Compliance Digest – January 25

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.

EDCA Judge Grants MTD in FDCPA Service Fee Case

A District Court judge in California has granted a defendant’s motion to dismiss a class-action lawsuit after it was sued for violating the Fair Debt Collection Practices Act when it was sued because the collection agency it placed a debt with sent a collection letter that indicated the plaintiff would have to pay a service fee if he made a payment using a debit or credit card. More details here.

WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER: Cases related to interest, fees and other charges continue to challenge the scope of what collectors (and their creditor clients) can and cannot recover. This case throws an interesting curveball, because the court did not actually rule on the merits of Martinez’s claim. Instead, the court held that because the disputed language “essentially place[d] the same conditions and limitations on the collection of service fees that the FDCPA places on debt collection in general,” Martinez lacked Article III standing. In reaching this conclusion, the court observed that the disputed language would actually help the least sophisticated consumer in “selecting a mode of payment,” and that it did not constitute a threat to impose unlawful fees. So, while the court did not technically hold that the language at issue complied with the FDCPA, the methodology used to reach the conclusion that the consumer lacked standing to proceed in federal court strongly implies as much.


Judge Grants MSJ For Defendant, Vacates Class Certification In FDCPA Creditor ID Case

A District Court judge in Wisconsin has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act class-action case, determining that the plaintiff lacked standing to sue because he took no action to clarify his confusion over whom he should pay after receiving a collection letter from the defendant. The judge also vacated an order certifying a class in the case. More details here.

WHAT THIS MEANS, FROM XERXES MARTIN OF MALONE FROST MARTIN: Last week’s opinion from the Western District of Wisconsin follows the recent FDCPA standing cases issued by the Seventh Circuit. The Seventh Circuit has made clear that a mere “a state of confusion” is not enough to satisfy Article III standing under the FDCPA. Judge Crocker held that the plaintiff failed to show that the purported confusing collection letters led him to take any action to his detriment. Consequently, the suit was dismissed for lack of standing as confusion itself is not a concrete injury. Letter cases are getting tough, especially in the Seventh Circuit, for the other side. The Ninth and Eleventh Circuits also have issued similar opinions.  Soon enough it may be the law of the land.

Judge Grants MTD in FCRA Case Over Ownership of Debt

A District Court judge in Illinois has granted a defendant’s motion to dismiss after it was sued for violating the Fair Credit Reporting Act because it allegedly did not conduct a reasonable investigation into a dispute, among other claims. More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: The Honorable Judge Franklin U. Valderrama (N.D. Ill.) dismissed with prejudice a group of FCRA claims against Equifax based on a recently solidified point of law in the Seventh Circuit: Unless a court has made a legal conclusion that a purported creditor does not actually own a debt, the debtor cannot raise FCRA claims against a credit reporting agency on the basis that its reporting of the debt’s ownership is inaccurate. Harris v. Equifax Info. Svc, LLC, No. 20-cv-01640, 2021 WL 66489 (Jan. 7, 2021). Relying heavily on the Seventh Circuit’s decision in Denan v. Trans Union LLC, 959 F. 3d 290 (7th Cir. 2020), Judge Valderrama reasoned that, while credit reporting agencies have a duty to investigate an alleged factual inaccuracy in a credit report, “questions regarding the ownership of debts present legal, not factual disputes.” A debtor can raise this legal defense in court, but cannot collaterally attack the validity of the debt by seeking an ownership determination from a credit reporting agency.

It remains to be seen if Harris will appeal the ruling. Six substantially similar FCRA dismissal rulings were consolidated for appeal in the Seventh Circuit last December. (Case Nos. 20-2392, 20-2775, 20-2776, 20-3000, 20-3351, 20-3368). The question on appeal is: “If a debt buyer reports to credit reporting agencies that it owns a consumer’s debt, and if the consumer disputes the accuracy of such report claiming that the debt buyer does not own the debt, does the consumer’s dispute challenge the factual accuracy of the report and trigger the credit reporting agencies’ duty to conduct a reasonable reinvestigation, or is it a legal challenge that does not trigger any duty to reinvestigate?” Denan appears to have answered this question. Yet, the Appellant’s Consolidated Opening Brief does not even acknowledge, let alone attempt to distinguish, Denan. I predict that the Appellee’s Response Brief will be a fun read.    

Judge Denies MTD in FDCPA Case Over Missing Reference in Validation Notice

We’ve all heard the joke, what happens when you assume? You make an ass of u and me. A collection law firm is learning that lesson the hard way after a District Court judge in North Carolina denied its motion to dismiss because it did not explicitly state who was assume a debt to be valid in a collection letter. More details here.

WHAT THIS MEANS, FROM SARAH DEMOSS OF PREMIERE CREDIT: Before writing an opinion on this case, the first thing I did was pull our letters to make sure we didn’t have the same issue. Luckily, we didn’t. But, I would never judge another agency or collection law firm for a letter lawsuit, because it is becoming near impossible to keep up with all of the different jurisdictions when it comes to letter cases. It seems like everything and/or nothing is confusing to the least sophisticated consumer, and there are plenty of consumer attorneys willing to take advantage of the uncertainty. Although I don’t love the final model validation notice language put forth by the CFPB, I do think the form will help reduce the letter lawsuits. Standardization and a safe harbor should help our industry dig out of the expensive, letter language, class action hole that consumer attorneys have put us in. Just make sure you invest in a good MAP attorney when you put the new notice in place.

Bill Introduced in Colorado to Extend Moratorium on ‘Extraordinary’ Collection Actions

The Colorado legislature kicked off its 2021 session yesterday and the second bill that was introduced in the state Senate was a measure to extend the moratorium on “extraordinary” collection actions in the state until June 1. More details here.

WHAT THIS MEANS, FROM MAKYLA MOODY OF GREENBERG SADA & MOODY: Colorado’s General Assembly convened for three (3) days to start the 2021 Legislative season before temporarily adjourning until February 16. All Bills introduced during the three-day session passed, including SB21-002 Extending Limitations on Debt Collection Actions, which extends the temporary consumer protections which were set to expire on February 1.  Governor Polis will sign the Bill in the coming days, and it will be implemented immediately.

Industry members operating in Colorado will need to act quickly once the bill is signed to update their statutorily mandated pre-garnishment notice, implemented last year by SB20-211, to reflect the extension of the temporary protections until June 1. Covered judgment creditors must also continue to refrain from engaging in the defined extraordinary debt collection activities, including all garnishments, until June 1 on any consumer that previously provided notification of COVID-19 impact.  Additionally, the passage of this legislation extends the temporary claim of exemption, up to four thousand dollars ($4,000.00), for depository accounts.

Although SB21-002 is the first Bill this year to pass in Colorado impacting the collection industry, it is not likely to be the last. Democrat control of Colorado’s Legislative and Executive branches continues to provide fertile ground for campaigns run by national organizations and policy groups that espouse pro-consumer and anti-collection rhetoric.  Even the economic realities and consumer sponsored research showing Coloradans are financially recovering from the pandemic faster than expected has not prevented or deterred the anti-industry sentiment that is growing in popularity at our State Capital. While SB21-002 does not contain a provision to extend the existing temporary measures beyond the June 1 deadline, there is nothing stopping the passage of further legislation this year to make these and other consumer protections and anti-industry measures permanent. To help guard against such activities, all industry members operating in Colorado must remain vigilant and willing to engage, providing testimony at committee hearings and emailing members of the General Assembly (their contact information can be located online at the General Assembly’s website), once the 2021 Legislative Session resumes in mid-February.  It may be an uphill battle, but taking action, especially with the much needed help from our out-of-state colleagues, is the only way to ensure our voices are heard and our industry has a future in Colorado. 

EDITOR’S NOTE: This bill was signed into law on January 21. More details are available by clicking here.

CFPB Issues Guidelines for Working With Limited English Proficiency Consumers

The Consumer Financial Protection Bureau has released a series of guidelines for companies in the financial services industry when dealing with individuals for whom English may not be their primary language. The guidelines echo a similar rule that was enacted last year in New York City, but stop short of requiring companies to adhere to the guidelines. More details here.

WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: Earlier this month, the Bureau of Consumer Financial Protection (Bureau) issued a Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency. The Statement is intended to encourage financial institutions to better serve consumers with limited English proficiency and to provide guidelines to assist financial institutions in complying with consumer protection laws. The Bureau must, among other guidelines, ensure the accuracy of any documents that are translated into other languages, and use verifiable information from reliable sources, such as the U.S. Census Bureau, to determine which language to translate into.

The goal is to assist financial institutions in complying with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Equal Credit Opportunity Act (ECOA), and other applicable laws. The Bureau also seeks to: (1) promote access to financial products for all consumers; (2) facilitate compliance by providing clear rules of the road; and (3) educate and empower consumers to make better informed financial decisions.

While the cause is worthy, there are concerns that the CFPB will place certain obligations on companies that are difficult to meet, such as discerning when translations are necessary for non-traditional languages and placing penalties on those companies who are trying but may not get it right. Obviously, with the new administration and the new CFPB director, only time will tell how aggressive the Bureau may be.

Collection Law Firm Facing Pair of FDCPA Class Actions

A collection law firm in New Jersey is facing a pair of class-action lawsuits that have been filed against it in Pennsylvania, accusing the firm of not sending mandatory notices required by law when suing individuals and for enrolling individuals in automatic payment plans without first obtaining their consent. More details here.

WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: There’s not much to say here, more self-inflicted injuries. In Augustine, the law firm allegedly failed to follow the local rules of court. Due to unfamiliarity? How does it go, “ignorance of the law is no excuse?” In the Hilliard matter, the law firm enrolled Hilliard, who had previously entered into a settlement and was making his payments, in an automatic payment scheme without his prior knowledge, authorization or consent. How does a law firm set up a reoccurring payment without written authorization to do so?

Understand, in other areas of alleged torts, an individual will usually first suffer some kind of real injury and then find or be directed to an attorney to get them compensation for the injury. Collection related torts however have a much different model. Attorneys specializing in alleged FDCPA violations will collect documents from debtors and then comb through them like old time prospectors panned for gold, looking for the nugget that will lead to riches, here a perceived violation. They will get their clients to show them every scrap of paper they have regarding the debt(s) in question and then search out something they can claim is a violation. So why make it easy by engaging in risky behavior. I’ve written in the past regarding questionable language in letters as being risky. Practicing in an unfamiliar court is text book risky behavior. What possibly can be said about Hilliard, other than, come on guys, what were you thinking?  

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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