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.
Appeals Court Overturns FCRA Ruling
The Court of Appeals for the Second Circuit has vacated a ruling and remanded a Fair Credit Reporting Act case back to the District Court, determining that there is no difference whether an alleged inaccuracy in a consumer’s credit report was “legal” and therefore not within the court’s jurisdiction — if an inaccuracy is objectively and readily verifiable, it is subject to the statute. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: The legal vs. factual distinction argument remains under attack from multiple sources. In addition to this recent Second Circuit decision, the Eleventh Circuit is also considering this issue in the Belair v. Holiday Inn Hotel appeal. The CFPB filed an amicus brief in both appeals, asserting the argument that this exception finds no support in the plain text of the FCRA. According to the CFPB, furnishers and CRAs alike investigate do all that they can to satisfy the “reasonableness” prong of the FCRA. But this seems to disregard the significant demands imposed by requiring legal conclusions by non-legally trainied professionals will now have to be rendered throughout the dispute resolution process.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Appeals Court Partially Reverses FDCPA Case Based on Statute of Limitations
The Court of Appeals for the Ninth Circuit has partially affirmed the dismissal of a Fair Debt Collection Practices Act case — determining that an individual who has had loans discharged in bankruptcy cannot subsequently accuse a collector of violating the statute — but also reversed the dismissal of claims based on the FDCPA’s one-year statute of limitations, introducing a new test for determining which acts constitute independent violations of the law. More details here.
WHAT THIS MEANS, FROM CHELSEY PANKRATZ OF FROST ECHOLS: This appeals decision puts forth a new basis for potential ongoing or subsequent violations of the FDCPA arising out of the bringing of a collection suit. Now, in addition to the filing of the suit, this decision holds that subsequent actions taken in litigating such suit can constitute independent violations of the FDCPA. In this case, a subsequent affidavit was held to constitute a post-filing FDCPA violation, with the Appeals Court noting that “by filing a new affidavit that attempted to show that the Trusts owned the debts, Defendants did more than ‘reaffirm’ the original complaint, … rather, they presented a new basis — not contained in the complaint — to show that the Trusts owned the debts.” The Court further stated that “when Defendants ceased to rely on the [original] Affidavit and moved forward with the [subsequent] Affidavit, this discrete event created a ‘last opportunity to comply’ with the FDCPA.” In making its determination, the Appeals Court defined the following test: “When the alleged FDCPA violation is the bringing of a debt collection lawsuit, we determine which actions constitute independent FDCPA violations by considering (1) the debt collector’s last opportunity to comply with the statute and (2) whether the date of the violation is easily ascertainable.”
Judge Grants MSJ For Defendant in FDCPA Case Over Called Off Dispute
A District Court judge in Arizona has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case after it was sued because the plaintiff informed the defendant that she was no longer disputing the debt, and the steps taken by the defendant did not lead to the dispute being removed from the plaintiff’s credit report. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: At first, I thought this was simply another of the “disputed – not disputed” series of case filed all over the country by the minions of Gary Nitzin, Esq. also known as the Michigan Consumer Credit Lawyers. It probably is, based on the fact that there was also a pending motion to withdraw as counsel by Plaintiff’s lawyer, par for the course in those cases, once the local attorney realizes who he or she is actually representing. However, whether it is or isn’t is irrelevant to the lesson provided by the Court.
It appears that after TCS (“Thunderbird Collection Specialists, Inc.”) got notice that the Plaintiff no longer wanted to dispute the debt it withdrew the dispute code, assuming that would be the end. Wrong. It remained on Plaintiff’s report still marked “disputed.” The Plaintiff argued that they did not withdraw it correctly (they only deleted the dispute code, but did not replace it with another code) and therefore it remained disputed. Per Plaintiff that was because TCS did not comply with the Credit Reporting Resource Guide (CRRG) which Plaintiff identified “as a source of credit reporting industry standards and procedures.”
Rather than get into the weeds of who did what and when, Judge Zipps made two threshold observations. First, Plaintiff failed to provide any foundation to support her use of the CRRG. “Rahier fails to provide expert testimony or other evidence which would support her assertion that the CRRG sets forth the credit report industry standards and procedures,” the CRRG was “inadmissible hearsay because plaintiff did not provide expert witness testimony to establish CRRG as an industry standard.” Ba da bump.
The second observation was that “compliance with industry guidelines, such as the CRRG, is not sufficient to prove (or disprove) an alleged violation of the FDCPA.” Read that comment in the context of believing the use of the model validation notice is a slam dunk defense.
The next time you review a new complaint, keep these points in mind as you consider defenses.
Judge Grants Partial MTD in FDCPA Case Over ID Theft Affidavit
A District Court judge in New York has granted a defendant’s motion to partially dismiss one of the two counts against it in a Fair Debt Collection Practices Act lawsuit, ruling that the language in an identity theft affidavit that was sent to the plaintiff did not make it appear that the defendant was affiliated with the federal government and that a notarization requirement was falsely conveyed. More details here.
WHAT THIS MEANS, FROM LAURIE NELSON OF AUTOSCRIBE: This case is interesting because the Creditor sent a standard affidavit form to comply with the FDCPA to investigate a debt when a debtor requests, which was then used as the basis that the Creditor violated the FDCPA. Luckily for this Defendant and creditors as an industry, the Court dismissed the claim.
For example, in a 2021 case, a U.S. District Court granted a motion for summary judgment in favor of a debt collection agency (Defendant) with respect to a plaintiff’s FCRA and FDCPA allegations that used the standard affidavit form as evidence of compliance (Ingram v. Experian Info. Sols., CIVIL ACTION No. 18-3776 (E.D. Pa. Jun. 30, 2021)). In that case, the Plaintiff alleged that the Defendant violated the FCRA and the FDCPA by failing to fulfill a reasonable investigation upon receipt of a dispute over an account allegedly opened in his name without his consent. The Court found for the Defendant as it followed up with the claim by requesting additional information, including a standard form affidavit, similar if not identical to the one in question in this case.
In this case, the Defendant claimed this commonly used affidavit for identify fraud claims, again the same type used to illustrate compliance in prior instances, violated the FDCPA as it was misleading. The Defendant felt the form was presented in a way to appear it was affiliated with the government. Again, luckily for the industry, this Court did not agree to this argument. The language the Plaintiff points out as misleading is used commonly. When the letter is viewed as a hold, and the language is not read in isolation, it makes it clear that the Defendant is not affiliated with the government. Defendants continue to get creative, and the industry must always continue to pay attention. If the Court found for the Defendant, many in the industry would be scrambling to update forms asap or be at risk of the same claim.
But letters are not read in isolation, noted Judge Lewis J. Liman of the District Court for the Southern District of New York. The phrases in question were immediately preceded by the statement that the “affidavit or the information it contains may be made available to federal, state, and/or local law enforcement agencies for such action within their jurisdiction as they deem appropriate.” This statement makes it clear that the Defendant is not a federal, state, or local law enforcement agency, Judge Liman ruled. “The language of the Theft Affidavit simply conveys information regarding the possible consequences of making a false statement in the Theft Affidavit. It does not mislead the putative-debtor as to the nature and legal status of the underlying debt or impede a consumer’s ability to respond to or dispute collection, in any way that the FDCPA is intended to protect.”
Appeals Court Upholds Ruling for Defendant in FDCPA Case Thanks to Bona Fide Error Defense
The Court of Appeals for the Seventh Circuit has affirmed a lower court’s summary judgment ruling in favor of a defendant that used the Fair Debt Collection Practices Act’s Bona Fide Error defense, agreeing with the District Court that 12 calls placed during a three-week period is not harassing and that the deliberate circumvention of the dispute instructions by the plaintiff’s husband — also her attorney — entitled the defendant to use the defense. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF GORDON REES: Plaintiff appealed the District Court’s granting of Financial Asset Management Systems, Inc.’s (“FAMS”) motion for summary judgment on the basis Plaintiff was not a consumer and without analysis of Defendant’s bona fide error argument related to violations of Sections 1692h(b), 1693d and 1692d(5) of the FDCPA. The Appellate Court reaffirmed the District Court’s grant of summary judgment finding FAMS was entitled to summary judgment under its bona fide error defense because it had reasonable procedures in place. Ultimately the 7th Circuit disallowed Plaintiff’s attempt to argue FAMS’s lack of procedures since Plaintiff failed to address those points in its motion for summary judgment filed in the District Court. What this means to me – address and counter each and every argument raised in a motion or be precluded on Appeal.
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.