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.
Nevada Governor Vetoes Medical Debt Collection Bill
The governor of Nevada last week vetoed a medical debt collection bill, saying it overreached and represented “excessive government intrusion” that would have resulted in “harmful consequences.” The veto was one of 87 different bills vetoed by the governor last week, a new state record. More details here.
WHAT THIS MEANS, FROM HEATH MORGAN OF MARTIN GOLDEN LYONS WATTS MORGAN: The governor’s veto of AB 204 is a win for the industry. While other states have ignored concerns from the industry and healthcare providers about overreach, unconstitutionality, and the unintended consequences of overly burdensome restrictions on medical debt collection that restricts access to care, Governor Joe Lambardo’s letter vetoing the bill indicates that he understands these concepts.
Governor Lambardo’s concerns about overreach comes as Nevada has amended it’s most restrictive portions of SB 248 amidst legal challenges from providers and the industry. No doubt, the changes that occurred in October 2024 played a part in the decision to veto AB 204.
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Judge Rules Law Firm Not Collector Under FDCPA
Three may be the number of licks it takes to get to the center of a Tootsie Pop, but it is not enough activity for a law firm to be considered a debt collector under the Fair Debt Collection Practices Act, a District Court judge in Minnesota has ruled. The judge granted summary judgment in favor of a law firm and its attorney, finding that their limited involvement in debt-related legal actions was insufficient to qualify them as “debt collectors” under the FDCPA, while also denying a motion for summary judgment from the plaintiff. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: This case presents an interesting fact pattern leading to a somewhat obvious result. The defendants, an attorney (solo practitioner) and his law firm, represented the plaintiff’s ex-wife in their divorce proceeding. The defendants obtained a significate arbitration award, which the plaintiff attempted to appeal. Before a ruling from the court, the defendants sought to garnish the plaintiff’s bank account. The garnishment summons inaccurately stated the amount was owed pursuant to a judgment entered by a state court referee when only the arbitration order had been entered. The plaintiff brought suit alleging this was a misrepresentation which violated the FDCPA.
While the defendants’ practice consisted largely of general civil litigation, the firm only brought three collection actions within the three years preceding suit, each for a different client. The court quickly and correctly concluded this did not meet the “principal purpose” portion of the FDCPA’s definition of “debt collector.” The court applied a multi-factor test and concluded this also did not meet the “regularly collects” portion of the definition either. Law firms taking the occasional collection matter would be well-served by reviewing the multi-factor test employed by the court.
New York Legislature Passes Consumer Protection Bill to Prohibit ‘Unfair’ and ‘Abusive’ Practices
The New York State Legislature has passed the FAIR Business Practices Act, marking the first major update to the state’s consumer protection law (General Business Law 349) in 45 years. The bill was sponsored by Senator Leroy Comrie and Assemblymember Micah Lasher and championed by Attorney General Letitia James. More details here.
WHAT THIS MEANS, FROM JONATHAN ROBBIN OF J. ROBBIN LAW: The New York State Legislature recently passed amendments to New York’s General Business Law Section 349 for the first time since 2014. Section 349 prohibits deceptive acts and practices in the conduct of any business, trade or commerce within the state. This includes debt collection. The changes greatly change the breadth of the Statute. The statute now encompasses additional unlawful acts previously not defined including unfair and abusive practices. Specifically, the statute has been broadened to the extent that it now makes it unlawful to commit either “unfair” or “abusive” acts which cause a “substantial injury”; whereas it was previously only deceptive practices. In addition, Consumer debt lenders/collectors must not “materially interfere with the ability of a person to understand a term or condition of a product or service.” The new law also has eliminated the need for a person bringing a claim under this section to establish that the violation has a broad public impact. Which means that now any individual violation could result in a violation of the statute
While existing policies likely comply with these changes, it is now imperative that consumer debt agreements be as clear as possible and contain no hidden provisions. When offering discounted payment options, consumer lenders/collectors should be as forthright as possible and set forth the advantages and disadvantages of accepting such a plan. The plans should also be written in multiple languages to ensure a complete understanding of the product. These changes are designed to make it easier for consumers to interpose claims and defenses pursuant to this statute as it now covers additional unlawful acts and has removed the requirement that a claimant establish a broad public impact as a result of the violation. Consumer lenders/debt collectors should exercise even more diligence when offering products and payment options in light of these changes.
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.
