Compliance Digest – November 1

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 Dismisses FDCPA Case Over Inadvertent Voicemail For Lack of Standing

Sometimes, you’re not paying attention when you’ve dialed your phone and are waiting for someone to pick up. Maybe you’re grooving out to a good song and you don’t notice that the call went to voicemail and that you’ve been humming and singing for a few seconds. While it likely won’t result in an invitation to audition for “American Idol” or “The Voice,” does it count as a violation of the Fair Debt Collection Practices Act if the individual making the call is a collector? In a case that was defended by the team at Malone Frost Martin, a District Court judge in Florida has ruled that it does not and dismissed the suit for lack of standing. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: When we discuss “ticky tacky” FDCPA cases it usually is in the context of a letter case. Santiago v Hunter Warfield is an exception, involving a four or five second errant voice message. The judge held that there was no Article III injury in fact for a collector that mistakenly hummed a couple words from a song while not realizing a message was being left. Interestingly, the judge tersely added that even if there was an injury, he would grant summary judgment for the collector because there was no violation and based on the bona fide error defense.  

It is a bit hard to believe that the errant message drew a 1692d, e and f lawsuit. Fortunately, this is another good example of a court applying a common sense approach and dismissing a case based on weak facts. 


Appeals Court Upholds Ruling Denying Defendant’s Request for Relief of Judgment in FDCPA Case

The Court of Appeals for the Ninth Circuit has affirmed a lower court’s ruling denying a debt collector’s motion for relief from a judgment because of “gross negligence” by its attorney for failing to respond to a motion for summary judgment filed by the plaintiff in a Fair Debt Collection Practices Act lawsuit that ultimately saw the plaintiffs awarded nearly $30,000 in attorney’s fees and awards. More details here.

WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: This case was messy from the start. There appears to have been a settlement, which then had to be enforced via a motion. The district court granted Plaintiff’s motion to enforce the settlement agreement at the same time it granted Plaintiffs’ motion for summary judgment. We all know litigation costs can skyrocket quickly, especially on FDCPA claims. From the docket and underlying orders, it looks like there was a breakdown in a settlement between the parties and then a breakdown of communication between defendant and it’s attorneys. This led to a perfect storm of events, but did not rise to the level of “gross negligence.” In short, if you’re not communicating well with your attorney or if you just don’t see eye-to-eye with your attorney, then it may be time to look for another attorney.

SDNY Judge Grants MTD in FDCPA Case Over Settlement Language 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 when it sent four letters to an individual that each offered to settle a debt for 50% of the balance owed, while noting that the defendant was not obligated to renew the offer, offering more time to respond if needed, and asking for payment upon receipt of the letters. More details here.

WHAT THIS MEANS, FROM MICHAEL KLUTHO OF BASSFORD REMELE: Another common sense Judge isn’t buying what the other side is selling.  Plaintiff’s challenge to a series of collection letters — each offering to settle and account — fell on deaf ears when it reached the Court.  Here the Agency had the audacity to send several written offers to the consumer each offering to settle the account at a 50% discount.  Each time the Agency also noted that it was not “obligated to renew the offer.”  Somehow that phrase offended the consumer.  Imagine that.  The court, however, was not offended in the least and summarily tossed the case.  The takeaway from this one is that the old adage “No good deeds goes unpunished” actually does have exceptions.

Chopra Picks Enforcement Director as Unit Staffs Up: Reports

The Consumer Financial Protection Bureau has started taking steps to beef up its enforcement division, announcing the hiring of an attorney who will lead the unit while also announcing that it is looking to hire as many as 30 additional attorneys, according to published reports. More details here.

WHAT THIS MEANS, FROM CARLOS ORTIZ OF POLSINELLI: The CFPB named Eric Halperin as its new enforcement director. Mr. Halperin is a longtime consumer advocacy attorney and worked with the U.S. DOJ during the Obama administration. During that stint, Mr. Halperin led the civil rights division’s fair housing, fair lending and employment non-discrimination enforcement program at the DOJ. His prior experience also includes serving as special counsel for fair lending and as a trial attorney in the DOJ’s civil rights division from 1998 to 2004. Mr. Halperin’s hiring confirms that the CFPB will have a more aggressive enforcement unit with a focus on fair lending and racial equity. To underscore this point, CFPB has armed Mr. Halperin with around two dozen additional enforcement attorneys. This news should signal to the mortgage industry that compliance will be key as it has now become a focus of the CFBP for at least the next few years.

N.Y. Governor Signs Law Requiring New Disclosure in Initial Communications

A new law is scheduled to go into effect in New York next month that will require collectors to provide an additional disclosure on initial letters sent to consumers, letting consumers know that the letter can be requested in an alternative format, such as large print, braille, or audio compact disc. More details here.

WHAT THIS MEANS, FROM LEAH STRICKLAND OF TROUTMAN PEPPER: For principal creditors and debt collectors doing business in New York, starting November 7, 2021, this amendment to the law requires both principal creditors and debt collectors to add a disclosure to “each initial communication” with a New York consumer. It notes that providing reasonable accommodation in compliance with the Americans with Disabilities Act of 1990 (“ADA”) “shall not be deemed to have violated” the New York statute — a not-so-subtle reminder that the ADA may apply to members of the collection industry. There is no private cause of action for violation of the New York law — the law provides for state agency enforcement—but debt collectors should take note that plaintiffs often attempt to use state law issues as predicates to a claim under federal law.

One open question left by the statute is the meaning of “each initial communication.” For debt collectors, “each initial communication” may refer to each account, if the collector handles more than one account for that consumer; or it may simply distinguish between the initial communication from the principal creditor versus the initial communication from the debt collector. Either way, debt collectors who collect debts from New York consumers should consult with counsel and review their initial communication form letters for compliance with this provision.

For principal creditors, it gets more complicated. One possible interpretation, based on the definitions of “consumer claim” and “principal creditor,” is the first communication once a debt has gone into default. The statute’s reference to “each initial communication” could then refer to the initial communication anytime a debt goes into default. The impact could become onerous, depending on the procedures the principal creditor employs for defaulted debts. Principal creditors should also consult with counsel, and review their procedures and form letters for compliance with this provision.

Judge Grants MTD in FDCPA Case Alleging Hunstein Disclosure

A District Court judge in Kansas has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling that the plaintiff lacked standing to sue because she was confused about an alleged discrepancy in the balance of her debt after receiving several collection letters, but, perhaps more importantly, that the use of a third party letter vendor to process and mail the letters was not a concrete injury. More details here.

WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The court in this case reviews the Hunstein decision in light of the more recent TransUnion US Supreme Court case and rejects it. The court specifically holds that because the plaintiff did not allege that someone at the letter vendor read her information, as opposed to the company simply processing her information to produce a letter electronically, the plaintiff did not have standing for her FDCPA claim of unreasonable publication about her debt.  The court also reviewed the plaintiff’s claims of confusion about the amount she owed based on a series of collection letters, but because the plaintiff did not allege a concrete injury that arose from her confusion the court found that she lacked standing for those claims as well.  This case should be useful in the defense of cases with claims similar to the claims in Hunstein, given the court’s focus on the impact of the reasoning in the TransUnion case on the Hunstein analysis.

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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