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.
Judge Dismisses FDCPA Class Action Over Undated MVN
It’s not a ruling on the merits of sending an undated Model Validation Notice, but a District Court judge — this time in California — has dismissed a plaintiff’s Fair Debt Collection Practices Act class action, ruling that the plaintiff did not suffer a concrete injury and thus does not have standing to sue. More details here.
WHAT THIS MEANS, FROM HEATH MORGAN OF MARTIN GOLDEN LYONS WATTS MORGAN: This is a great ruling that helps the ARM industry push back against the frivolous cases about undated Model Validation Notices. This ruling follows other rulings in New York that are starting to shut these cases down. The plaintiff was given the chance to amend their complaint and allege specific damages related to the undated notice, but so far we have not seen other attempts be successful.
It is still a best practice to for all debt collectors to include a date on the MVN, as we are unfortunately still a year or so away from having nationwide consensus from the courts on these types of lawsuits.
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Judge Grants MTD in FDCPA Class Action
A Magistrate Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit on the grounds the plaintiffs lacked standing to sue after accusing the defendant of attempting to collect without a license to do so under state law. The plaintiffs attempted a unique strategy that hinged on alleging a violation under the tort of unreasonable debt collection, which is recognized in one jurisdiction – Texas. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: On the one hand this is another in a long line of cases where the Court found no Article III Standing. Where this case and its predecessor differ is Counsel’s argument that the courts in New Jersey should look to Texas law for guidance. Wow. In full disclosure I represented the defendants in both cases. Query, did the fact that Barron & Newburger is a Texas firm have anything to do with Plaintiff’s counsel going there? Both cases were quite old and clearly there were no actual damages. Church v. Collection Bureau of the Hudson Valley, Inc., 2023 U.S. Dist. LEXIS 210569 (D.N.J. Nov. 27, 2023) was originally filed on March 23, 2020 and Chun Ik Chang v. Frontline Asset Strategies, LLC, 2024 U.S. Dist. LEXIS 50164 (D.N.J. Mar. 21, 2024) was filed on February 20, 2018. In Chang, the recent decision, Hon, Michael Hammer, U.S.M.J. relied heavily on the prior decision by Hon. Michael Farbiaz, U.S.D.J. who observed, “[t]his Court has held, more than 20 times, that there is no standing in no-injury scenarios analogous to the one at issue here. But the Plaintiffs look to sidestep these cases by pressing a novel argument.” He then went into a pretty comprehensive review of the “Texas” theory and why it could not be relied on. Worth a look.
I am not aware of any other 3rd Circuit cases where the Texas tort of unreasonable debt collection was raised, of course it’s possible that after these two decisions Yongmoon Kim realized that he’d have a better chance trying to sell snow to Eskimos than Texas law to New Jersey judges. Of note, Kim now files the majority of his cases in the New Jersey state court to avoid making ridiculous standing arguments.
I expect we will be seeing more and more creative arguments regarding “concrete injury” when there is a contest regarding Article III standing. A related humorous phenomena is when after removal, the Plaintiff argues he has no damages to get it kicked back to state court. One then gets to request that Plaintiff explain to the state court why he/she is wasting their time with a lawsuit with no injury. Oh well.
BONUS COMMENTARY
In a bonus comment I noticed Mike’s comment in the April 5 edition of Accounts Recovery
• They say that lightning never strikes the same place twice. And, as we all no doubt know, there are millions (if not more) ways that an individual can dispute a debt. But what are the odds of two different plaintiffs sending the exact same dispute message to the same defendant one day apart from each other? And when you see what the dispute message is, you’ll no doubt note that the odds of two people doing this randomly are very small.
What Mike didn’t know is that in the case of Elliot Elo, the attorney who brought those two cases, lightning strikes in the same place a lot more than twice. Mr. Elo has filed over fifty (50) literally identical complaints (same format, idiosyncratic language and false factual allegations) in New York and New Jersey where the sole complaint is that after a communication from the collector, there was a written response asking for verification and “within the dispute letter Plaintiff informed the debt collector that the only convenient way to contact him/her was via email.” Those responses were all handwritten, and from a review of a fair number were written by the same person, and appear have been mailed from outside the NY/NJ area. Coincidence? I think not.
This is concerning on a number of levels. Mr. Elo, is new to this space and these complaints are his first foray. I just recently saw a complaint from North Carolina by a pro se where the complaint looked identical (format, type face and language) Be interesting to hear if anyone else is seeing this and similar behavior from attorneys new to this space.
Republican AGs File Suit to Block SAVE Student Loan Repayment Program
A group of 10 state Attorneys General — all Republicans — have filed a lawsuit against the federal government, seeking to block the enactment of an income-driven repayment plan saying it is another attempt at government overreach in the student loan arena and does nothing but transfer wealth from low-income individuals to people with higher incomes. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: While challenges alleging overreaching by the executive branch are not necessarily a new concept, they certainly continue to be a frequent occurrence across the last few administrations. While I have no reason to anticipate this trend slowing any time soon so long as agencies continue to announce new rules involving issues on which Congress has not reached a consensus or attempt to restate prior rules that were overturned when challenged. However, while the judicial process can take time, it also is serving its intended purpose: to pump the brakes and ensure that agencies conduct their rulemaking in accordance with law. As a result, it seems unlikely that any of the new rules currently subject to legal challenge will take effect in the immediate future in their current forms, if ever. Interested industry members should of course continue to monitor these challenges but may not need to implement any specific changes for some time.
Judge Grants MSJ for Defendant in FDCPA Case Over Unremoved Dispute Notification
A District Court judge in Missouri has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling the plaintiff lacked standing to sue after unsuccessfully attempting to have a dispute notation removed from her credit report. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: This decision rejects one of the Credit Repair Lawyers’ theories of trying to manufacture a claim by sending a letter to the furnisher of the data to remove a dispute on the account previously articulated by a consumer. Despite the request to remove the dispute on the account, the furnisher continued to report the account as disputed and the lawsuit followed. The Court determined that there was no standing finding : (1) the record lacked any evidence that the failure to remove the dispute notation affected plaintiff’s creditworthiness or her ability to obtain credit; (2) plaintiff’s purported emotional distress was not traceable to the defendant’s alleged violation; and (3) the reporting of inaccurate information to the bureaus is akin to the common law tort of defamation and plaintiff could not show that defendant’s failure to remove her dispute caused harm to her reputation. Judge Schelp’s decision is a road map on how to attack a consumer’s claim that the failure to remove a prior dispute has caused the plaintiff harm.
Judge Denies MTD in FDCPA Class Action Over Post-Judgment Fees
A District Court judge in Pennsylvania has denied a defendant’s motion to dismiss a Fair Debt Collection Practices Act class action lawsuit, ruling the plaintiff plausibly alleged violations of the statute after the defendant — a collection law firm — allegedly edited an account statement to include additional fees. More details here.
WHAT THIS MEANS, FROM SARAH DOERR OF MOSS & BARNETT: While the result seems obvious, the Panzarella opinion underscores the importance of clear communication and balance itemization. Collection agencies and law firms are well-advised to assume the “least sophisticated consumer” standard applies, regardless of jurisdiction.
CPPA Issues First Enforcement Advisory; Focuses on Data Minimization
The California Privacy Protection Agency yesterday issued its first enforcement advisory, warning companies about collecting, using, keeping, or sharing more personal information of consumers than needed when processing requests. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: As the states continue to advance bills related to artificial intelligence (AI) and sweeping privacy protections, California’s Privacy Protection Agency’s (“CPPA”) evolving Enforcement Division issues Advisory #2024-01 telling businesses they must thoughtfully apply “data minimization” principles in any instances in which they collect, disclose, retain or process consumers’ data. “Data minimization” concepts are “need to know” and are foundational to good data governance. Collecting, using, retaining and disclosing only so much information as is truly needed in specific circumstances best advances the goals of any privacy program, reduces risks of data loss, and assures that any purposes for which consumer data is collected shape what businesses do when framing up requests for data, responding to disclosure requests, and uses to which data is put.
There is an interesting tension between data minimization and a wide range of consumer-protective legitimate business needs for data. A common example is verifying that you are using the right data for the right customer and/or sharing data to or about the right customer – such as applying “know your customer” rules. An example is when a financial services business or even healthcare provider are asked to share information, those businesses are expected to perform some sort of verification process before sharing to assure that the requestor has a true need to know – and more importantly is the customer (or the customer’s legal representative). The CPPA’s advisory is clear that companies must align to data minimization principles when collecting, using, retaining, and sharing information.
Here are five things businesses should consider in light of the CCPA’s Enforcement Division’s advisory:
- Am I limiting the consumer I am requesting to only the minimum necessary information I need to accomplish my reasonable business purposes?
- Have I kept my data retention and data destruction policies up to date to align with keeping only that data necessary to meet my legal and regulatory responsibilities?
- Am I confident in my inventory of all the places consumer data is stored so I can retrieve it and know it is secured when it is at rest?
- Am I responsibly using consumer data to verify incoming requests to release or disclose it to assure they are coming from authorized persons?
- Have I designated enough resources to receive, track and respond to consumers’ opt-out requests or other restrictions, permissions and revocations of permissions if and as they occur?
Judge Grants MTD in FDCPA Case Over Collection Lawsuit
In a case that was defended by Patrick Newman and Kira Locke from Bassford Remele, a District Court judge in Minnesota has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, because the plaintiff lacked standing on some of her claims, failed to state a claim on others, and should have raised certain defenses when she was sued for not paying the debt in the first place instead of doing it here, the judge ruled. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: If you’ve got 20 minutes and want to read through a well-written opinion, here is your case. However, the opinion is 37 pages long, so I’m going to have to touch on the highpoints here. Frist, the Court reiterated that an informational injury that does not result in actual downstream consequences cannot give rise to Article III standing. Second, the Court found that the Plaintiff was collaterally estopped from bringing an FDCPA claim premised on Midland not owning the debt because Midland had already obtained a default judgment against the consumer in a previous state court matter. Third, the Court states that “court forms” and “form templates that have gone through the legislative process” should be given extreme deference — especially given that the latter were created by the lawmakers themselves. Solid win for the industry.
Debt Collection Complaint Volume Falls in 2023: CFPB
There were only two categories of complaints filed by consumers with the Consumer Financial Protection Bureau that fell between 2022 and 2023 and debt collection was one of them. In fact, the size of the drop was also the largest in terms of the number of complaints and the percentage change year over year. There were 109,900 complaints filed by consumers about debt collection which was down from 115,800 complaints in 2022. More details here.
WHAT THIS MEANS, FROM KIRA LOCKE OF BASSFORD REMELE: The solar eclipse happened this week, causing us to see a decrease in sunlight. Do you know what else is seeing a decrease? The number of debt collection complaints filed by consumers with the Consumer Financial Protection Bureau. In 2023, there were 109,900 consumer complaints related to debt collection, which was a decrease from previous years.
With the solar eclipse, darkness was temporary, and the sunlight soon returned. Will a rise in CFPB debt collection complaints return as well, or will the number of these complaints continue to fall? Time will tell.
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.