Compliance Digest – June 13

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.

Class-Action Accuses Collector of Trying to Collect Canceled Debt

A class-action lawsuit has been filed against a collection agency, accusing it of contacting an individual who was represented by an attorney — because the plaintiff had already filed suit against another agency for the same debt before the account was recalled and placed with another agency — and for sending a collection letter two days after the healthcare provider sent a letter informing the individual that the debt had been canceled, and for using an envelope with a glassine window, through which the phrase “Mail this form to:” was visible. More details here.

WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: Here is a case with a lot of moving parts, and some questions for which just a few answers are likely to have a significant influence on the defense strategy and ultimate outcome. Did the agency know of the representation of the debtor by counsel, or should they have, whether due to information received from the creditor or simply because the prior action was filed on the same debt? If yes, there may be an issue with respect to this particular named plaintiff. Of course, the fact the agency may have known of that fact with respect to the named plaintiff does not mean there are other debts and debtors with whom this happened. And figuring that out sounds like an individualized question the defense can use to challenge class certification.

Second, did the agency know the creditor had sent a letter to the plaintiff cancelling the debt 2 days before the agency sent its initial letter? If so, this could be a tough one for the defense, though interestingly the plaintiff does not allege such knowledge on the part of the agency. But if not, this may be ripe for a bona fide error defense. It could also lead to some conversations about potential for indemnification.

And finally, while we question whether the phrase “Mail this form to:” by itself is really sufficient to support an FDCPA violation, determining whether this occurred with any kind of regularity is likely to require significant effort. As with the first question, this sounds like another potentially individualized question that could make class certification difficult.


Class-Action Accuses Collector of Not Honoring Opt-Out Requests, Not Sending Validation Notice

A class-action complaint has been filed in federal court in Florida accusing a collection agency of ignoring opt-out requests sent by an individual who received text messages from the agency attempting to collect on a debt, and because when the individual attempted to call one of the phone numbers used to send one of the text messages, the number was allegedly not in service. More details here.

WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: Last year, in the countless sessions and webinars about implementation of Regulation F, one of the consistent themes was system development. More specifically, Regulation F allows collectors to communicate with debtors in a variety of ways, but collectors must have systems that can process opt-outs, time-and-place limitations, and other nuances requested by debtors. While this complaint doesn’t explicitly arise under Regulation F, it illustrates the pitfalls of not following that advice.

If you believe the complaint, this debtor collector sent several texts to the debtor. That’s fine. The problem arose when the collector’s opt-out option wasn’t effective. Any text message requesting cessation should have sufficed, but certainly one including the word “stop,” no matter how many other words accompanied it. Worse yet, the numbers from which the texts were sent was “disconnected.”  Sending messages without providing any reasonable way to stop the messages will lead to class actions like this and, after Regulation F, the ire of the CFPB.

Judge Certifies Class in TCPA Case Against Collector

A District Court judge in Washington has granted a plaintiff’s motion to certify a class action against a debt collector accused of violating the Telephone Consumer Protection Act by obtaining the plaintiff’s cell phone number via a skiptracing service and contacting the plaintiff without first obtaining consent to do so, even though the defendant had access to call recordings that included the number and a file from another contractor that the number was in, as well. More details here.

WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: A common misconception in the ARM industry is that a merits-based defense of a case will prevent a class from being certified. Sometimes a court will look at the merits when evaluating a class certification motion, but, unfortunately, many times the trial court simply applies a rote formula to class certification. Here, the court expressed an opinion that the defendant may very well prevail on the consent issue, but that the plaintiff had nevertheless met all of the procedural requirements of Rule 23 and the class was certified. The lesson here is that a defendant with a merits-based defense must be prepared to have a class certified even if it can ultimately prevail on a later-filed summary judgment motion.

New Calif. Privacy Agency Releases First Draft of CCPA Regulation

The California Privacy Protection Agency has released a draft of its proposed regulations that would implement the California Consumer Privacy Act, but the draft only addresses a small number of the 22 different topics that the CPPA needs to address. More details here.

WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: The California Privacy Protection Agency (“CPPA”) has released its first draft regulations implementing the California Consumer Privacy Act (“the Act”), as amended by the California Privacy Rights Act of 2020.  The amended Act, which goes into effect on January 1, 2023, requires the CPPA to issue regulations affecting how companies collect, store, and use consumer data.

The 66-page draft regulations are only the tip of the iceberg, addressing a fraction of the issues the CPPA has been tasked with policing.  However, even these first regulations place heavy burdens on the regulated companies and contain plenty of fodder for would-be plaintiffs’ lawyers.  For example, the new Section 7002 requires personal information collection or use to be “reasonably necessary and proportionate” to its purposes or “reasonably expected” by an average consumer.  The regulations also include disclosure and privacy policy requirements and regulate when and how businesses may obtain consent for data collection or use.  For companies that use vendors to collect data, the regulations specify that both the company and the vendor must make the required disclosures and contain additional requirements for third parties and vendor contracts.  The regulations also affect how businesses must respond to consumer requests to manage or delete personal data.  Finally, the regulations set out an initial enforcement framework, providing parameters for consumer complaints, “probable cause” proceedings, stipulated orders, and audits.

While businesses can expect to see these regulations expand as the CPPA gets underway, including instructions on privacy requests from individuals interacting with companies in a business-to-business capacity, and while these draft regulations are still subject to change, this initial draft gives businesses plenty of food for thought.  Businesses affected by these regulations will want to review these regulations carefully to identify the aspects of their policies and procedures which will need to be overhauled to ensure compliance. 

Florida Supreme Court Rules Injured Worker Can Sue Under State Collection Law

The Florida Supreme Court has affirmed a lower court’s ruling holding that an individual subjected to debt collection activities for an injury covered by workers’ compensation can sue under the Florida Consumer Collection Practices Act instead of the state’s Department of Financial Services holding jurisdiction. More details here.

WHAT THIS MEANS, FROM DALE GOLDEN OF GOLDEN SCAZ GAGAIN: There’s no shortage of Florida attorneys filing lawsuits against debt collectors alleging violations of the Florida Consumer Collection Practices Act (FCCPA) by attempting to collect debts that are subject to workers’ compensation claims and therefore, uncollectible in the near-term. And there was a glimmer of hope that the practice would be short-circuited by a favorable ruling in this case. But alas, that didn’t happen.

The Defendants, a pair of diagnostic medical services providers, argued that their attempts to collect unpaid medical bills the Plaintiff claimed were covered by Workers’ Compensation laws was “a matter concerning reimbursement,” and because the Florida Department of Financial Services “has exclusive jurisdiction to decide any matters concerning reimbursement” per the State’s Worker’s Compensation statute, state courts lack jurisdiction to entertain FCCPA cases. The Florida Supreme court rejected the Defendants’ argument, ruling: “reimbursement matters [] involve the relationship between the provider and the [insurance] carrier” not the patient.

While this was a noble attempt to try to coral the growing number of Workers Compensation disputes that give birth to FCCPA claims, the Defendants’ efforts fell short. So, we can expect to continue to see these claims in Florida state courts. But it’s important to remember that in order to prove liability under the FCCPA, the patient will need to show that the defendant had “actual knowledge” the debt was subject to a Worker’s Compensation claim. “Should have known” will not be enough.

Judge Grants Motion to Remand Hunstein Copycat Back to State Court

This is one of those articles where the lede gets buried, but I think it’s worth reading all the way to the end, especially if you’re interested in Hunstein-related lawsuits. A District court judge in Illinois has granted a plaintiff’s motion to remand a Hunstein case back to state court, but in doing so, essentially made the defendant’s case for why such an alleged disclosure should not be considered to be a violation of the Fair Debt Collection Practices Act, at least as far as my non-lawyer eyes can see. More details here.

WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: While remands from the district courts in the Seventh Circuit on FDCPA cases are frequent these days, it is interesting to look at this in the context of the dissent that was issued in Pierre v. Midland Credit Management, Inc., by Judge Hamilton of the Seventh Circuit Court of Appeals. Judge Hamilton, who was joined by three fellow judges, wrote a scathing dissent opining about how the Seventh Circuit had perhaps taken its position on Article III standing a bit too far.  The Seventh Circuit, perhaps more than any other, has remanded cases at a fast and, in my opinion, aggressive clip. Relying heavily on the necessity of a Plaintiff showing a concrete injury, but one that must be more than just hypothetical or conjectural.  In the Seventh Circuit’s mind, this also excluded psychological injuries. Judge Hamilton’s dissent rejects this latter notion and argues that Seventh Circuit’s stance has all but “neutered” consumer protection law cases. The real question is how the dissent will shape future decisions and whether it will have any bearing on the Eleventh Circuit Court of Appeals’ forthcoming decision in the actual Hunstein case.

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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