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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 Motion to Compel in FDCPA Case Involving Wife
A District Court judge in Georgia has ruled that the wife of a man who signed a contract to purchase a vehicle only to default on the contract, leading the vehicle to be repossessed is bound by the terms of the agreement even if she didn’t sign it because she literally inserted herself in the situation when she got into the vehicle in order to prevent the repossession from taking place and then sued, alleging the lender and the repossession agent violated the Fair Debt Collection Practices Act and Georgia state law. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: This make good sense.
Generally, under the Federal Arbitration Act, arbitration provisions can be enforced both by and against non-signatories. However, courts look to the applicable state’s law to determine whether non-signatories can be obligated to arbitrate.
Most states provide several different avenues for parties to bind non-signatories to arbitration agreements, including assumption, agency, estoppel, veil piercing, incorporation by reference, and third-party beneficiary.
At bottom, parties seeking to compel arbitration will need to review the relevant state law to determine if it allows for arbitration of claims brought by or asserted against non-signatories.
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Appeals Court Rules Filing Lawsuit on Expired Debt Waived Arbitration Rights
The Court of Appeals for the Fourth Circuit has affirmed a lower court’s ruling preventing a debt buyer from invoking the underlying credit agreement’s arbitration clause because it chose to file a lawsuit to collect on the debt even though the statute of limitations had expired. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: Creditors and debt collectors should be careful about filing lawsuits if they want to rely on arbitration clauses later, since going to court first can be seen as giving up that right. If the claims they sue over are connected to what they later want to arbitrate, it may look like they’ve chosen litigation instead. To keep the option of arbitration open, it’s important to think through how court actions might affect that right. This case shows how quickly arbitration rights can be lost if the strategy isn’t consistent from the start.
FDCPA Does Not Mandate Email Communication, Judge Rules
In a case that was defended by Mitch Williamson of Barron & Newburger, a District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act lawsuit after the defendant mailed validation inquiry back to the plaintiff instead of emailing it as the plaintiff requested. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: This is a great example of the importance of statutory interpretation arguments. Judge Wigenton invoked statutory interpretation twice—first in holding that the FDCPA does not empower consumers to designate inconvenient means of communications, and then again in pointing out that the FDCPA requires debt collectors to send certain notices by U.S. Mail. Even if the court was persuaded by the concept of regular mail being inconvenient and thus prohibited under the FDCPA, the statutory language argument leaves the court with little wiggle room. One primary rule of statutory interpretation is that judges cannot read into statutes words that Congress did not use: here, Congress used “time” and “place,” but not “means.” Another rule provides that every word in a statute is there for a purpose, which here means (among other things) that the court can’t just ignore the “mail” requirement in 1692g. Sometimes, the simplest argument is the most powerful and here, it carried the day.
Senate Dems Blast CFPB for Siding With Industry on Medical Debt
Following Friday’s ruling vacating the Consumer Financial Protection Bureau’s medical debt credit reporting rule, a coalition of 30 Democratic senators, led by Senator Raphael Warnock [D-Ga.], is demanding transparency from the Trump administration following the CFPB”s decision to join the defendants in the lawsuit and advocate for vacating the rule. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: It should come as no surprise that Democratic Senators are doing what they can to save the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) on many fronts, including trying to preserve the Medical Debt Rule even though a court has determined that the Bureau exceeded its statutory authority. All of this is a posturing side show in an effort to allow the minority party an opportunity to stay relevant. The Democrats stood up an agency with a naïve notion that it could remain apolitical. They were mistaken. If the party in charge wants to vacate any rule, whether it be the Medical Debt Rule or Reg F, for that matter, they can. Elections matter. The Senators can make any number of requests for information or subpoena information from a CFPB Director. Former CFPB Director, Richard Cordray, rarely responded to Congressional subpoenas; it is doubtful that Acting Director Vought will similarly comply.
What should be more concerning for industry are the calls for the regulation and reporting of medical debt. This is evident in the numerous state laws popping up daily that are further restricting this activity, despite certain pre-emptions found under the Fair Credit Reporting Act (“FCRA”). While the recent decision in the Cornerstone Credit Union League et al v. the CFPB, may have put a nail in the coffin for the Medical Debt Rule for future CFPB administrations (should the agency be resurrected), nothing is preventing Congress from amending the FCRA in the future. There are already several proposed bills currently gathering dust in Congress, expect those bills to gather steam should there be a changing majority.
Appeals Court: Time and Money Spent on Unshared Credit Report Errors Does Not Meet Standing Threshold
The Court of Appeals for the Eleventh Circuit has vacated a lower court’s ruling after determining that a plaintiff did not have standing when she accused a credit reporting agency of violating the Fair Credit Reporting Act because it did not correct information that was never provided to a third party. More details here.
WHAT THIS MEANS, FROM JAY TILLMAN OF FROST ECHOLS: In what can be a challenging venue for the industry, Circuit Judge Brasher on behalf of the 11th Circuit, stated what we all learned on the playground, no harm, no foul! His important opinion and order on behalf of the panel further amplifies the 11th Circuit’s process of analysis and standard regarding whether or not a consumer suffered a real and palpable injury conferring standing in his Circuit and the District Court for the Northern District of Alabama. Failure to correct innocuous information (i.e. the spelling of Plaintiff’s maiden name, address to her mother’s home, an address to her attorney’s office, and a variation of her social security number) is not enough to show a real and palpable injury or an impending injury that is justiciable. “A plaintiff cannot manufacture standing by spending time and money to rectify an otherwise harmless statutory violation.” Because the incorrect information in Plaintiff’s consumer file is not in and of itself a concrete harm, the time and money she spent to correct that information is not a concrete harm either. Judge Brasher also found Plaintiff’s argument that the errors in her report created an increased risk of identity theft to be without merit as such threat of harm was not “certainly impending” to cause an injury in fact. This is a great ruling for the 11th Circuit and worthy of time to read and take on board.
Indiana Appeals Court Affirms Ruling for Defendant in FDCPA Dispute Case
An Indiana Appeals Court has affirmed the dismissal of a Fair Debt Collection Practices Act case against a collection operation that centered over an alleged dispute that may have been made against the plaintiff before the defendant filed a collection lawsuit. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The consumer plaintiffs in this case did not prosecute it very well. They lost on their FDCPA claims because they could not produce a written dispute they said they sent to the collection agency. The parties agreed that the consumer disputed the debt on the phone, but they did not agree about whether the agency agreed to send itemized debt statements to the consumer. And without a written dispute made within 30 days after receipt of the debt validation notice, the FDCPA did not impose a requirement for debt collectors to stop collecting debt and provide verification of a debt. The plaintiffs also failed to ask for certain discovery before the court entered judgment against them for the debt they challenged, so the court did not allow them to reopen discovery after the fact. It is not clear that the consumers would have prevailed on the FDCPA claims had they obtained more discovery or produced a copy of a written dispute – but they may have avoided the lawsuit, judgment and the ultimate loss on appeal.
Granted MTD in FDCPA, TCPA Case Leads to Second Amended Complaint Against Creditor
A District Court judge in Arizona has granted a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act, leading the plaintiffs to file a second amended complaint further detailing the alleged infractions committed by the defendant, a financial institution. More details here.
WHAT THIS MEANS, FROM MICHAEL CHAPMAN OF BASSFORD REMELE: In Gaddis v. US Bank, No. CV-24-02683-PHX-DJH (D. Ariz. July 7, 2025), the District of Arizona dismissed pro se plaintiffs’ claims under the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) for failing to properly allege that the bank was a “debt collector” under the FDCPA or that telephone calls were placed utilizing an automatic telephone dialing system (ATDS) or prerecorded voice under the TCPA. The court emphasized that threadbare allegations, even from pro se litigants, are insufficient to state plausible statutory claims and underscored the need for specific factual content in the complaint. Dismissing the complaint and noting that Plaintiffs’ allegations may be curable, the court granted plaintiffs leave to amend within thirty days to cure the pleading deficiencies, providing explicit guidance about the requisite factual pleading requirements necessary to survive dismissal.
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.
