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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.
Oregon Enacts Trio of Consumer Protection Laws
Oregon Gov.Tina Kotek yesterday signed three new consumer protection laws that will reshape how medical debt, online pricing, and auto loan agreements are handled in the state. Each law is set to take effect in 2026 and aims to boost fairness and transparency in common financial transactions. More details here.
WHAT THIS MEANS, FROM ALEX MCFALL OF HUSCH BLACKWELL: Oregon is joining a growing trend of states stepping in to set new compliance standards. Three recently signed laws targeting (1) medical debt, (2) online pricing, and (3) auto lending introduce new requirements for companies and expand potential liability under Oregon’s Unlawful Trade Practices Act.
- SB 605 (medical debt): Hospitals, collectors, and credit bureaus will be barred from reporting medical debt on consumer credit reports, and courts may declare such debts void if reported. Organizations should assess their current credit reporting and dispute processes to identify any areas where medical debt could be inadvertently reported or mishandled.
- SB 430 (online fees): Online sellers must display the full price (including all required fees) up front, with narrow exceptions for taxes and certain shipping charges. Businesses may want to review their Oregon-facing websites and checkout processes to ensure all mandatory fees are clearly presented before consumers reach the payment stage.
- HB 3178 (auto lending): The law shortens the funding window for auto loans to 10 days, requires plain-language disclosures in multiple languages, and restricts processing of trade-ins before loan approval. Dealers should consider evaluating their current sales and funding workflows to confirm they align with these new requirements once effective.
These developments reflect a broader trend of states stepping in to fill regulatory gaps and set higher bars for consumer protection. Companies operating in Oregon will want to monitor implementation timelines and begin preparing for these changes well in advance.
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California Lawmakers Send Sweeping AI Safety Bill to Newsom’s Desk
California’s legislature has approved SB 53, a landmark artificial intelligence bill that sets new transparency and accountability requirements for large AI developers, and putting Gov. Gavin Newsom in the hot seat as the state continues to chart its own course on tech regulation. More details here.
WHAT THIS MEANS, FROM HEATH MORGAN OF MARTIN GOLDEN LYONS WATTS MORGAN: California SB 53, the Transparency in Frontier Artificial Intelligence Act, creates new regulatory requirements for large AI developers that could indirectly impact small financial services businesses.
The law primarily targets “large frontier developers” with annual revenues exceeding $500 million who train AI models using massive computing power, so most companies in the ARM industry won’t be directly regulated since they typically use AI tools rather than develop them. But the law requires AI developers to publish detailed “frontier AI frameworks” describing their risk management approaches and report critical safety incidents to California’s Office of Emergency Services within 15 days. For companies subject to HIPAA and GLBA, this could create potential conflicts around data handling and breach notification requirements, as AI vendor incidents could trigger your own regulatory obligations.
Companies should also catalogue their AI tools to identify which vendors might be subject to SB 53, review existing contracts for AI-specific compliance gaps, and consider adding provisions for SB 53 compliance representations and incident notification requirements.
BFE Defense Not Enough When Debt Collector Relies on Creditor Data, Judge Rules
A District Court judge in Washington has granted a plaintiff’s motion for partial summary judgment on claims that a collection operation violated the Fair Debt Collection Practices Act when it reported a debt that was not owed by the plaintiff on his credit report, denying the defendant’s attempt to use the bona fide error defense because it relied on the information it was provided by the original creditor. More details here.
WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: In Amaya v Sentry, the agency reported on plaintiff’s credit report a debt that turned out not to be his. Plaintiff raised the issue with the agency, who subsequently removed the tradeline. Plaintiff then filed the FDCPA case. The court held that the agency violated sections e and f of the Act. The agency asserted the bona fide error defense, presenting evidence of the contract’s representations. It argued that reliance on the creditor was a reasonable procedure. The court rejected the argument, reasoning that “[d]efendant here identifies no internal procedure designed to prevent the reporting of a debt not owed; rather, it attempts to outsource responsibility to the creditor.”
I disagree with the ruling. There is a long history of relying on clients and third parties. Courts have held it is a BFE to rely on a third-party vendor to scrub bankruptcies, even if that scrub is not perfect. Hyman v Tate, 362 F.3d 965 (7th Cir. 2004). Likewise, courts recognize that the creditor contract representations and conduct can be used in the defense, even if not perfect. Ross v RJM, 480 F.3d 493 (7th Circ 2007). The debt is assumed valid if there is no dispute in response to the initial letter. It is an unrealistic burden for an agency to essentially validate the debtor before seeking to collect, and the Act does not contemplate that.
It is hard to tell if the record here is strong for an appeal. If it is, perhaps there will be an appeal. Hopefully, we’ll get other courts to rule differently.
Judge Denies MTD FDCPA Claim Over Disputed Debt Reporting
Timing is everything. Reporting the results of a dispute investigation to a consumer and sending an update to the credit reporting agencies on the same day rendered it impossible for a plaintiff to continue her dispute of a debt, a District Court judge in Illinois has ruled, denying a motion to dismiss claims it violated the Fair Debt Collection Practices Act. More details here.
WHAT THIS MEANS, FROM MICHAEL CHAPMAN OF BASSFORD REMELE: In Skoff v. NCB Management Services, Inc., No. 24 C 10426 (N.D. Ill. Sept. 9, 2025), the Northern District of Illinois refused to dismiss an FDCPA claim under 15 U.S.C. § 1692e(8). Plaintiff Pamela Skoff alleged NCB reported to Experian that her debt was “previously disputed” the same day it sent her a letter concluding its investigation, without allowing time for her to reaffirm her dispute. NCB argued that once it finished its investigation and notified Skoff, she had to re-communicate to keep the dispute “active,” but the court found that simultaneous reporting could plausibly render the credit reporting false. The court distinguished Foster v. AFNI, Inc., 2020 WL 1531651 (E.D. Mich. 2020), where the furnisher waited two days before reporting, and denied NCB’s Rule 12(b)(6) motion. This decision signals that debt collectors and credit furnishers must give consumers a reasonable opportunity to respond after dispute investigations before updating tradelines.
Judge Denies Pro Se Plaintiff’s Motions in FCRA/FDCPA Case
One trend that has been mentioned by a growing number of attorneys are plaintiffs who are representing themselves in cases against collection operations. This ruling highlights what defending those types of cases is like. A Magistrate Court judge in New York has denied a number of motions filed by a plaintiff, including one seeking sanctions against the defendants in a Fair Credit Reporting Act and Fair Debt Collection Practices Act case. More details here.
WHAT THIS MEANS, FROM CHAD ECHOLS OF FROST ECHOLS: The industry is experiencing a marked increase in pro se litigation that mirrors the intensity of fully contested cases, where both sides are represented by counsel and every issue is litigated aggressively. This trend is fueled in part by the rise of online coaching platforms — including social media outlets such as TikTok — and the ready availability of AI drafting tools, both of which have empowered pro se litigants to push cases further than in years past. For the collections industry, this development presents significant challenges. Defending such cases can be disproportionately expensive. While a pro se litigant invests primarily time, defendants shoulder the full financial burden of counsel fees and procedural costs. Courts may deny motion after motion, but each filing requires a response, driving up expenses and frustration. The key is early identification. Talking directly with a pro se litigant at the outset may help gauge the likely litigation trajectory. If it appears the case will track like a contested matter, defendants should prepare accordingly.
One important piece of advice: resist the temptation to become jaded or obstructive. Instead, support your defense counsel’s strategy of being aggressive, comprehensive, and transparent with the court. This approach yields two major benefits: (1) credibility with the court, by avoiding games of delay or obstruction, and (2) exposure of pro se errors. Over time, a pro se litigant’s inevitable missteps, overreach, and faulty legal analysis will become evident to the court.
The danger lies in letting frustration dull your performance. Courts may easily equate a sloppy or reactive defense with the erratic filings of a pro se party. The best strategy is to stay disciplined, give your counsel the tools to litigate effectively, and trust that a well-managed defense will withstand the pressures of this growing trend.
Judge Vacates Default Judgment in FDCPA Case, Calls Out Plaintiff’s ‘Gamesmanship’
Not so fast there, Skippy. A Magistrate Court judge in New York has granted a defendant’s motion to vacate a default judgment that had been issued against it in a Fair Debt Collection Practices Act case, ruling that if anyone is “guilty” of “tactical maneuvering” and “procedural gamesmanship” it was the plaintiff who rushed to the court to enter a $301,000 judgment against the defendant less than seven hours after the deadline to respond to the complaint had passed. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: This case highlights the risk surround missing a deadline to respond to Complaint, as well as effective ways to cure such procedural errors.
If a Defendant technically defaults by not responding to the complaint within the time set, a Defendant my move to vacate the default under Federal Rule of Civil Procedure 55(c). To set aside a default, there must be “good cause” which includes having “meritorious defenses.” Here, the Court found the default defendant had meritorious defenses which were raised in a Motion to Dismiss, even though that Motion to Dismiss was filed after default had been entered. The Court was correct to consider those meritorious defenses as grounds supporting vacating the default.
Best practice is to timely respond to Complaints before a default is entered. But this case shows defendants have legal avenues to set aside defaults, especially where they have meritorious defenses.
Defendants should seek out counsel that are highly responsive and can work on tight timelines to avoid defaults in the first place. However, if defendants default, good legal counsel can often get defaults set aside, especially where there are meritorious defenses or other grounds for good cause, as occurred in this case.
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.
