I recently blogged about a couple of prolific spam robocallers, including Midland Credit Management (MCM) and the now defunct Receivables Performance Management (RPM). Both of these are/were “debt” collectors who routinely program their automatic dialers to illegally harass people who have no responsibility for the “debts”. While nuisance organizations like this obviously damage everyone’s quality of life and harm the overall economy, they also directly imperil businesses who foolishly enter into contracts with them. That’s part of the story I will tell today about Convergent Outsourcing, Inc., which is now part of Transworld Systems, Inc. (TSI), and its fractured relationship with its former client UMB Financial.
Convergent Outsourcing is a “debt” collector with a checkered history of consumer law violations and litigation. In 2016, it agreed to pay $5.5 million to settle a Telephone Consumer Protection Act (TCPA) case involving illegal robocalls to more than 500,000 cell phone numbers. A seven-figure penalty would convince most people to correct their behavioral problems, but it did nothing to change Convergent’s nasty habits. The recidivist company quickly got sued again for another huge batch of robocalls between 2016 and 2019, and had to pay out another $3.75 million.
You’re thinking that Convergent surely stopped the illegal automated calls after this second TCPA settlement, right? I can personally attest that it did not. Soon after the second multi-million dollar case ended, I began getting dozens of calls from several local phone numbers that differed only in the last few digits. My phone blocked these unsolicited calls, but I couldn’t be certain that they were spam. Perhaps my favorite radio station was trying to tell me I won the drawing I entered in 1989, and that I get two tickets to see the Fine Young Cannibals? Or maybe my long-lost second cousin died and I inherited her collection of 19th century soap dishes? I tried calling the numbers back, but got only an anonymous recorded message. I decided to disable the spam blocker so that I could talk to this mysterious entity, which was now calling up to five times a day.
I answered their next call, just a few hours later, and was greeted by the non-sound of dead air on the line. This was a sure indication of an automated predictive dialer: the favorite toy of disreputable phone spammers. I knew right away that my chances of scoring those concert tickets and soap dishes were not good. After a few awkward seconds of silence, a man with a foreign accent spoke to me. I learned that he was calling from Convergent Outsourcing regarding someone else’s account – a “debt” that I was already very familiar with (as I will soon explain). I asked if anyone had given Convergent consent to autodial my number, and he readily confessed that they had not. He seemed embarrassed that his employer had put him in this position of breaking the law, and he agreed not to bother me again.
There were at least three legal and ethical problems with Convergent’s calls to me. The first was the use of a predictive dialer without consent, in clear defiance of the controlling 6th Circuit case law – not to mention the norms of civilized society. (This was prior to the Supreme Court’s controversial Facebook ruling that threw the TCPA’s autodialer definition into chaos.) The second was the use of deceptive Caller ID numbers to falsely make it appear that the calls originated from within my state. It is, of course, a violation of the Fair Debt Collection Practices Act (FDCPA) to use “any false representation or deceptive means” when collecting a debt, but a few of the sleaziest collectors employ this so-called “virtual DID” technique anyway to cloak their spam calls and dubious debts with a hint of legitimacy. And that leads me to the third problem: the “debt” in question was well over 10 years old and was unenforceable. How do I know this tidbit about the finances of some guy who I’ve never met? Because I had already sued a different collector for robocalling me regarding the same ancient bill! By repeatedly calling me about this other man’s personal matter, Convergent and other collectors have violated his privacy over and over again.
So why didn’t I sue Convergent for dozens of TCPA violations at $500+ apiece? Partly because I knew that one small confidential settlement wasn’t going to be much of a deterrent to a robocaller that had weathered millions of dollars in judgments. Plus, courts have recently invented a new roadblock to TCPA and FDCPA lawsuits. According to this novel judicial theory, which involves Article III of the Constitution, you can break the law without any consequences unless the violations actually inflict significant physical or financial damage on someone. Strangely, this defense only seems to apply to corporations, and only when defending themselves from angry consumers. It doesn’t work for ordinary people. (“I know you saw me run that red light, officer, but I didn’t cause an accident so you can’t cite me. Article III! And would you like some cocaine?”)
Maybe I shouldn’t overemphasize Convergent Outsourcing’s salacious phone behavior, because its postal etiquette has been abysmal too. In 2014, it sent a woman a bill alleging that she owed $2,000 to something called “LVNV Funding”. (LVNV Funding is mentioned all the time in lawsuits and complaints connected to bottom-of-the-barrel debt collectors. It is as ubiquitous in these documents as Stephen A. Smith is on the TVs at sports bars, except that Stephen A. Smith doesn’t have a 1.1-star rating on Google Reviews.) Unfortunately for Convergent, the recipient was a consumer finance blogger who knew immediately that this account was fictitious. Not only did she decline to pay the bogus debt, she also posted the bill on her website to alert others. Later, the Washington Attorney General caught Convergent mailing settlement demands for other “debts” that it knew were unenforceable. The A.G. ordered the company to reimburse 1,405 state residents for their losses (plus interest!) and cease using the deceptive letters nationwide.
Convergent Outsourcing doesn’t just engage in robocalling and mailing questionable bills. Consistent with the “outsourcing” part of its name, it also has a legitimate side business in which it provides call centers that companies can hire for customer service operations. However, this too is not all that it should be, as the Missouri bank UMB Financial discovered in 2022. UMB had entrusted its customer service to Convergent, which abruptly stopped performing any of this work after being hit with a cyber attack. UMB didn’t have a call center of its own, so without any notice it was left scrambling to take care of customer issues. The bank incurred considerable expense and loss of goodwill, and is now suing Convergent for breaching its contract.
While Convergent will probably have to pay for UMB’s damages, I don’t think either party is blameless. Someone at the bank decided to outsource the entire customer service department to a company known primarily for making tons of illegal robocalls, losing lawsuits, and racking up huge numbers of consumer complaints. Convergent Outsourcing even has an “F” rating from the Better Business Bureau, normally one of the most lenient and forgiving organizations in the world. How could UMB entrust a major part of its business to someone whose massive flaws could be found with just a couple minutes of googling? The bank probably does more due diligence before hiring a lady to water the plants in the lobby, to make sure that she doesn’t walk out with the calendar and the pens.
UMB Financial is not the only business to unwisely intertwine its fortunes with Convergent Outsourcing. Transworld Systems, Inc. (TSI) spent over $140 million to acquire Convergent and its sibling companies in 2021. TSI likes to brag about its compliance with the law and its comparatively low number of complaints in recent years, and I have no specific knowledge to refute this. So why did it risk its reputation to align itself with such a toxic brand and assimilate such a broken company? Who vets the acquisitions at this place? “Hey look, someone left a crate of spoiled lunch meat on the sidewalk! It’s a perfect fit for our organization. Let’s bid $140 million for it.” And now Convergent Outsourcing’s cyber attack and related data breach have led to some costly and embarrassing litigation apart from the UMB mess. I’m betting that TSI wishes it had spent that $140 million on ape NFTs instead.
So what’s the lesson? Spam robocalls and frequent consumer law violations should not be dismissed as normal and acceptable things for a corporation to do. This disrespect for the public is usually accompanied by disrespect for clients and vendors, along with other problems like lax cybersecurity and general incompetence. If you do business with a spammer, you risk being dragged into the sewer along with them – and you deserve it.