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 MSJ for Defendant in FDCPA Case Over Convenient Mode of Communication
If you have ever listened to an attorney on one of my webinars talk about the differences between filing a motion to dismiss and a motion for summary judgment, they will tell you that the motion for summary judgment allows them to gather evidence, such as deposing the plaintiff. That step can get a plaintiff to say, for example, that when she claimed receiving mail is inconvenient and that a collection operation shouldn’t send her any more mail, what she meant was that it was inconvenient to get the type of mail that may include financial information, which was one of the reasons why a District Court judge granted the defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: If you’ve litigated FDCPA cases long enough, you’ve likely encountered a Watts & Herring “dispute letter” setup case. This case involved that type of claim, as well as a claim based on the statement in the Plaintiff’s dispute letter: “do not send me any documentation through the mail as receiving mail from you is inconvenient to me.” On the latter “inconvenience” claim, the court relied on several rulings from various federal courts holding that in the merely telling the collector that “receiving mail is inconvenient” is insufficient to prohibit the collector from sending mail to the debtor’s home. On the dispute claim engineered by our colleagues at Watts & Herring, Chief Judge David Proctor found the letter “contains language engineered to set up an FDCPA lawsuit” and stated: “counsel ghost-drafted the July 19 dispute letter, and then sat back to see what response Plaintiff would receive.” Judge Proctor refused to be part of the Watts & Herring scheme granting summary judgment on the remaining claims and dismissing the case. I’m looking forward to using this ruling in cases we’re defending against the same consumer attorneys.
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Judge Halts CFPB Dismantling, Administration Files Appeal
A District Court judge on Friday issued a preliminary injunction preventing the Trump administration from dismantling the Consumer Financial Protection Bureau — a ruling that the administration has already announced it is appealing. The decisions that have been made by Acting Director Russell Vought “were taken in complete disregard for the decision Congress made 15 years ago” forcing Judge Amy Berman Jackson to take the “extraordinary step” of issuing the injunction in a 112-page ruling. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: The recent ruling keeps the CFPB up and running, which means its oversight of the industry continues. Keep following the policies and practices that align with CFPB guidance — now’s not the time to scale back on compliance. The court made it clear the CFPB has to stay consistent, even through leadership changes or shifting priorities, so agencies need to stay sharp on current regulations. With things changing quickly and often, it’s more important than ever to keep your compliance program up to date and pay attention to any new developments. Some regulatory effective dates are still on hold under the current CFPB leadership, so stay in the loop to make sure you’re ready when things move again.
Judge Grants MTD in FDCPA Case Over Alleged ‘Harassing’ Calls
If you were ever unsure about the value that can be obtained by recording calls with consumers, this case should seal the deal. A District Court judge in Illinois has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case on the grounds that the plaintiff did not suffer a concrete injury, and reached this conclusion based in part on the recordings that the defendant submitted of its interactions with the plaintiff and her father. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: Another case in the Seventh Circuit, another dismissal for lack of standing. Or at least that’s how it seems. This case presents a good example of how transcripts can be used by the debt collector to assist it when defending a case. No doubt it was the inclusion of them by the debt collector that assisted its motion to dismiss. The transcript should also be used as a training opportunity. It is true that the debt collector did nothing to cause a concrete or particularized harm to the consumer, I cannot help but wonder if the debt collector’s representative had not called the consumer “unprofessional” if this case still would have been filed. Collector’s should be trained (as much as possible) to keep judgmental statements out of their dialogue with consumers. A consumer who feels like they have been insulted or treated disrespectfully by a collector is much more likely to cause problems (even if those problem do not cause a concrete, particularized injury).
Court Dismisses FDCPA Class Action Over Confusion About SOL Disclosure in Letter
A District Court judge in New York has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class action on the grounds that confusion over whether interest was accruing on a debt after reading a statute of limitations disclosure in a collection letter is not enough for the plaintiff to have standing to sue. More details here.
WHAT THIS MEANS, FROM ISSA MOE OF MOSS & BARNETT: Chalk this one up as another solid standing victory out of New York. In short, the judge (who apparently values common sense) called the plaintiff out on his nonsense claim that he suffered injury after receiving a collection letter disclosing that the time limit to sue on his debt may have expired — which, incidentally, was required by NY law — and failed to clarify whether interest was accruing. The plaintiff alleged that after reading the letter, he was anxious and confused regarding whether he would be sued and whether interest would accrue on his debt. While the decision involves a more technical standing analysis, oversimplified, the judge determined that the plaintiff’s alleged fear of theoretical future harm, like the possibility that a lawsuit would be filed or interest might accrue, was too speculative to constitute an actionable injury for which a plaintiff can sue in federal court. In other words, an alleged statutory violation alone is insufficient. An actionable injury is required, at least in federal courts. Because the plaintiff failed to meet that requirement in this case, the courthouse doors were closed to him.
We’ve seen our fair share of favorable standing decisions like this one out of the Empire State since the 11th Circuit’s opinion in Hunstein which, in a way, put this all in motion. That’s particularly true in federal court, where the proof of harm required to confer standing tends to be heightened as compared to state law requirements. What’s interesting, though, is that we’re seeing some state courts, including in New York, follow suit. We saw that, for example, in the recent case Warren v. Halsted Fin. Servs., LLC, No. 2023-169 S C, 2025 WL 542620, at *2 (N.Y. App. Term. Jan. 16, 2025), where various claims based on speculative injuries, including a Hunstein third-party disclosure claim, were dismissed for lack of standing. So, as it turns out, Hunstein was not the Doomsday outcome some predicted after the decision hit. The sky is not in fact falling post-Hunstein, Chicken Little. Winning in state court is possible. As a result, regardless of your venue (be it federal or state court), don’t just roll over when faced with these garbage, extortionist, no-injury claims. Keep fighting the good fight! The industry and your peers will be better off for it.
State Appeals Court Affirms Ruling in High-Profile FCRA Case
In a case that has made its way across the country and up and down the legal ladder — including a stop at the Supreme Court in a case that is cited daily in today’s collection world — an Illinois state Appeals Court has affirmed the ruling of a lower court in a Fair Credit Reporting Act case. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW & CULBERTSON: This case is a good example of the interplay between federal and state legal principles. This interplay is especially important as cases move from federal to state court as the metes and bounds of Article III continue to be developed. In this case, the Court looked to the Illinois legal prohibition for cross-jurisdictional tolling to bar plaintiff’s claims, initially brought in federal court. These concepts and defenses will likely expand into the class considerations to determine if and when they apply to prohibit class certification.
CFPB Pulls Back on BNPL, Payday Lending Rules
In two more moves indicating its retrenchment and retreat from actions under its previous administration, the Consumer Financial Protection Bureau has announced its intentions to revoke one rule while also announcing it will not prioritize enforcement actions under another rule. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The current CFPB is making its way down the proverbial checklist of items to scrap from Chopra era. It is not surprising that the CFPB targeted the BNPL guidance and the Payday Lending rule in this latest round of cuts.
Both the BNPL guidance and Payday Rule were the subject of litigation. However, in the case of BNPL, the CFPB never issued a final rule and instead chose to treat the guidance as a final rulemaking. Furthermore, the CFPB chose to apply TILA’s credit card protections to BNPL transactions; a legal interpretation that runs contrary to SCOTUS’s decision in Loper Bright. It was more than likely that the Plaintiffs would have been successful in their challenge against the CFPB.
The announcement that the CFPB would not “prioritize” the enforcement of the Payday Rule’s payment provision, set in my mind an interesting but concerning precedent. It should be remembered that the former CFPB Director, Kathy Kraninger, who served under the previous Trump administration, rescinded the “ability to repay” portion of the rule but kept the payment provision. The Court of Appeals hearing the case ultimately rejected the payday lenders’ claims, affirmed the rule, and upheld the CFPB’s finding that the prohibited practice was unfair. More recently, it rejected the payday lenders’ efforts to further delay the rule and confirmed that the rule will finally take effect March 30, 2025. Whatever you thought about the rule, there must be respect for the decision of the Court. If we go down the path of ignoring court decisions, those who favor the current CFPB administration should remember that a new CFPB director, under a different president, could choose to ignore court decisions that are unfavorable to consumers as easily as they are unfavorable to industry. This inconsistency is bad for business and operation and through regulatory expectation to the wind.
House Bills Aim to Revamp CFPB Rulemaking
As part of Wednesday’s hearing regarding the future of the Consumer Financial Protection Bureau before the House Financial Services Subcommittee on Financial Institutions, a number of bills were reviewed, including two recently introduced measures that would impact rulemaking from the Bureau. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: The new bills highlight issues that many in the industry have raised over the years – the cost-benefit analysis and efficacy of the Bureau’s rulemaking. In many instances, the CFPB has issued strenuous requirements for consumer-facing companies, at significant cost, without a clear gauge of whether the requirements offer any monetary or time-savings for consumers. These bills could require the Bureau to “show its work” and provide metrics of success, which could be extremely difficult. In our age of de-regulation, regulators are under more and more scrutiny to show the necessity of their intervention.
Judge Grants MTD in FDCPA Case Over Email Sent to Represented Plaintiff
Disclosing that you are a debt collector and the email you are sending is an attempt to collect a debt is not enough to make you subject to the Fair Debt Collection Practices Act, a District Court judge in Ohio has ruled, granting a defendant’s motion to dismiss. What also helped in this case was the wording used by the plaintiff to indicate how the defendant ended up attempting to collect on the debt in the first place. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: There are three ways to be a “debt collector” under the FDCPA: (1) the principal purpose of your business is the collection of debts, (2) you regularly collect debts owed to another, or (3) as a creditor, you use a false name to collect your own debts. The plaintiff alleged that the defendant acquired the debt after default, but this allegation was insufficient to plausibly allege that the defendant was a “debt collector.” The court reasoned that if the defendant “acquired” the debt, then it was collecting on its own behalf and not for “another.” Although the plaintiff also alleged that the “principal purpose” of the defendant’s business is the collection of debts, the plaintiff must not have asserted any facts in support of this conclusory allegation because the decision barely addressed this aspect of the FDCPA’s definition of “debt collector.”
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.
