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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 Grants MSJ for Defendant in FDCPA Case Over Non-Removal of Dispute Flag
A District Court judge in Michigan has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling the plaintiff lacked standing to sue because he did not suffer a concrete injury. This is a case involving a claim from plaintiffs that was pretty popular for a while and it demonstrates the importance of discovery. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: This case represents yet another Rumpelstiltskin-like effort by the consumer bar to spin straw into gold. Credit Repair Lawyers of America disputed a debt on behalf of the plaintiff and sent a second letter stating the plaintiff no longer disputed the debt. They then filed suit when the debt buyer failed to remove the dispute code from the consumer’s credit, claiming this failure violated the FDCPA and analogous state statutes.
At summary judgment, the Court found the consumer lacked standing under the FDCPA and declined to exercise jurisdiction over his state law claims. The claim was not akin to defamation since there was no evidence the supposedly incorrect reporting painted plaintiff in a negative light. The consumer’s claim that the reporting caused him to lose out on a mortgage refinance was not supported by evidence and, in fact, plaintiff produced a letter from a lender which stated a different reason for his loan denial. Plaintiff claimed emotional stress related to him “having more obligations and less disposable income” but failed to provide evidence the dispute mark on his credit limited his disposable income. In short – no harm, no foul.
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Judge Grants MJOP for Defendant in FDCPA Class Action Over POC in BK Proceeding
A District Court judge in Pennsylvania has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act class-action, ruling the defendants did not violate a state law regarding the interest rate it was charging and were not required to itemize the debt when filing a proof of claim during the plaintiffs’ bankruptcy proceedings. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: The District Court gave additional color to a novel theory that was rejected by the Third Circuit in 2022 and also rejected the plaintiff’s alternative argument affirming a long standing and widely accepted principle the Fair Debt Collection Practices Act (“FDCPA”) does not require a debt collector to itemize the balance of the debt into principal, interest and fees. First, the plaintiff argued the defendant-debt buyer was subject to PA’s Consumer Discount Company Act and because it was not licensed by the PA Department of Banking and Securities Act to charge higher interest, the defendant-debt buyer was afoul of the FDCPA. However, the District Court, like the Third Circuit, found that a debt buyer is not required to maintain a license because is not in the business of “making” or “negotiating” loans and is outside the purview the statute. The District Court searched the plaintiff’s amended complaint and could find no facts to suggest that the defendant-debt buyer was making or negotiating loans and to the contrary, the only alleged that the defendant purchased charged off receivables for pennies on the dollar. Accordingly, the Court could dismiss the amended complaint as a matter of law.
Second, Plaintiff’s fall-back theory, that defendant was required to itemize the debt when filing a proof of claim in the Bankruptcy Court, also fell flat. The District Court, citing in and out of circuit cases, affirmed the long-standing principle that the FDCPA does not require a debt collector to itemize the debt. Plaintiff’s attempt to argue that the law changes in the bankruptcy context was rejected as the District Court followed other district opinions holding that the bankruptcy context does not change the analysis because conduct alleged does not violate the FDCPA in the first place.
Judge Vacates Prior Ruling, Says Defendant Not Liable in FDCPA, FCRA Case
A District Court judge has reconsidered his position after a bench trial and has found that a collector did not violate the Fair Credit Reporting Act because the plaintiffs failed to show there was any liability for the company.` More details here.
WHAT THIS MEANS, FROM KIRA LOCKE OF BASSFORD REMELE: Did you hear about the court that changed its mind? It found there was room for improvement in a prior order.
A Texas court initially determined that a data furnisher failed to conduct a reasonable investigation of a dispute. However, after a trial on other issues, the court later ruled that the furnisher was not liable under the FCRA because the consumer did not present sufficient evidence to establish the tradeline was inaccurate. Without that evidence, the court found no reason to submit the case to the jury for decision, and instead ruled in the furnisher’s favor as a matter of law.
A great reminder that courts can have a change of heart at different stages of litigation based on the different evidentiary standard in play. In other words, a lost battle does not necessarily mean a lost war. In fact, the evidentiary requirements get progressively more onerous for the plaintiff as the case goes on. They get the most leeway on motions to dismiss, a slightly higher bar in opposing summary judgment (often referred to as the “put up or shut up” moment in litigation), and then the final test at trial, where the plaintiff must present enough evidence to prove their case.
With the right facts, it sometimes makes sense to solider on.
Judge Grants MSJ For Defendant in FDCPA Case Over ID Theft Claim
A District Court judge in New York has given the final heave-ho to a Fair Debt Collection Practices Act case by granting the defendant’s motion for summary judgment over the language used in a communication sent by the defendant to the plaintiff after the plaintiff claimed to be the victim of identity theft. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: Talk about burying the lede. While the Defendant law firm made three distinct summary judgment arguments, the most straight-forward was that its “identity theft claim” letter sent to Plaintiff’s counsel didn’t violate the FDCPA. Yet the court spent 10 pages ruminating on whether there was sufficient evidence the obligation at issue was a “debt” as defined by the statute, and nearly 6 more pages debating whether the letter was sent “in connection with an ongoing debt-collection effort.” It was only after siding with the Plaintiff on both of those issues that the court ultimately found the letter didn’t violated either § 1692e or § 1692f because there was nothing “deceptive or false in the letter” and the fact that the Plaintiff claimed ID theft didn’t render the letter violative of the FDCPA’s prohibition on attempting to collect any that is not “expressly authorized by the agreement create the debt.” The biggest takeaway here may be that Joe Jones and Ben Wolf continue to push the envelope in prosecuting FDCPA claims.
CFPB Finalizes Credit Card Late Payment Rule; Chamber Vows to Sue
The Consumer Financial Protection Bureau has determined that the cost of collecting on unpaid credit card debts for larger companies can be covered by charging an $8 late payment fee, but will allow those issuers to charge more if they are willing to show why their collection costs are higher than that threshold. More details here.
Groups Sue CFPB Over Credit Card Late Fee Rule
As promised, the Chamber of Commerce, along with a number of other banking trade groups — including some from Texas — filed a lawsuit yesterday against the Consumer Financial Protection Bureau, saying the regulator overstepped its authority it issuing a rule capping late fees that can be charged for missed credit card payments. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: The future of the final rule is uncertain. The lawsuit filed by the Chamber of Commerce and others was a necessary first step in slowing it down, and it is anticipated that a stay against enforcement will be sought soon. Thereafter, an appeal to the Fifth Circuit will surely follow regardless of which side ultimately prevails in the underlying district court case. Thereafter, we could see a petition for certorari filed with the Supreme Court and so on. As a result, the rule is at least several years away from taking effect in any form and could ultimately never come to fruition at all. Only time will tell. Perhaps Congress will act in the interim, but probably not. Either way, I doubt anyone is lowering their fee to $8 immediately, given the current events and likely trajectory of the rule.
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.