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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 Rejects SOL Bid in Indiana FCRA Case
A District Court judge in Indiana has denied a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act, ruling that the five-sentence complaint that was originally filed in state court was done so within the two-year statute of limitations, even though the defendant was never served and the case was not pursued until 18 months later, when an amended complaint was filed. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF MESSER STRICKLER BURNETTE: The court denied Trans Union’s motion to dismiss, ruling that Plaintiff’s Fair Credit Reporting Act claims were timely because her original state court complaint that was filed in April 2023 was done before the two-year statute of limitations. Even with arguments regarding lack of service and the case being inactive, the court held that the filing and payment of the filing fee was sufficient under Indiana law. The Court found that Plaintiff’s amended pleading related back to the original filing date.
What we learn is that timely filing is of critical importance as in Browne it preserves claims even if the case is inactive or service is delayed. It also shows the relationship between state procedure, the relation-back doctrine and how state procedure protects a plaintiff from statute of limitation defense. Finally, defendants be aware that the failure to raise insufficient service under Rule 12 is waived and in this case fatal to defendant’s motion to dismiss.
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Judge Dismisses FDCPA Suit Challenging Email Offer and Tradeline Language
A District Court judge in California has granted a defendant’s motion to dismiss a lawsuit claiming it violated the Fair Debt Collection Practices Act, for, among other reasons, indicating what would happen to the tradeline on the consumer’s credit report if the account was satisfied. More details here.
WHAT THIS MEANS, FROM CHAD ECHOLS OF FROST ECHOLS: No good deed goes unpunished. I am always struck by how often collection entities and debt buyers offer consumers an opportunity to resolve a debt for less than the full balance—only to find themselves defending that very communication. In this case, the consumer was offered a settlement for less than what was owed, along with deletion of the account from the credit report. Rather than saying “thank you,” the consumer filed suit asserting various FDCPA claims based on the settlement letter. The key takeaway from this case is straightforward: written communications must be true and accurate for the specific consumer receiving them. Over the years, I have reviewed many collection letters that were “true at times” or “true for some consumers.” Those letters are vulnerable. Defensible communications are those that are accurate as applied to the individual account and consumer at issue. Here, the account was lawfully purchased, ownership was clearly disclosed, the settlement offer was available, and the account would have been deleted upon payment. Kudos to the defendant for refusing to pay a “ransom” to settle a case where the letter complied with the law.
Court Rejects MTD in Pay-to-Pay Fee Class Action
A District Court judge in North Carolina has denied a defendant’s motion to dismiss claims over its charging of “pay-to-pay” fees. The decision keeps alive a proposed class action alleging that a mortgage servicer violated the North Carolina Debt Collection Act (NCDCA) and the North Carolina Unfair and Deceptive Trade Practices Act (NCUDTPA) by charging borrowers fees to make mortgage payments online or by phone. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: Losing a motion to dismiss is a bummer. But ‘tis the season to green-frame things, so here’s my rosy take: sometimes, losing a motion to dismiss can save defendants a whole bunch of hassle (and money) in the long run. To the extent that the “legally entitled” argument was a test balloon, the court make the results very clear and rejected the concept that “legally entitled” means “not otherwise prohibited.” Other defendants planning to invoke a similar argument now know how at least one district court judge feels about the argument, and can revise their positions accordingly. Is there a work-around for things the court found particularly problematic? Would framing the argument differently change the outcome? Is this position better saved for summary judgment?
Nobody likes to be on the wrong end of motions practice—but sometimes, that experience opens up a better path forward. May all your losses really be wins. Happy holidays!
Judge Rejects Late Attempt to Add Defendant After FDCPA Deadline Passes
Waiting until the last minute to file a Fair Debt Collection Practices Act before the one-year statute of limitations expires is not always the best idea, a plaintiff has learned. A District Court judge has denied the plaintiff’s motion to file an amended complaint after the plaintiff learned the identity of one of the defendants and sought to include him. More details here.
WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: As defense counsel, we see this often—a plaintiff files suit just days before the statute of limitations runs. Although plaintiffs frequently invoke the “liberal policy” for allowing amendments, this case shows that is concept has its limits. The court refused to let the plaintiff substitute the CEO of a defendant for a John Doe party. It rejected both the plaintiff’s “mistake” argument and her request for equitable tolling largely because the plaintiff chose to file so close to the statute of limitations deadline that she did not leave herself the opportunity to timely discover the John Doe’s identity.
FCRA Dispute Moves Forward After Borrowers Claim Payments Were Returned, Not Late
A Magistrate Court judge in Kentucky has denied a motion to dismiss filed by a bank that is being accused of violating the Fair Credit Reporting Act because the bank allegedly failed to correct reporting that the plaintiffs were late on their mortgage payments after returning payments back to the plaintiffs. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: In Finney v. Bank of America, N.A., the Western District of Kentucky District Court granted in part and denied in part Bank of America’s Motion to Dismiss, allowing Plaintiffs’ Fair Credit Reporting Act claim to proceed while dismissing their invasion of privacy and negligent hiring and supervision claims. The court held that Plaintiffs plausibly alleged that Bank of America furnished incomplete or misleading mortgage payment information by reporting them as late despite Plaintiffs being current and failing to correct the reports after receiving notice of disputes from credit reporting agencies, which is sufficient at the pleading stage to state a negligent or willful violation of the FCRA. However, the court found that reporting disputed information to credit bureaus does not constitute an invasion of privacy under Kentucky law absent intrusion into a private matter or public dissemination, and that Plaintiffs failed to allege facts showing Bank of America knew or should have known any employee was unfit or that negligent supervision caused their harm. As a result, the FCRA claim remains pending, while the state-law claims were dismissed.
The allegations, which have yet to be flushed out with supporting evidence by either side, gave the Court more than enough to find a fact issue for the FCRA claims to survive a FRCP 12(b)(6) Motion, but the Motion was successful in eliminating the common law claims. It will be interesting to see if the evidence can support no FCRA violation at the summary judgment stage.
Groups Sue CFPB, Vought to Keep Regulator Open
A coalition of consumer advocacy groups has filed a lawsuit seeking to block what they call a deliberate attempt by Acting CFPB Director Russell Vought and the Trump administration to “shut down” the Consumer Financial Protection Bureau by cutting off its access to funding. The case, filed in the Northern District of California, marks the most direct legal challenge yet to the administration’s effort to wind down the Bureau after months of internal turmoil, shrinking reserves, and warnings of an imminent funding lapse. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: In the never-ending saga of the survival of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), the latest salvo is a lawsuit filed by a coalition of several consumer advocacy groups (“consumer groups”) challenging Acting Director’s Vought decision to stop asking for funding from the Federal Reserve (“Fed”) and from shutting down the Bureau. While there is consensus, albeit in varying degrees, of why the existence of the CFPB is necessary, the consumer groups may have taken the bait from the Administration and ultimately compromised the agency in the long term. This could happen in one of two ways.
First, the litigation filed by the employees’ union, which is currently pending before the D.C. Circuit Court, focused on whether the Acting Director had the authority to issue a reduction in force “RIF”. Whether the CFPB could seek funding from the Fed was not before the District Court that initially heard the case and issued the injunction. Nor is it before the D.C. Circuit Court. The Circuit Court just granted a hearing en banc (meaning the entire panel of the Circuit Court will hear the case) and reinstated the lower court’s injunction. When argument before the en banc hearing is held, the consumer groups will want to argue the funding issue and either will ask to join in the Circuit Court argument, or their case will make its way to the Supreme Court on its own only to be consolidated before the Supreme Court at some later time. In either scenario, the funding issue will now be in play, where it wasn’t before. Whether the Supreme Court is amenable to this argument is unclear, and its not necessarily a slam dunk for the consumer groups.
Second, the Supreme Court just heard the Slaughter v. FTC case which challenged Humprey’s Executor and the fate of independent agencies. At oral argument, the Court seemed inclined to hold that the Executive Branch should be able to exercise its control over executive agencies, including how these agencies are run and who should be in charge. That Congress continues to write bad and ambiguous laws, as is the case with Dodd Frank, may provide further support for the Court’s reasoning. This will be a significant consideration, especially if Slaughter is decided prior.
Judge Tosses FDCPA Class Action Over Eviction Fee
A District Court judge in Illinois has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit over a fee that was assessed during eviction proceedings, because the fee was explicitly referenced in the underlying community association agreement. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: It feels like the cases challenging fees under the FDPCA are coming up more frequently since the Carrington Mortgage case in the Fourth Circuit a few years back. This one turned out to be fairly simple for Judge Coleman of the District Court because, consistent with Illinois law, the operative community association documents actually did specifically authorize the $100 fee the plaintiff complained about. The judge had to dig a little beyond the consumer plaintiff’s pleadings to find language in those documents that the plaintiff did not include in her complaint, but that she referenced with excerpts. But she found the specific fee authorization in those documents, and the plaintiff lost this one on the Motion to Dismiss. While this fee issue remains on the front burner, agencies and debt buyers should ensure that they have clear grounds for imposing fees before doing so. When that is the case, disposing of a case like this should be straightforward.
Missouri Appeals Court Revives Pre-Spokeo FCRA Settlement
Timing is everything. A settlement inked between parties in a Fair Credit Reporting Act case four days before the Supreme Court issued its ruling in Spokeo v. Robins has led a Missouri Appeals Court to overturn a lower court’s dismissal of that settlement. More details here.
WHAT THIS MEANS, FROM JAMES K. SCHULTZ OF SESSIONS, ISRAEL & SHARTLE: It took nearly 10 years of litigation spanning the trial and appellate courts in federal and state court before a final say was provided by the Missouri appellate court verifying the age-old legal truism we all learned on the playground: there are no take backs. Despite there being just a handwritten summary of settlement terms for a case that likely could no longer be brought today because of the Supreme Court creating a heightened jurisdictional standard for “injury,” the court here found that the settlement agreement was still enforceable and is requiring defendant to move forward on paying 1/3 of a million dollars. Missouri’s court of appeals was not bothered by the jurisdictional defect in the underlying case, saying “a deal’s a deal, even if it was a terrible deal” so that defendant has to pay to settle a claim that would likely be barred today.
FDCPA Case Falls Apart After Plaintiff Omits Basic Elements Needed to Proceed
When suing collection operations, there are boxes that plaintiffs need to check, and if those steps are missed, it makes it easy for judges to rule. A District Court judge in Florida has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case because the plaintiff forgot, or chose not to, make sure that she alleged the debts were for personal use and that the defendants were, in fact, debt collectors under the statute. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF BASSFORD REMELE: In this case, the consumer filed a 222-paragraph complaint alleging violations of the FDCPA and common law misrepresentation against the defendants. The complaint was later amended, expanding to 365 paragraphs. However, both versions notably lacked any allegation that the debt was a consumer debt or that the defendants regularly attempted to collect consumer debts owed to others.
The court granted summary judgment in favor of the defendants, holding that the plaintiff’s failure to establish that the defendants were “debt collectors” under the FDCPA was fatal to her claim. Interestingly, the court allowed the plaintiff to amend her complaint by December 8, 2025, but prohibited her from including any FDCPA claims. Had the defendants moved to dismiss earlier, rather than waiting for summary judgment, the plaintiff might have been permitted to amend her FDCPA claims. Thus, the decision to wait for summary judgment proved to be a strategic advantage.
That said, the matter may not be fully resolved. On December 15, 2025, the court closed the file. Later that same day, the consumer filed a motion requesting additional time to submit an amended complaint.
Missed Deposition Opportunities Sink Motion to Reopen Discovery in FDCPA Case
A Magistrate Court judge in Utah has denied a motion from the defendants in a Fair Debt Collection Practices Act case to re-open discovery so they can depose the plaintiff, ruling that the defendants “were not diligent in pursuing” the deposition when they had the chance. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: The decision underscores the importance of litigation diligence, even in difficult instances where there is a change in counsel. Citing a lack of diligence, the court denied the defendants’ motion to reopen discovery. However, the court nonetheless still granted additional time for the defendants to file dispositive motions.
Coerced Debt Bill Sent to N.Y. Governor
The New York legislature has passed a law and sent it to Gov. Kathy Hochul that prohibits creditors from enforcing coerced consumer debts while also creating a private right of action. More details here.
WHAT THIS MEANS, FROM JOHN L. CULHANE OF BALLARD SPAHR: On December 19, New York Governor Kathy Hochul signed into law S. 1353, the Coerced Debt Right of Action Act (the “Act”). The Act, which will go into effect on March 19, 2026, protects a victim of domestic violence or other abuse who was forced to take out debts in their own name. The Act treats such coerced debt somewhat like debt created by identity theft, establishing a procedure for the victim to dispute the debt with the creditor and have it removed from their credit report. It also gives the victim the right to sue the creditor to have the debt declared invalid. The Act was supported by domestic violence advocates, the Urban Resource Institute and the Legal Aid Society of New York City, among others. Earlier this year, the CFPB indicated that, in response to a petition from the NCLC and the Center for Survivor Agency and Justice, it was likewise considering issuing a proposed rule to address coerced debt reported to consumer reporting agencies; however, the CFPB has yet to issue a proposed rule and, with the agency’s future uncertain, it is unclear when or if it might do so.
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.
