Compliance Digest – November 23

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit, email John H. Bedard, Jr., or call (678) 253-1871.

Every week, brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.

Judge Grants MTD in FDCPA Case, Puts Plaintiff’s Attorney ‘on Notice’ About Filing Similar Cases in the Future

A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act while warning the plaintiff’s attorney that should “similar cases of this nature” be filed in the future, they will “undoubtedly result in the imposition of sanctions.” More details here.

WHAT THIS MEANS, FROM DENNIS BARTON OF THE BARTON LAW GROUP: There are certain universal truths in life: the sun rises in the east and sets in the west; water boils at 212 degrees Fahrenheit; and the New England Patriots are compulsive cheaters (just checking to see if future ACA Board member Jeff DiMatteo is paying attention). Unfortunately, you can also add to the list “life is not fair.” A perfect example is that judges rarely sanction attorneys absent extreme circumstances.

That is what happened in this case. The consumer alleged a clearly compliant letter was in violation by arguing it instructed consumers to mail payments to themselves. No, that was not a typo, just a really stupid claim. The court denied the collector’s motion to award sanctions, but it suggested sanctions may be awarded in any future cases that bring the same claim. While such a ruling does not pay the bills, it does support defending bogus cases (rather than settling them) to show judges the ridiculousness consumer attorney put us through and to not allow frivolous claims to gain traction in the courts.


Judge Grants MSJ For Plaintiff in FDCPA Dispute Case

A District Court judge in Illinois has denied a defendant’s motion for summary judgment and granted a summary judgment motion for the plaintiff in a Fair Debt Collection Practices Act case in which a dispute was inadvertently sent to the wrong employee and therefor not logged, with the judge ruling the defendant was not entitled to the FDCPA’s bona fide error defense. More details here.

WHAT THIS MEANS, FROM CARLOS ORTIZ OF HINSHAW CULBERTSON: This is a tough decision that exemplifies how most courts will heavily scrutinize a debt collector’s defense when it is based on bona fide error. Under the FDCPA:

A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was (1) not intentional and (2) resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(emphasis supplied) 15 U.S.C. 1692k(c). At issue in this case was the maintenance of procedures reasonably adapted to avoid the specific error. The plaintiff alleged that the defendant failed to report the debt as disputed after plaintiff had submitted a written dispute to the debt collector. Although the defendant invested in training its employees in compliance, which included a one-week training session on the FDCPA at the beginning of employment, annual FDCPA testing that must be passed with at least a 95% score, multiple training questions to employees on a weekly basis, and training on the content of the training manual, the court still found that the debt collector did not have procedure reasonably adapted to avoid the error that was at issue. The error was that the written dispute was not sent to the company representative who was charged with flagging debts as disputed before they were credit reported. The court was critical of the defendant for not having any procedure in place that ensured that disputes were actually being routed to the appropriate individual. The court expected there to be redundancies or safeguards to prevent the exact error – misrouting of the dispute. What this tells us that in evaluating whether to defend a case based on bona fide error, it is important to not only look at the overall system a client has invested in to ensure compliance. It is also important to ensure that there was a procedure in place to prevent the very error that occurred. Defending a case based on bona fide error can be very expensive. Thus, it is of the upmost importance that careful consideration be given to this at the beginning of the engagement.

Judge Grants MTD in FDCPA Case Over Alleged Mis-Identified Creditor, Amount in Letter

A District Court judge in New Jersey has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act because the plaintiff claimed the amount cited as being owed in a collection letter was inaccurate and that the plaintiff did not owe the debt to the current owner cited in the letter, which purchased the debt from the original creditor. More details here.

WHAT THIS MEANS, FROM HEATH MORGAN OF MALONE FROST MARTIN: The creativity of plaintiff’s law firms in manufacturing frivolous new claims and new lawsuits off the initial letter remains unparalleled. This unpublished opinion is a good one that can be used by the industry to continue to push back against plaintiff’s attorneys who continue to try to manufacture cases base on the initial letter. The important part of this case is that it was decided on a motion to dismiss, rather than a motion for summary judgment. This saves the agency thousands of dollars in defense costs, and also helps future agencies, who may be sued on similar claims, to hopefully have those cases dismissed early on in the litigation process by way of a motion to dismiss. 

Biden Names Former CFPB Deputy Director To Head Agency’s Transition Team

President-elect Joe Biden has chosen a name that will be familiar to many in the accounts receivable management industry to head the transition team overseeing the Consumer Financial Protection Bureau. Leandra English, the former deputy director of the CFPB has been tapped to lead a team of fellow volunteers whose responsibilities include “understanding the operations of each agency, ensuring a smooth transfer of power, and preparing for President-elect Biden and Vice President-elect Harris and their cabinet to hit the ground running on Day One,” according to the incoming administration’s transition plan. More details here.

WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: President-elect Joe Biden has published a transition plan, which includes agency review teams tasked with understanding the operations of each agency and ensuring a smooth transfer of power. The plan names Leandra English to lead the review team for the Consumer Financial Protection Bureau. English, the former deputy director of the CFPB, previously clashed with the Trump administration following the resignation of CFPB Director Richard Cordray in November 2017. When President Trump appointed the Director of the Office of Management and Budget, Mick Mulvaney, to serve as the acting director, English unsuccessfully filed suit to block the move and have herself appointed acting director. She resigned from the CFPB in July of 2018 following Kathleen Kraninger’s appointment to serve as the Director. 

English will oversee a team of seven others, including the legislative director for the United Autoworkers and six alums of the Obama-era CFPB. The group will advise the Biden campaign on taking over the agency when Biden assumes office in January. English’s appearance on the CFPB, therefore, appears to be a harsh rebuttal to the Trump administration’s regulatory agenda. Her appearance on the transition team — along with other Obama alums — indicates that a Biden-era CFPB will return to the aggressive regulatory posture adopted during the Obama administration.

House Dems Ask FCC, FTC to Pause ‘Controversial’ Rulemakings During Transition

Democrats in the House of Representatives have written letters to the Federal Communications Commission and the Federal Trade Commission, asking both agencies to “immediately stop work on all partisan, controversial items under consideration” now that the result of the 2020 presidential election is “apparent.” More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW FIRM: On November 10, House Democrats sent nearly identical letters to the FCC and FTC, urging the agencies to “immediately stop work on all partisan, controversial items under consideration” and focus only on consensus matters until the apparent President-elect, Joe Biden, takes office.

So, what matters are these agencies currently considering? In October, the FTC met to discuss its investigation into Facebook for potential antitrust violations, and although a decision is rumored to be near, no filing decision has been made public to date. Recent government efforts to pursue antitrust claims against Big Tech (like the recent lawsuit against Google), however, have been met with broad bipartisan praise. 

The FCC announced in mid-October that it would review proposed reforms to Section 230 of the Communications Decency Act (the “CDA”). The CDA protects and limits the liability of online intermediaries/platforms that host third-party and user-generated content. One of the proposed bills (the Platform Accountability and Consumer Transparency (PACT) Act), is bipartisan legislation intended to increase transparency in how content is moderated and limit platform protection from action by federal regulators. Notably, this issue was not discussed during the FCC’s November 18, 2020 Open Commission Meeting, and the agenda items were not particularly controversial. 

It is not entirely clear what pending agency efforts should be paused, as some of the more publicized matters under consideration are not partisan or controversial. Perhaps the letters are just a general expression of hope that the agency transitions will be diplomatic and uneventful, unlike the rest of 2020. 

Collector to Pay CFPB $500k to Settle Credit Reporting Claims

The Consumer Financial Protection Bureau yesterday announced a settlement with a debt collector after it was accused of a number of violations of the Fair Credit Reporting Act. The collector, Afni, Inc., will pay a $500,00 fine and agreed to update its policies and procedures to ensure the accuracy of the information it reports to the credit reporting agencies. More details here.

WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: The demise of the CFPB during the Trump Administration in enforcement and investigation has been greatly exaggerated. There has been a subtle shift in focus from the Cordray years in that the CFPB premises its enforcement on alleged violations of actual provisions of the law instead of under the Bureau’s general UDAAP provision. Here, the collection agency was accused of furnishing information it knew was inaccurate or should have know was inaccurate. Significantly, it also failed to properly report the date of first delinquency, which is the quintessential date needed to determine how long the information remains on a consumer’s report. The agency used the charge-off date of the debt, which is usually several months after the date on which a payment was due but not made. The effect of the wrong date of first delinquency means that the obligation would be on the consumer report longer than it should be. This should be a warning to data furnishers to make sure they are using the correct date of first delinquency and not simply relying on information given to it by the creditor.

CFPB Stands Behind Credit Reporting Guidance in Letter to Advocacy

The Consumer Financial Protection Bureau is not planning to make any changes to the guidance it issued earlier this year telling furnishers that as long as they are making “good faith efforts” to investigate disputes as quickly as possible that they can take longer than the legally required 30 days to do so, according to a letter written by CFPB Director Kathleen Kraninger in response to a request from a number of consumer groups asking the agency to reconsider its decision and obtained by Law360. More details here.

WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The continuing battle between consumer advocates and the Consumer Financial Protection Bureau (CFPB or Bureau) regarding credit reporting continued when Director Kathleen Kraninger informed consumer advocates that she would not be pulling back her prior guidance issued on April 1.

To recap, Section 4201 of the CARES Act provided for a short term amendment to the Fair Credit Reporting Act (FCRA) with regard to the reporting of information during COVID. It required data furnishers to report an accommodation with respect to one or more payments on a credit obligation. The term accommodation was defined broadly in the Act. The Act said nothing about changing the statutory timeline for the FCRA dispute process. The Bureau’s guidance attempted to balance the needs of consumers and the operational disruption that occurred within the industry as the result of business shutdowns. The Bureau’s guidance extended the statutory dispute period from 30 days to 45.

In late September, a group of consumer advocates asked that the CFPB rescind that guidance, in part because shutdowns were partially or completely lifted. In a letter dated November 9, to the National Consumer Law Center, Director Kraninger formally rejected that request and reiterated the Bureau’s position that it “does not intend to cite in an examination or enforcement action against firms who exceed the deadlines to investigate disputes” as long as they made a good faith effort to do so. Given the current rise in COVID-19 cases and with more and more cities and regions re-implementing shut downs, the advocates’ position seems unreasonable.

What is important to note in Director Kraninger’s November letter is her re-emphasis on Prioritized Assessments in response to the COVID-19 pandemic as well as the CFPB’s commitment to use its supervisory authority to prevent violations of Federal consumer financial laws. Specifically, the Director stated that Prioritized Assessments allows the Bureau to “expand the number of institutions under review”. The Director’s letter attempts to drives home the point that the Bureau’s authority and oversight will not be impacted by the pandemic. Expect continued oversight whether it be over credit reporting or other consumer financial products or services through the remainder of year and into 2021, especially if there is a new Director.

California Voters Approve Measure to Bolster CCPA

Temporarily lost amid the ongoing battle for the White House were some measures and developments in other areas that have the potential to impact the accounts receivable management industry. Voters in California, for example, approved a ballot initiative known as Proposition 24, or the California Privacy Rights Act of 2020. It is a companion law to the California Consumer Privacy Act, and includes a number of provisions regarding how companies store and use data about consumers. More details here.

WHAT THIS MEANS, FROM KIM PHAN OF BALLARD SPAHR: The California Privacy Rights Act (CPRA) represents a significant leap forward in US privacy law, much like its predecessor, the California Consumer Privacy Act (CCPA). Even though the CCPA is barely two years old, the success of this ballot initiative keeps California at the forefront of privacy developments in the U.S. For example, the CPRA creates a new California Privacy Protection Agency, the first US agency of its kind dedicated to privacy enforcement. The CPRA also adopts many protections from the European Union General Data Protection Regulation (GDPR). While many other states had been expected to follow in the footsteps of the CCPA with passage of their own privacy laws, the CPRA has just moved the bar higher for both federal and state legislatures.

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit, email John H. Bedard, Jr., or call (678) 253-1871.

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