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.
Bankruptcy Court Blocks Collection Efforts on Discharged Student Loans
A Bankruptcy Court judge in New York has granted a plaintiff’s motion for a preliminary injunction that will block the collection efforts on thousands of student loans that individuals allege were discharged in bankruptcy, ruling that there was no legal interest in continuing to collect on these debts. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: Well, if there is anything less fun to read than opinion from a court its an opinion from a bankruptcy court. After sifting through it all, it appears that the plaintiff in this case is taking the position that the student loan debt at issue should be discharged because the loan was not made from “a bona fide nonprofit institution” and because the loan exceeded the costs of her higher education attendance. This will be an interesting one to keep an eye on, as I imagine many higher education loans exceeded the exact amount needed to attend school. And, if this ends up holding up, I know a few attorneys who want their student loans discharged!
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Florida Updates Collection Law to Allow Overnight Emails to Consumers
The Florida Legislature has passed a bill that would allow collectors to communicate with consumers via email outside of the normal 8 a.m. to 9 p.m. window, noting that the channel is “less invasive and less disruptive” than telephone calls. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: As a born-and-raised Floridian I am proud to see my state lead the charge in clarifying statutory “ambiguity” to quell litigation abuse. The Florida Legislature never contemplated that Section 557.77(17) would apply to emails—as has been pointed out numerous times, the statute only mentions telephone calls. But this did not stop the avalanche of litigation arising from benign messages opened at the recipient’s convenience. The fact that SB 232 was passed unanimously shows the urgency of addressing the root cause of these lawsuits.
Not only does SB 232 resolve any doubt caused by the competing opinions from courts struggling to reconcile old statutory language with new technology, but it specifically states in its preamble what those who litigate these claims have been saying since the first claim was filed: emails are “less invasive and less disruptive than telephone calls.” And the Florida Legislature left little room for creative statutory interpretation, stating very clearly that the “prohibited hours” provision of the FCCPA does not apply to emails.
SB 232 is not retroactive. But the revisions to the statute and the language chosen by the Florida Legislature is powerful support for the argument that even pre-SB 232 claims are without merit, since the statute was never intended to apply to emails in the first instance.
Pennsylvania Court Affirms Remote Testimony in Debt Collection Dispute
A Pennsylvania Appeals Court has affirmed a lower court’s ruling in favor of a creditor that sued a consumer over an unpaid credit card bill, where the trial court allowed a witness to testify remotely. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: The pandemic shifted life for almost every facet of American life and the court system is no different. While Pennsylvania state courts were notoriously rigid about requiring in-person testimony pre-pandemic, this appellate decision is a welcome affirmation that testimony over video-conferencing is allowed at the judge’s discretion. Of course, creditors’ attorneys must now be willing to allow a consumer to testify virtually as well. Since the pandemic, telephonic and video-conferencing hearings have allowed much more participation by consumers and allows creditors to rebut that narrative by the consumer bar that it is difficult for consumers to have their day in court. Creditors’ attorneys should be equipped with arguments to allow remote testimony and be prepared to put on effective examination of their remote witness.
N.J. Appeals Court Affirms Dismissal of Case Over Alleged Licensing Violations
In a case that was defended by Rick Perr and Monica Littman of Kaufman Dolowich, a New Jersey Appeals Court has affirmed a lower court’s dismissal of a case accusing a collection operation of violating the New Jersey Consumer Finance Licensing Act and the Fair Debt Collection Practices Act, agreeing with the state court judge that the NJCFLA does not allow for a private right of action. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: It’s a truth as old as time: not every statutory violation gives rise to a civil lawsuit. One such statute is the New Jersey Consumer Finance License Act, which as relevant here, requires entities meeting certain statutory definitions to obtain a license from the state. The plaintiff filed suit claiming the defendant was required to be licensed under the statute but was not thereby violating both the New Jersey statute and the FDCPA. The trial court ruled that the state statute created no private cause of action and that a violation of the licensing statute was not a per se violation of the FDCPA. The appellate court agreed and went out of its way to chastise the plaintiff’s attorney for failing to address an adverse ruling on the same claims that had been issued during the appeal. Worse, the same attorney represented the plaintiff in both cases. That’s pretty shady behavior, but no enough apparently to warrant an explicit reprimand or sanctions.
CFPB Proposes Scrapping Registry of Nonbank Offenders
The Consumer Financial Protection Bureau is proposing to rescind a rule that would have created a public registry of nonbank financial companies subject to law enforcement or court orders for violating consumer protection laws. The decision, part of a broader rollback of CFPB initiatives under the Trump administration, could relieve hundreds of companies — especially in the collections and lending sectors — of a compliance obligation that critics say imposed significant costs with little proven benefit. More details here.
CFPB Pulls Plug on Data Broker Rule
The Consumer Financial Protection Bureau announced yesterday that it is officially withdrawing its proposed rule that would have brought data brokers under the scope of the Fair Credit Reporting Act. The rule, originally proposed in December 2024 under then-Director Rohit Chopra, aimed to reclassify data brokers as consumer reporting agencies and impose stricter standards on the use and sale of sensitive personal information. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: The Consumer Financial Protection Bureau (“CFPB”) is proposing to rescind finalized and proposed rules as part of a broader rollback of initiatives under the Trump administration.
Nonbank Offenders
The Registry of Nonbank Covered Persons rule was finalized in July 2024, and the CFPB has proposed to rescind this rule, as published in the Federal Register on May 13. The rule required the report of certain public enforcement or court orders related to consumer financial products and services by nonbank financial entities, such as debt collectors, payday lenders, and credit reporting companies. While the CFPB proffered this rule as a tool to assist regulators and law enforcement in identifying repeat offenders, critics believed it imposed significant costs on these nonbank financial entities with limited proven benefit. The CFPB cites concerns raised by small business advocates about regulatory duplication and cost. All comments must be submitted within 30 days of publication, by June 12, 2025.
Data Broker Rule
The Data Broker Rule was originally proposed in December 2024. The rule aimed to reclassify data brokers as consumer reporting agencies, and would have imposed stricter standards on the use and sale of sensitive personal information. On one hand, industry groups raised concerns that classifying “credit header” data (i.e., names, addresses, and Social Security numbers) as part of a consumer report would disrupt fraud prevention and law enforcement efforts. On the other hand, privacy advocates argued the rule was vital to close loopholes exploited by data brokers. For now, data brokers will continue operating without the consumer protections and obligations which would have been imposed by the proposed rule.
Proposed and finalized rules of the CFPB are in flux as the Trump administration analyzes agency authority. We will continue to watch and monitor.
Consumer Groups Granted Role in Legal Battle Over CFPB Medical Debt Rule
A federal judge has approved a motion allowing two individuals and two consumer advocacy organizations to intervene in the legal fight over the Consumer Financial Protection Bureau’s rule banning medical debt from consumer credit reports. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: As the Consumer Financial Protection Bureau (the “CFPB”) under Acting Director Russell Vought rescinds regulatory guidance and advisory interpretation materials while revising finalized enforcement action consent orders, the CFPB’s rule prohibiting medical debt from being credit reported (the “Rule”) remains alive at least until July 28, 2025. Readers may recall that the CFPB’s priority list released informally in social media a few weeks indicated that the CFPB was not going to prioritize medical debt issues in the coming year. Several consumer groups represented by, among others, the National Consumer Law Center (“NCLC”) sought to intervene in the legal challenge to the Rule, out of concern that the evolving CFPB may not be marshalling resources to defend it.
Separately, the CFPB rescinded its advisory guidance related to medical debt collections and its bulletin indicating that debt collectors attempting to collect debt that violates the No Surprises Act were acting in violation of the Fair Debt Collection Practices Act. Since the Biden Administration CFPB began its rulemaking efforts, a lot has changed regarding medical debt credit reporting. A growing number of states have enacted laws banning medical debt credit reporting, some going so far as to indicate that attempts to credit report medical debt could extinguish that debt, making it uncollectible. In addition, the three major consumer reporting agencies ceased accepting tradelines on medical accounts less than a year old or with balances at placement of less than $500. There is a legal battle also being waged in California against the consumer reporting agencies for refusing to accept credit reporting of small balance medical debts, but in that case the plaintiffs have repeatedly amended their complaint, but each complaint has been flawed enough to prevent the case from proceeding.
What does this mean for healthcare providers and their collection agencies? In the short run, whether the CFPB’s rule survives or not, healthcare providers and their collection agencies may want to be developing and employing alternatives to credit reporting medical bills as a collections strategy. Consumer advocacy groups have developed a well-organized state-level lobbying effort related to a host of medical debt protection issues. As a result, states are poised to continue to enact laws prohibiting credit reporting medical debt, and the major consumer reporting agencies appear unlikely to roll back their prohibition against credit reporting small balance medical bills.
Stay tuned in Texas as the briefing by all the parties to the suit is due by the end of May, and a hearing is set for 1 pm on June 11, 2025.
CFPB Drops Enforcement of BNPL Regulation
The Consumer Financial Protection Bureau announced yesterday that it will no longer prioritize enforcement of a Biden-era rule treating Buy Now, Pay Later (BNPL) firms like credit card issuers under the Truth in Lending Act. The CFPB is also considering rescinding the rule entirely, marking another rollback of regulations under the Trump Administration. More details here.
CFPB Withdraws Massive Amount of Previously Issued Guidance
The Consumer Financial Protection Bureau today released a document that is due to be published in the Federal Register on Monday rescinding and withdrawing 57 different pieces of guidance and interpretive rules that the Bureau has released, some of which date back to 2011. This includes guidance related to the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and Regulation F. More details here.
Administration Shifts Gears: CFPB Nominee McKernan Tapped for Treasury Post Instead
Jonathan McKernan, originally nominated to lead the Consumer Financial Protection Bureau, is now being put forward for a senior role at the Treasury Department, it was announced today, raising questions about the future leadership of the consumer watchdog agency amid ongoing turmoil. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: The Consumer Financial Protection Bureau (the “CFPB”) was created under Dodd-Frank to regulate the offering and provision of consumer financial products or services under federal consumer financial laws; however, since its creation, the CFPB has been used largely as a political pawn by the Republicans and Democrats to carry out their politically motivated agendas. The latest flurry of activity, then, should come as no surprise as the pendulum has swung yet again the other way and highlights the need for CFPB reform.
While the shift in policy is unsurprising, the breadth of the rescission actions taken by the CFPB in recent weeks is. In one fell swoop, the CFPB withdrew 67 guidance documents. The broad sweeping rescission of written guidance, interpretive rules, policy statements and advisory opinions includes not only the rapid fire opinions and guidance issued during the Biden administration, but also those issued by the prior Trump and Obama administrations. While some of these actions may be applauded as a welcome change, the continuing treatment of the agency as a political pawn should be concerning to the industry. Rules, regulations, advisory opinions are intended to create guidance and predictability. Unfortunately, the use of the nonbinding instruments that have been favored by the CFPB are just that: nonbinding and subject to rescission on the whim of the current administration (whomever it might be). And such whimsical change creates an increased cost and burden on compliance departments.
A final note – While the Bureau withdrew a litany of prior guidance, they have left open the possibility that some guidance may be reinstated. Compliance departments, therefore, should carefully monitor the situation as things continue to rapidly change and should continue to remember that the consumer protection statutes remain in place and should be used as the North Star in creating policies and procedures.
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.
