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 Law Firm Specializing in Evictions Meets FDCPA’s Definition of ‘Debt Collector’
A District Court judge in Minnesota has denied a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act case, ruling the defendant — a law firm that specializes in representing landlords — meets the statute’s definition of a “debt collector.” More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: A Minnesota federal court recently refused to dismiss FDCPA claims filed against a law firm that specializes in eviction proceedings for landlords. The court rejected the firm’s position that only a single provision of the FDCPA – 15 U.S.C. § 1692f(6) – applies to its actions because it was merely enforcing a security interest and therefore fits within the “limited-purpose” definition of a “debt collector.”
All restrictions and requirements set forth in the FDCPA apply to a traditional “debt collector,” but the restrictions in section 1692f(6), in particular, also apply to “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.” Section 1692f(6) prohibits nonjudicial action to affect dispossession or disablement of property (e.g., a nonjudicial foreclosure action) if there is no right or present intention to take possession,or the property is exempt. In 2019, the U.S. Supreme Court confirmed that an entity engaged only in security interest enforcement falls within the limited-purpose definition and is not a “debt collector” for purposes of the entire FDCPA. See Obduskey v. McCarthy & Holthus LLP, 586 U.S. 466 (2019).
The eviction law firm argued that its actions were mere security enforcement because Minnesota law provides for summary eviction proceedings (arguably the enforcement of a security interest), and requires a separate action to collect unpaid rent (arguably an action beyond the enforcement of a security interest). The court disagreed, finding that the Supreme Court in Obduskey did not speak to, or establish any test to determine, what types of actions (and specifically the pursuit of an eviction) have the primary purpose of enforcing a security interest. The opinion was instead limited to the enforcement of a classic security interest – a mortgage. Thus, the FDCPA claims will proceed against the eviction firm.
The District of Minnesota ruling is a good reminder that statutory exceptions are narrowly construed. When building and examining statutory compliance programs and policies, an entity should carefully consider the risks of relying on an exception or limited carve-out of otherwise applicable rules, the scope of which may change as interpreting guidance and case law emerges.
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Connecticut Supreme Court Affirms Protections for Law Firms in Debt Negotiation Disputes
The Supreme Court of Connecticut yesterday delivered a ruling on the regulation of debt negotiation services, reinforcing the separation of powers between the judicial and executive branches of government. In its decision, the Court ruled in Commonwealth Servicing Group, LLC v. Department of Banking, affirming that the regulation of debt negotiation by attorneys falls exclusively under the judicial branch, and not under the Department of Banking’s authority. More details here.
WHAT THIS MEANS, FROM BILL MAROHN OF TOBIN & MAROHN: While we may never know what came first, the chicken or the egg; in Connecticut we now know what comes first when determining whether a lawyer’s activities are the practice of law. In 2015 the Connecticut Supreme Court held that it is the judicial branch that “wields the sole authority to license and regulate the general practice of law in Connecticut.” Persels & Associates, LLC v. Banking Commissioner, 318 Conn. 652, (2015). Here they built on that precedent and made clear that courts and not regulators are the arbiters of whether an attorney’s activities constitute a “bona-fide attorney-client relationship.” This is an incredibly important decision in ensuring the independence of the co-equal judicial branch and should prove useful for attorneys facing regulatory inquiry that pries into their practice of law and/or attorney-client relationship.
Overdraft Fees and Payment App Rule Rollbacks Head to Trump’s Desk
The House of Representatives voted Wednesday to overturn two significant rules finalized by the Consumer Financial Protection Bureau during the final days of the Biden administration. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: On April 9, the House of Representatives passed two Congressional Review Act (CRA) joint resolutions aimed at nullifying certain Consumer Financial Protection Bureau (CFPB) rules finalized in the final days of the Biden-Harris Administration. The two final rules targeted (1) a cap on overdraft fees and (2) oversight over digital payment apps.
For overdraft fees, the CFPB proposed a rule aimed at financial institutions with over $10 billion in assets. The rule would cap overdraft fees at $5 unless the bank could demonstrate higher costs. The CFPB estimated that the rule would save consumers $5 billion by cutting the average $35 overdraft fee to $5. In total, 22 attorneys general and the District of Columbia opposed overturning the rule because it would prioritize bank profits over consumer protection.
For oversight of digital payment apps, the CFPB proposed a rule which would have subjected companies processing more than $50 million transactions annually to agency supervision. The rule would have affected companies such as Venmo, Cash App, Google Pay, and Apple Pay. Proponents of the rule warned that eliminating oversight would leave consumers open to fraud and privacy risks.
The passage of these two CRA resolutions to overturn the CFPB final rules highlights the continuing efforts of the current Administration to roll back regulations enacted in the final days of the Biden-Harris Administration. The CRA process allows Congress to reject recent federal regulations within 60 legislative days by a simple majority vote in both chambers. If signed by the President, these final rules would be rescinded, and the CFPB would be prohibited from issuing substantially similar rules without explicit legislative authorization.
Judge Reduces Attorney Fee Award in ‘Uncomplicated’ FDCPA Case
A District Court judge in Indiana has reduced the requested amount of attorney’s fees by more than 50% in a Fair Debt Collection Practices Act case, noting the “significant concerns” not only with the amount sought by the plaintiff but also the work expended in an “uncomplicated” case. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: Good for the judge in this case for cutting the attorneys’ fees as substantially as she did. The judge cut 70% of the fees the plaintiff’s attorneys claimed after the defendant’s first settlement, which the plaintiff rejected. That offer that would have covered the statutory damages the plaintiff ultimately accepted plus the attorneys’ fees incurred to file what sounded like the same complaint the plaintiff filed in the first settled case on the same claims (the underlying case was about failure to report a dispute to the consumer reporting agencies, which failure evidently persisted after the first lawsuit settled). The judge admonished the parties not to posture and editorialize in briefs, but found fault mostly with the plaintiff’s lawyer’s ambiguous time entries, 40-plus nickel-and-dime billings of .1 hours for “receiving” documents and the like, not engaging with defendant’s counsel before filing motions and billing attorney time for clerical work. The judge makes the subtle case in this opinion that the plaintiff’s lawyer should have worked with her client and taken the original offer that would have covered her legal fees expended as of the time of the offer. She ended up getting more, but not nearly what she asked for.
FCC Extends Part of TCPA Revocation Rule Deadline to 2026
Days before a new rule was set to go into effect, the Federal Communications Commission (FCC) yesterday granted a one-year extension for a key provision of the rule related to the Telephone Consumer Protection Act that impacts how companies were going to be required to process revocation requests from consumers. More details here.
WHAT THIS MEANS, FROM JAY TILLMAN OF FROST ECHOLS: Although just a few days prior to implementation, the Federal Communications Commission (“FCC”), through its acting director Eduard Bartholme III, used common sense in delaying implementation of its new rule regarding consumer consent and how that consent can be revoked. Nevertheless, businesses that use calls or text messaging for outreach need to be ready for this big change. Although TCPA lawsuits declined in 2024, class actions are increasing. Will your company be able to quickly and effectively account for, across multiple lines of operation, a consumer’s revocation of consent as, pursuant to the new rule, a consumer’s revocation applies to all future automated calls and texts even on unrelated matters? The new rule takes effect April 11, 2026. Be ready.
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.
