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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 Defense in FDCPA Case Over Unitemized Debts in Letter
A District Court judge in Kentucky has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling the collection letter that was sent to the plaintiff did not misrepresent that eight different debts had been aggregated into one, mainly because the plaintiff was provided with an itemized breakdown of the debts when she disputed them. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This is a really fantastic case for the defense. The plaintiff alleged that the MVN was misleading because it utilized a single account number in the itemization table when the aggregate amount in the table actually corresponded to eight different accounts (and seven different account numbers). Setting out multiple debts (with multiple account numbers) in the MVN’s itemization table was one of the early headaches we felt when trying to operationalize Regulation F in the beginning. Thankfully, the court took a commonsense approach to analyzing the issue and considered the collection process as a whole – not just this letter. The court looked at the information contained in the itemization table of the MVN together with a previous communication to the consumer including a complete itemization of all of her accounts. Based on both communications, the court concluded the information provided to the consumer was not misleading. The court relied heavily on case law stating that the “least sophisticated consumer” standard presumes a “basic level of reasonableness” and prevents “bizarre or idiosyncratic interpretations” of collection notices. The court also noted that only a “material” violation of the FDCPA could amount to an actionable claim – and given the context here, the violation (if one exists) was immaterial. This is definitely a ruling to keep in your arsenal if you are ever faced with defending a claim based on the allegations that your itemization table in your MVN is somehow misleading.
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Judge Declines to Strike Down N.J. Law Requiring Credit Reports be Made Available in Spanish
A District Court judge in New Jersey has ruled that the state can require the three major credit bureaus have to provide credit reports in Spanish as well as English, but the bureaus do not have to make the reports available in 10 languages which was required under state law. A trade group representing the bureaus had sued the state, saying that the state law was pre-empted by the Fair Credit Reporting Act and, if not pre-empted, infringed upon the commercial speech rights under the First Amendment. More details here.
WHAT THIS MEANS, FROM LAURIE NELSON OF AUTOSCRIBE: The effort of the CDIA to push against the requirement is justified as, like many compliance requirements, the new requirements will result in a significant financial impact on credit agencies. While the CDIA can walk away from what many call a partial victory, the credit agencies will still need to update processes to provide Spanish in addition to English language reports.
The case’s subject amendment was issued in 2019, and the CDIA filed this caseon the date that required compliance in October 2019. This decision was,therefore, issued over three years later. If credit agencies decided to ignore the amendment pending the litigation, they are left open now to risk. If credit agencies had pushed to comply fully with the amendment as the litigation pended, the credit agencies could have spent a significant amount of money trying to accommodate many languages that are based on this Court’s opinion and are not required at this time.
As the national credit agencies (Equifax, Experian, and TransUnion) that this amendment will apply to our well-known and few, I took it upon myself to review their webpages to see what, if any, compliance language related to this amendment is easy to view. While all three provide an option for Spanish language reports, it is unclear if all disclosures are provided in Spanish.
Judge Grants MTD in FDCPA Over Whether Plaintiff Disputed Debt
We have discussed at great lengths all the different ways that consumers can say they are disputing a debt without using the word dispute. Sometimes because they don’t know they didn’t say it and sometimes because they are trying to trap the collector into thinking the debt wasn’t disputed when it actually was. A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling the plaintiff never crossed the threshold of actually disputing the debt and therefore could not claim the defendant violated the statute by not reporting the debt as disputed with the credit reporting agencies. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK DOWD & TURNER: Green v. LVNV Funding, LLC is a great reminder that details matter. Though she claimed otherwise, the plaintiff never actually disputed her debt during a December 2023 call. That detail was not lost on LVNV and, in moving to dismiss the Complaint, it attached a transcript of the call at issue. Because what was said on the call was integral to the plaintiff’s claims, the District of New Jersey was able to consider the transcript without converting LVNV’s motion into one for summary judgment. Such early supplementation of the record can be an effective strategy when the communications being alluded to in the complaint are favorable and are not attached as exhibits. This is often seen with letter claims when the letter itself is compliant and has been (likely intentionally) omitted. Applying that same approach to the collection call in this case was a winning strategy and serves as a great example of an ARM defendant and its counsel working together to identify the critical facts and getting those facts in front of the judge as early as possible.
Judge Rules MTD Should be Granted in FDCPA Case Over Email Preference for Communications
A Magistrate Court judge in Texas has recommended that a defendant’s motion to dismiss a Fair Debt Collection Practices Act be granted after it was sued for sending a letter to the plaintiff who had indicated that the only convenient way to contact him was via email. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: Although the Court noted several different reasons why it ruled the way it did, the most significant rationale, and the one that will carry the most weight in other jurisdictions, is that while the FDCPA allows a consumer to make time/place/manner restrictions for communication, it also requires that all collection activity cease until the validation response “is mailed” to the consumer. In other words, a consumer cannot force a collection agency to deviate from the express intent of Congress. Here, the collection agency properly mailed the validation response even though the consumer demanded communication only by email. This is a unique circumstances and an agency should consult with an attorney before unilaterally interpreting the FDCPA.
Judge Denies Defendant’s MJOP in FDCPA Case Over Tax Debt
What constitutes a debt? The definition seems to change by the day. A District Court judge in Connecticut has denied a defendant’s motion for judgment on the pleadings, ruling the debt in question does meet the Fair Debt Collection Practice Act’s definition of a debt and that the suit should proceed. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: This case is fascinating and requires a close read; I know I read it more than once. This case requires a careful reading of the definition of “debt.” Under the FDCPA, a “‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. . .” 15 U.S.C. 1692a(5). The overwhelming majority of the time, we (the industry in general) focuses on whether the debt was for “personal, family, or household purposes,” but more and more we are seeing cases that highlight the transactional nature that’s required of the underlying obligation as well. This case highlights the importance of that analysis.
The consumer leased a vehicle from Hyundai (who remained owner of the vehicle) and, pursuant to the terms of the lease, the consumer was responsible for paying any vehicle or personal property taxes during the term of the lease. The vehicle was involved in accident and totaled. Hyundai received full compensation for the loss of the vehicle, but taxes were still due on the car for the period prior to the accident. Hyundai sought, through the debt collector, to collect the debt and the consumer sued the debt collector under the FDCPA.
The debt collector filed a motion for judgment on pleadings arguing that the obligation was not a “debt” under the FDCPA. The Court disagreed and found that because the debt was incurred under the terms of the lease, it was an obligation “arising out of a transaction.” It may seem boring and like a waste of time, but determining the basis of an obligation is just as important has determining the purpose of the obligation.
Judge Grants MTD in FDCPA Class Action for Lack of Standing
A District Court judge in New York has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action, ruling the plaintiff lacked standing to sue over a disclosure made in a collection letter. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: The Article III standing arguments continue to be made and continue to receive somewhat inconsistent treatments by various judges in different federal courthouses. In this case, the District Judge rejected the plaintiff’s generalized claims of emotional and reputational harm, as well as an allegation of expending time, money, and effort to mitigate risks created by the defendant’s letter, finding them insufficient to create Article III jurisdictional standing.
The puzzling part of this ruling—and one that frequently leaves me scratching my head—is the court’s dismissal of the case for lack of jurisdiction, while also granting the plaintiff leave to file an amended complaint. That ruling, in my opinion, demonstrates a fundamental misunderstanding of Article III jurisdiction by many federal judges, including some circuit court judges. Back in 1998, the Supreme Court unequivocally ruled: “Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94, 118 S. Ct. 1003, 1012 (1998) (emphasis added). And while I’ve lost this argument on more than one occasion myself, it remains clear to me that if a court dismisses a complaint for lack of Article III jurisdiction, it cannot grant leave to amend. The only exception to this rule is in diversity jurisdiction cases, dismissal of which implicates a specific federal statute permitting amendment in limited situations.
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.