to contact the plaintiff to post notices on the property that the bank had foreclosed the property and advising her of certain rights available. After no contact from the plaintiff, the defendant informed the bank that the property was vacant, and began to secure the property by performing maintenance and clearing the property, including removing belongings and changing the locks. The plaintiff alleged that the defendant violated 15 U.S.C. §1692f(6) by dispossessing her of her property when there was no legal right to possession.

PRINCIPAL PURPOSE.  Under the FDCPA, for the limited purposes set forth in §1692f(6), a “debt collector includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.” 15 U.S.C. §1692(a)(6) (emphasis added).   While the parties disputed “whether, in the abstract, a property-preservation company that secures and maintains properties on behalf of a mortgagee during non-judicial foreclosure proceedings can be said to the in the business of enforcing security interests,” the Court did not reach that issue because the Plaintiff did not allege nor offer evidence as to Defendant’s general practices.

TIMING IS EVERYTHING.  Instead, the Court considered the defendant’s practices as they specifically related to its  actions in this case: Defendant entered the property and began to clear and secure the property after the foreclosure proceedings had ended and title had passed to the bank. Because the redemption period had ended prior to defendant’s involvement, the plaintiff’s rights in property had already been extinguished. Furthermore, the Court reasoned that the fact that the bank was entitled to a deficiency judgment did not change the result because there was no evidence that Defendant would take part in that action, nor was there evidence that Defendant’s “principal purpose” was to do so. The Court was further persuaded by the fact that the right to seek a deficiency judgment stems from the promissory note and does not relate to the enforcement of a security interest.

Based on that reasoning, the Court held that the defendant, did not meet the definition under 15 U.S.C. §1692f(6) and affirmed the district court's judgment in favor of the defendant.

Anna Claire Turpin is a member of Smith Debnam’s Consumer Financial Services Litigation and Compliance team.

Saturday, April 25, 2020

North Carolina Department of Insurance Extends Deferral Period

The North Carolina Department of Insurance has extended its previous order which activated the payment deferral provisions of N.C.Gen. Stat. 58-2-46.  The Order would have expired April 26th and has been extended an additional thirty (30) days through and including May 27, 2020.  A copy of the Extended Order can be found here.  

Additionally, in response to the number of questions posed with respect to the obligations of collection agencies and others licensed by the North Carolina Department of Insurance, the Department has now published  a list of FAQs.  Collection agencies should be mindful that the North Carolina Collection Agency Act encompasses to the collection of commercial, as well as consumer debts, and that this Order, by extension, applies similarly. The FAQs make clear:
  •  There is no affirmative duty on collection agencies to send a mass mailing to debtors offering deferrals.  Instead, it is "up to the customer" to contact the collection agency to discuss options.  If, however, a collection agency contacts a debtor to discuss repayment, the agency is affirmatively obligated to advise the customer of the option to defer payment for 30 days.
  • A request for deferment acts as a cease and desist for the 30 day period.  "Not just payments are deferred; ANY collection activity should cease for 30 days should the customer request a deferral."
  • The Order and Extended Order apply to all payments, including those required by payment plans, ACHs and credit card repayment agreements. If the customer requests the deferments, the collection agency should cease all collection payment, including collection according to pre-arranged ACHs, credit card payments and other pre-arranged agreements for the 30 day period.
  • While the Order and Extended Order do not generally apply to law firms and attorneys collecting debt, the Order and Extended Order do apply to law firms and attorneys to the extent they are seeking to collect payments under insurance contracts or policies.  In those instances, the law firm or attorney "must delay collection activities on behalf of its clients during the deferral period.
Collection agencies and others impacted by the Order and Extended Order should continue to check periodically for further extensions of the Order.

Tuesday, March 31, 2020

North Carolina Department of Insurance Amends COVID-19 Order

On March 30th, Commissioner Mike Causey amended his March 27th Order regarding COVID-19 to provide for thirty days rather than sixty days.  The Order will now expire April 26th. A copy of the Amended Order can be found here.  Aside from the change in the Order's expiration date, the Order remains in effect as originally reported yesterday.  

The DOI Order notes the emergency conditions in the state and invokes the provisions of N.C. Gen. Stat. § 58-2-46 (1)-(3). N.C. Gen. Stat. § 58-2-46(2) requires collection agencies and debt buyers to give their customers the option of deferring premium or debt payments[.]” The DOI Order designates the entire state as the affected geographic area, so consumers located anywhere in the state must be given the option to defer payments. Further, Chapter 58 of the General Statutes broadly defines “consumers” to include businesses, so the mandate applies equally to traditional consumer debt (that incurred for personal, family or household debt) and commercial debt. 

Additionally, the NCDOI has confirmed that licensed entities are not required to preemptively notify "consumers" of the waiver option but do have an obligation to offer the deferred payment to "consumers" when discussing payment. The option to defer payments must be given for payments that are due through and including the time period covered by the DOI Order as amended. Subsection 2 goes on to state that the deferral period “shall be 30 days from the last day the premium or debt payment may be made under the terms of the policy or contract.” While this statutory section is open to (at least) a few possible interpretations, we believe the best reading is that the option to defer must be given until at least April 26, 2020, when the DOI Order is currently set to expire. If a consumer elects to defer a payment, the deferral must be granted and the new payment date should be set 30 days after the original payment date.