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.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Judge Denies Certification in FDCPA Case Involving Questionnaire to Determine Standing
In a case that was defended by Dale Golden and the team at Martin Golden Lyons Watts Morgan and has already been to the Court of Appeals for the Third Circuit and back, a District Court judge in Pennsylvania has denied a plaintiff’s motion to certify a class in a Fair Debt Collection Practices Act case, ruling that the use of a questionnaire by the plaintiff that was sent to potential class members to determine if they had standing to participate in the case was not a “plausible straightforward method” to make that determination. More details here.
WHAT THIS MEANS, FROM MICHAEL CHAPMAN OF BASSFORD REMELE: The U.S. District Court for the Western District of Pennsylvania shot down the plaintiffs’ motion for class certification in Lezark v. I.C. System, Inc., 2:20-cv-00403, rejecting both a broad class of over 15,000 people and a narrower class of 747 consumers. The Court found that sorting out whether each person had Article III standing by the use of a claim form questionnaire was too burdensome and individualized under Fed. R. Civ. P. 23(b)(3)’s predominance requirement, since every individual would need to show actual harm—such as emotional distress or that they relied on the letter—to qualify for damages under the Fair Debt Collection Practices Act (“FDCPA”). The Court also declined to stretch Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982), to cover FDCPA claims based solely on receiving a collection letter, determining that “tester-standing” (individuals who seek out potential claims for violations against businesses) did not apply. The ruling strengthens TransUnion v. Ramirez, 594 U.S. 413 (2021),and Huber v. Simon’s Agency, 84 F.4th 132 (3d Cir. 2023), as solid defenses against putative class actions premised upon vague or speculative injuries.
Judge Grants MSJ – Again – For Defendant in FDCPA Case Over Disputed Debt
On remand from the Court of Appeals for the Seventh Circuit, a District Court judge in Illinois has again granted summary judgment in favor of the defendant on the issue of actual damages in a Fair Debt Collection Practices Act case after the defendant was accused of not flagging the underlying account as disputed with the credit reporting agencies. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: The recent opinion from a Federal District Court Judge in the Northern District of Illinois entitled Wood v Security Credit Services LLC, No. 1:20-cv-02369 (N.D. Ill. May 28, 2025), could be a chapter from fictional novel “There And Back Again” by Bilbo Baggins (not to be confused with Tolkien).
Filed in March 2020, pre-COVID-19 pandemic, this case is now poised for a trial in December 2025 after a round trip to the 7th Circuit and two summary judgment rulings. The latest of which succinctly states on the docket: “If Wood prevails on liability, he cannot recover actual damages.” But there is much more to the story of how the parties got here. Like many cases citing a technical violation of 1692e(8) for reporting a debt to a credit reporting agency without also reporting the debt as disputed, the allegations of emotional injury and economic injury make prodigious use of adjectives but ultimately are revealed to be unsupported hyperbole.
Putting the complex issue of Article III standing aside, the big story here is that in the 7th Circuit’s opinion (issued January 28, 2025) it wrote: “Our view is that §1692e(8) creates a negligence standard.” For FDCPA law geeks, this is a big deal (i.e., strict liability standard of proof statute is now paired, not conflated, with a negligence standard of care… watch out law review article editors, here we come!). For others, this means you may have a better chance of successfully defending against §1692e(8) claims. In this case, using a negligence standard, the question for the liability trial is whether the defendant used reasonable care to obtain information from the seller of the accounts about whether the debts it purchased were disputed. This means that during the trial, the Plaintiff, who is also an attorney that regularly files FDCPA complaints, will have virtually no relevant testimony other than to say that he disputed the debt with the original creditor and he didn’t respond to the original creditor’s investigation of that dispute, which told him “[a] review of our records for the account listed above indicates that the delinquency in question is valid and will not be removed” from credit reporting.
There remain a few pages left of this modern-day Red Book of Westmarch, and the parties are scheduled for a one or two-day trial on Dec 1, 2025. The question on the minds of many court-watchers is whether it will end “not with a bang but a whimper” (T. S. Eliot).
Appeals Court Issues Another Ruling Over Language in Arbitration Clause
The Court of Appeals for the Fourth Circuit has upheld the denial of a defendant’s motion to compel arbitration in a class-action case involving a credit card lender and the debt buyer that acquired the account in question, using a recent precedent that questioned the one-sided nature of the language used in the underlying agreement. More details here.
WHAT THIS MEANS, FROM JAY TILLMAN OF FROST ECHOLS: This was a “no brainer” for the Fourth Circuit who would not overrule its earlier determination under very similar facts in another case. Remember, the basic principles of contract law will determine whether or not a party is entitled to arbitration versus a court and jury. The court will strictly construe whether the contract provides for arbitration. Here, the District Court determined that because the change clause of the credit contract was unilateral, meaning the creditor and not the debtor could change or remove the conditions of the arbitration clause, the promise was illusory (“words in a promissory form that mean nothing”) and therefore there was no consideration for the arbitration agreement. A court will review whether or not there is privity of contract, whether or not there was a “meeting of the minds” regarding the terms of the agreement and, as here, consideration. Make sure you are working with competent people in drafting and reviewing agreements that seek arbitration so the court will not need to review and construe the terms of the agreement as it did here.”
Judge Dismisses Suit Over Email Only Request, $0.38 Difference in Debt
A District Court judge in New Jersey has granted a motion to dismiss filed by the defendants in a Fair Debt Collection Practices Act case, ruling that responding to a request for email communication only with a letter and purportedly misstating the amount that was due by $0.38 is insufficient for the suit to proceed. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: In this case, pro se plaintiff Reidge Johannes sued LVNV Funding LLC and Resurgent Capital Services LP, alleging violations of the Fair Debt Collection Practices Act (FDCPA). Johannes claimed the defendants improperly mailed him a debt validation letter after he requested email-only contact and misrepresented his debt by $0.38 on his credit report. My guess is this credit repair strategy was learned on Tik-Tok. However, the Court ruled that his claims were barred by res judicata and the entire controversy doctrine, as he had already raised these issues in a prior state court proceeding where judgment was entered against him. The court further found that neither the minor $0.38 discrepancy nor the use of postal mail constituted an FDCPA violation. Concluding that Johannes failed to state a claim, the Court granted the defendants’ motion to dismiss and dismissed the complaint.
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.
