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Every week, AccountsRecovery.net 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.
EDPA Judge Partially Denies MTD in FCRA Case
A District Court judge in Pennsylvania has become the latest to tackle the issue of whether a plaintiff has standing to sue when claiming certain violations of the Fair Credit Reporting Act, partially denying the defendant’s motion to dismiss in a class-action suit. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF MALONE FROST MARTIN: As was the case here, inaccurate reporting allegations under 1682e(b) are likely to survive scrutiny under Spokeo analysis as actual harm is not overwhelmingly difficult to ascertain when someone’s credit file has inaccurate information. Here, the tradeline was still reporting three years after the consumer received a discharge on the underlying debt in bankruptcy. Not great facts for the defense. The court also established standing as to the allegation regarding the reasonableness of the Defendant’s investigation under 1681i(a)(1). Beyond showing that the Plaintiff’s injuries were concrete, the Plaintiff’s showed the Court that they are particularized to him, such that the injury-in fact exists. The procedural violations were dismissed for lack of standing. FCRA claims are on the rise. As seen here, inaccurate reporting will likely survive an MTD based on standing arguments where the injuries are unique to the Plaintiff and the inaccurate reporting is supported by the facts in the claim. Those claims that are simply premised on procedural violations are more likely to be dismissed in the early stages of litigation.
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Appeals Court Upholds Denial of Certification in TCPA Case
The Court of Appeals for the Tenth Circuit has upheld a lower court’s denial of class certification in a Telephone Consumer Protection Act lawsuit in which the plaintiff alleged to have received more than 200 robocalls from an auto lender, agreeing with the lower court that the plaintiff did not provide enough information to define the scope of the class. More details here.
WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON MESSER: The case of Rivera v. Exeter Finance Corp. cannot have been a difficult one for the Tenth Circuit to decide.
Rivera was a TCPA class action case, and the plaintiff appealed from the District Court’s denial of his Motion for Class Certification. The problem for the plaintiff was that his counsel had failed to propose a class definition in the class certification proceedings. Instead, the plaintiff’s counsel had merely submitted a list of other persons who supposedly received robocalls from the defendant, and left it to the District Court to come up with a class definition that met Rule 23’s certification requirements. The District Court found that this was inappropriate. This just shows how inept the plaintiff’s Counsel was with regard to his duties in a case involving class certification.
On appeal, the Tenth Circuit Court of Appeals predictably affirmed and agreed with the lower Federal District Court’s decision, concluding that defining a class action is not the District Court’s job. By failing to provide a proposed class definition, the plaintiff failed to meet his burden of fulling the basic requirements under Federal Rule 23 (the Class Action Statute).
GOBSMACKED OVER THIS ONE – The failure here of plaintiff’s Counsel is just jaw dropping. It is difficult to fathom how a plaintiff’s attorney could believe that seeking class certification without providing the most basic requirement, a class definition, as required by the class action rules, would somehow be acceptable to the court. This is just bad case handling. Perhaps the answer is this Counsel had become so confident in his case (due to some overly consumer-friendly case law that often does not seem to follow the “rigorous analysis” rule required for class certification), that counsel possibly thought he could get away with providing even the most basic information in a class action such as the proposed class definition. Hopefully the Tenth Circuit’s decision in Rivera will serve as a reminder to other Courts that it is the plaintiff and no one else who must establish compliance with all of the Rule 23 class action requirements, or a class action cannot and should not be certified under the law. Thankfully, none of the courts involved helped plaintiff’s counsel out of this mess.
CFPB Files Suit Against Debt Relief Company and its Owners
The Consumer Financial Protection Bureau on Friday announced it had filed a lawsuit against a debt settlement company and its owners for allegedly taking money from customers before achieving the results it promised and deceiving individuals about “material aspects” of the services it provided. More details here.
WHAT THIS MEANS, FROM MICHAEL KLUTHO OF BASSFORD REMELE: Enforcement where enforcement is needed. The CFPB has sued an entity (FDATR, Inc.) and its owners claiming that they violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA). The CFPB alleges FDATR and its owners engaged in deceptive and abusive telemarketing acts when they promised consumers they would provide student-loan debt-relief and credit-repair services. The Bureau seeks injunctions against FDATR and its owners, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.
Entities that claim to offer credit repair and debt relief, thankfully, are now on the radar of the CFPB. As alleged in the CFPB’s complaint, when an entity such as FDATR engages in the type of conduct alleged, not only do they harm the consumers they convinced to pay them money, they oftentimes fail to “repair” the consumer’s credit or secure any debt relief for them, all the while collecting hundreds of dollars from them. To be sure, they do gum up the works for entities attempting to collect just and owing debts with baseless credit repair and “debt relief” efforts. So it’s good to see enforcement being directed where it’s truly needed.
OCC Issues Proposed Rule To Officially End Operation Choke Point
Without ever mentioning its name, the Office of the Comptroller of the Currency on Friday issued a proposed rule that would put an end to Operation Choke Point by calling on banks to ensure provide access to services and capital based on the risks of the particular client and not make broad-based decisions that affect entire industries. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: Operation Choke Point was touted as an investigative tool to combat fraud and money laundering, but it empowered unaccountable bureaucrats to terminate the banking services of lawful businesses by applying regulatory pressure on their banks. Collection agencies and law firms were among the businesses whose operations were disrupted. In addition, public-interest groups also successfully pressured banks to stop serving customers in targeted industries. This rule would prohibit certain OCC-regulated institutions from denying services to customers based on their membership in a particular category of businesses. The relatively short comment period is presumably intended to allow time for the OCC to complete a final rule before President-elect Biden’s inauguration.
Trade Groups, Including ACA Int’l, Urge FCC to Strengthen Measures to Fix Call Blocking, Mislabeling Issues
A number of trade groups, including ACA International, met with representatives of the Federal Communications Commission last week to discuss the agency’s efforts ensure that legitimate calls are not either blocked or mislabeled by carriers, and, when they are, to provide notification to the callers in real-time. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF BALLARD SPAHR: Creditors and their collection partners are authorized by law to contact consumers about their debts. Consumers also are authorized by law to stop such communications, something that the CFPB endeavored to further enhance in the final collections rule. The inability of consumers to conveniently and promptly resolve their debts results in consumers accruing additional fees and interest, experiencing ongoing adverse credit reporting, and risking repossession or other legal remedies like garnishment. The FCC’s failure to address the ongoing and significant blockage of legitimate, lawful, and important communications aimed at reaching consumers to avoid such events increases the potential for consumer harm. These companies are not the nameless, faceless spoofers who the FCC’s call blocking initiative was intended to target. Rather, they are legitimate, known entities with a legitimate, authorized purpose for their communications. At some point, the only option that may remain to address the situation may be legal action to challenge the initiative as perpetuating unlawful speech restrictions and business impacts. Hopefully, the FCC will heed the calls of industry and take steps promptly to implement a workable solution.
EDNY Judge Grants MTD in FDCPA Letter Case
A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for violating a number of provisions of the Fair Debt Collection Practices Act, such as including multiple addresses in a collection letter and because he received two letters that each included a 30-day validation notice. More details here.
WHAT THIS MEANS, FROM JACQUELYN DICICCO OF J. ROBBIN LAW: In continuing a recent pattern, the Eastern District of New York saw through another baseless construct of an FDCPA claim by an eager plaintiff. The Court correctly held that sending a debtor two separate letters, each containing a thirty-day validation period, setting forth the debtor’s rights to validate the debt, and containing multiple addresses for individual purposes, does not violate the FDCPA. The Court held that the least sophisticated consumer would: (1) not be confused by a second 30-day validation notice, which only provides a benefit to the debtor by enlarging a debtor’s rights to validate the debt; (2) understand to read both the front and back page of the letter, regardless of whether the letter indicates that the “important notices and consumer rights” are on the back of the letter; and (3) understand the purpose of multiple addresses, where the letters designate the purpose of each address and provide instructions regarding each one. Thus, there is no authority for holding a collector liable for sending multiple letters to a debtor, each providing a thirty-day validation period. The Eastern District has become one of the leading federal courts to consistently dismiss attorney manufactured FDCPA claims and providing multiple validation notices is simply another example of plaintiffs’ attorneys attempting to create a violation when one does not exist.
FCC Imposes $10M Fine on Robocaller For Spoofing Competitor’s Number
Spoofing a phone number is bad. Spoofing the phone number of your “bitter” competitor and then making more than 47,000 pre-recorded robocalls is even worse. Which is why the Federal Communications Commission has imposed a fine of nearly $10 million on Kenneth Moser for intentionally trying to harm the business of his competition. More details here.
WHAT THIS MEANS, FROM NICOLE STRICKLER OF MESSER STRICKLER: “Spoofing” is something we all have experienced by now. Your cell phone rings and you see a local area code and telephone number. You answer the phone, thinking the phone call is legitimate, and are met with artificial intelligence or a prerecorded message from “Visa Mastercard Discover Card Services” or “A Message for the Vehicle Owner”. “Spoofing” is the formal term attributed to altering the true identity of a caller or telephone number placing a call in such a fashion. The Truth-In-Caller ID Act of 2009 prevents such behavior when it is done to “defraud, cause harm, or wrongfully obtain anything of value.” While the Act itself does not contain a private right of action, this case serves as a nice reminder that the FCC can and will enforce the Truth-In-Caller ID Act through the imposition of fines and penalties. In this particular case, the FCC displayed this power by fining a business owner who admittedly intentionally spoofed the phone number of his rival and transmitted thousands of prerecorded messages to California consumers falsely accusing a candidate for an open California senate seat of sexual assault. As a result of the calls, the business rival received a multitude of complaints, cease and desists, and threats of “imminent litigation.” In it’s order, the FCC stressed that the a intent to harm both California consumers as well as specific individuals was both readily apparent by the business owner’s conduct and a driving factor in assessing the almost 10 million dollar penalty.
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 www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.