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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 Denies Class Certification in TCPA Case Over Collection Calls
A District Court judge in Virginia has denied a plaintiff’s motion to certify a class action in a Telephone Consumer Protection Act case, after the plaintiff filed suit because he received a pre-recorded message to his cell phone that was intended for someone else, but the number had been reassigned to the plaintiff. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF GORDON REES: In this putative TCPA Class Action, Plaintiff filed suit against Capital One related to pre-recorded messages received on his cellular phone. The cellular number was reassigned to Plaintiff, however, Capital One had consent of the prior cellular phone owner to place calls. The District Court discussed the Class and whether a Class Member such as Plaintiff had standing and whether Plaintiff’s injury was sufficient. The Court found that to suffer a concrete injury, Plaintiff and Class Members must have actually received the pre-recorded voice message, or had a pre-paid or restricted minute cellular plan. The Court redefined the class to include only those members. However, the Class was not certified as Plaintiff’s expert testimony was considered “ipse dixit” – the expert’s methodology was not tested or peer reviewed and therefore unreliable as the expert was unable to further refine the class from an initial subset to eliminate non-class members. Plaintiff’s expert also issued a supplemental declaration that the Court rejected as untimely under the Court’s scheduling Order. Finally, in determining whether the Class should be certified the Court found the class lacked ascertainability and predominance based on its ruling on Plaintiff’s proposed expert testimony (lack of a reliable method for identifying class members) and since the proposed class could not meet the ascertainability threshold, the predominance requirements were unmet as well.
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Another Appeals Court Rules Plaintiff in Hunstein Case Lacks Standing to Sue
In a case that was defended by Brendan Little at Lippes Mathias, the Court of Appeals for the Seventh Circuit yesterday became the latest to rule that a plaintiff in a Hunstein lawsuit does not have standing to sue because she did not suffer a concrete injury, although the 13 months it took the Court to issue its ruling did cause some concern that maybe it wasn’t as cut-and-dried as other courts have determined these types of cases to be. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: It may be time to officially stick a fork in Hunstein cases filed in federal court. The Seventh Circuit has now joined the Eleventh and Tenth Circuits, ruling that the disclosure of debtor information to a letter vendor does not cause a concrete injury and therefore, the Article III jurisdiction does not exist. The Plaintiff claimed that the “disclosure harmed her by ‘invading her privacy.’” But the court rejected that argument since a common law claim for “invasion of privacy” requires proof of publication. And the disclosure to the letter vendor was not “public” disclosure. One takeaway here is that we could see more Hunstein cases in state court. However, state courts have not been overly receptive to the merits of Hunstein claims, and many states also have standing requirements that are quite similar to the Article III “concrete injury” hurdle in federal court.
Bills Introduced in House, Senate to Prohibit Medical Debt Credit Reporting
A pair of bills have been introduced — one in the House of Representatives and one in the Senate — that seek to amend the Fair Credit Reporting Act to prohibit the inclusion of medical debt items on a consumer’s credit report as a show of support for the Consumer Financial Protection Bureau’s efforts to do the same. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: Just over a month after the Consumer Financial Protection Bureau introduced its SBREFA proposal for updating the Fair Credit Reporting Act regulations to prohibit medical debt reporting, bills have now been introduced in Congress to reach the same result. Senate Bill 3103 was introduced in last week by Senators Merkley, Menendez, Fetterman and Blumenthal. The bill titled the “Medical Debt Relief Act of 2023” proposes to amend the Fair Credit Reporting Act by prohibiting the inclusion of medical debt on a consumer report. The bill’s brief text authorizes and directs the Consumer Financial Protection Bureau to take steps to amend Regulation V to also prohibit creditors from obtaining or using information relating to a consumer’s medical debt in determining whether or not to extend credit to that consumer. A bill was introduced in the House, H.R. 6003 by Representative Katie Porter with the support of 26 cosponsors. The text of H.R. 6003 is not yet available but its summary suggests it is also proposing to amend the FCRA to prohibit the inclusion of medical debt on a consumer report.
Interestingly the Kaiser Family Foundation (“KFF”) has released information about consumer experiences with health insurance “shows complexity, red tape, and confusion” that rival affordability as problems. KFF’s research shows that 58% of people with health insurance “say they encountered at least one problem using their coverage in the past year.” Speaking for KFF, its President and CEO Drew Altman said, “People report an obstacle course of claims denials, limited in-network providers, and a labyrinth of red tape, with many saying it prevented them from getting needed care.”
In other medical debt news, a new Minnesota law, SF 2995 took effect November 1, 2023, which requires non-profit hospitals to screen uninsured patients for financial assistance within thirty days of receiving services. The law applies prospectively to services rendered in Minnesota nonprofit hospitals on or after November 1, 2023. The new law, similar to a medical debt protection law passed in 2021 in Maryland, prohibits hospitals from offering patients enrollment in payment plans or referring patients for collections or offering patients medical credit cards before determining whether or not an uninsured patient is eligible for charity care.
Judge Grants MTD in FDCPA Case Over Lack of Claims
A District Court judge in Ohio has granted a defendant’s motion to dismiss after it was sued for allegedly violating multiple statutes, including the Fair Debt Collection Practices Act, as well as a consent decree with the Consumer Financial Protection Bureau. More details here.
WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: I’m always a little in awe of pro se litigants – they are fearless in their filings and arguments while attorneys, at times, walk a tight rope in their pleadings and arguments. Here we have a pro se litigant who sought recovery via a Consent Decree from the CFPB, Ohio’s Frivolous Conduct Statute, and, while not expressly labeled, possible FDCPA and defamation claims. Portfolio Recovery Associates, LLC filed a Motion to Dismiss and (drum roll, please!) was successful. There are a few takeaways from this case: 1) a consumer does not have a private right of action under the Consumer Financial Protection Act; 2) the courts are almost always going to construe a pro se litigant’s complaint more liberally than it would an attorney-filed complaint; and 3) oftentimes, the leniency provided is actually beneficial to the collection agency in that it provides little room for the pro se litigant to claim the court didn’t consider all their claims (ultimately, they feel heard and are less likely to continue fighting).
Know when you’re up against a pro se litigant the courts may grant them more leniency, but the courts will also hold them accountable to the pleading standards.
Problems With Debt Collection Tactics Cited in CFPB Report on Student Loans
An annual report released yesterday by the Consumer Financial Protection Bureau’s education loan ombudsman notes that three out of every four complaints filed by consumers about student loans had to do with how those loans are being serviced and collected, and references “coercive debt collection practices” related to the collection of private student loans as one of the key risks and challenges impacting individuals with federal student loans. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: Overall, this CFPB report on student loan servicing complaints is only marginally useful for debt collectors and student loan servicers seeking to tighten up practices, policies and procedures. As a threshold matter, it is noteworthy that the Bureau received fewer than 10,000 complaints on student loans, both public and private. In contrast, during the same period the Bureau reported over 880,000 complaints about consumer reporting and debt repair, and almost 64,000 complaints about debt collection generally. So the volume of complaints was not extraordinary (especially given that the complaint intake mechanism does not evaluate the complaint and consumers may post anything they want in the complaint portal). In addition, the Bureau notes that during the review period student loan servicers were generally doing well, having transferred “millions of accounts, implement[ed] new policies to reduce monthly payments, and address[ed] long-standing servicing failures including inadequate customer service and errors in basic loan administration.” In light of complaints about long hold times for customer service and giving incorrect loan information on the phone, it appears that at least some servicers can still improve on basic servicing functions. But there was not much information for third-party debt collectors because the central debt collection complaint, received more than once, involved schools as creditors (not debt collectors) withholding transcripts where the schools alleged that the students owed money. The Bureau identified that as an abusive practice in collection, but third-party debt collectors do not have transcripts to withhold. The report is definitely worth a read for any student loan servicer or debt collector but may not tell you much more than you already know.
FCC Announces Inquiry into AI’s Impact on Robocalls, Robotexts
The Federal Communications Commission yesterday announced it will begin assessing the evolving threat of how artificial intelligence is being used to impact illegal and unwanted robocalls and texts with the intention of looking at how the Telephone Consumer Protection Act can be used to protect consumers. More details here.
WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON & MESSER: Consistent with the White House’s Executive Order this past week laying out a national policy on AI, the Federal Communications Commission (“FCC”) released a draft Notice of Inquiry (“NOI”) that would look into the implications of emerging Artificial Intelligence (“AI”) technologies on the Commission’s efforts to prevent unwanted and illegal calls and texts under the Telephone Consumer Protection Act (“TCPA”). The FCC seeks to determine how they can use the TCPA to address AI concerns, on such issue as:
- How AI technologies fit into the Commission’s statutory responsibilities under the Telephone Consumer Protection Act (TCPA);
- If and when future AI technologies fall under the TCPA;
- How AI impacts existing regulatory frameworks and future policy formulation;
- If the Commission should consider ways to verify the authenticity of legitimately generated AI voice or text content from trusted sources; and,
- What next steps, if any, are necessary to advance this inquiry.
The FCC has already deemed that the TCPA can reach artificial voice generated by AI. However, questions remain whether the TCPA can be used in a way to address other forms of AI that is used, including AI that can be used disruptively to make illegal, fraudulent, or otherwise unwanted robocalls and robotexts, such as to avoid blocking systems or by enabling bad actors to increase call volumes.
On the other hand, the FCC also wants to determine any potential benefits and risks that AI technologies could create for consumers regarding unwanted robocalls and texts. For example, the FCC would examine how AI could enable calling platforms to tailor messages to individual recipients in more helpful ways that are consistent with TCPA protections or how AI technology could be used to help recognize and block scam or other unwanted calls before they reach consumers.
The questions will be: How far is the reach of the TCPA with regard to emerging technologies? In some respects, this could be a tough haul for the FCC. The TCPA drafters had vision, and they understood that the TCPA may have to be used and adapted to future technologies. However, as you recall, the FCC faced challenges when interpreting the TCPA too broadly as they did back in 2015 and its 2015 Order was ultimately struck down through the decision in ACA v. FCC.
It will be interesting to see which provisions of the TCPA the FCC believes can reach the ever evolving AI issues that may come before the FCC. Stay tuned – some much is happening so fast on the AI front, and it can be used and adapted for so many things, that it likely the FCC cannot keep pace with the chameleon that we now know as AI.
Utah Appeals Court Affirms Ruling for Debt Buyer Accused of Violating State Licensing Law
The Utah Court of Appeals has affirmed a lower court’s ruling in favor of a debt buyer that was sued by a group of plaintiffs that alleged the debt buyer’s attempts to collect debts while unlicensed under the Utah Collection Agency Act (UCAA) constituted deceptive and unconscionable acts under the Utah Consumer Sales Practices Act (UCSPA), saying that the debt buyer didn’t intentionally mislead the plaintiffs with its actions. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: Many licensing statutes are open to interpretation. Whether you actually need a particular license often matters less than whether the licensing statute can be read to support a claim that (1) the license is required and (2) the failure to have that license is enforceable through a private right of action. Licensing evaluations involve a good deal of statutory interpretation. This can be tedious, but it will often spare you from expensive litigation. I’ll give you one licensing tip for free: you don’t need the Utah license that was at issue in this case because the statute was repealed earlier this year.
N.J. Appeals Court Affirms Dismissal of FDCPA Case for Lack of Jurisdiction
The Appellate Division of the Superior Court of New Jersey has affirmed a lower court’s ruling in favor of a defendant that was sued in New Jersey small claims court for violating the Fair Debt Collection Practices Act, agreeing with the lower court that the suit was filed in the wrong jurisdiction. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: There is a distinction between jurisdiction and venue. A court has jurisdiction either if the subject matter is appropriately before the court or if a party (usually a defendant) is subject to being sued there. Venue is the place most connected to the parties and the cause of action. A court must have jurisdiction to hear a case (hint – Hunstein). Venue mostly describes which forum is most convenient given the parties and facts. Here, the defendant collection agency claimed the events of the collection efforts all took place in Nevada, not New Jersey, and that the agency had no presence in New Jersey and did not do business in New Jersey. The court agreed and dismissed the case. It is interesting to note that even if the agency had conducted business in New Jersey generally, since the debt was created in Nevada, the contacts were in Nevada and the underlying contract was performed in Nevada, a motion for a change in venue for bringing the action to a forum with more convenience and connection to the conduct, while within a certain discretion of the court, would have likely been granted.
Judge Expands Injunction Blocking Enactment of CFPB’s Small Business Lending Rule
A federal judge in Texas has expanded the stay against the Consumer Financial Protection Bureau’s plan to enforce a rule designed to combat gender and racial discrimination in small business lending to cover all financial institutions impacted by the rule. The judge had initially issued a preliminary injunction back in August the applied only to the plaintiffs in the case — members of the Texas Bankers Association and the American Bankers Association. More details here.
WHAT THIS MEANS, FROM ARI DERMAN OF CLARK HILL: When I last commented about this in August, we were feeling optimistic about the injunction and what it meant for the financial services industry, yet somewhat concerned since it technically applied only to the plaintiffs in the instant case (the FOMO vibes were real!). With the stay expanded, it provides some much needed clarity to impacted parties. It seems like this was the only fair resolution to ensure a level playing field and consistent regulatory roadmap.
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.