Compliance Digest – March 7

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Every week, AccountsRecovery.net 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 Class Action Over Settlement Offer in Letter

I think I’m probably not the only person in the world, who, when wandering around a store and coming across an item without a price tag, makes a comment about how said item must be free. We all know that just because there is no price tag, the item isn’t free, but I guess some people are willing to try harder than others. That has led a District Court judge in New Jersey to grant a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit after a plaintiff received a collection letter offering a 20% discount to settle a debt but the discount applied to only one of the two payment plan options that were offered. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: Pistone v Halsted reminds me of the quote – “No good deed goes unpunished.” This is another FDCPA case over a settlement letter. It seems a bit remarkable how many lawsuits are filed against collection agencies that offer discounts and flexible payment plans. In this instance, a fairly short settlement offer that included the Evory safe harbor language drew a class action lawsuit that alleged two 1692e claims, a 1692f claim and a 1692g claim.

The judge wrote a nice, tight twelve page opinion. For anyone who practices in the Third Circuit, it has an excellent discussion on how to analyze 1692e, f and g allegations. For instance, we’ve often seen plaintiffs allege that a letter is deceptive if it is subject to two interpretations, which was alleged in this instance. The court emphasized that those two interpretations must be “reasonable” and in this case the theory was not reasonable. This is a good Rule 12 victory.   

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Plaintiff Accuses Collector of Requiring Reason for Dispute in FDCPA Class Action

A class-action complaint has been filed in federal court in Florida accusing a collector of violating the Fair Debt Collection Practices Act by requiring that the plaintiff include a reason why a debt was being disputed when disputing a debt during a phone call with a representative of the defendant. More details here.

WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: This putative class action will be an interesting one to watch and I will be interested to see if it gets kicked on a motion to dismiss or for lack of Article III standing. What makes this complaint interesting is the point it illustrates: section 1692g allows consumers to dispute debts but does not require any specificity as to the nature of the dispute which hampers the ability of the debt collector to ascertain whether the dispute has merit. From a compliance perspective, debt collectors need to consider their scripting for the scenario where a consumer calls in to dispute the debt. Do they ask about the nature of the dispute or simply say thank you and hang up the phone? The former is of more benefit to the consumer and the debt collector as it allows for the debt collector to ascertain the nature of the dispute and provide information to the consumer that is actually, helpful. But the latter is all that is required and is “safe” because it complies with the statute and simply put, it benefits no one in the long run and does not put the parties closer to a resolution.

Judge Grants MSJ for Defendant in TCPA ATDS Case

A District Court judge in Indiana has granted a defendant’s motion for summary judgment in a Telephone Consumer Protection Act case, ruling that the defendant did not use an automated telephone dialing system when contacting the plaintiff on his cell phone to collect on an unpaid debt after he had revoked consent to be contacted. More details here.

WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON & MESSER: A recent ruling from the Northern District of Indiana has joined the chorus of decisions reaffirming the Supreme Court’s decision in Facebook. The Facebook decision made it clear that dialing from a list of numbers without evidence of random or sequential number generation does not trigger that TCPA’s autodialer restrictions. In addressing cross-motions for summary judgment filed by both parties, the Court eviscerated the unrepresented plaintiff’s motion, primarily on evidentiary grounds. In granting Navient’s defense motion for summary judgment, the Court noted Navient did not select the numbers to be called randomly or sequentially, but did so based on specific business calling criteria and data points selected by the company.  

This decision follows the many other decisions that have held (post-Facebook)  that curated lists that are frequently used to make collection calls have a strong case that they do not run afoul of the TCPA’s autodialer rules. Bottom line — those lists are not created by a random or sequential number generator. As the days go by, the autodialer arguments are getting weaker and weaker.    

Banking Groups File Brief in Appeals Court Case over FDCPA Convenience Fees

A group of five banking trade associations has filed an amicus brief in a case before the Ninth Circuit Court of Appeals taking the stance that the Consumer Financial Protection Bureau and the appellants are wrong in asserting that the Fair Debt Collection Practices Act prohibits debt collectors from collecting convenience fees unless explicitly authorized. More details here.

WHAT THIS MEANS, FROM NICOLE STRICKLER OF MESSER STRICKLER: Five top banking groups recently weighed-in on the CFPB’s position that §1692f(1) prohibits the assessment of “pay-to-pay” fees. A “pay-to-pay” fee, otherwise known as a “convenience fee”, is charged to a consumer at the time of payment, ostensibly to cover the cost of the payment transaction. According to the CFPB, these “pay-to-pay” fees may only be lawfully charged if expressly authorized by the agreement creating the debt or “a law expressly or affirmatively authorized them.” Thomas-Lawson v. Carrington Mortgage Services, LLC | Consumer Financial Protection Bureau (consumerfinance.gov).

The banking associations recently submitted briefing in Thomas-Lawson arguing that the CFPB’s interpretation is too restrictive and contrary to basic rules of statutory interpretation. Specifically, they argue that the CFPB’s approach requires the court to read words not already present into the statutory text and find that the law must “expressly” or “affirmatively” authorize the charges. In contrast, the associations argue that the law must simply allow for the charge, which may occur via a subsequent oral contract between a collector and the consumer at the point of payment. The associations’ textualist position may resonate with the Ninth Circuit as the circuit has grown increasingly moderate in the law few years. However, the CFPB’s position should not be overlooked when assessing risk in operational practices. The CFPB has expressly stated its distaste for convenience fees agreed to at the time of payment. Thus, regardless of the Ninth Circuit’s ruling, those charging fees may want to rethink their practices to avoid a regulatory headache.

Patient Files Class Action, Accusing Debt Collector of Violating FDCPA, Regulation F

A class action lawsuit has been filed in North Carolina federal court against a hospital network and the collection agency it uses, accusing them of violating state law in North Carolina as well as the Fair Debt Collection Practices Act by overcharging him for a visit to the emergency room and using “aggressive, manipulative, and illegal collection practices” to collect on the debts. More details here.

WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: I would pay particularly close attention to this class action if you collect medical debts. I would also send this on to your health care provider clients to illustrate the importance of the No Surprises Act (“the Act”) on medical collections. The Act, which went into effect on January 1, 2022, regulates certain health care provider billing practices. Specifically, the law was enacted to limit “surprise billing” associated with emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers. Shortly after the Act’s implementation, the CFPB issued a compliance bulletin stating that debt collectors may be held liable under the FDCPA/FCRA for collecting on accounts that do not comply with the Act. While this particular complaint does not allege claims under the Act (the law wasn’t yet in effect), the tenor and policy arguments reflected in the allegations are substantially similar to those under the Act. The upshot for collection agencies is that you may find yourself defending a lawsuit against claims directed at your provider-client’s emergency billing practices under the Act. This should (if you haven’t already) prompt a conversation with your medical provider clients to ensure they have implemented policies and procedures aimed at identifying and addressing accounts subject to the Act.    

Judge Rules Plaintiff Lacks Standing in FDCPA Case Because Collection Letters Were Never Opened

A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling that the plaintiff lacked standing to sue because even though she accused the defendant of sending her 85 collection letters, she never claimed to have opened any of them. More details here.

WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: This case fits the quote from now-Associate Supreme Court Justice Amy Coney Barrett:  “No harm, no foul.”  When a consumer complains about the contents of a letter, they had better be sure that they actually opened the letter and read it. That is very baseline needed to show harm; something this Plaintiff failed to do – on their Third Amended Complaint. The debt collector’s decision to fight on standing at this stage may have made strategic sense since the claim was originally filed in 2018. Four years later, the FDCPA statute of limitations has run and the consumer will need to determine whether they can re-file in New Jersey state court based on the New Jersey savings statute. While a decision on the merits is generally more favorable than a decision on standing, this may be one of the rare cases where a decision on standing made more strategic sense.

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 www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.

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