Compliance Digest – January 3

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 Denies MSJ for Defendant in FDCPA Class Over SOL Language in Letter

A District Court judge in New Jersey has denied a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act class-action case, ruling that it is unclear which state’s statute of limitations apply in determining the enforceability of an unpaid debt, and that the defendant’s actions may indicate it knew that the statute of limitations had expired. More details here.

WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: The essence and real import of this case is contained in footnote 4 of the decision where Judge McNulty wrote:

It is curious that PRA has not itself produced a copy of the underlying contract. . . . Because an assignee steps into the shoes of the assignor and seeks to collect a debt based on a contract, the Court will not lightly indulge a claim of ignorance of the contractual terms. As PRA acknowledges in its papers, following its purchase of Ms. Pazymino’s account, it remained bound by the terms of her original agreement with Comenity Bank. However, at oral argument, counsel for PRA stated that it does not have access to a copy of Ms. Pazymino’s contract. This is difficult to accept. As a sophisticated financial services entity, it is probable that PRA possesses or at least has access to the “written terms” at issue here. Even on the doubtful assumption that PRA cannot informally obtain the documents from Comenity, it is just as capable of pursuing third-party discovery as Ms. Pazymino is” 

PRA’s argument in its motion for summary judgment relied on the premise that, notwithstanding a choice of law provision which designated Delaware law as governing, New Jersey’s statue of limitations should govern. And the Court discussed at length under what circumstances that might be true. However, in summation Judge McNulty declined to rule on the legal issues due to the absence of the actual contract governing the account and decided to leave it to a jury to determine whether circumstantial evidence provided by the Plaintiff was sufficient to decide the choice of law question in her favor. Yikes!

I simply do not understand how at this point in time, the credit grantors don’t have records which identify the documents they provide to a consumer upon opening an account. I also wonder whether it is by design that most of the credit grantors do not maintain a library of their own terms and conditions. Most Judges share Judge McNulty’s incredulity as to the absence of what would appear to be essential records. 

The moral of the story is unless you are dealing with fresh defaults, you need to have the contract that goes to the specific account (“terms and conditions”) so you can defend the statute of limitations you rely on. Same holds true should one want to invoke an arbitration clause. 

Having lost its SJ motion, PRA is left in the position of going to a gunfight with only a knife should it proceed to trial.


Appeals Court Upholds Dismissal of FDCPA Case Over Use of Letter Vendor, Lack of Disclosure in Letter

The Court of Appeals for the Tenth Circuit has upheld the dismissal of a lower court’s ruling in a Fair Debt Collection Practices Act case in which the defendant was accused of disclosing the existence of the debt by using an outside vendor to print and mail the letter and because it failed to disclose that the amount of the underlying debt may increase. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The Tenth Circuit cited the Eleventh Circuit’s en banc decision in Hunstein in holding that the consumer did not have standing to maintain her letter-vendor claim because she failed to allege “publicity.” The consumer in this case also alleged that she was confused by the collector’s alleged failure to disclose that her debt was increasing due to interest. However, the Tenth Circuit concluded that confusion is not enough to confer standing absent an allegation that the consumer took some action in response to the allegedly misleading communication. The consumer apparently did claim that she detrimentally relied on the absence of an interest disclosure, but this assertion was made in a declaration filed in response to the collector’s motion rather than in the complaint itself. Because the collector asserted a facial challenge to standing, the Tenth Circuit held that the trial court did not abuse its discretion by refusing to consider that declaration. 

Judge Grants MTD in FDCPA Class Action Over SOL Disclosure in Letter

A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action related to the statute of limitations disclosure in a collection letter, affirming that the disclosure made by the defendant is one that has already been ruled on by other judges in and out of The Garden State to not violate the FDCPA. Full credit to the plaintiff, though, for pointing out that there is nothing to stop a creditor from filing a lawsuit to collect a debt for which the statute of limitations has expired and that it must be used as an affirmative defense by the party being sued. The ruling is helpful because it reinforces that the specific disclosure used in this case has now been ruled yet again to not violate the FDCPA. More details here.

WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: This class-action lawsuit was filed in New Jersey District Court alleging that the Defendant violated the Fair Debt Collection Practices Act (FDCPA) by including a disclosure regarding time-barred debt that falsely implies that the Plaintiff cannot be sued on the debt unless she takes certain actions – she alleged this statement to be false because the Plaintiff can still be sued on the time-barred debt, but also has a complete legal defense to such a suit. The Plaintiff further alleged that the disclosure is misleading because it implies that if she were sued on a time-barred debt, she could be led to believe, based on the disclosure language, that she was not obligated to do anything in response to such lawsuit, which would likely lead to an entry of default.

The Court concluded that the time-barred debt disclosure language used in this case is the exact same language used in the O’Neil case where Judge Salas dismissed the action for failure to give rise to a claim under the FDCPA and properly dismissed the matter. The Court again support to time-barred debt disclosure statement to be utilized on applicable accounts. 

As an industry, we are seeing cases with similar allegations related to the use, or failure to use, disclosure statements as a violation of the FDCPA. While disclosure statement litigation is not new it is an area that warrants review for continued compliance and preparation for defense.  

Judge Grants MSJ For Defendant in FDCPA Case Over Debt That was Sold

A debt that is sold to a third party can be confusing for a consumer, but confusion is not grounds for standing to sue under the Fair Debt Collection Practices Act, and bad lawyer jokes aside, using legal terms does not constitute the use of obscene or profane language, a District Court judge in Pennsylvania has ruled, granting a defendant’s motion for summary judgment. More details here.

WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN LYONS WATTS MORGAN: I can now sleep better knowing that a federal judge has declared the word “attorney” does not express “[i]rreverance toward God or holy things” and is not “offensive to accepted standard of decency”. The opinion in Berrian v. Midland Credit Management, Inc., does a good job focusing on the actual intent of the FDCPA, to eliminate abusive debt collection practices, and not set the least sophisticated (or unsophisticated in other jurisdictions) debtor standard to a level reachable only by submarines. The relevant case law was applied to the facts and Midland rightfully prevailed.

Bill Introduced in Senate to Change Leadership Structure, Funding Mechanism at CFPB

A bill has been introduced in the Senate — by outgoing Senator Pat Toomey [R-Penn.], the ranking member of the Senate Banking Committee — that aims to place the budget and funding of the Consumer Financial Protection Bureau under the congressional appropriations process while also changing the leadership structure of the Bureau to a five-member commission. More details here.

WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Will this bill create meaningful change with the Bureau? Difficult to predict with any sort of precision, but it seems unlikely. Which is a great reminder that the approach and functionality of regulatory agencies, both state and federal, are susceptible to political ebbs and flows—particularly the reigning administration’s goals. And that’s just another way of saying that most of this is out of your hands.

Thus, as we begin this new year let’s focus on the things we can control: policies and procedures! (Your favorite and mine.)

Good compliance practices, established in good-faith and with “consumer-centric” focus in close calls or cases of doubt, are like a nice blue suit. It will never go out of style, regardless of what the fashion (or political winds) of the day might be. To the extent there is any “lull” in your business operations on the heels of the holiday season, now is the perfect time to revisit your compliance protocols (and wardrobe)!

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.

Check Also

Judge Dismisses FDCPA Class Action for Lack of Standing

A District Court judge in New Jersey has dismissed a Fair Debt Collection Practices Act …

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