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 Grants MJOP For Defendant in FDCPA Case Over Whether Calls Were Convenient
In a case defended by Avanti Bakane at Gordon Rees, a District Court judge in California has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act case over whether the plaintiff informed the defendant that its calls were being made at an inconvenient time. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: It is great to see companies standing up to these manufactured and frivolous claims. In Puentes v. Portfolio Recovery Associates, LLC, Plaintiff filed his suit pro se generally alleging Portfolio Recovery Associates, LLC (“PRA”) was calling him at a time known to be inconvenient after two separate calls indicating it was inconvenient to talk at that very moment. A motion for judgment on the pleadings was filed and the court ruled in favor of PRA finding Mr. Puentes never informed PRA that any future calls would be inconvenient, nor could PRA have known of such. Cases like this are becoming more and more common this year and hopefully more favorable decisions like Puentes are in store. Great work by Avanti, and thanks to PRA for investing in the case.
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Judge Grants MSJ For Defendant in FDCPA Bona Fide Error Case
A Magistrate Court judge in Colorado has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case on the grounds that it was entitled to the “bona fide error” defense after it was accused of misrepresenting the debt that the plaintiff owed. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: The Bona Fide Error defense is the subject of much scrutiny by trial courts and their opinions vary widely. In this case, the trial court essentially allowed the agency to rely on the information passed along by the creditor as a defense even though the information was, in fact, not correct. However, many courts have concluded that reliance on the creditor alone is not a defense. Make sure you have sufficient indemnification provisions in your agreements with your creditor clients to protect you in the event the creditor provides you with erroneous data and you are subject to a lawsuit as a result.
Judge Grants MSJ For Defendant in FDCPA Case Over Alleged Inconvenient Calls
A District Court judge in Nevada has granted a defendant’s motion for summary judgment and denied the plaintiff’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that the defendant could not have known it was contacting the plaintiff at an inconvenient time after the plaintiff told the defendant he was at work and could not talk during a prior conversation. More details here.
WHAT THIS MEANS, FROM KHARI FERRELL OF FROST ECHOLS: This case highlights the importance of being proactive in responding to a consumer’s statement that a particular time or place is inconvenient for the purposes of contacting them.
In my view, the key to the defendant prevailing in this case was difference between the timing of the first call as opposed to the second call.
Specifically, despite the plaintiff failing to identify a specific inconvenient timeframe during his first call with the defendant, the defendant nevertheless called him at a different time of the day and day of the week than it did on the first call. By doing this, the defendant was able to escape any notion that it knew or should have known that the timing of its second call was inconvenient for the plaintiff.
CFPB Issues Rule to Treat BNPL Like Credit Cards
The Consumer Financial Protection Bureau yesterday issued an interpretive rule to ensure that Buy Now, Pay Later lenders adhere to the same consumer protections as traditional credit card issuers. This significant move mandates that BNPL lenders provide key protections, including the ability for consumers to dispute charges and receive refunds. This rule stems from extensive analysis and a 2022 CFPB study that revealed a tenfold increase in BNPL lending volumes between 2019 and 2021, alongside significant consumer risks such as debt accumulation and lack of standardized disclosures. More details here.
WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: In yet another example of rulemaking by fiat, the CFPB published an “interpretive rule” stating that Buy Now Pay Later transactions are the equivalent of a credit card transaction under TILA, providing consumers with certain benefits such as the ability to dispute charges and receive periodic statements (in addition to others). Given this is only an interpretive rule and therefore guidance, as well as the CFPB’s prior statements that guidance is not law, this new rule creates more confusion than clarity. One has to imagine the complete lack of compliance with the APA materially increases the likelihood this rule will be subject to challenge, whether through litigation or, in the event of a change in administration, the CRA process.
Judge Grants MTD in FCRA, FDCPA Case Over Post-Divorce Liability
A District Court judge in Florida has granted a motion to dismiss filed by defendants in a Fair Credit Reporting Act and Fair Debt Collection Practices Act case, ruling that the plaintiff is liable for her debts even though her divorce decree states that her now ex-husband would be responsible for them. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK DOWD & TURNER: My takeaway from Judge Rosenberg’s May 14, 2024, Order in Hom v. TransUnion, LLC, et al. is that, in the law, details matter and it is sometimes necessary to split hairs. And this adage may ring even more true in our field of credit and collections. The difference between legal obligation and legal responsibility in Hom might be slight, but it exists. Ms. Hom’s creditors were not parties to her divorce case and her legal obligations to her creditors remained intact post-divorce. The fact that her ex-husband had agreed to be responsible for payment of the debts at issue did not alter the legal foundation on which her obligations were based or the rights of her creditors to enforce those obligations. I don’t know how Judge Rosenberg could have come to any other decision. If Ms. Hom is ever entitled to any relief for (alleged) damages flowing from this situation, both from a legal perspective and a common-sense perspective, it should come from her ex-husband for (allegedly) not doing what he had obligated himself to do.
Notably, Judge Rosenberg granted Ms. Hom until May 30 to file a second amended complaint to, ostensibly, include a new theory (that had been argued but not plead) about how Ms. Hom’s debts should have been reported. A second amended complaint was filed on May 28 so it remains to be seen how these issues will ultimately play out.
More Regulation, More Enforcement at CFPB Following Supreme Court Ruling
Now that its future seems a little more secure and stable, the Consumer Financial Protection Bureau plans to start “firing on all cylinders,” its director, Rohit Chopra said on Friday. This includes beefing up the size of its enforcement unit and moving forward with new regulations, especially in the area of credit reports and credit scores, Chopra said. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: It has been nearly two weeks since the CFPB issued its public statements that the CFPB v. Community Financial Services Association of America Supreme Court decision was “a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive.” The CFPB announced it will be able to “forge ahead” with law enforcement work – renewing promises Director Chopra made in October,2023, to dramatically increase the Bureau’s enforcement staff. Director Chopra promised to focus energies on “repeat offenders” as well as on individual executives “calling the shots” at companies alleged to be engaging in practices that are harmful to consumers. Additional regulatory focus is on the various fees – allegedly “illegally obtained junk fees” financial firms of all sorts charge consumers. Not surprisingly, the CFPB has renewed its attention on the growth of consumer complaints about credit reports and notes it is “considering new rules to make sure that so-called data brokers who ingest, assemble, and sell our personal data” are abiding by traditional consumer credit laws. In just under two weeks, the CFPB has made announcements about three major enforcement actions since the Supreme Court decision, has launched an inquiry into junk fees in mortgage closing costs, and has issued an interpretive ruling related to buy now, pay later credit offerings.
What might this mean for the credit and collections industry? First, businesses who are data furnishers may want to take a hard look at the ballooning consumer complaints about credit reporting to ascertain what the subject matter and content of those complaints are – and analyze, and track them. How many are recurring or identical? Data furnishers may want to consider reviewing and updating their processes for onboarding consumer accounts and associated data to assure the debt substantiation upon which they rely to collect and potentially credit report meet accuracy and integrity expectations – and that sufficient debt documentation is available if and when needed to conduct a reasonable investigation upon receipt of disputes. Other key practical steps a business may want to consider related to making it straightforward and easy for consumers to dispute or complaint directly to them. This may improve a business’ opportunities to quickly and directly resolve consumers’ concerns and gather information helpful to the resolution of consumers’ outstanding accounts.
Illinois Legislature Passes Medical Debt Credit Reporting Bill
The Illinois legislature is sending a bill to the desk of Gov. JB Pritzker that would make the state the latest to ban medical debt from appearing on consumers’ credit reports. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER: Illinois is expected to become the latest state to prohibit consumer reporting agencies from reporting adverse information relating to medical debt. The bill defines “medical debt” as any debt arising from the receipt of health care services, products, or devices, and the bill excludes medical debt that is charged to a credit card other than a credit card used solely for the purpose of purchasing health care services. If the bill is enacted, Illinois will join California, Colorado, New York, and Minnesota as states on the front lines of removing medical bills from consumer reports.
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.
