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 Rules Investigation into Disputed Debt was Reasonable
A District Court judge in Indiana has granted a defendant’s motion for summary judgment that its investigation into direct and indirect disputes filed by the plaintiff were reasonable under the Fair Credit Reporting Act while also denying a motion for summary judgment from the plaintiff on claims the defendant violated the Fair Debt Collection Practices Act. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: These FCRA claims based on “reasonable dispute procedures” are becoming more common. They are difficult to defend because rarely are they suitable for a motion to dismiss and, instead, must go through discovery and then a motion for summary judgment. Not only must the debt collector be willing to pay for that expense (summary judgment is never cheap), but the debt collector must also be willing to disclose their internal policies and procedures. (A debt collector who is not satisfied with their internal policies and procedures should not be willing to go down this path.) While disclosing policies and procedures in a public forum such a court is rarely advised, the defense attorney did the appropriate thing and asked the court to seal those portions of the docket that contained the policies and procedures which provides some protection for the debt collector. While this was a good win on the FCRA claim, readers should note that the FDCPA remained pending.
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CRAs File New MTD in Suit Over $500 Medical Debt Reporting Threshold
The three major credit reporting agencies have filed a new motion to dismiss a class-action lawsuit against them accusing them of conspiring together when they announced a decision not to include medical debts under $500 on consumers’ credit reports. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: It’s fair to say that the CRAs have jointly agreed to not report certain medical debts that are less than $500. The Plaintiffs and putative class in this case are composed of medical providers claiming that the CRA’s agreement violates anti-trust laws. But it looks like they are facing an uphill battle. The court granted the CRAs’ initial Motion to Dismiss, and the Amended Complaint was met with a similar motion. The hurdle that the Plaintiffs are struggling to surmount is that it’s difficult — if not impossible — to plead standing to challenge the CRAs collective action. While the Plaintiffs allege that the CRAs refusal to report medical debts less than $500 makes it less likely that those patients will pay their debts, the Plaintiffs have no direct relationship with the CRAs. They don’t report debts directly. And they don’t purchase credit reports. If the court dismisses the Amended Complaint, an appeal to the Ninth Circuit Court will undoubtedly be filed. Irrespective of who “wins” in the District Court, this case is likely to be tied up in litigation for the foreseeable future.
Judge Dismisses FDCPA Complaint, Enjoins Frequent Filer from Initiating New Suits Without Permission
Even judges have limits. If there is one takeaway from this case, that is likely to be it. A District Court judge in Ohio has dismissed a Fair Debt Collection Practices Act case and permanently enjoined the plaintiff — a frequent filer — from initiating new lawsuits in that jurisdiction without first getting permission from a court because of filing yet another lawsuit that is “so unsubstantial, frivolous, and devoid merit” which he probably should have known because the form he used for this suit had previously been called out in another FDCPA suit he had filed. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW & CULBERTSON: With the rise in AI capabilities, pro se plaintiffs are becoming both more prevalent and more sophisticated. There is little more frustrating to the industry than having to waste time and spend money on what usually amounts to a baseless claim, especially when judges appear to bend over backwards to give them their day in court. This case represents a hopeful trend where the Court’s realize the burden these high filers place on the entire system. It is a first step, hopefully of multiple, that the Court’s can and should take to curb vexatious litigants from using the Courts to coerce settlements on claims that are not grounded in fact.
CFPB Drops Another Suit, But Plans to Continue Prosecution of At Least One Enforcement Action From Previous Regime
The Consumer Financial Protection Bureau and TransUnion on Friday filed a joint stipulation of dismissal of a lawsuit filed by the regulator against the credit reporting agency in 2022 that accused the company and one of its executives of violating a 2017 order issued by the Bureau. This marks the seventh enforcement action that the CFPB has stopped in the past month following the firing of Rohit Chopra and replacing him with Russell Vought as the Bureau’s Acting Director. But the news for companies being sued by the Bureau is not all positive, with the CFPB announcing plans to continue at least one enforcement action that was initiated by Chopra’s CFPB. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: The Consumer Financial Protection Bureau (CFPB) has dismissed another enforcement action against, this time against TransUnion, a prominent consumer credit reporting agency. Initially filed in 2022, the lawsuit accused TransUnion of violating a 2017 consent order by employing deceptive marketing tactics, such as misleading consumers into enrolling in costly subscription services under the guise of free trials.
This dismissal is part of a broader trend under the current administration, with the CFPB retracting several enforcement actions against financial companies accused of consumer regulatory violations. The CFPB has indicated that it will continue with a lawsuit against MoneyLion which was sued in 2022 alleging that MoneyLion charged members of the military illegally high interest rates. While the CFPB has dropped several pending litigation matters and stalled several consumer investigation demands, future litigation and regulatory activities are uncertain. What we do know, the CFPB’s future regulatory activity are subject to significance change and Congress has several pending bills that seek to restructure the CFPB’s funding mechanism and organizational structure.
CFPB’s Overdraft Rule Faces Resistance
The CFPB’s proposed rule to limit overdraft fees for large financial institutions also encountered pushback. On the same day, the House Financial Services Committee voted to approve a resolution disapproving of the “Overdraft Lending: Very Large Financial Institutions” rule (H.J. Res. 59). This rule, finalized in December 2023, mandates that institutions with over $10 billion in assets cap overdraft fees at $5 or ensure that fees cover only actual costs. Opponents, including committee Republicans, argue the rule restricts consumer choice and pushes customers toward riskier financial products. The resolution now heads to the House floor, with a matching resolution awaiting a Senate vote. More details here.
WHAT THIS MEANS FROM LESLIE BENDER OF EVERSHEDS-SUTHERLAND: Although both houses of Congress have not yet aligned on any resolutions challenging some of the CFPB’s rules, the Senate and House each have passed separate resolutions challenging specific CFPB rules related to defining large market participants. The House approved a resolution disapproving of the Overdraft Lending:Very Large Financial Institutions (over $10 billion in assets) rule designed to cap overdraft fees at $5.00 (or actual costs). Meanwhile the Senate passed a resolution disapproving of a CFPB rule that would have given the CFPB the ability to regulate nonbank providers of digital payments (if they handle 50 million or more transactions annually).
What this may mean for the credit and collections industry is that the resolutions now pending in the Senate and the House disapproving of the CFPB’s rule prohibiting the credit reporting of medical debts could also pass. Again, the House and Senate have not yet approved each other’s resolutions related to these CFPB rules so we will need to stay tuned to see what develops.
In the meantime, at the end of last week the media reported that judges in Maryland and in California have ruled that there were legal problems with the mass terminations of federal workers, including an estimated 200,000 probationary workers. It is unclear what the impact of potentially reinstating the federal workers will be or what the logistics are. The CFPB reported late last week it brought back staff to handle the backlog of 16,000 consumer complaints and to prepare legislatively required reports to Congress. Sunday night, Bloomberg News reported that the CFPB reinstated all probationary and most term employees and that the terminated CFPB employees would receive back pay from the time they were fired. Most however are to remain on administrative leave until instructed to return to work.
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.
