Compliance Digest – July 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, 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.

SDNY Judge Grants MTD in FDCPA Case Over Settlement Language in Letter

Creating a sense of urgency is a tried-and-true sales tactic that has been used time and again. Make people think they have to act fast to save a few bucks and they will often take you up on that offer. Following that sense of urgency with a note that if you need more time to make a decision, additional time might be available, may not be the best sales tactic, but for one defendant, it was enough for a District Court judge to rule that a collection letter did not violate the Fair Debt Collection Practices Act and convinced him to grant a motion to dismiss. More details here.

WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: This opinion underscores the need to be careful in how settlement offers are presented. In this case, the letter contained two settlement offers, an invitation to set up payments on the full balance, the caveat to contact the debt collector if additional time was needed to respond, and the language “[w]e are not obligated to renew these offers.” The Court’s opinion affirms the safe harbor provided by other courts for use of the aforementioned language. Even more importantly, litigators should pay careful attention to the Court’s reliance on the minimum pleading standards to support its decision. Specifically, the Court held that the consumer had not presented any facts to bolster its position that the statement that “[w]e are not obligated to renew these offers” was untrue. From a compliance perspective, debt collectors should continue to be mindful as to how their settlement offers are couched and that they are devoid of false deadlines or “one time only” sorts of language.


Judge Grants Motion to Deny Certification in TCPA Class Action

A District Court judge in Oregon has granted a defendant’s motion to deny class certification in a Telephone Consumer Protection Act case, ruling that the question of whether the number that was called by the defendant was a business or residential number makes it unclear whether or not the plaintiff can even assert protections under the TCPA, thus not allowing him to meet the necessary requirements to be the named plaintiff in the suit. More details here.

WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: The Do Not Call Registry does not apply to business telephone numbers. The particular issue in this TCPA class action focuses on whether the telephone number at issue is a personal phone number or a phone number used by a business. The Court, adopting in part the Report and Recommendation of the Magistrate Judge, concluded that the specific focus in the litigation over the personal/business nature of the plaintiff’s telephone number would monopolize the case to the detriment of the class. In fact, if it were a business number, plaintiff would not be an appropriate class representative. Thus, the Court correctly denied class certification. While the Court held that plaintiff had standing to pursue the case, that decision is questionable since only the business would have standing to file a lawsuit for a number owned by the business.

Judge Dismisses TCPA Class Action Over Collection Calls

A District Court judge in Michigan has dismissed class-action claims made by a plaintiff that debt collection calls made by a creditor to a consumer’s cell phone without consent in an attempt to reach the plaintiff’s brother violated the Telephone Consumer Protection Act because the equipment used by the defendant to make the calls did not include a random and sequential number generator, as required to meet the definition of an automated telephone dialing system following the Supreme Court’s ruling in Facebook v. Duguid. More details here.

WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON BIRD: The District Court in Barry v. Ally Financial, considering the implications of the U.S. Supreme Court’s “clear holding” in Facebook v. Duguid that an ATDS must actually use a random and sequential number generator to be considered an ATDS, dismissed this class action complaint with prejudice. The court was having none of plaintiff’s argument that simply having the capacity to randomly or sequentially generate and store numbers (and requesting the court allow discovery to determine whether the technology in question had such capacity) was enough. Instead, the court relied on plaintiff’s allegations that the defendant specifically targeted her for the calls in question in an effort to force a relative to pay an outstanding obligation. The court reasoned that if the plaintiff was specifically targeted, the calls could not have been sequentially or randomly generated and, as a result, could not have involved the use of an ATDS. While no clear pattern has emerged as to the impact Facebook will ultimately have at the motion to dismiss stage, the Barry decision is certainly encouraging.

Judge Grants MSJ For Defense in FCRA Case, But Denies Motion for Sanctions Against Plaintiff’s Counsel

A District Court judge in Michigan has granted a defendant’s motion for summary judgment in a Fair Credit Reporting Act case while also denying the defendant’s motion for sanctions, but noting that he was “troubled” by the plaintiff’s counsel’s conduct in the case and “expressly” warning that “continuing to file and pursue similar baseless claims going forward will likely result in sanctions.” More details here.

WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: Lawson is a good example of how difficult it is to get a sanctions award. The plaintiff’s claims were the exact same as those that had already been dismissed in other cases. Moreover, the Court acknowledged that “no reader of the report could have been confused about the status of the accounts” and noted that the Court was “troubled” by the plaintiff’s counsel’s conduct in pursuing the case. The bright side is that while the Court didn’t issue sanctions here, the Court promised to so in the future. This case also provides a great roadmap for defending against the increasingly common claim that the “historical monthly payment amount” is somehow misleading on charged off and closed, or paid and closed, debts. Heck, maybe it will even deter consumer attorneys from filing such claims in the future.

Appeals Court Affirms Ruling For Defendants in FCRA Cases Over Ownership of Debts

The Court of Appeals for the Seventh Circuit has affirmed the rulings from District Court judges in a consolidated appeal of seven Fair Credit Reporting Act cases in which the plaintiffs sued credit reporting agencies because they allegedly did not properly investigate claims that debts being reported by debt buyers on the plaintiffs’ credit reports were actually owned by those creditors. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The Seventh Circuit held that, with some exceptions, whether a debt was assigned is a question of law not of fact. Keep this decision in mind when evaluating FDCPA claims alleging, with no factual support, that the assignee was misidentified as the current creditor because there was no proper assignment. On a motion to dismiss, courts must assume that the plaintiff’s factual allegations are true but courts do not assume the truth of legal conclusions.

Judge Grants MSJ For Defendant in FDCPA Class Action For Lack of Standing

Companies in the accounts receivable management industry can add “irritation,” “concern,” “feeling targeted,” and “hustled,” to the list of harms that do not create standing to sue in federal court when accusing a debt collector of violating the Fair Debt Collection Practices Act after a District Court judge in Ohio granted a defendant’s motion for summary judgment in a class action because it did not inform the recipient of a collection letter what would happen if she made a payment on a time-barred debt. More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW FIRM: Welcome, Ohio. Let the standing challenges begin.

In Barnes v. Midland Credit Management, Inc., No. 19-cv-01483 (N.D. Ohio July 12, 2021), the Honorable Judge Christopher A. Boyko granted a defense summary judgment, finding a lack of standing to raise FDCPA claims due to a lack of sufficient harm.

Here, the plaintiff’s debt was time-barred. She received a letter with settlement options that included a disclosure that, “[b]ecause of the age of the debt, we will not sue you for it,” but there was no warning that accepting one of the offers or making a partial payment would restart the limitations period. Plaintiff took no action in reliance on the letter and made no payment, but she filed a putative class action lawsuit based on her receipt of the letter.  

As shown in her deposition (filed in full), this plaintiff claimed that she knew a payment would remove the limitations bar to suit and was not personally deceived by the letter. But, upon reading the letter she deemed it misleading and “wonky,” was irritated by its purportedly misleading nature, and became concerned for others who may receive a similar letter but not understand the potential consequences of making a payment.

The court referred to the plaintiff’s deposition in the summary judgment order and found that she had described only “generalized emotional harms” resulting from her receipt of the allegedly misleading collection letter, and those “do not qualify as injuries in fact” sufficient to confer Article III standing.

The following “generalized emotional harm” is insufficient to show “any actual or imminent injury” or “concrete and particularized harm or material risk of harm”:

  • Feeling “irritated” or “annoyed”
  • Feeling that you are being “hustled” or “targeted”
  • Feeling concerned whether you owe a debt
  • Feeling concerned that the debt collector thinks you are stupid
  • “[C]onfusion, fear and anxiety hypothetically produced in third persons,” who may not understand the consequences of taking action on a time-barred debt  

So, add another standing case to the defense arsenal, and please do not hesitate to depose FDCPA plaintiffs.   

Senate Republicans Tell Chopra He Should be Disqualified from CFPB Nomination for Refusal to Answer Questions

Senate Republicans are calling for Rohit Chopra to be disqualified from consideration as the next Director of the Consumer Financial Protection Bureau after he refused to provide answers to questions that he was sent following the publication of a report detailing how the Biden administration is attempting to “sideline” top officials at the regulator. More details here.

WHAT THIS MEANS, FROM STEFANIE JACKMAN OF BALLARD SPAHR: The PHH decision made the Director answerable only to the President. Absent action by Congress with legislation to alter the structure of the CFPB – which the last two Congresses decided not to pursue – that will remain the case. This same sort of back and forth between the CFPB and members in Congress on the other side of the aisle happened under each of the prior administrations – Republicans and Cordray, Democrats and Kraninger – that is just more of the same. Political posturing for political purposes. At the end of the day, this strikes me as unlikely to result in any realistic chance that Nominee Chopra will not be confirmed as Director unless the Republican members of the Senate somehow manage to block any vote until after the 2022 midterms and also retake control of the Senate.

Emergency Collection Bills Introduced in District of Columbia

A pair of bills have been introduced in Washington, D.C., that seek to implement temporary restrictions on how debts are collected in the District now that it is ending the pandemic emergency declaration that was enacted last year. The bills were authored by Phil Mendelson, the chairman of the D.C. Council, and Karl Racine, the Attorney General of Washington, D.C., and are precursors to additional legislation that is coming “in the near future” that will propose “permanent updates to modernize the District’s debt collection laws in the long-term,” according to a release announcing the introduction of the temporary bills. More details here.

WHAT THIS MEANS, FROM LESLIE BENDER OF CLARK HILL: The juxtaposition of the state of emergency and moratorium on debt collection in the District of Columbia are emblematic of challenges all states and municipalities face. How can or should municipalities or states map a course for recovery for their constituents in recovering from the pandemic? Over the past 16 months emergency declarations dramatically expanded the powers of local and state leaders – including powers to suppress evictions, prevent utilities cutoffs, or curtail debt collection activities. Is it time to allow all or some of these emergency declarations to expire?

In the District of Columbia (D.C.) the pandemic related public emergency is set to be lifted July 25, 2021; however D.C.’s Council has thus far supported all of Mayor Muriel Bowser’s requests for extensions and local experts believe a further extension could be approved. Allowing public emergency declarations to end has wide implications for any state or municipality.

Meanwhile, with the full support of D.C.’s Attorney General, Karl Racine and the unanimous support of D.C.’s Council, D.C. recently proposed to temporarily amend its debt collection laws which proposed amendment has passed a first reading and could be signed into law, during the emergency, by Mayor Bowser. No public hearing was scheduled on this initiative nor has one occurred. This temporary amendment, among other things, would do these things:

  • Make DC’s existing debt collection laws extend to cover medical debt and credit card debt.
  • Consider a debt buyer to be a debt collector “for all purposes.”
  • Confirms that a violation of the federal Fair Debt Collection Practices Act would be considered a violation of this law. 
  • DC’s law carries with it its own fines and penalties of up to $4000 per harmed person. 
  • 3 in 7 communication caps, including texts, calls and emails in the prohibition against excessive communications.
  • Suppress bench warrants for consumers who when sued to collect a debt do not appear for scheduled court dates.

Laws like this raise challenging additional if unintended recordkeeping responsibilities. For folks undertaking legal strategies to collect debts, the emergency law would toll the statute of limitations – but with the expiration of the public emergency declaration being somewhat fluid, some additional recordkeeping may be required to note in unique accounts the impact of how and when D.C.’s act tolled the statute of limitations – should it later be necessary to prove that using legal means to collect is not barred by any statute of limitations. 

The D.C. act while barring debt collectors from initiating debt collection activities, does permit debt collectors to respond to consumers who initiate communications about debt collection with them. Assuming the manner in which a consumer initiated contact would be important for a collector collecting from a D.C. resident. Stay tuned over the next few days to see if D.C. allows its emergency declaration to expire on July 25, 2021, and prepare to document any incoming communications from D.C. consumers when you receive them to assure you are maintaining a paper trail regarding how debt collection occurred during this uncertain time.

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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