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.
Judge Recommends Dismissal of FDCPA Claim After ‘Refusal to Pay’ Buried in Essay
When is a refusal to pay and request to cease communications not a refusal to pay and request to cease communications? When it’s couched in a seven-paragraph letter about Christmas, a Magistrate Court judge in California has ruled, recommending that a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act case be granted. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: Given the volume of correspondence that collectors must review, it can be challenging to identify every word or phrase that might trigger a statutory obligation. This task becomes even more difficult when consumers deliberately use cryptic language or embed their cease-communication requests in poems or essays about the holidays. If you are not already doing so, consider utilizing automated tools to help flag compliance risks in consumer correspondence. Of course, work with your compliance counsel to ensure those tools are being used appropriately.
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CFPB Rescinds Public Release of Supervisory Designation Orders
The Consumer Financial Protection Bureau has finalized a rule rolling back its 2022–2024 amendments to supervisory designation procedures, once again treating decisions and orders as confidential supervisory information. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: This ruling is generally good news to the ARM industry as it once again removes public disclosure of final decisions and orders. After the 2022 and 2024 amendments that permitted public disclosure of final decisions and orders, a growing concern emerged that public disclosure would unfairly harm the entities involved. It appears that the “new” CFPB considered those concerns, as well as the reasonable implication that the fear of public disclosure would hampered full investigations in reversing course. At the recently concluded ComplianceCon, current and former CFPB employees did caution that while they expect CFPB activity to lessen under the Trump administration, a ramp-up of activity by state regulators may be on the horizon.
Appeals Court Affirms Sanctions Against Lawyers Behind Contrived FDCPA Dispute Letters
The Court of Appeals for the Third Circuit has affirmed a ruling sanctioning a pair of plaintiff’s attorneys who were found to have been behind intentionally vague dispute letters that were allegedly written by consumers and sent to the defendant. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This appellate decision is a decisive win for the collections industry. The Court saw right through a scheme by consumer attorneys who were sending intentionally confusing, bogus handwritten dispute letters—designed to be ignored—just to trigger FDCPA violations and collect attorney’s fees. Calling it a “campaign of deception,” the Court upheld serious sanctions, recognizing that these tactics not only mislead the courts but also place an unfair burden on legitimate collection businesses. The ruling underscores why it’s critical for agencies to strategically invest in defending cases — rather than settling quickly — because exposing bad-faith litigation tactics can pay off in the long run.
Appeals Court Says Post-Complaint Filings Don’t Revive FDCPA Claims
The Court of Appeals for the Third Circuit has upheld the dismissal of a Fair Debt Collection Practices Act case that attempted to invoke the continuing violation theory because the suit was filed more than a year after the alleged violation occurred. More details here.
WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: A consumer defaulted on an auto loan, so the vehicle was repossessed and sold. The sale of the vehicle resulted in a deficiency of over $12,000. The credit union decided to sue the consumer for the balance after the applicable 4 year statute of limitations had run. The court entered a default judgment against the consumer. The credit union, through its attorneys, engaged in post default collections. More than one year after the lawsuit against the consumer was filed, the consumer alleged the law firm violated the FDCPA and relied on the “continuing violation theory” to circumvent the statute of limitations issue. Despite the consumer filing the suit more than one year later (the applicable statute of limitations associated with FDCPA claims), she argued her suit was timely filed because the law firm engaged in post-complaint conduct which occurred within the statute of limitations. The court disagreed.
The court determined the “continuing violation theory” did not apply to the consumer’s claims. Specifically, the court found that the application of this theory is “rare and not automatic” and that “no federal appellate court has extended the continuing violation theory to FDCPA claims.” Despite the post judgment filings by the law firm that did fall within the 1 year statute of limitations, the Court outlined that ceasing communications integral in a lawsuit would result in these lawsuits grinding to a halt.
This is a good ruling for the industry. It’s helpful to have sweeping language from a court that could result in quickly defending a suit based on this theory. It is important to note this court outlines this is not binding precedent as it is not an opinion of the full court, but it provides citations from other courts to support its position. So, this opinion also provides a guide for how to make the argument and where to look for support.
FDCPA Case Nets Plaintiff $450K in Fees After Lengthy Litigation
A District Court judge in Pennsylvania has awarded a plaintiff more than $450,000 in attorney’s fees in a Fair Debt Collection Practices Act case, although it was well less than the $700,000 that the plaintiff was seeking. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The attorneys’ fee in this case is pretty remarkable, given that it settled. The court measured everything out as required on a motion and made a couple of minor downward adjustments on the plaintiffs’ attorney fee. The court then ultimately reduced the requested fee by 35% because the plaintiff was not successful in certifying a class. The fact that the creditor did not have a license appears to be what cost the creditor the most, because it appears to have been the factor that gave credibility to the FDCPA claims (i.e., the plaintiff alleged that the creditor had misrepresented the legal status of the debt in a collection letter, in violation of the FDCPA, because the creditor was not licensed to hold the loan and could not enforce it. The creditor was not successful in getting that claim dismissed). That fact itself is kind of surprising in a case involving an out-of-statute debt, the collection of which often serves as the basis for consumer plaintiffs’ claims. In all, the creditor paid the settlement amount required to make the case go away before trial (an amount the court did not reveal in the opinion), its own attorneys’ fees for a 5-year case, and then more than $450,000 in plaintiffs’ attorney fees. This was an expensive case.
Judge Rejects Bid to Halt State Court Collection Case in FDCPA Suit
A District Court judge in New York has denied a motion from a plaintiff who has filed a Fair Debt Collection Practices Act complaint against a collection law firm that sought an injunction stopping a collection lawsuit that was filed against her in state court. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF MESSER STRICKLER BURNETTE: Plaintiff’s filed a lawsuit in the District Court, Eastern District of New York lawsuit alleging violations of the Fair Debt Collection Practices Act (“FDCPA”) and New York State violations of the General Business Law. Plaintiff filed a motion seeking an injunction to stay a pending State Court debt collection action. The Court denied Plaintiff’s request for an injunction as Plaintiff failed to show any applicable exception to the Anti-Injunction Act. After considering each of the exceptions available under the Anti-Injunction Act, the Court denied Plaintiff’s motion finding none of the exceptions applicable.
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.
