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 MTD in FDCPA Case Over ID Theft
A District Court judge in Illinois has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling the plaintiff lacked standing after alleging violations related to a disputed debt originating from identity theft. More details here.
WHAT THIS MEANS, FROM NICK PROLA OF BASSFORD REMELE: At first glance, the underlying facts of this case display the hallmarks of a risky and expensive litigation path. Plaintiff alleged identity theft, filed a police report, and notified the collection firm of the dispute in writing. Yet, the complaint only alleges injuries limited to a violation of the FDCPA and the expense incurred in hiring a “professional” to stop collection of the debt.
Recognizing these weak allegations of injury, the collection firm filed a motion to dismiss challenging Plaintiff’s lack of Article III standing. Briefly, “Article III standing” refers to the legal requirement in the U.S. Constitution that a plaintiff must demonstrate a concrete, personal injury directly caused by the defendant’s actions in order to bring a lawsuit in federal court, ensuring that the case is a genuine “case or controversy” and not just a hypothetical question; to establish standing, a plaintiff must show they have suffered an “injury in fact,” that the injury is traceable to the defendant, and that a favorable court decision can remedy the injury.
First, the Court aptly recognized that a mere procedural violation of the FDCPA is not sufficient to confer standing in federal court. Second, and following precedent holding that hiring an attorney is an insufficient injury, the Court found that hiring a different “professional” to assist with stopping collection activity is not an injury-in-fact such that Plaintiff had standing to proceed in federal court.
It is clear that the Northern District of Illinois applies a high bar of entry for actions in federal court. The Court reiterated that “any non-physical injury, such as emotional harm, is insufficient to establish standing under Article III.” Though a great result in this matter, more and more of these bare procedural violation cases are now being filed in state courts where judges may be less familiar with the intricacies of the law and the tactics of the consumer bar.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Florida Appeals Court Upholds Dismissal in FCCPA Case Over Claims Assignability
A Florida Appeals Court has upheld the dismissal of a case that hinged on whether claims filed under the Florida Consumer Collections Practices Act (FCCPA) were assignable to third parties. This ruling could have significant implications for debt collection practices and the legal strategies employed by both consumers and collection agencies. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: Some ideas sound great on paper but, in reality, make little sense. Brian Forte, who styles himself a consumer attorney, set up a company to purchase FDCPA/FCCPA claims from consumers and then hire his firm to file lawsuits. I’m guessing he wondered why no lawyer had ever done that in the past. The reason, it turns out, is real simple. Because consumer claims are “personal torts [they] cannot be assigned,” according to the Florida Appeals Court. While seems to be a no-brainer, the potential downside to a adverse ruling here would have been substantial. One could easily imagine an attorney “buying” collection claims for a few hundred bucks apiece and then turning around and settling them for two or three times that amount without investing any real labor or resources. But common sense ultimately prevailed in this case.
State Regulators Fine Mortgage Servicer $20 Million Over Cybersecurity Violations Resulting from Data Breach
Fifty-three state financial regulatory agencies have imposed a $20 million penalty on Bayview Asset Management LLC and its affiliates — Lakeview Loan Servicing, Community Loan Servicing, and Pingora Holdings — for inadequate cybersecurity practices and delayed compliance with state regulators. The coordinated enforcement action follows a 2021 data breach impacting 5.8 million consumers. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: In January 2025, fifty-three state financial regulatory agencies collectively imposed a $20 million penalty on Bayview Asset Management LLC and its affiliates — Lakeview Loan Servicing, Community Loan Servicing, and Pingora Holdings — due to inadequate cybersecurity practices and delays in compliance with state regulators. The enforcement action stems from a 2021 data breach, which exposed the personal information of 5.8 million consumers.
The breach, which was publicly disclosed in late 2021, prompted investigations across multiple states into the companies’ cybersecurity protocols and responses. Regulatory agencies found that the firms had failed to implement adequate security measures to protect sensitive consumer data and had delayed in reporting the breach and cooperating with state regulatory bodies. This allegedly resulted in significant harm to affected consumers, including potential identity theft and financial fraud risks.
The $20 million penalty represents a coordinated effort by state regulators to hold the companies accountable for their failure to meet regulatory cybersecurity standards and to compensate for the damage caused by the breach. The penalty is part of a broader trend of increased scrutiny and enforcement by state financial regulators over cybersecurity practices within the financial services industry.
In addition to the monetary penalty, the companies are required to implement enhanced cybersecurity measures, undergo regular audits, and comply with state-specific consumer protection regulations moving forward. The coordinated enforcement also reflects growing concern among state regulators about the adequacy of cybersecurity protections in the financial services sector, particularly as the number and severity of data breaches continue to rise.
This enforcement action underscores the increasing importance of robust cybersecurity measures for financial institutions and serves as a warning to other companies in the industry about the legal and financial consequences of failing to safeguard consumer data.
CFPB Releases Final Medical Debt Credit Reporting Rule
The Consumer Financial Protection Bureau this morning announced the release of its final rule prohibiting the inclusion of medical debt on consumer credit reports. This rule is expected to remove $49 billion in medical debt from credit reports, impacting approximately 15 million consumers. Additionally, it bars lenders from considering medical information in credit decisions, addressing concerns about the fairness and accuracy of medical debt in credit assessments. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER LOCKE: In addition to the two separate lawsuits filed by the Consumer Data Industry Association (CDIA) and the American Collectors Association (ACA) challenging the CFPB’s medical debt credit reporting rule, there is a distinct possibility that the rule may face a Congressional Review Act (CRA) resolution of disapproval in the incoming Congress. The incoming chairs of both the House Financial Services Committee and the Senate Banking Committee have expressed concerns about the rule, increasing the chances that a resolution of disapproval could be introduced in both committees.
Of course, given the Republicans’ slim margins in both the House and Senate, it remains uncertain whether there will be enough votes to ultimately pass such a resolution. However, addressing this rule is likely to be a priority for both committees from the outset, given the time-sensitive nature of the CRA process.
Groups Sue CFPB Over Medical Debt Credit Reporting Rule
Two trade groups — the Consumer Data Industry Association (CDIA) and the Cornerstone Credit Union League — yesterday filed a lawsuit in the District Court for the Eastern District of Texas against the Consumer Financial Protection Bureau over its new rule prohibiting the inclusion of most medical debts on consumer credit reports. More details here.
ACA, Collection Agency, Sue CFPB to Block Medical Debt Credit Reporting Rule from Going Into Effect
ACA International, alongside Specialized Collection Systems, yesterday filed a lawsuit against the Consumer Financial Protection Bureau in the District Court for the Southern District of Texas. The legal action challenges the CFPB’s recently issued final rule under the Fair Credit Reporting Act regarding medical debt reporting and is the second suit filed against the CFPB in two days seeking to block the rule’s implementation. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: CDIA and the Cornerstone Credit Union League, and ACA International and Specialized Collection Systems separately, filed their lawsuits right after the CFPB issued its final rule prohibiting consumer reporting agencies from including medical debt in the consumer reports on which most creditors rely to make underwriting decisions. The trade groups and other plaintiffs raise compelling arguments against the rule, including a very fair argument about how the CFPB exceeded its authority by writing a rule prohibiting HIPAA-compliant data furnishing on consumer medical debts that Congress specifically authorized in the Fair Credit Reporting Act. The CFPB cannot do that. With the demise of Chevron deference to the agency since the Supreme Court’s Loper Bright decision in June of last year and a virtually certain change in the leadership at the CFPB in the near term, the future of this this controversial rule is, to put it mildly, uncertain.
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.
