Compliance Digest – May 31

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 Over Settlement Language, Mentions Hunstein

A District Court judge in Illinois has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act because it informed the plaintiff in two collection letters that it was not obligated to renew settlement offers that were being made and because the inclusion of the defendant’s privacy notice confused and intimidated the plaintiff. The case may also be the first one to be ruled on where the word Hunstein is muttered, albeit in a judicial footnote. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: In granting a motion to dismiss with prejudice, Giannini v United Collection Bureau, Inc. (“UCB”) contains a number of timely and, at least in part, helpful rulings.

First, the court ruled that at the motion to dismiss stage the plaintiff alleged enough to survive an Article III (“Spokeo”) challenge. It pointed to the allegations that UCB’s letters (somehow) created a false sense of urgency that led her to unsuccessfully attempt to secure funds to accept discounted offers; thus, allegedly, other debts remained in default and accrued interest, and her credit score declined due to the derogatory reporting. It would be interesting to know if plaintiff could actually prove these were caused by the alleged FDCPA violation.

Second, plaintiff received a settlement letter that used approved safe harbor language: “We are not obligated to renew this offer.” Plaintiff challenged this despite the 7th Circuit Court of Appeals twice ruling that such language was sufficient, Evory v RJM (2007) and Preston v Midland (2020). Not surprisingly, the trial court dismissed this claim.

Third, and perhaps most interesting, is that the controversial Hunstein case came up. Plaintiff had a somewhat convoluted theory about the use of a Privacy Notice and cited Hunstein as supplemental authority.  In a footnote, the court ruled that the citation was not helpful.  It stated:  “Here, there is no allegation that UCB transmitted any of Giannini’s information unlawfully or without her consent. And contrary to Giannini’s arguments in her motion,…the privacy notice’s suggestion that sharing personal information could, in some instances, comply with the FDCPA is not false or misleading. As Hunstein notes, § 1692c(b) alone includes several exceptions that demonstrate some transmission can be lawful under the FDCPA.”

This last language and the use of Privacy Notices may well be helpful to the industry in these Hunstein cases.


WDNY Judge Dismisses Class Claims in FDCPA Suit Over Chain of Title Issues

In a case that was defended by Jonathan Robbin of J. Robbin Law, a District Court judge in New York has dismissed class-action claims filed in a Fair Debt Collection Practices Act case and compelled arbitration on an individual basis after a plaintiff accused the defendant of filing a collection suit against him without having a proper chain of title. More details here.

WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK, DOWD & TURNER: Another great example of how important it is for an ARM defendant to (1) obtain and carefully analyze the terms and conditions on which an account was created and (2) have sufficient documentation establishing the chain of title on an account.  With the seeming onslaught of new class action theories from the consumer plaintiff’s bar, arbitration and class action waiver provisions in underlying contracts and agreements are an incredibly valuable tool, if available, when defending a putative class action case.

In this case, the parties’ dispute centered not on the existence of an applicable arbitration provision, but rather on whether Defendants were entitled to enforce it.  Such “you-can’t-enforce-that-against-me” arguments are common from consumer plaintiffs.  Here, the Court determined that the Plaintiff’s attempts to call the chain of title into question did not create a genuine issue of fact as to whether Defendant LVNV could enforce the underlying arbitration and class action waiver provisions in the Plaintiff’s original agreement with Synchrony Bank.  Because Defendant LVNV was not seeking to collect on the account but was rather defending itself against the Plaintiff’s FDCPA allegations, Defendant LVNV needed only to establish its entitlement to enforce the provisions at issue by a preponderance of the evidence and not the more stringent New York state law chain of title standard applicable when the assignee of an account is seeking to affirmatively collect it.

Because the ability of an ARM defendant to successfully wield arbitration and class action waiver arguments necessarily depends on the existence and availability of those underlying contracts and agreements, it is important that creditors continue to maintain such documentation in the event a dispute arises down-stream.

EDNY Judge Grants Motion for Defendant in FDCPA Case Over Dispute Language in Letter

In a case that was defended by Malone Frost Martin, a District Court judge in New York has granted a defendant’s motion for judgment on the pleadings after it was sued for allegedly violating the Fair Debt Collection Practices Act because it included a statement in a collection letter requesting that the plaintiff send all correspondence to a specific P.O. Box, thereby creating the impression that disputes could only be filed in writing. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: No consumer thinks that a request to send correspondence to a post office box means that any dispute must be made in writing, and no consumer will fail to realize that important information is printed on the reverse side when the letter informs the consumer in all caps and bold print to “see reverse side for important information.” This is a good example of what another judge in the Eastern District of New York called a “lawyer’s case,” which is a case alleging “a defect of which only a sophisticated lawyer, not the least sophisticated consumer, would conceive.”

Bill Introduced in Senate to Cancel Utility Debts for Low-Income Households

A bill has been introduced in the Senate that would provide $30 billion to utility companies and broadband Internet providers across the country in order to prevent those companies from shutting off services to customers because of unpaid debts, especially those that have accumulated during the COVID-19 pandemic. More details here.

WHAT THIS MEANS, FROM ETHAN OSTROFF OF TROUTMAN PEPPER: Utility protections enacted in the early months of the pandemic are expiring in some states and will continue to lapse over the next few weeks, causing alarm among congressional lawmakers and community activists who are pushing for a nationwide moratorium. On the flip side, overdue utility bills have soared since the onset of the pandemic as people lost jobs and utilities stopped shutoffs for late payment. With consumption changes, pauses on late fees, more past due bills, and the costs to implement payment plans for customers, many utilities continue to experience significant revenue losses.

The country’s response to the COVID-19 pandemic has highlighted the interconnected nature of the utility industry and the need for further public investment to aid companies and consumers as we move out of the public health crisis – that said, it is questionable whether S. 1783 is capable of accomplishing this goal. While Senator Markley’s proposed $30 billion low-interest loan program for electric, water, sewage and broadband providers would allow them to recoup money to stay afloat without resorting to fines and shutoffs, utilities have long relied on disconnections as means to motivate customers to keep up with their bills. Many times, customers with unpaid bills typically will not work with utility companies on a payment plan until they receive a disconnection warning. It is further unclear how much is owed to utility companies nationwide, and it could be more than the $30 billion earmarked in the bill.

This bill is arguably an effort to refocus the Biden administration’s attention on the issue, with many consumer advocacy groups calling on the President to issue an executive order directing the CDC to use the Public Health Service Act to prevent utilities from stopping taps and turning off lights. While the President has pushed for more economic relief since taking office, Biden has been reticent about committing to stopping shutoffs. The idea of a nationwide ban has been met with similar skepticism from utilities that say the issue is better left up to state officials, and that working with local regulators to respond to the needs of each state is more effective than a one-size-fits-all approach to recovery.

Seventh Circuit Attacks Standing Again, but Judges Now Wondering if The Court Went Too Far

The Court of Appeals for the Seventh Circuit has weighed in on standing in yet another case, this time affirming a lower court’s dismissal of a Fair Debt Collection Practices Act lawsuit against a collector, but, for the first time, judges within the Seventh Circuit are showing signs that maybe the Court has overstepped in determining how and when an individual has suffered a concrete injury required to pursue a federal lawsuit. More details here.

WHAT THIS MEANS, FROM JUDD PEAK OF CAPITAL ACCOUNTS: Markakos v. Medicredit is a new decision regarding standing, which has recently become a buzzword within collections legal circles. The whole “standing” issue has gained new importance in the wake of the 11th Circuit’s Hunstein decision from a couple of weeks ago. (To refresh, standing in the legal sense merely means the consumer has the right to bring a lawsuit in court. It is not a question about the issues, but rather whether the plaintiff is the proper party to file a lawsuit. Most issues related to proper standing concern whether the plaintiff alleges he or she has suffered a tangible injury as a result of the defendant’s conduct.)

It’s fairly remarkable. Several years ago, the existence of standing was almost a foregone conclusion in consumer litigation. If a plaintiff alleged a technical violation of federal law such as the FDCPA that involved statutory damages, that was enough to support standing and the lawsuit could go forward. Then, in 2016 the U.S. Supreme Court issued its decision in Spokeo, Inc. v. Robins, which held that a plaintiff must vocalize some sort of tangible injury-in-fact in order to establish standing. The downstream effects of Spokeo resulted in a lot of dismissals of lawsuits under the FDCPA and FCRA where the consumer did not properly allege a tangible injury due to the defendant’s conduct.

Fast forward to 2021, and the Hunstein Court takes a broader approach than I think is required under Spokeo and essentially says a consumer plaintiff has standing – even in the absence of a tangible injury – if the allegations assert a violation of law that Congress has already interpreted as causing consumer harm.

The Seventh Circuit Court of Appeals is not bound by Hunstein, however (although it is required to follow Spokeo). Recent decisions from the 7th Circuit have required a consumer to allege some concrete injury, not just a violation of law by the defendant. While this Markakos decision keeps in line with those other cases, the analysis from the panel of judges seems to lay some critique on the “must show injury-in-fact” requirement for standing. To the judges, the strict requirement of standing has the result of allowing debt collectors to engage in deceitful behavior free from consequence, unless that deceit is successful. This analysis, coupled with the Hunstein case, appears to foretell a pushback within the federal courts against a strict interpretation of the requirement of standing for consumer litigation.

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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