Compliance Digest – June 28

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 Alleged Attorney Threat in Letter

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 because the plaintiff received a collection letter that indicated her account would be referred to an attorney to review “possible legal options” if a payment was not received, ruling that the statement was not a threat to take action that could not be taken and that the letter provided the plaintiff with enough options to avoid such a fate. More details here.

WHAT THIS MEANS, FROM STEFANIE JACKMAN OF BALLARD SPAHR: This ruling reflects another common sense, reasonable application of FDCPA protections to the plain language of a standard collection letter. It is critical that courts interpret and apply plain, clear text as just that – plain, clear text. Doing so provides a necessary degree of consistency and reliability to the industry when communicating about delinquent debts and working to resolve them with consumers.


Appeals Court Affirms Dismissal of FDCPA Suit Over Definition of Debt, Consumer

The Court of Appeals for the Eleventh Circuit has affirmed a lower court’s dismissal of a Fair Debt Collection Practices Act suit over whether an underlying debt was a consumer debt as defined by the FDCPA because the plaintiff and his wife used a fictitious name under state law in Florida when making the purchase. More details here.

WHAT THIS MEANS, FROM HEATH MORGAN OF MALONE FROST MARTIN: This is a great win for the industry at the Circuit level. It was the right decision and shuts the door on potential frivolous complaints based on consumers acquiring products or services in a business name and then later trying to sue under the FDCPA. Beyond it being a great decision, it also gives me hope for the 11th Circuit and how it will rule on Hunstein en banc petition. This opinion sends a message that judges on the 11th Circuit understand and do take into consideration facts outside of the complaint – in this case, that the consumers used a fictitious name to acquire the property – to grant the motion to dismiss. One can hope this type of logic prevails on the en banc Hunstein review.

Judge Grants MTD in FDCPA Case Over Alleged Third-Party Disclosure

Who else but the recipient of a collection letter and the mail carrier who delivered it would have access to that letter to see a mini-Miranda statement that had bled through an envelope, asked a District Court judge in Illinois when granting a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act, ruling that hypothetical third-party disclosures and a state of confusion is not enough for the plaintiff’s case to continue. More details here.

WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Stop me if you’ve heard this allegation in a FDCPA complaint before: “The collection letter’s [insert plain-as-day-letter-verbiage here] could confuse the unsophisticated consumer.” Or, “The collector’s [entirely benign] voicemail message could have been overheard by a third-party.” Your author fully appreciates why these “claims” are frustrating for the defendants, but indulge me for a moment as to why this is maddening from a defense lawyer’s perspective. In our federal court system, the plaintiff needs to allege enough facts to make the claim plausible. A plaintiff can’t just allege something is possible. Or, as one of my law school professors more colorfully put it, “You can’t just sue me for being the devil incarnate. You have to allege something factual to back that up — like you’ve seen me touch holy water and make it boil.”

For years, the plaintiffs’ bar has simply been making unsupported you’re-the-devil-incarnate allegations in FDCPA cases without any fact allegations to back it up. It has felt like FDCPA cases are litigated in the Twilight Zone in this regard—this type of pleading absolutely will not fly in other cases outside the consumer-protection realm. But rulings like this one give us hope that we are exiting the Twilight Zone: “Here, Plaintiff has failed to allege any concrete, particularized, and nonhypothetical injury. The fact that the debt collection letter could potentially be seen through the envelope is a remote harm and there is no allegation that makes this a plausible injury.” In other words, without any facts, the claim fails (in this instance for lack of cognizable injury). Great to see, hopefully this trend continues.

Judge Grants MSJ For Defense Over Pay-For-Delete Request From Plaintiff

Even though he had been told otherwise, writing a note in the memo line of a check that a debt was being paid in exchange for deletion of a tradeline does not work, according to a District Court judge in New Jersey who granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case. More details here.

WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER: Good for Rushmore for hanging tough! There are lots of good take-aways here. First, never forget your fundamentals! Too often, litigants focus so heavily on the merits of their cases that they lose sight of the importance of making consumers meet their threshold burden of establishing that the conduct at issue even falls within the purview of the FDCPA. Second, don’t be afraid to put consumers to task when they cite the “remedial” nature of the FDCPA. While it’s true that courts construe the statute broadly, such a construction does not mean that certain activity is “debt collection activity” actionable under the statute simply because the consumer says so. Remember—this is the plaintiff’s case, and the plaintiff bears the burden of proof. Here, Rushmore challenged Plaintiff’s reliance on the “remedial statute” argument—in other words, Rushmore challenged the plaintiff to “prove it,” which he ultimately could not do. And finally, always stay tuned in to the latest litigation trends, and develop a plan to address them. By having an established policy and practice adding account numbers and striking all other lines before depositing the check, and by maintaining careful documentation of its earlier communication with the consumer, Rushmore was able to paint a clear picture for the Court demonstrating that even if its conduct had fallen within the scope of the FDCPA, Plaintiff’s “understanding” that adding language to the check’s memo line would result in tradeline deletion was unreasonable.

Judge Grants MTD in FDCPA Case Over Attorney’s Fees

Being confused about whether he owed attorney’s fees and hiring his own lawyer is not enough for a plaintiff to have standing to pursue a Fair Debt Collection Practices Act case, a District Court judge in Illinois has ruled, granting the defendant’s motion to dismiss on the grounds that the Court lacked subject matter jurisdiction because the plaintiff lacked standing to sue. More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: In Choice v. Unifund CCR, LLC, No. 19-cv-5773, 2021 WL 2399984 (N.D. Ill. June 11, 2021), the Honorable Judge Sharon Johnson Coleman dismissed an Amended Complaint raising FDCPA claims because the federal court did not have subject matter jurisdiction due to the plaintiff’s lack of Article III standing. 

Defendant Unifund CCR, LLC’s February brief (adopted by co-defendant Kohn Law Firm S.C.) cites the six Seventh Circuit FDCPA standing opinions issued in December 2020. Judge Coleman’s dismissal order adds the 2021 follow-ups: Smith v. GC Servs. Ltd. P’ship, 986 F.3d 708, 710 (7th Cir. 2021) and Pennell v. Glob. Tr. Mgmt., LLC, 990 F.3d 1041, 1045 (7th Cir. 2021). Now, you can add the Choice v. Unifund opinion to the long string cite of dismissal opinions ready and waiting to be inserted into the next standing motion.

Choice v. Unifund drives home a few key points:

  • A plaintiff’s claimed confusion, alone, does not establish standing. The plaintiff must allege a detrimental action taken based on that confusion, such as making a payment;
  • Hiring a lawyer is not a sufficient detrimental action to create standing; and
  • Lost sleep caused by worry is pure psychological harm that does not establish standing.

So… lack of standing for the win…again. Are plaintiffs’ attorneys in the Seventh Circuit not getting the memo?

Appeals Court Denies En Banc Request in TCPA Case Over Single Pre-Recorded Message

An Appeals Court yesterday denied an en banc request in a case relevant to the debt collection industry, but it wasn’t the Eleventh Circuit and it wasn’t the Hunstein case. The Third Circuit Court of Appeals yesterday denied an en banc request in a Telephone Consumer Protection Act case over a single phone call after a three-judge panel had determined the plaintiff lacked standing because he only suffered a “bare procedural harm that resulted in no harm.” The denial of the rehearing may bring to a close a case that has been in the Courts for a decade. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: Petitions for rehearing are very rarely granted, so this is not a surprise. A rehearing is especially unwarranted given Friday’s decision from the Supreme Court in TransUnion v. Ramirez, which supports the Third Circuit’s dismissal for lack of standing. Sometimes a plaintiff can re-file his claim in state court after it is dismissed for lack of Article III standing, but the single call at issue here was placed over sixteen years ago and it does not appear that New Jersey’s savings statute can save this one. 

CFPB to Restart Examinations Related to Military Lending

The Consumer Financial Protection Bureau yesterday issued an interpretive rule that reverses a policy decision put in place under the Bureau’s former leadership that will restart examinations in order to enforce the Military Lending Act. More details here.

WHAT THIS MEANS, FROM DUSTIN ALONZO OF HINSHAW CULBERTSON: The CFPB’s Interpretative Rule shows once again that the Biden Administration’s CFPB will take a more aggressive supervisory position than we have seen over the past four years.  That said, the CFPB’s continued scrutiny of the treatment of servicemembers by financial services companies should not come as a surprise, particularly given its recent consent order and settlement with two lenders in December 2020 and January 2021. What remains to be seen is how the CFPB will handle the Department of Defense’s (DoD) February 2020 rescission of the infamous QA2 to its Interpretative Rule for the MLA, which previously specified that purchase money vehicle loans are not exempt from the MLA if they finance any credit product such as GAP.  We hope the CFPB’s new leadership takes a position consistent with the DoD, so servicemembers continue to have access to these beneficial products. Otherwise, a narrow interpretation of this exclusion by the CFPB during its reinstituted MLA exams could create problems for not only auto finance companies and debt collectors, but also our military members.

New Chair at FTC Means Chopra Likely Now on Way to CFPB

It appears as though the last domino that needed to fall in order for Rohit Chopra to become the next director of the Consumer Financial Protection Bureau has fallen and all that is left is for the Senate to confirm him, a move that is expected to occur within the next month. More details here.

WHAT THIS MEANS, FROM HELEN MAC MURRAY OF MAC MURRAY & SHUSTER: Talk about a sea change. Known for his years at Richard Cordray’s CFPB, Chopra actually does have some business experience having worked at McKinsey & Company, a financial services company. Which may not be helpful and may just have shown him where the bodies are (or where he thinks they are). Targets at this point are likely student loans and tech antitrust issues. Hold on for quite a ride.

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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