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.
Extra Steps to Dispute Debt Count as Concrete Harm Under FDCPA, Judge Rules in Denying MTD
A District Court judge in Kansas has denied a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling the plaintiff’s claim of having to spend “additional time, effort, and expense” in informing the defendant a second time that she was disputing her debt is enough for her to have standing to pursue her claims. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF MESSER STRICKLER BURNETTE: Just 78¢: The Price of Legal Standing
Plaintiff filed suit against Nationwide Capital Services (“NCS”) for violating the FDCPA §§ 1692d(8) and 1692f, alleging NCS failed to mark her debt as disputed, causing harm to her credit reputation and ability to obtain credit. NCS moved to dismiss for lack of Article III standing. The Court denied the motion finding Plaintiff suffered tangible. The Court held that Plaintiff’s extra time, effort and expense incurred in having her attorney send a second dispute was sufficient to allege a tangible injury. In reaching its decision, the Court cited to cases from the Seventh (purchase postage) and Eighth Circuit (purchase of postage and an envelop) can confer standing.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Attempt to Revisit FDCPA Standing Ruling Rejected
A District Court judge in Kansas has denied a defendant’s motion for reconsideration of an order denying its motion for summary judgment in a Fair Debt Collection Practices Act case on whether the reputational harm of purportedly falsely furnishing information to the credit reporting agencies is enough for the plaintiff to have standing to sue. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This case underscores the growing tension between FDCPA and FCRA standing rulings. The consumer’s entire claim arose from an alleged failure to mark her accounts as disputed when the debt collector reported them to a credit bureau. The court nevertheless found that she could pursue an FDCPA claim for reputational harm based solely on that reporting—even without evidence of a reduced credit score or denied credit—departing from TransUnion and subsequent FCRA cases that require a concrete injury tied to dissemination or credit impact. In the court’s view, even a technical issue such as a missing dispute flag can constitute a “reputational injury” sufficient to establish standing. Taken together with the broader wave of FCRA litigation, this decision highlights why robust compliance procedures are essential—and why, even with them, litigation risk remains.
DFS Reminds Regulated Entities: You Can Outsource Services to Third Parties, Not Accountability
The New York Department of Financial Services has released new cybersecurity guidance emphasizing how regulated entities should manage the growing risks tied to third-party service providers. Acting Superintendent Kaitlin Asrow issued the guidance this week, which falls during Cybersecurity Awareness Month, warning that while vendors bring innovation and efficiency, regulated companies remain ultimately responsible for safeguarding consumer data and maintaining cybersecurity compliance. More details here.
WHAT THIS MEANS, FROM KIM PHAN OF TROUTMAN PEPPER & LOCKE: Because data breaches often originate with vendors, regulators are increasingly focused on this potential threat to the cybersecurity of financial data. With heightened scrutiny by regulators, the ARM industry should be prepared to respond to enhanced oversight by banks and other regulated financial institutions. Under the recent NYDFS industry letter, this may take the form of more robust due diligence, contractual provisions, monitoring, and oversight as banks endeavor to comply with the NYDFS expectations for third party service provider risk management.
Judge Dismisses FDCPA Complaint Against Hospital Collection Unit
Medical debts can be tricky. A lot of times, separate physician groups or medical practices work out of a hospital and can bill a patient directly, making it confusing for the patient to know who is collecting for what. A District Court judge in Pennsylvania has adopted a magistrate judge’s recommendation to grant a defendant’s motion to dismiss a Fair Debt Collection Practices Act case after the plaintiff sued the collection department of a hospital because the plaintiff did not clearly prove the defendant met the statute’s definition of a debt collector. More details here.
WHAT THIS MEANS, FROM CHAD ECHOLS OF FROST ECHOLS: Always remember that definitions matter—both in statutes and in contracts. Under 15 U.S.C. § 1692a(6), the term “debt collector” expressly excludes creditors collecting debts in their own name. In the context of medical debt, this distinction can become particularly murky because of the many entities involved in providing and billing for medical services. Nonetheless, in this case, it is likely that the pro se consumer will be unable to plead around the statutory exclusion that protects the hospital from FDCPA liability.
That said, creditors must remain cautious. To preserve the protection afforded by the FDCPA’s creditor exclusion, a creditor must actually be collecting its own debt and must do so in its own name. Using a different or misleading variation of the creditor’s name to create the appearance of being “in collections” or to increase recovery rates may appear strategically sound, but it risks crossing the line into debt collection activity and could trigger the FDCPA’s application—an outcome best avoided.
New York Bill Would Create Private Right of Action for Improper Debt Collection
A new bill introduced in the New York State Assembly would give consumers the right to sue debt collectors directly for violations of the state’s debt collection laws. More details here.
WHAT THIS MEANS, FROM JAMES K. SCHULTZ OF SESSIONS, ISRAEL & SHARTLE: New York law generally has state-specific rules for collecting debts in the state that largely mirror the FDCPA. The good news is that those rules are currently enforceable by the state attorney general. But that apparently isn’t good enough as the Legislature wants to make sure that consumers can sue as well to recover damages in the event of an alleged violation. If this becomes law, the potential exposure for a case by a New York consumer just went up, as we will see double dipping of claims being brought under both the FDCPA and state law (like routinely happens in California with the Rosenthal Act). And to make it worse, New York would empower courts to award punitive damages under some circumstances – a type of exposure that is not present under the FDCPA. Consumer lawyers in New York are certain to weaponize the threat of punitive damages to justify absurd settlement demands.
D.C. Council Introduces Medical Debt Reform Bill
A new proposal before the D.C. Council aims to overhaul how medical debt is incurred, reported, and collected in the District of Columbia, setting what could become one of the most comprehensive local frameworks for protecting consumers from the long-term effects of unpaid medical bills. More details here.
WHAT THIS MEANS, FROM LORAINE LYONS OF MARTIN GOLDEN LYONS WATTS MORGAN: The District’s proposed Medical Debt Mitigation Amendment Act of 2025 was introduced following a June 2025 report by Tzedek DC, an organization dedicated to protecting low-income residents from abusive debt collection practices. Further support for this bill is research by the Peterson Center on Healthcare, which promotes initiatives to make healthcare more affordable.
If enacted, the legislation would impose substantial operational restrictions on large healthcare facilities and debt collectors, including a complete prohibition on reporting medical debt to credit bureaus. Notably, there is no indication in the legislative record that healthcare providers, the debt collection industry, or other stakeholders were consulted during the drafting process.
While the legislation aims to address legitimate consumer protection concerns, drafting it without input from the affected industries presents significant risks. The bill could create unintended operational consequences, and its development appears to have been one-sided, increasing its vulnerability to legal challenges.
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.
