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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 Denies MSJ for Defendant in FDCPA Class-Action Over SOL Disclosure, Call Notification in Letter
A District Court judge in Pennsylvania has denied a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act class-action lawsuit, ruling the defendant needed to disclose that a partial payment could restart the statute of limitations on a time-barred debt and that a reference to contacting the defendant by phone for further assistance overshadows that disputes must be made in writing. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: Let me begin with acknowledging that the defense attorneys in this case did an admirable job. They relied on in-Circuit precedent to make their argument. Unfortunately, the judge did not agree with them. Disclosures regarding the statute of limitations are difficult for this very reason — does a debt collector have to disclose what will restart the statute of limitations clock? This judge believes that a debt collector must disclose what actions taken by a debtor would restart that clock. Pennsylvania does not have statutorily required notice regarding the statute of limitations like other jurisdictions. Would that have solved this lawsuit? Maybe.
At the end of the day, this case serves as a reminder that judges do not always interpret arguments and opinions in the same way as other judges and that make litigation inherently risky.
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Judge Grants MTD in FDCPA Case Over Sending Verification Letter After Receiving Cease Communication Request
A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case after it was sued for sending a debt verification letter to a consumer who had refused to pay a debt and demanded the defendant cease communication with him. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: A dispute combined with a refusal to pay can present compliance challenges. In certain circumstances, a dispute triggers verification requirements while a refusal to pay operates as a demand to cease communication. This was a good win for the defense and a just result for a collector that was simply trying to comply with two FDCPA requirements that are sometimes in tension.
Appeals Court Again Overturns Ruling on Whether Call Center Agents Should be Paid While Computers Boot Up
The Court of Appeals for the Ninth Circuit has, for the second time, reversed a summary judgment ruling in favor of a defendant that was sued for violating the Fair Labor Standards Act because it refused to compensate employees of a call center for time spent booting up and shutting down their computers, even if that period of time is brief. More details here.
WHAT THIS MEANS, FROM KHARI FERRELL OF FROST ECHOLS: This case is a great example of why it is essential for employers to have processes in place to optimize the efficiency and performance of their employees. In this case, the defendant would have greatly benefited from having a system for employees to clock in without needing to start up a computer. There are many existing platforms that allow employees to clock in using their cellular phones. Alternatively, if the defendant had a process that allowed a supervisor to adjust an employee’s time based on the time needed to start up the employee’s computer, the Ninth Circuit would likely have likely come out differently in this case.
Judge Grants MTD in FDCPA Case Over Worker’s Comp Debt
A District Court judge in Florida has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case involving a worker’s compensation claim because the plaintiff failed to sufficiently allege a concrete injury, thus lacking the necessary standing to pursue the lawsuit. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: This case is more about the lack of factual specificity in the complaint than it is about the law. Plaintiffs must allege concrete injury to maintain standing in federal court. Here, the plaintiff alleged such injury in conclusory fashion. The trial court dismissed the complaint without prejudice allowing the plaintiff to file an amended complaint with more specifics.
CFPB Supervisory Highlights Spotlight Issues with Debt Collectors
You can say a lot of things about the Consumer Financial Protection Bureau, but one thing you can’t say is that they keep you in the dark about what they are thinking and the issues that matter to them. One of the ways they keep the credit and collection industry updated is by publishing summaries of what they find during examinations of companies in this space. These Supervisory Highlights reports offer glimpses into the types of issues that are being uncovered and can serve as a crystal ball that shows what types of issues are likely to be the focus of future enforcement actions. In its latest issue, which the CFPB released yesterday, the Bureau highlighted issues with debt collectors misleading and harassing consumers. More details here.
WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: The CFPB, in its most recent Supervisory Highlights, provides more insight into the types of issues they are seeing and remain interested in with respect to debt collection. Not surprisingly, failing to provide a debt validation notice when required is high on their list and the type of issue none of us are surprised they would take issue with. Similarly, they identified concerns with collectors using false names, not providing required disclosures, and being verbally abusive to consumers . . . again, not surprising. Perhaps most interesting were some alleged failures on the part of card issuers to calculate the statute of limitations, which can create problems for both the issuer and collector. It’s probably a good idea, where possible, for collectors to try and verify the statute of limitations if that information is provided as part of a file from the creditor to avoid enhanced risk of a violation regarding the providing of notice.
Appeals Court Overturns Summary Judgment for Defendants in Case Over Call Frequency
The Court of Appeals for the First Circuit has overturned a summary judgment ruling in favor of a creditor and two debt collectors that were sued in a class action for violating state law in Massachusetts related to how often a consumer can be contacted on the phone by a collector, ruling the plaintiff had standing to sue. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: The United States Court of Appeals for the First Circuit recently overturned a defense ruling from the United States District Court for the District of Massachusetts. The case involved alleged violations of the call frequency restrictions established by the Massachusetts Consumer Protection Act. Under that Act, a debt collector is limited to initiating no more than two calls or text messages in any seven-day period. A consumer that has been injured by excess calls has a private right of action to file suit. The First Circuit’s decision ultimately focused on the proof necessary to satisfy the “cognizable injury” requirement built into the state Act. In this case, the Court held that the debtor had offered sufficient proof of privacy-related and emotional distress injuries arising from his receipt of the unlawful, excess calls. Thus, the defense victory was vacated and the case was remanded and will now proceed.
This opinion is a good reminder to debt collectors that FDCPA and Regulation F compliance, while extremely important, is not enough. Whether the topic is call frequency, required disclosures, or record-keeping, etc., state (and in some cases city) statutes and their implementing rules/code cannot be ignored. Because state law is also more easily and frequently updated than federal law, debt collectors also need to regularly review and revise their policies and procedures to ensure compliance. In addition to potential state-wide class action liability, state regulators pose a real enforcement concern and, in my experience, are increasingly active in recent years. If it is has been awhile since you audited and updated your state and local compliance programs, now would be a great time for a refresh.
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.
