Compliance Digest – November 22

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 Lowers Attorney’s Fees by 50% in FDCPA Case

A District Court judge in Missouri has lowered the attorney’s fees awarded in a Fair Debt Collection Practices Act case by 50%, ruling that a “hyper-technical” violation of the statute that led a jury to award the plaintiff $200 in damages was fair and reasonable. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: Saxerud v. T-H Professional & Medical Collections is an excellent example for valuing a case. First, the plaintiff claimed actual and statutory damages for a false statement about the credit reporting status. The jury awarded no actual damages and the judge commented that any such damages was highly unlikely. The jury then awarded only $200 in statutory damages. The verdict is thus a good indicator of the value for a relative technical violation.

Second, the judge’s ruling on the fees is great. He succinctly laid out the factors and then cut the fees by 50% (from about $30,000 down to $15,000). The reasons for the reductions hit on things we often see in defending similar cases: (1) damages were at most “modest, (2) the violation was technical, (3) it was a relatively simple matter, (4) Plaintiff’s counsel had extensive experience in consumer cases such that there should be efficiencies, (5) “over-lawyering” – the court found it was improper to have two experienced lawyers do a short trial, and (6) the lawyer billed for clerical work.

These rulings can be used with plaintiff’s counsel during negotiations and with a judge or mediator in a settlement conference.


N.Y. Governor Signs Debt Collection Bill Into Law

The Governor of New York yesterday signed a trio of consumer protection bills into law, including a debt collection bill called the Consumer Credit Fairness Act that lowers the statute of limitations, increases the amount of information needed when filing collection lawsuits, and institute specific requirements when seeking default judgments. More details here.

WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: Based on conversations I’ve had with industry colleagues in New York, much of this bill contains items that have been hanging around in the legislature for quite some time. The local industry members put up a good fight for a long time, but unfortunately these bills passed this time around. I think the scary part is that the interest rate provision could be retroactive and that could cause a host of issues on numerous levels. Overall, not a great news for the industry, but I applaud the New York industry members and the New York State Creditors’ Bar Association for putting up a good fight for a long time.

Regulators Announce End to Servicers’ Pandemic ‘Temporary Flexibility’

Mortgage servicers, your time is up. The 18 months that you have been given to adjust your operations in order to work with individuals who have been affected by the COVID-19 pandemic and “develop robust business continuity and remote work capabilities” are enough that state ad federal regulators have come together and announced that the “temporary flexibility” that they offered regarding their supervision and enforcement prerogatives are over. More details here.

WHAT THIS MEANS, FROM AMANDA GRIFFITH OF BERMAN BERMAN BERMAN SCHNEIDER & LOWARY: This Winter, the CFPB is coming … While rather ominous, the statement is reflective of the “warning” the CFPB has recently issued to mortgage servicers that it will be policing the procedures and processes in place to ensure foreclosures does not occur – if avoidable. This includes, but is not limited to, the procedural safeguards outlined by the CFPB to ensure that borrowers have a meaningful opportunity to be reviewed for loss mitigation prior to any foreclosure actions. This level of oversight appears reflective of the CFPB’s increasingly consumer-centric narrative which we all have come accustom to and is not likely to change in the near future. 

Headache Not Enough For Plaintiff to Have Standing to Proceed with FDCPA Suit

A District Court judge in Indiana has dismissed a Fair Debt Collection Practices Act case, ruling that headaches, sadness, fear, and anxiety are not enough for the plaintiff to have standing to sue in federal court. More details here.

WHAT THIS MEANS, FROM MIKE FROST OF MALONE FROST MARTIN: In this case, the Defendant filed and sought Motion for Summary Judgment premised on the fact that the underlying debt was not a consumer debt and therefore not subject to the Fair Debt Collection Practices Act. The underlying debt was a commercial automobile policy and the argument set forth by Defendant was solid but instead of ruling on the motion filed by the Defendant, the Court took it upon itself to review Article III standing concerns before reaching any merits of the case.

This is another example of various Courts requiring more than mere allegations of medical conditions or pain suffered by a Plaintiff to conclude a concrete injury which would ultimately provide standing to pursue the underlying lawsuit in Federal Court. The Supreme Court ruling in TransUnion v. Ramirez was sited by this Court which ultimately found that stress or anxiety caused by, or annoyance from, the debt collection process is not enough to create an injury-in-fact.

Judge Rules for Defendant in FDCPA Glassine Window Case

There are no shortage of cases detailing the consequences of allowing an individual’s account number to be seen through the glassine portion of an envelope containing a collection letter, but a District Court judge in Illinois has settled the debate about what should happen when only a portion of an account number is visible through that window. More details here.

WHAT THIS MEANS, FROM JUNE COLEMAN OF MESSER STRICKLER: Standing has been a hot topic on many federal cases, but sometimes raising standing only moves a case into state court.  But this case, Brewer v. The Law Office of Mitchell D. Blum & Associations, LLC, case no. 1:21-cv-00294 (N.D. Ill.  Nov. 1, 2021), emphasizes a point in  the U.S. Supreme Court’s recent case about standing, TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), and may also speak to the scope of what is “disclosure” on an envelope. This Seventh Circuit case starts with its repeated holding that “a breach of the [FDCPA] does not, by itself, cause an injury in fact.” (Markakos v. Medicredit, Inc., 997 F.3d 778, 779 (7th Cir. 2021).) To have standing in a federal court, the plaintiff must have suffered personal harm.  Various courts have addressed that harm exists when a consumer’s entire account number is visible through a glassine window in an envelope. It cannot be stressed enough that many state courts do not have a injury in fact/standing requirement. Therefore, if Plaintiff fails to have sufficient standing for federal court, and the plaintiff’s case get dismissed, the plaintiff can refile in state court in many instances.

One aspect of the Brewer case that I found interesting was the idea of prospective injury in fact  – the standard for standing when the argument is that the defendant has exposed the plaintiff to the risk of injury.  In the recent TransUnon case, the U.S. Supreme Court set forth a standard for prospective “injury in fact,” i.e., the risk of real harm or injury – is only applicable for injunctive relief.  (TransUnion LLC, supra, 141 S. Ct. at2210-11.) Therefore, the harm must have actually occurred; the risk of harm is insufficient. This is a really important distinction. If you have a credit report issue, the allegation that the credit report information might be viewed by someone or that the lower credit score would impact credit granting is all prospective injury that only become real injury when a credit grantor has refused to grant credit or granted credit on less desirable terms because of the allegedly inaccurate credit information. 

Also notable is the footnote that the Court finds it implausible that a partial account number disclosure would create any risk of injury. This language may bode well to inadvertent instances where part of an account number is disclosed through a glassine window. It seems like it would be hard pressed to call that a third party disclosure. The ability to view a partial account number may still create liability because most of the envelope cases are alleging violation of section 1692f(8), which prohibits any language or symbol  on an envelope. But perhaps the Brewer case can be used to argue against liability and standing. We will have to see …

Judge Grants MTD in FCRA Case Over Charged Off Debt

If an unpaid debt is charged off, should it be removed from an individual’s credit report? While a plaintiff believed it should, a District Court judge in Oregon thought differently, and has dismissed a Fair Credit Reporting Act case against a pair of defendants. More details here.

WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Let’s call this one “It Looks Dead, But It Ain’t Necessarily Buried Yet.”

The good news: this is a sound ruling and it was smart to take the quick shot on a motion to dismiss.

This decision is great not only because it dismissed a puffed-up FCRA claim, but also because the judge was willing to do so on a motion to dismiss. That can be a tough a “get” with FCRA claims, which often require a developed fact record before a court will consider kicking the consumer’s claim as a matter of law on summary judgment. The defense benefitted from this court’s willingness to rely on decisions from other courts dismissing similar theories on the grounds that it is neither inaccurate nor misleading to report the tradeline status as “charged off” over several months. Great stuff; looks like this claim is dead!

But now, the rub: the court has given the plaintiff leave to file an amended complaint to cure the defects outlined in the order. In other words, the plaintiff now has a legal roadmap for attempting to file a complaint that does state a claim. Whether she attempts to do that remains to be seen, but it is a distinct possibility that this one could “rise from the dead” in the form of an amended complaint.

This case study gives us two take-home thoughts for defending consumer lawsuits: (1) What does a “win” look like if we get it? Does that outcome end the case in a favorable manner? (2) Is a motion to dismiss the right tool for the job? It’s always attractive to swing for the fence and try to end the case at the pleadings stage, but will a favorable decision on the motion actually end the case the way we want it ended? Or are we only achieving a partial victory, or a victory susceptible to attack by amendment (or appeal)? Answering these questions correctly is the key to victory.

Senators Call on CFPB to Investigate, Reform Credit Reporting Process

A number of leading Senate Democrats are calling on Rohit Chopra and the Consumer Financial Protection Bureau to “take concrete steps to reform the credit reporting industry,” including improving the accuracy of credit reports and streamlining the dispute resolution process. More details here.

WHAT THIS MEANS, FROM CARLOS ORTIZ OF POLSINELLI: U.S. Democratic senators recently called for reform in the credit reporting industry. The senators wrote to CFBP Director Chopra requesting that the agency exercise its supervisory, rulemaking, and enforcement authority over to bring about immediate change.  Specifically, the senators requested that the CFBP focus on credit reporting agencies (“CRA’s”) to improve the accuracy of credit reports and streamline the dispute resolution process. According to the senators, the CFBP should hold CRA’s accountable for addressing persistent errors. The senators wrote that consumers should not have to navigate lengthy, complicated processes to correct credit reporting errors, or to protect themselves against identity theft or fraud. The senators recommended that the CFBP examine how CRA’s frequently fail to devote sufficient personnel and resources for dispute resolution. Included in the senators’ request was that the CFBP establish an ombudsperson position to facilitate the dispute resolution process, require CRA’s to match an individual’s full Social Security number, consider requiring nationwide CRA’s to perform accuracy audits on information furnishers provide, and codify provisions of the nationwide CRA’s settlement with state attorneys general that delayed reporting of medical debt for six months and removed debts paid by insurance.

The letter was signed by U.S. Senators Brian Schatz [D-HI], Sherrod Brown [D-Ohio], Ron Wyden [D-Ore.], Elizabeth Warren [D-Mass.], Jack Reed [D-R.I.], Chris Van Hollen [D-Md.], and Ben Ray Luján [D-N.M.].

The financial services industry should anticipate that the CFBP will be more active in flexing their regulatory muscle.

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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