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.
CFPB Issues Advisory Opinions on FCRA Procedures
The Consumer Financial Protection Bureau yesterday released a pair of advisory opinions related to the Fair Credit Reporting Act — one addressing inaccurate background check reports and the other reminding credit reporting agencies that consumers have a right to their entire credit file any time it is requested. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: The Biden Administration CFPB has been particularly focused on credit reporting. And, as has been the pattern during Democratic appointees to the Bureau, the CFPB chooses to provide regulatory guidance through its investigatory reports, consent orders, and advisory opinions rather than through formal rule-making. This rule-making through enforcement has been a staple that sets it apart from Republican governance of the Bureau.
Recent advisory opinions remind Consumer Reporting Agencies that accuracy includes more than baseline regurgitation of information obtained in public records. The CFPB places the burden on CRA’s to provide full sourcing of their public records and policing of that information to ensure that the entire picture is presented.
The CRA’s must allow those being reported to be able to fully dispute incomplete or inaccurate information without having to independently perform an investigation on their own to uncover the full picture presented by a single tradeline.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Judge Dismisses FDCPA Suit Over Failure to Respond to Disputes
A District Court judge in Ohio has dismissed a Fair Debt Collection Practices Act case because the plaintiff lacked standing to sue, even though he did allege some claims that have been considered sufficient for standing in the past (at least to my non-lawyer eyes). More details here.
WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: This is a helpful standing case out of the Southern District of Ohio. A pro se litigant alleged multiple claims against Defendants. In response, Defendants moved to dismiss the case for lack of jurisdiction and failure to state a claim. The court addressed the 12(b)(1) motion first, found it dispositive, and did not address the 12(b)(6) motion.
The Court found Plaintiff lacked standing. Plaintiff alleged financial harms by way of postage costs, but the Court found “that type of self-inflicted harm is not enough to confer standing without showing another concrete injury that is either current or certainly impending.” Plaintiff also failed to include any facts in his complaint; rather, he simply made conclusory statements. As a result, the Court found it lacked jurisdiction over the dispute.
I’m a fan of this ruling. The Court acknowledged Plaintiff’s pro se status confers a more liberal pleading standing on him, yet still held him accountable for not sufficiently pleading Article III standing.
Judge Denies Competing Summary Judgment Motions in FDCPA Case Over Botox Purchase
A District Court judge in Nevada has denied competing summary judgment motions from both parties in a Fair Debt Collection Practices Act case, ruling that it isn’t totally clear whether the debt in question — the purchase of Botox — is covered under the FDCPA. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: It’s not everyday that a central issue of a FDCPA case is whether the underlying debt was actually purchased for “corporate espionage,” but here we are. Although the defendant here attempted to have the case dismissed both on standing and on the basis that the FDCPA did not apply, neither strategy was successful. The Court concluded that the Plaintiff’s self-serving affidavit claiming that the stress associated with the debt caused her to loose sleep and her appetite and suffer from migraines and depression was enough. In addition, the Court concluded that there was a “fact question” as to whether the Plaintiff purchased the Botox for her own use or for commercial purposes. In the end, this is another ruling in which a Plaintiff’s threadbare claims of “stress” were enough to confer standing to further pursue the action. It’s worth noting that the Court ultimately moved this case into a settlement conference. Based on the tone of the order, I think it can be fairly interpreted that the Court was frustrated by the case in general.
Utah Appeals Court Overturns Dismissal of FDCPA Suit Related to State License
The Utah Court of Appeals has overturned the dismissal of a Fair Debt Collection Practices Act case against a collector that was sued for obtaining default judgments against a pair of plaintiffs on the grounds that it was not licensed properly in Utah when it filed the collection lawsuits and obtained the judgments, ruling the judge dismissed the case too prematurely, before all the facts needed to make a determination were submitted. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The resolution of the FDCPA claims in this case turns on the resolution of the underlying state law claim: whether the alleged debt collector was properly registered and bonded as a collection agency in Utah (at a time prior to the relatively recent repeal of that requirement) when it sought and obtained default judgments against two debtors. The idea that a consumer can make a successful case that a debt collector who is not properly licensed under state law has committed a deceptive practice under the FDCPA by misrepresenting the legal status of the debt is pretty well settled in case law at this point. But this case presents some factual issues for the lower courts to work out about the collection agency’s registration status during a period when it was allegedly operating as a d/b/a of another, properly registered, company. If the plaintiffs can establish at trial that the collection agency was not properly registered in Utah when it obtained those judgments, the FDCPA claims are likely to naturally follow. However this case works out, the facts underscore the importance of obtaining and maintaining the right state and local licenses.
Judge Dismisses FDCPA Class Action for Lack of Standing
A District Court judge in New York has dismissed a Fair Debt Collection Practices Act class action case on the grounds the plaintiff lacked standing to sue and thus does not have subject matter jurisdiction, after accusing a collector of sending a Model Validation Notice that had two different balances in it. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATTHIAS: The Hon. Pamela K. Chen has been one of the judges leading the charge in the Eastern District of New York to repeatedly articulate that plaintiffs with cookie cutter allegations regarding harm do not have Article III standing to proceed in federal court. The procedural history in this case supports how aggressively the Eastern District of New York is trying to send FDCPA cases back to state court. Within 3 days of Plaintiff’s commencement of this lawsuit and before Defendant was even served, Judge Chen issued an Order to Show Cause asking Plaintiff to articulate why she believed she had Article III standing to proceed in federal court. In rejecting Plaintiff’s arguments, Judge Chen again emphasized that: (1) Plaintiff’s form allegations of increased heart rate, difficulty with sleep, anxiety and emotional distress are insufficient to confer Article III standing; and (2) the receipt of a letter from Defendant is not akin to one of the four traditional torts of fraud, negligent infliction of emotional distress, invasion of privacy or nuisance. Defendants should take notice that if they try to remove a FDCPA cause of action to the Eastern District of New York, the Court, sua sponte, will quickly challenge subject matter jurisdiction and they should be prepared to articulate why the particular allegations in the complaint at issue differ from the allegations in the dozens of cases where the Eastern District of New York rejected arguments, post Trans Union, advocating that Article III standing exists.
Judge Denies Motion to Stay Discovery in FDCPA Case Over Garnishment of Wrong Individual
A District Court judge in New York has denied a defendant’s motion to stay discovery pending the outcome of its motion to dismiss a Fair Debt Collection Practices Act case after it was sued for allegedly garnishing the wages of the wrong individual. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: Can anybody really challenge the following:
It would be absurd to hold that a plaintiff who is subject to debt collection efforts for an obligation that he does not owe is ineligible for the FDCPA’s protections simply because he cannot characterize the nature of that obligation. (Citations omitted)
The Magistrate Judge here, cited the above language in his decision denying the Defendant law firm’s motion to stay discovery while waiting for the District Judge to rule on the law firm’s motion to dismiss based on the argument that Thomas failed to establish that the debt in question was consumer related.
Briefly discuss the strength of the motion to dismiss, Magistrate Judge Pedersen stated that he did “not think it is enough for a complaint to state simply that “upon information and belief, the debt is personal” and went on to point out that there were several indicators “showing that the debt is consumer in nature.” Those were that the “small” amount of the debt, the account was in the name of an individual and not a business and it was a residential address associated with the account. I have to point out that I’ve seen multiple “business” accounts that had those same characteristics.
Did anyone really think the Court was going to dismiss the case without discovery based on a failure to plead the nature of the case-especially when the moving party had singular access to the pertinent information (type of account)? But that point was not explored by the Judge.
In denying the motion to stay, Judge Pedersen focused on the argument raised by the law firm that discovery would be burdensome, and pointed out when you claim burdensome, you have to explain why, which was not done here.
Credit Bureau Removing All N.Y. Consumer Medical Debts From Reports
In response to a new law enacted last month in New York, one of the three major credit reporting agencies has announced it will no longer include any medical debt for residents of the Empire State on their credit reports. The move affects 2.2% of the total amount of medical debt, according to the company. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: The regulatory scrutiny of credit reporting medical debt continues to have an impact. Responding to New York’s recent enactment of a law banning the furnishing of medical debt information to CRAs and reporting by CRAs, Experian has taken a conservative approach by stating that it will no longer display any identifiable medical debt data for New York residents. While the recent New York law applies state-licensed and authorized healthcare providers, in practice there is no way for a credit reporting agency to easily discern the licensing status of a medical creditor. Banning all NY medical debt data is one way to ensure compliance without relying on furnishers to determine which medical debt can still be reported in New York. This announcement from Experian follows the joint decision of Experian, Trans Union and Equifax to stop reporting medical debt under $500 beginning in 2023.
Experian’s decision is in line with the CFPB’s recent September 2023 announcement that it was beginning the rulemaking process to remove medical bills from all American consumers’ credit reports. By the time we have a proposed rule on this issue it is likely that more states (and possibly more CRAs and furnishers) will have decided that not reporting medical debt is the best compliance move. Until we have a nationwide rule, if you continue to furnish information about medical debt, remember that this is a swiftly changing landscape, update your policies and procedures regularly and by state to ensure compliance, and use caution.
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.