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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.
Court Backs Certification in Fee-Based Collection Letter Suit, Questions Adequacy of Representative
A New Jersey Appeals Court has affirmed the certification of a Fair Debt Collection Practices Act case over an alleged attempt to collect improper fees while remanding the case back to state court to determine whether the plaintiff is able to represent both of the suit’s subclasses. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: This case involves the propriety of the collector adding a collection fee to an account referred for collection. The underlying creditor’s contracts contained two distinct fees provisions. The plaintiff’s contract obviously included only one of the provisions. And the creditor provided an affidavit indicating it had no means of determining which collection fee provision applies to any of the more than 11,000 accounts at issue. The trial court certified two classes based on the distinct provisions and appointed the plaintiff as class representative of both.
On appeal, the defendant argued that the plaintiff could not represent a class unless he was a member, and he wasn’t a member of both classes. The defendant also claimed that although plaintiff suggested he could identify which fees provision was implicated in each class member’s contract using “AI,” he provided no support for this contention.
With respect to the first argument, the court seemed to agree with the defendant that the plaintiff could not represent a class without being a member of that class. But instead of reversing, it remanded to the trial court to “make findings as to whether plaintiff is fit to serve as class representative for both subclasses and to make the requisite findings and conclusions of law on this issue.” It alternatively indicated the court could consider “permit[ting] the parties to propose an alternative representative for the October 2014 subclass.” I’m not sure how an alternative representative would be identified and convinced to become a class representative at this point in the case since the contracts stretch back more than a decade.
As for the defendant’s second argument regarding identifying which contract governed each specific class member’s relationship with Banfield, the court found that argument—based on Banfield’s uncontradicted testimony that it had no means to easily determine which clause is in any specific agreement—“without merit.” The court ruled that even if the review of nearly 11,000 contracts would be “undoubtedly time-consuming … there is nothing unreasonable about conducting an independent review of accounts and records contained in them.” That seems rather odd for a number or reason including the fact that the records are owned by a non-party and the plaintiff never proposed an actual method to either the trial court or the appeals court.
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Judge Dismisses FDCPA Claims, Allows FCRA Claim to Proceed Against Creditor
A District Court judge in Illinois has granted motions to dismiss from two collection operations and the original creditor claims that they violated the Fair Debt Collection Practices Act, but denied the creditor’s motion to dismiss a claim it also violated the Fair Credit Reporting Act, questioning the creditor’s strategy to defeat the FCRA claim. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: This case highlights the increasing importance of standing arguments as part of motions to dismiss. And not just whether a plaintiff alleges a cognizable injury, but also whether that injury is actually caused by the alleged statutory violation(s). The pro se consumer here defaulted on a Bank of America credit card. Bank of America furnished the account to the credit bureaus. The plaintiff disputed the account, claiming she did not owe anything. Bank of America verified the reporting without noting plaintiff disputed the account. The account was placed with a collection agency, who sent one dunning letter, and then with a law firm, who sent one letter and filed a collection lawsuit. The plaintiff brought suit against all three asserting each party violated the FDCPA and the FCRA.
The court initially conducted a standing analysis, concluding the plaintiff had sufficiently alleged an injury in fact – i.e. that the inaccurate reporting hurt her credit score. The court quickly dispensed with the FDCPA claim against Bank of America because it is not a debt collector and with the FCRA claims against the collection agency and law firm because they were not furnishers. Importantly, the court dismissed the FDCPA claims against the collection agency and the law firm because the harm plaintiff claimed—a decreased credit score—was not caused by the sending of the collection letters or the filing of the lawsuit. The court determined she sufficiently stated an FCRA claim against Bank of America. The takeaway is to make sure to analyze whether the claimed injury if fairly traceable to the claimed violation when conducting a standing analysis and pressing a dispositive motion.
NJ Appeals Court: Waiting Three Years to Act Means Judgment Stands
By no means am I attempting to make light of the consumer’s situation, but when judges note that the consumer “slept on her rights” it feels only natural to say, you snooze, you lose. A New Jersey Appeals Court has denied a consumer’s motion to vacate a default judgment, agreeing with the lower court that she waited too long and because proper procedure was followed. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: I am a little bit curious about the defense the consumer in this case said she had not asserted but wanted to raise in her motion to vacate the judgment on her debt. But the trial court and the appeals court were not curious, and that’s all that matters. LVNV and its lawyers followed New Jersey’s Rule of Civil Procedure at every step leading to the judgment and ultimately the execution against the consumer’s bank account, and that is the primary reason why the appeals court did not overturn the trial judge’s decision on the consumer’s motion to vacate. LVNV served this defendant seven (!) times by regular and certified mail to the correct address with no response. And when she did file her motion to vacate the judgment, the consumer did not deny the debt (nor did she deny it on appeal – if she had a defense to payment, she would have been smart to include that in the initial motion to vacate along with her claims of failure of service). LVNV took all the right steps, and that made it easy for the court to get to the right result in this case.
DOJ Opinion Blocks CFPB From Drawing Fed Funds, Raising Operational Questions
The Consumer Financial Protection Bureau will remain open through at least the end of 2025 but could face a funding lapse in early 2026 after the Department of Justice determined the agency can no longer legally draw money from the Federal Reserve. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: On November 18, 2025, about a week after the DOJ indicated the CFPB would run out of funding by yearend, President Trump nominated Stuart Levenbach, as permanent director of the CFPB.
Levanbach, is an associate director of the budget office, who has worked under Russel Vaught at the Office of Management and Budget and who is the current acting director of the CPFB. Levanbach has little experience in consumer finance, making his confirmation uncertain. But, he appears to be nominated to allow Vaught more time to wind down operations at the CFPB. Vaught’s term as acting director is set to expire in December, but federal law allows him to remain acting director if the White House nominates a permanent director.
Taken together, the lapse in funding and further extension of Vaught’s tenure, many are speculating that this will almost certainly result in CFPB operations terminating entirely in the next few months.
As the CFPB steps back from regulatory enforcement, state regulators and attorneys general are picking up the slack. We have seen increased activity by state regulators and attorneys general. Consumer finance companies should connect with trusted legal counsel to avoid and defend regulatory investigations and other state actions.
Judge Grants MTD in FCRA Case Over Missing Dispute Flag on Credit Report
A District Court judge in Pennsylvania has granted motions to dismiss filed by the defendants — a credit reporting agency and a collection operation — in a Fair Credit Reporting Act case that claimed inaccurate information was included in the plaintiff’s credit report. More details here.
WHAT THIS MEANS, FROM AKEELA WHITE OF HINSHAW CULBERTSON: The Bandes decision reinforces that enforceability and collectability fights usually do not create FCRA inaccuracies against CRAs under Section 1681e(b) or furnishers under Section 1681s‑2(b). Dismissals with prejudice or time bars do not require reclassifying accounts as uncollectible or extinguished in Pennsylvania. Because voluntary repayment requests are allowed, “in collections” reporting is not inherently misleading even when litigation is off the table. That remains true under “objectively and readily verifiable” frameworks. Operationally, furnishers must avoid materially misleading reporting but need not decide collectability. If consumers want the legal status changed, they should obtain a clear court order and use it in any dispute. Expect continued testing of the “objectively verifiable” exception, but Bandes resists using the FCRA to litigate underlying debt defenses.
Court Finds Misprinted Fee Description Not Misleading Under FDCPA
A District Court judge in Illinois has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act case involving a printing error that mis-identified a fee in a notice that was sent to a consumer. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF BASSFORD REMELE: In this case, the court properly found that the condo association’s declaration (bylaws) provided for the fees sought in the collection action and eventually paid by the consumer. The court rejected the consumer’s argument that a printing error that mislabeled a fee violated the FDCPA or Illinois Consumer Fraud Act, essentially finding that the error was not a material misrepresentation as it did not change the balance owed. And because the amount sought was proper, the consumer’s claim of unjust enrichment was likewise without merit. This case underscores the value that a broad contract, or in this case, a condo association’s declaration, provides both as a sword in a collection action and as a shield against meritless claims.
Lawsuit Claims Ed. Dept., CRAs ‘Weaponized’ Credit Reporting
The former head of the Department of Education’s student loan portfolio during President Trump’s first term is behind a class-action lawsuit that was filed last week accusing the department and the three major credit reporting agencies of violating the Fair Credit Reporting Act for allegedly forcing student loan borrowers into default by inaccurately furnishing information about the debts. More details here.
WHAT THIS MEANS, FROM JIM SANDY OF MCGLINCHEY STAFFORD: In this putative class action the plaintiff has filed suit against the Department of Education as well as the credit reporting agencies for “improperly” declaring more than five million individuals delinquent on their federal student loans. According to plaintiff this is all by design to weaponize credit reporting as a “back-end collection tool.”
The class plaintiffs have asserted a number of claims against the Department, including claims under the Fair Credit Reporting Act for reporting inaccurate information and failing to undertake a reasonable investigation into a consumer dispute regarding credit reporting. The complaint also seeks declaratory and equitable relief as well as damages in excess of $100,000 per class member.
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.
