Compliance Digest – October 24

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.

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.

Lack of Jurisdiction Leads EDPA Judge to Grant MTD in FCRA, FDCPA Case

In what feels like a “three people who have never been in my kitchen” claim, a District Court judge in Pennsylvania has granted a motion to dismiss filed by two debt collection companies that were sued for allegedly violating the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, on the grounds that there was no reason for the case to be filed in that jurisdiction in the first place. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: There has been a lot of recent focus on Article III standing, but there are other limits to a court’s jurisdiction. At the risk of oversimplification, a defendant can be sued in its “home” district or in the district where the alleged violation occurred. However, furnishing credit information to a credit reporting agency is generally not enough (on its own) to subject yourself to jurisdiction in the district where the CRA is located. A dismissal for lack of personal jurisdiction is usually without prejudice, so the plaintiff is able to refile the claims in a proper jurisdiction. Also, under some circumstances a federal court can simply transfer the case to a proper jurisdiction. While a dismissal based on lack of jurisdiction is rarely a complete win, it can provide a number of strategic advantages for a defendant. 

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Judge Partially Grants MTD in FDCPA Case Over Wrong Debt On Plaintiff’s Credit Report

A District Court judge in Arizona has partially granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by furnishing information to the credit reporting agencies that did not belong the plaintiff.  More details here.

WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: At the outset of a case, a court is required to deny a motion to dismiss if the facts as pled, and accepted as true by the court, state a cause of action. It does not matter that the ultimate facts discovered in the case will demonstrate that the pleading was inaccurate. The court in this case concluded that plaintiff stated a cause of action that it was the defendant who provided the consumer reporting agency with the inaccurate information that the agency knew or should have know was false under 1692e(8).

‘Least Sophisticated Consumer’ Allegations Not Enough for Plaintiff to Have Standing, Judge Rules

I know that a lot of legal experts across the accounts receivable management industry view legal victories built on whether the plaintiff had standing to sue the same as they view Andy Dufresne’s escape from prison in “The Shawshank Redemption” in that it’s great that he got out, but wasn’t there a better way than crawling through sewage to do it? But, a District Court judge in New Jersey may have opened an interesting door when she granted a defendant’s motion to dismiss a class-action lawsuit because the plaintiff lacked standing — ruling that a claim asserting that a “least sophisticated consumer” would have been harmed by the alleged infraction is not enough for the plaintiff to have grounds to pursue her claim. More details here.

WHAT THIS MEANS, FROM KATHERINE O’BRIEN OF BARRON & NEWBURGER: That’s right — another case about standing! Here, one of the issues the Plaintiff claimed was that the collection letter sent had an improper collection fee added to the balance, causing her and a hypothetical least sophisticated consumer, to be confused or uncertain about the amount owed. However, the Court ruled that mere allegations of confusion or uncertainty when receiving a collection letter without some form of detrimental reliance, i.e., action or inaction taken by the Plaintiff (or her hypothetical least sophisticated consumer) because of the alleged error in the letter, was not enough to establish an injury. The mere risk of future harm without more is still not enough. 

Also interesting in this case, the Court found that the Plaintiff’s time spent “discussing the case with counsel” was also not a sufficient injury pled because the complaint was absent of “allegations regarding any time, money or effort expended in consulting with a lawyer.” You may recall in the Toste matter the 11th Circuit found that the Plaintiff’s “wasted time” was enough to find standing there. So, remember to always review your jurisdictions latest standing requirements when deciding on your defensive strategy as Courts continue to address these standing particulars.

Collection Operations to Forgive $23M in Debts Under Enforcement Order with N.C. AG

The Attorney General of North Carolina has announced a consent judgment with the president and chief executive officer of two debt collection companies — and the companies, as well — that will see the forgiveness of $23 million in unpaid debts, $225,000 in restitution to consumers, and nearly $30,000 in fines and legal costs after they were sued for allegedly engaging in illegal collection practices. More details here.

WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: In May of this year, the CFPB issued an interpretive rule “to provide further clarity regarding the scope of State enforcement” and reenforce the Bureau’s view that States can rely upon Dodd Frank to pursue enforcement actions against covered persons. Even without the Bureau’s encouragement, however, members of the ARM industry should not be surprised to see state AGs taking on enforcement actions. Why? A couple of reasons – first, these settlements can generate revenue for the AG’s office which help support and fund other sections of the AG’s office; and secondly, it can be good for an AG’s political aspirations. Beyond that, this consent order serves as a harsh reminder that many states require debt collectors and debt buyers to be licensed to do business in their state and many states have statutes which govern debt collection. Before dipping their toe into a new state, members of the ARM industry should always acclimate themselves with the state’s statutory scheme and licensing requirements.

Judge Grants MSJ for Defendant in FCRA, FDCPA Case Over Disputed Debt

A District Court judge in Pennsylvania has granted a defendant’s motion for summary judgment after it was sued for violating the Fair Credit Reporting Act and the Fair Debt Collection Practices Act by allegedly reporting inaccurate information to the credit reporting agencies and allegedly failing to produce the requested information when the plaintiff disputed the debt with the defendant. More details here.

WHAT THIS MEANS, FROM CHRIS MORRIS OF BASSFORD REMELE: The pro se plaintiff in this case came nowhere close to submitting evidence needed to survive summary judgment on his FCRA and FDCPA claims. Plaintiff admitted that he received a $20,000 loan and never made any payments, yet complained that the loan was incorrectly credit reported, and that defendants failed to sufficiently verify the debt by failing to provide a loan agreement bearing his signature. As to the FCRA claims, there was no evidence presented that any credit bureau reported a dispute to the creditor or collector, so duties under 1681s-2(b) were not even triggered. Other FCRA sections which plaintiff alleged were violated did not permit a private cause of action. As to the FDCPA claims, while the Court was persuaded that a genuine fact dispute existed as to whether defendants were “debt collectors”, plaintiff failed to submit any evidence that defendants used any false representations or unconscionable means to collect the debt. As to the theory that defendants were obligated to produce a signed loan agreement in response to a demand for verification, the Court noted that the FDCPA does not prescribe what qualifies as sufficient verification, but there is no support for the notion that the statute requires production of documents bearing a signature. In this case, the verification consisting of an account summary report showing the debt balance, current owner, name of plaintiff, and dates on which the debt was incurred and charged off, was deemed sufficient.

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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