Compliance Digest – April 26

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.

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.

Appeals Court Affirms Ruling in FCRA Judgment Case

The Court of Appeals for the Second Circuit has upheld a lower court’s ruling in favor of a defendant that was sued for allegedly violating the Fair Credit Reporting Act for how it identified a default judgment that had been subsequently settled on the plaintiff’s credit report. More details here.

WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: This case is another instance of the use of plain meaning and a court agreeing to apply common sense to word choice. After entry of a default judgment, plaintiff and defendant settled the underlying case. Defendant then reported the judgment as satisfied.  Plaintiff wanted the obligation to not be reported at all as plaintiff’s motion to vacate the default judgment prompted the settlement. The Court found that the judgment was satisfied according to its dictionary definition and the analysis ended there. But, as we have recently seen, the common application of words can result in undesirable outcomes.  Here, it ended well for the agency.

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Appeals Court Affirms Dismissal of FDCPA Suit Over Letter Itemizing ‘$0.00’ in Interest, Fees

The Court of Appeals for the Third Circuit has affirmed the dismissal of a Fair Debt Collection Practices Act case in which the defendant was sued for itemizing the interest and fees due as “$0.00” in a collection letter because the plaintiff claimed the itemization falsely implied that they could accrue in the future. More details here.

WHAT THIS MEANS, FROM LORAINE LYONS OF MALONE FROST MARTIN: The Third Circuit agreed that a collection letter itemizing $0.00 in interest and fees on a static debt was not misleading and did not violate the FDCPA. Persuasive was the Fifth Circuit’s Salinas case and the Seventh Circuit’s Degroot case. However, the appellant tried to distinguish these cases stating in the Third Circuit, the “least sophisticated consumer” approach yields a less savvy consumer than an “unsophisticated consumer” standard used in the other Circuits. The Third Circuit was not buying it. The Third Circuit recognized it has used the “least sophisticated consumer” standard and that its “word choice may invite an argument that [its] standard is less exacting than that of these Circuits.” However, the Third Circuit does analyze FDCPA claims similarly. Additionally, even if the Court had to apply a “least sophisticated consumer” standard, the Third Circuit would still reject the claim like the Second Circuit did in the Taylor case under a “least sophisticated consumer” standard.  

Judge Grants MSJ For Defense Under BFE in FDCPA Dispute Case

What do you do when you receive a letter disputing a debt, but when you check your records, you have more than 600 individuals with the same name in your system? Sometimes, you don’t mark the right accounts with the dispute notification. But, if you have the proper policies and procedures in place, you can use the Fair Debt Collection Practices Act’s bona fide error defense, and that’s just how one defendant was able to obtain a summary judgment ruling in a lawsuit that was filed against it in Wisconsin. More details here.

WHAT THIS MEANS, FROM SARAH DEMOSS OF

More details here.

WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER: This opinion emphasizes one aspect of Article III analysis that too often gets lost when cases focus on the existence or absence of an injury. Specifically, as this judge pointed out, even if you take Plaintiff’s injury claims at face value, she still lacked standing because there was no correlation between the injury she claimed to have sustained and the conduct at the heart of her FDCPA claim. In that regard, this opinion serves as an important reminder that standing consists of three parts—injury, causation and redressability. While most recent FDCPA cases have turned on the first element, we should always keep the other two in mind!

Appeals Court Affirms Ruling for Defendant in FDCPA Case Over Healthcare Debt

In a case that was defended by the team at Malone Frost Martin, the Court of Appeals for the Eighth Circuit has affirmed a lower court’s ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act because it did not include a copy of the original creditor’s financial assistance plan when it sent the plaintiff a collection letter. The Appeals Court ruled that collection agencies are not bound to comply with a regulation from the Treasury Department requiring healthcare providers to include its financial assistance policy with their billing statements. More details here.

WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Nomenclature and definitions matter. In this world of “alphabet soup” consumer-protection statutes (FDCPA, FCRA, TCPA, GLBA, etc.) it is easy for judges to conflate identities, functions, and responsibilities under these laws. (One notable example is Justice Gorsuch’s use of the term “repo man” to describe a debt collector — two very different things — in a FDCPA case before the Supreme Court).

Here, the Eighth Circuit aptly noted the difference between a healthcare provider and a debt collector and, critically, that the creditor’s assignment of an account for collection does not “impute [the creditor’s] responsibility to comply with … medical billing regulations to debt collectors working on its behalf.”

Take home message: the plaintiffs’ bar’s attempt to assert “blurred lines” claims that conflate the roles and responsibilities of creditors and collectors is not a new phenomenon, but it certainly continues. As this case demonstrates, the best way to combat these claims is to clearly and concisely educate the bench about the entities’ respective roles in the collection process.

Pa. AG Settles With Collector Over Payday Loan Scheme

The Attorney General of Pennsylvania announced separate settlements with the former Chief Executive Officer of Think Finance and a debt collector, National Creditor Adjusters (NCA), in relation to a $133 million allegedly illegal online payday lending scheme. As part of its settlement, NCA has agreed to pay more than $600,000 to cover the cost of the investigation and litigation. More details here.

WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: Earlier this month, the Pennsylvania attorney general reached a settlement with debt collector National Credit Adjusters (“NCA”), ending a multi-year investigation into an allegedly illegal payday lending scheme involving over $133 million in accounts. Under the terms of the settlement, NCA agreed to pay $602,000 over two years to cover the cost of the litigation. The attorney general agreed to suspend another $276,523 in fines. NCA also agreed to cancel the loan balances on the affected accounts and refrain from collecting on internet loans from non-bank lenders that violate Pennsylvania’s usury laws; it had voluntarily ceased collecting on the accounts at issue in 2015, when the investigation commenced. The contested loans allegedly charged interest in excess of Pennsylvania’s 6% cap.

NCA’s co-defendant, Think Finance, an online financial technology company associated with various tribal lenders, reached a separate settlement with the Pennsylvania attorney general in 2019. The investigation is emblematic of states’ ongoing efforts to enforce their consumer protection laws against online lenders and any entities that participate in collecting those debts.

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.


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