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.
Debt Buyer Prevails in En Banc Ruling on Standing and Counterclaims
In an en banc decision released yesterday, the Virginia Court of Appeals upheld a circuit court ruling that a debt buyer had standing to sue for an unpaid credit account balance, affirming its ownership of the debt, while reversing the circuit court’s decision to dismiss the consumer’s counterclaim, citing lack of jurisdiction. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The Court of Appeals of Virginia, sitting en banc, did not fully agree about the disposition of this case that turned on standing after several decisions on the standing question. A pro se consumer had managed to get a 3-judge panel of the Court of Appeals to reverse (in a 2-1 decision) lower court rulings finding that PRA had established its standing to sue and its ownership of the debtor’s account in the underlying collection action, and judgment in its favor on the debt. But in this opinion, the full Court of Appeals distilled the case down to whether it would have been appropriate to award summary judgment to the consumer defendant on the issue of standing – and found that there was enough of a dispute over that question that the lower court was right not to award summary judgment for the defendant. The question of standing was a triable issue in this case, with PRA having shared chain-of-title documentation that the consumer disputed at trial (before the motion). The Court of Appeals spent some time distinguishing the question of standing from the deeper questions on the merits of PRA’s claim to recovery from the consumer (some of which touched on PRA’s ownership of the account and the defendant’s obligation to pay it). That, and the fact that this was a summary judgment question, led the court to the correct conclusion that it was not appropriate to award summary judgment on the question of standing. That appears to be the right result after all.
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Judge Dismisses Claims of ID Theft in FCRA, FDCPA Case
A District Court Judge in Pennsylvania has dismissed a Fair Credit Reporting Act and Fair Debt Collection Practices Act case filed by a consumer representing herself on the grounds that the claims were insufficiently pleaded and because it’s not considered identity theft when a furnisher sends information about a consumer to a credit reporting agency. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: Litigating against pro se plaintiffs (those representing themselves without a lawyer) present both positives and negatives. On the positive side, pro se plaintiffs are generally unskilled at proceeding in court and routinely misunderstand the law. In addition, because they do not have lawyers, the defendant is not subject to paying a plaintiff’s legal fees if the defendant loses. On the other hand, courts bend over backwards to allow pro se plaintiffs full access to the court. This means that they are given wide latitude for mistakes and inartful litigation that a lawyer would not be given. This usually drives up defense costs as numerous motions and pleadings are permitted where the represented party only gets one chance.
This case is a prime example of both scenarios. The plaintiff here pleads a shotgun case against multiple defendants in a single complaint. It reflects misapplication of the law and seeks relief for certain conduct for which there is no cause of action. Nevertheless, the court only dismisses most counts without prejudice with the right for the plaintiff to refile the complaint. And in this case, requires the plaintiff to file separate complaints against the defendants instead of a collective one.
The defendants, who might ultimately prevail, are now subject to a second complaint probably followed by a second motion to dismiss, and maybe even a third before the court concludes the action is futile. In fact, some pro se plaintiffs proceed with appeals after such a loss. A high price to pay.
Judge Dismisses FCRA, FDCPA Case Over ID Theft Claims
A District Court Judge in Washington has granted a motion to dismiss filed by all the defendants in a Fair Credit Reporting Act and Fair Debt Collection Practices Act case, ruling that the plaintiff failed to adequately allege that the defendants’ actions were impermissible under the law. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: This case was filed pro se by the plaintiff in federal court alleging that defendant accessed her credit information without a permissible purpose and submitted a negative tradeline on her credit report for an identity theft related account. The plaintiff further alleged defamation and corresponding state law allegations. The court dismissed the complaint against both defendants finding that the plaintiff failed to sufficiently allege detailed facts to state a claim. The plaintiff failed to plead any facts about what specific information was inaccurate, how the inaccurate information was reported or any information identifying the impermissible purpose by defendants in said report. The agency and CRA both filed motions to dismiss in this case which assisted in the additional case law that continues to support permissible purpose for a debt collector to access a consumer credit account.
Bankruptcy Reform Bill Introduced in House
A bill has been re-introduced in the House or Representatives that would overhaul consumer bankruptcy and make it easier for individuals to file and have their debts discharged. The bill was introduced by Rep. Jerry Nadler [D-N.Y.] and is also backed by Sen. Elizabeth Warren [D-Mass.]. They first introduced the Consumer Bankruptcy Reform Act in 2020. The bill seeks to simplify the process, reduce costs, and offer broader relief to financially-strapped individuals, including the ability to discharge student loans through bankruptcy. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: I would be very surprised to see this bill get any traction in the new Congress, given that it did not move forward when originally introduced in 2020 and seems even less likely to do so now. It is not a bipartisan bill and also touches on a hot button issue in Washington in proposing to make both private and public student loans more dischargeable in bankruptcy. From my perspective, this bill is aimed more at allowing members of Congress to tell their constituents that they are trying to reform the bankruptcy system as a talking point for the midterms and beyond if the economy begins to struggle and bankruptcy filings increase back to pre-pandemic levels.”
Judge Grants MSJ For Defendant in FDCPA Case Over Text Sent After Cease Request Made
A District Court judge in Oklahoma has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that a subsequent text message to the plaintiff after she had requested communications be ceased did not violate the statute because it was an attempt to collect a separate debt. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: Defendant sent a text message to Plaintiff attempting to collect an account owed to AT&T U-Verse. Plaintiff responded to Defendant’s text message stating that she refused to pay the debt. Defendant processed the dispute and put the account into a cease status. Shortly thereafter, Defendant sent Plaintiff a text message attempting to collect on a completely different account. Plaintiff commenced an action claiming that Defendant violated Section 1692c(c) of the FDCPA. In adjudicating Defendant’s motion for summary judgment, the Court rejected Plaintiff’s position that she had Article III standing to proceed in federal court because she did not suffer an injury in fact. In addition, the Court relied on prior district court opinions finding that Section 1692c(c) applies on a debt-by-debt basis. Therefore, given that Plaintiff did not dispute the second account, Defendant’s text message concerning the second account did not fun afoul of the FDCPA and granted Defendant’s motion for summary judgment.
Waters Reintroduces Debt Collection Reform Bill
Rep. Maxine Waters [D-Calif.], ranking member of the House Financial Services Committee, this week reintroduced H.R. 10509, the Comprehensive Debt Collection Improvement Act. This legislation, first introduced in 2021, seeks to modernize federal debt collection laws while offering stronger protections for consumers facing various types of debt. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: Since the implementation of Regulation F, Democrats in the House Financial Services Committee have tried, but have not succeeded, in expanding the reach of the Fair Debt Collection Practices Act. HR 10509 is the same bill (HR 2547) that went nowhere in the Senate in 2022. The 118th Congress ended for the House of Representatives on December 24 and for the Senate on December 26. To say this bill was a shot across the bow is an understatement.
The 119th Congress will convene on January 3, 2025. Currently the Republicans hold a eight-seat majority but there are five (5) vacancies (three Democrats and two Republicans) to be filled. The Senate will hold a six-seat majority. The fate of HR 10509 died last Thursday. That is not to say that Rep. Waters and her co-sponsors will not reintroduce this bill in the future, but its passage looks even more challenging that it did in prior congressional sessions.
The rhetoric around the alleged demise of the CFPB maybe the reason around the introduction of this bill. This latest maneuver may be a foreshadow of the Democratic strategy for the next two years with regard to federal consumer protection, namely refocusing on legislation rather than regulation. Like previous bills, the roadblock will be the Senate, at least for the next two years.
Nonetheless, it will be important for industry to pay attention to the text and details of these future bills. Introduced in 2021, HR 2547 sought to ban the credit reporting of medical debt. We certainly know the path that policy has taken since then, both at the federal and state level. As minority party looks to reinvent and reinvigorate itself for the future, proposed legislation should not be taken lightly or ignored.
Happy New Year to all!
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.
