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.
Confusion Alone Not Enough: Court Dismisses FDCPA Case
A District Court judge in New York has granted a motion to dismiss filed by defendants in a Fair Debt Collection Practices Act lawsuit on the grounds the plaintiff did not have standing to sue. More details here.
WHAT THIS MEANS, FROM NICK PROLA OF BASSFORD REMELE: As the court observed, TransUnion LLC v. Ramirez recognized two categories of cognizable harms: tangible injuries (physical or monetary) and intangible injuries (such as defamation, privacy invasion, or reputational harm) with a close common-law analogue. 594 U.S. 413, 427 (2021). Yet, courts post-TransUnion have demanded specificity: a misleading letter that merely causes confusion or anxiety lacks the historical grounding to qualify as an injury in fact.
It is encouraging to see the court act as a gatekeeper to the types of claims where it is clear that no harm or injury is implicated. However, the pro se Plaintiff does have an opportunity to amend his complaint and the court has provided a roadmap for alleging concrete harm. It is becoming an unfortunate trend for plaintiffs (pro se or not) to manufacture allegations of harm for the sole purpose of surviving a dismissal on standing.
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Judge Tosses Sovereign Citizen’s FDCPA Suit
Sovereign citizens remind me of a great line from “Hoosiers.” Essentially, there are two types of dumb: the guy that gets naked and runs out in the snow and barks at the moon, and the guy who does the same thing in my living room. First one don’t matter, the second one you’re kinda forced to deal with. Sovereign citizen cases are fun to hear about and read about but not always fun to deal with when you are on the other side. In a case that was defended by Jonathan Robbin of J. Robbin Law, a District Court judge in New York has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act case that was started because a sovereign citizen claimed not to have received all the documents he requested when he disputed the debt. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: Having been around the industry for quite some time, I remember when I first started dealing with sovereign citizens in the early 2000s. Yes, they always made life difficult but were usually easy to spot — the trademarked or copyrighted name, use of ALL CAPS, red thumbprints, fake promissory notes. Then they seemed to go away for a while, but the last few years it seems they have come back in full force, probably due a mix of political climate and social media. The good news is that the industry generally has a strong track record for handling these types of claims. This particular case is a good example of nipping the case in bud as early as possible. Attorney Robbins did a good job of cutting through the sovereign citizen jargon and laying out a simple case before the Court which allowed it to dismiss the case. The sovereign citizen movement is not likely to die out anytime soon, but the more the industry can work together to share coherent and cogent Court opinions that cut through their crap, the easier it will be to fight them.
Durbin, Hawley Introduce Bipartisan AI Liability Bill
A bipartisan push in the Senate could reshape the legal landscape for artificial intelligence, opening the door to lawsuits against AI developers when their systems cause harm. More details here.
WHAT THIS MEANS, FROM ARI DERMAN OF CLARK HILL:The Durbin-Hawley AI Liability bill (S. 2937) is well-intentioned, aiming to fill a real legal gap by treating AI systems as products within the traditional liability framework. But legislation like this seems a bit premature and overly broad. Remember, even ambitious states like Colorado, which passed one of the first comprehensive AI laws, have already had to pause implementation because the technology and its risks (and rewards) are evolving faster than regulators can keep up. The bill’s failure to define what constitutes a “defect” in an adaptive algorithm makes it impossible to distinguish design flaws from normal AI behavior. In practice, this could even chill innovation, overburden smaller developers, and harden the dominance of large tech firms that can afford to weather the legal uncertainty.
Ill. Appeals Court Upholds Ruling for Collection Agency in FDCPA Harassment Case
An Illinois State Appeals Court has affirmed a lower court’s ruling in favor of a collection operation that was sued for violating the Fair Debt Collection Practices Act because, among other claims, it allegedly engaged in harassing behavior against the plaintiff; however, it was the plaintiff who made “threatening, intimidating, and vulgar statements.” More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: The Carter decision provides good news for debt collection defendants, with a trial court willing to walk through the facts and find that a debt collector “went ‘way beyond’” its obligations under the FDCPA. While the court noted that the defendant’s “obligation was solely to verify the debt,” the company went over documents with the plaintiff, provided him with additional documents, and “ended up actually reducing the amount of debt” through its verification process. The decision further emphasizes the requirements for litigants, even pro se litigants, to follow the rules of court, as the appellate court affirmed the trial court’s decision to strike plaintiff’s motion for summary judgment for failure to obtain leave.
Consumer Advocates, Bank Groups Push Back on CFPB’s Supervision Proposal
Consumer groups and industry trade associations are urging the Consumer Financial Protection Bureau not to scale back its supervisory authority over nonbanks — but for very different reasons. More details here.
WHAT THIS MEANS, FROM JAMES SCHULTZ OF SESSIONS, ISRAEL & SHARTLE: Anyone paying even a little attention to the goings-on at the CFPB for the last 9 months know that the Bureau has been keen on reducing its supervisory footprint. The CFPB’s latest efforts to raise the threshold to qualify as a large market participant has created a union of strange bedfellows – as blue state attorneys general and big banks are united in opposing those efforts, albeit for different reasons. The AGs want to maximize federal oversight and lightening their own load (and budget) while the banks want an even regulatory playing field, not one where smaller non-traditional lender competitors fly under the federal regulator radar putting them at a competitive advantage. But that pushback likely won’t matter – we can expect the Bureau to raise the threshold because the #1 Bureau priority seems to be to do less.
NTEU Petitions for En Banc Review of CFPB Layoff Ruling
The National Treasury Employees Union (NTEU) is asking the full D.C. Circuit to rehear the case over mass layoffs at the Consumer Financial Protection Bureau, arguing that a recent panel decision clears the way for the Trump administration to effectively abolish the agency in violation of the Constitution. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: The status and the future of the CFPB remain unclear, after months of attempts to reduce the agency’s power and ability to operate through funding cuts, reductions in force, and statements of narrowed supervision and enforcement.
Regarding staffing, mass layoffs were announced in February, which would shrink CFPB staff by over 80%. On March 28, 2025, the United States District Court for the District of Columbia entered an order temporarily prohibiting the mass terminations, finding that there was a concerted, expedited effort by the Executive Branch to shut down the CFPB (a Congressionally-established agency) entirely, and that such action was likely to be found a violation of the Constitution’s separation of powers.
On August 15, 2025, a divided panel of the D.C. Circuit Court of Appeals reversed, holding that the preliminary injunction should be vacated on jurisdictional grounds, including that the action being challenged was not a final agency action as required by the Administrative Procedures Act, but rather a broad and abstract policy decision. The Honorable Judge Cornelia Pillard dissented, stating, “The notion that courts are powerless to prevent the President from abolishing the agencies of the federal government that he was elected to lead cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws.”
On September 29, 2025, the National Treasury Employees Union led the filing of a petition for rehearing en banc, asking that the full set of active judges on the D.C. Circuit Court of Appeals hear the matter. A majority of those judges must vote in favor of the rehearing for the case to proceed to an en banc ruling. That decision, however, has been delayed indefinitely due to the recent government shutdown in late September. On October 7, 2025, the government sought an unopposed stay of its deadline to oppose the petition for rehearing en banc, due to the Department of Justice’ loss of funding, noting that “Department of Justice attorneys are prohibited from working, even on a voluntary basis, except in very limited circumstances.” The Court of Appeals has yet to rule on the stay request. Thus, it seems we will not have any quick answers to our questions regarding the future viability of the CFPB.
Judge Dismisses Sovereign Citizen Lawsuit Against Multiple Collectors
Another day, another dismissal of a suit against pro se plaintiffs who claim to be sovereign citizens. In this case, the plaintiffs sued seven different defendants, including four different collection operations, with a complaint that was “short on facts and improperly include[d] rambling citations to legal authorities and argument.” More details here.
WHAT THIS MEANS, FROM CRYSTAL DUPLAY OF FROST ECHOLS: In Reed, et al v. Kia Finance America, et al, No. 4:2025‑cv‑02471 (S.D. Tex.), the Plaintiffs filed a complaint against multiple creditors and debt collection companies. Several of the Defendants filed Motions to Dismiss for failure to state a claim upon which relief can be granted. The court stated that the Complaint was “short on facts.” The Court held that “sovereign citizens” cannot relieve themselves of a contractual obligation simply by tendering some fictional form of payment and declaring themselves no long indebted. This case highlights the importance of well plead Complaints and the fact that the sovereign citizen movement is still active, despite its history of not being persuasive in a court of law – not a single time.
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.
