I’m thrilled to announce that Frost Echols is the new sponsor for the Compliance Digest. Frost Echols reputation has been built on aggressively protecting the rights of businesses throughout our local jurisdictions. Founding partners, Mike Frost and Chad Echols, developed a deep understanding of regulatory compliance, commercial litigation and business operations through years of advising executives in the collection industry. We are committed to a strategic, economic, and aggressive approach to your legal representation.
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 Narrows FCRA Case Over COVID Forbearance Reporting, Dismisses Most Claims
A District Court judge in Washington has largely granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act related to how it reported information about the plaintiff’s mortgage, which was in forbearance, during the COVID-19 pandemic. The ruling pares back a wide-ranging complaint that accused the defendant of improperly reporting mortgage delinquencies during and after pandemic-related forbearance periods, while allowing a narrow portion of the FCRA claims tied to earlier reporting activity to move forward. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW CULBERTSON: This ruling is interesting for a few reasons, and underscores the importance of seeking to dismiss claims strategically. First, the Court considered the applicable forbearance agreements even though they were not included by the Plaintiff with the complaint. Federal courts allow defendants to include documents and materials outside the complaint when they are inherently incorporated by the allegations in the complaint. For example, a breach of contract claim that does not include the contract inherently incorporates the contract itself. Here, the Court correctly took notice of the forbearance agreements to interpret the obligations with respect to the delinquency reports. Courts appear to be expanding a bit the scope of documents that they will review at a motion to dismiss, especially where, as here, the documents are not controverted by the Plaintiff. Second, the Court gives a nice summary of the FCRA preemption of state claims. While many courts have wrangled with whether to apply total preemption, the statutory approach, or the temporal approach, this Court succinctly disposed of the issue by gathering cases to hold that total preemption applies. Third, while this motion did not ultimately resolve all of the claims, it ruled on the remaining claims in a way that could set up a relatively straightforward summary judgment motion; namely whether Plaintiff discovered his damage, or that Plaintiff reasonably should have discovered the damages such that they are barred by the two-year statute-of-limitations period. It seems discovery for the Defendant can focus on that issue and potentially resolve the sole remaining claims.
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CFPB to Restart Exams in Q2 With Fewer Reviews and Narrower Scope: Bloomberg
Consumer Financial Protection Bureau examiners sidelined for much of the past year are expected to return to work as early as April, but with a dramatically scaled-back examination program that will feature far fewer exams, narrower scope, and fully virtual reviews, according to a published report. The CFPB expects to conduct fewer than 70 exams in 2026, a steep decline from recent years, as supervisors begin developing exam scopes next week ahead of second-quarter reviews. More details here.
WHAT THIS MEANS, FROM JOANN NEEEDLEMAN OF CLARK HILL: I guess with $145 million in new funding, the CFPB will need to justify its existence and affirm their statutory duties. It’s hard to imagine that future supervisions will have the scope and breadth of past examinations, given the reduction of staff. Supervisions are a months-long process leading up to the actual exam. It can take months thereafter for the final examination report which in most cases will identify matters requiring attention (MRA) and then remediations. There can be instances when supervisors will refer their findings to enforcement. Given the thin staff of the CFPB in all departments, it will be unlikely those referrals will be made, unless there are some egregious activity and clear-cut violations of the law.
It is important to put the past puzzle pieces together to gain an understanding of how and in what manner these new examinations will impact the ARM industry. In April 2025, the CFPB issued a memo regarding their Supervision and Enforcement Priorities which rescinded all prior supervision priority documents and confirmed that examinations would be reduced by 50%. Further the April 2025 memo stated that the Bureau will return to the 2012 proportionality levels of 70% bank supervisions as opposed to 30% nonbanks. If the Bureau is only going to do 70 examinations, potentially 21 of those exams will be on non-banks, with the mortgage industry getting the top priority, followed by credit reporting and then debt collection. There will be no CFPB and multi-state examinations, which was done in 2024. The CFPB also indicated that it will “deprioritize supervisions where States have and exercise ample and regulatory and supervisory authority”. This could be interpreted to mean that the CFPB will bypass entities that already undergo state supervision.
As reported the exams will be virtual, but that does not mean that the information requests will be minimal. Nor do we know the time frame of the examinations.
As it has been mentioned numerous times both in the Compliance Digests and various Accounts Recovery webinars, the pull back by the CFPB has only emboldened the States. State examinations are more frequent, more protracted and more unreasonable in their conclusions of MRAs. While an examination under this administration maybe vanilla, a state examination is nothing but.
Mass. Governor Moves to Ban Medical Debt From Credit Reports
The governor of Massachusetts announced last week during her State of the Commonwealth address that her office is planning to issue a regulation that would ban the credit reporting of medical debt. More details here.
WHAT THIS MEANS, FROM JEFF TOPOR OF WOMBLE BOND DICKINSON: If finalized, the rule would affect healthcare providers, medical debt collectors, collection agencies, and data furnishers, as well as credit reporting agencies operating in Massachusetts. Entities that currently furnish medical debt data would need to cease reporting for Massachusetts consumers and ensure existing reporting practices do not violate state requirements. Importantly, the proposal reflects the state’s view that medical debt reporting is an unfair consumer harm rather than a valid credit-risk indicator.
From a compliance perspective, organizations should anticipate state-level obligations that go beyond federal Fair Credit Reporting Act (FCRA) requirements. While the CFPB finalized a federal rule in 2025 limiting the use of medical debt in credit decisions, Massachusetts’ approach would prohibit reporting outright, reinforcing that state laws may impose stricter standards than federal baselines. If the forthcoming regulation is not preempted by the FCRA, the failure to update furnishing practices, vendor agreements, and compliance controls could lead to regulatory enforcement, consumer complaints, and reputational risk.
Compliance teams should consider inventorying any medical debt reporting workflows, identifying whether Massachusetts residents are involved, and coordinating with third‑party collection agencies and credit reporting partners. Policies, procedures, training, and monitoring programs should be reviewed in the event they need to be updated if the prohibition comes to pass.
Court Dismisses FCRA Claim Despite ‘Cursory’ Furnisher Investigation
Having your apartment infested with rodents and still offering to pay the rent and probably being right that a collector’s efforts to verify the reporting of a debt “were cursory and insufficient” were not enough for a plaintiff’s Fair Credit Reporting Act lawsuit to survive a motion for judgment on the pleadings filed by the collection operation, a District Court judge in New York has ruled. Even if a collector’s investigation was minimal, an FCRA claim cannot proceed unless the plaintiff plausibly alleges an inaccuracy that is objectively and readily verifiable, the judge ruled. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK, DOWD & TURNER: In Silver v. Top Line Reporting, et al., Plaintiff Aliyah Silver’s Amended Complaint failed to allege “an objectively and readily verifiable inaccuracy” to support her FCRA claims. This failure was fatal to her FCRA claims against both Trans Union (the CRA) and Top Line Reporting (the furnisher). In his Memorandum Decision and Order (granting Top Line’s Motion for partial judgment on the pleadings), Judge Brian Cogan of the Eastern District of New York explained how “accuracy” is an essential element of any failure-to-reasonably-investigate claim brought under 1681s-2(b). Without alleging “an objectively and readily verifiable inaccuracy,” a plaintiff’s arguments about the reasonableness of a furnisher’s investigation (or a CRA’s reinvestigation) cannot make it over the threshold for consideration. So, what are the morals of the story here? First, Judge Cogan continues to appear to be a relatively good draw when defending claims in the Eastern District of New York. His plain-spoken writing style and concise analyses are easy to understand. Second, when considering any kind of potentially claim-dispositive motion, take care to understand the rulings made by the judge in your case before you file. You might find that the judge has already decided an issue in the case (law of the case) that you can use to your advantage.
Mass. Judge Dismisses FDCPA Claims Over Interest Accrual
A District Court judge in Massachusetts has granted a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act, as well as state debt collection regulations over the contents of an acceleration letter that was sent to the plaintiff. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: Hodges v. NewRez LLC (D. Mass., No. 1:25-cv-10147) is a federal lawsuit filed in the U.S. District Court for the District of Massachusetts arising from a home equity line of credit (HELOC) and a Chapter 7 bankruptcy that was discharged in 2008 eliminating the Plaintiff’s personal liability for the loan. Plaintiff alleged that after she obtained a HELOC in 2005 and filed for Chapter 7 bankruptcy in 2008—discharging her personal liability on the loan but defendant left the lien on her Massachusetts home—she received no monthly statements for over 15 years and more than a decade later received a notice of default to foreclose on more than $200,000 alleged due. In 2024, loan servicer NewRez LLC (doing business as Shellpoint Mortgage Servicing) and loan holder The Bank of New York Mellon sought payment of more than $150,000 in interest and fees accrued during the long gap without statements, threatening foreclosure if she did not pay. Hodges’s amended complaint claimed these practices violated state and federal consumer protection laws.
Defendants have moved to dismiss, arguing, among other things, that the applicable statutes do not impose the duties alleged against mortgage servicers. Judge Burroughs rejected the Plaintiff’s theory in its entirety under the FDCPA suggesting that the FDCPA itself imposes no requirement that debt collectors send monthly statements, etc.
Keep an eye out on this case as it is likely we will see another amendment to this pleading with allegations under other federal statutes and when defending like cases focus on the statutory allegation within the pleading for applicable application.
N.J. Appeals Court Rejects Arbitration Clause Added by Bill Stuffer
A New Jersey Appeals Court has affirmed a lower court’s ruling that deemed an arbitration provision was unenforceable because the defendant failed to follow its own contact in how amendments to the underlying agreement needed to be made. The court emphasized that arbitration clauses cannot be imposed through shortcuts when an institution’s own agreement sets stricter requirements for contract changes. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: Motions to compel arbitration are a common battleground where the underlying contract contains an arbitration provision and the plaintiff asserts putative class claims. In an unpublished opinion the New Jersey Court of Appeals reminds parties that arbitration clauses are contracts and of the importance of clear, unambiguous contract language. In Herbert, the original agreement contained two provisions which addressed contract modification. The first required all changes to the agreement be in a signed writing. The second addressed amendments to the contract’s terms. In reaching its ruling, the Court distinguished between amendments (which would apply to existing terms) and changes (which would include an addition of terms – in this case, the addition of the arbitration provision by unilateral notice by the creditor subject to an opt out provision which was inserted in a monthly statement). Because the arbitration clause was added at a later date, the Court took the position that it was a change that required a written signed agreement from the parties. The moral to the story? Word choice matters and parties should pay particular attention to how amendment clauses are drafted to ensure they are clear and unambiguous.
Judge Finds No Credit Reporting Inaccuracy Despite Consumer Scam
A District Court judge in Maine has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act in a case involving the plaintiff being scammed out of nearly $60,000. The ruling narrows a lawsuit brought by a consumer who alleged that a credit union improperly investigated and reported a home equity line of credit balance that arose after she fell victim to a sophisticated fraud scheme. While the court allowed a narrow claim under the Electronic Fund Transfer Act to proceed related to timing requirements, it dismissed the FCRA claim. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: This opinion is a gold mine for defendants fighting the good fight in FCRA claims involving allegedly fraudulent accounts. The opinion touches on, and ultimately agrees with, a number of arguments that furnisher defendants should continue to raise in fraud-based FCRA claims, whose numbers continue to increase. Of the many conclusions reached, a few stood out as particularly useful:
- An account can be the product of fraud and accurately furnished; the two are not mutually exclusive.
- Fundamentally, disputes like this plaintiff’s are disputes over who should pay the debt, not whether the data itself is incorrect. Furnishers are not responsible for adjudicating disputes over legal responsibility. “Plaintiff’s concern sounds in loss allocation, not credit reporting… Plaintiff is seeking to impose liability on Defendant based on legal questions over who is liable for the loss.”
- The FCRA was not intended to serve as a backdoor way for fraud victims to recoup their losses: although the Court clearly felt bad for the Plaintiff, the FCRA is not the right vehicle for Plaintiff to seek damages for the events giving rise to her lawsuit.
One important thing to note: the First Circuit takes a minority approach to FCRA claims alleging fraud, and delineates between legal versus factual inaccuracies. But even in circuits who apply the “objectively and readily verifiable” standard, these arguments still apply, and the end result should be the same: the FCRA’s “reasonable investigation” framework wasn’t meant to burden furnishers with law enforcement-level obligations under the guise of consumer protection. Slowly, the case law is beginning to agree.
Court Certifies TCPA Wrong Number Class Against Medical Debt Collector
A District Court judge in Missouri has certified a class action against a collection operation accused of violating the Telephone Consumer Protection Act over wrong number calls that were made to the plaintiffs. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: TCPA class cases may be the Lazarus of consumer litigation. Advances in technology along with the emergence of strong Article III standing requirements in federal court appeared to raise the bar on class certification to near insurmountable heights. But the news of the death of TCPA class actions has been exaggerated. In this case, the court relied on binding precedent from the Eighth Circuit to certify a “wrong number” class. The primary argument here was that there is no means to determine the owner of a telephone number at an given time without investigating each number. The court rejected that argument, ruling: “The reverse look-up process identifies potential plaintiffs associated with each number.” But a “potential” plaintiff is just that—and the court provided no means by which Defendant could challenge any persons claim of class membership. Defendant has an absolute right to do just that. To be sure, the court made clear on several occasions that it was bound by binding precedent from the Eighth Circuit. So, while winning on appeal is never a guarantee, this case provides fertile ground for the Eighth Circuit to revisit its prior rulings in light of more recent Supreme Court decisions should Defendant decide to appeal.
Misidentified Creditor in Bankruptcy Claim Not Enough for FDCPA Liability
A District Court judge in Illinois has affirmed a bankruptcy court’s ruling in a Fair Debt Collection Practices Act case involving attorneys, a bankruptcy filing, and an unpaid sanctions award. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: In Mogan v. Sacks, Glazier, Franklin & Lodise LLP et al., No. 1:25 C 5858 (N.D. Ill. Jan. 26, 2026), the district court affirmed dismissal of an FDCPA adversary proceeding arising from a proof of claim filed in a debtor’s bankruptcy case to collect court-ordered attorneys’ fees imposed as sanctions in prior litigation. Although the proof of claim mistakenly identified the creditor, the court held that the alleged obligation did not qualify as a “debt” under the FDCPA because it did not arise from a consumer transaction for personal, family, or household purposes. Instead, the fees stemmed from a federal court sanction order, placing them outside the FDCPA’s scope as a matter of law.
The decision reinforces that FDCPA exposure turns first and foremost on whether the underlying obligation is a qualifying consumer debt — not on technical defects in collection activity such as creditor misidentification. Even in bankruptcy, attempts to collect court-ordered attorneys’ fees, sanctions, or similar litigation-based obligations generally will not support FDCPA claims absent a consumer-transaction nexus.
While there has always been an intersection between consumer bankruptcies and the FDCPA, with the U.S. Courts website reporting that personal and business bankruptcies rose 11% for the 12-month period ending December 31, 2025, I would not be surprised if we began see an uptick in adversary claims alleging FDCPA violations.
Judge Highlights Timing and Pleading Gaps in FDCPA Case
A District Court judge in Washington has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act in a case that serves as a reminder about some of the timing and foundational elements that are required when alleging violations of the FDCPA. More details here.
WHAT THIS MEANS, FROM ANASTASIA CATON OF HUDSON COOK: Reading between the lines, the plaintiffs seemed frustrated that the purported debt collector (the defendant) serviced their mortgage after the mortgage had been transferred within MERS without being publicly recorded. Fortunately, the court did not buy the customer’s argument that this meant that the purported debt collector had no right to service or collect the mortgage. Instead, the court focused on the facts and found that because the defendant serviced the mortgage prior to any default (indeed the plaintiffs claimed that they were current on the mortgage until they discovered an unknow third party was receiving their payments), it was not a “debt collector” subject to the federal FDCPA. You have to wonder if perhaps notice of the behind-the-scenes transfer would have headed off this lawsuit.
Ed. Dept. Proposes Overhaul of Student Loan Repayment
The Department of Education yesterday issued a proposed rule aimed at reducing the cost of higher education and simplifying federal student loan repayment, a move that could materially reshape how graduate and professional student loans are originated, repaid, and resolved in default. The Notice of Proposed Rulemaking follows last year’s enactment of President Trump’s Working Families Tax Cuts Act and opens a 30-day public comment period for stakeholders across the student loan ecosystem. More details here.
WHAT THIS MEANS, FROM ISSA MOE OF MOE LAW GROUP: The Department of Education’s proposal is intended to curb if not reverse the ever-increasing cost of higher education. To accomplish that, the proposed rule would cap federal student loan borrowing limits for graduate and professional students. The proposal creates standard fixed-term repayment and income-driven repayment plans, which, in turn, would shift how much borrowers are required to pay each month, and creates additional rehabilitation options for defaulted loans.
Though well-intentioned, it’s unclear whether the downstream impact of any final rule will be positive, negative, or neutral. In terms of practical impact for student-loan servicers, when federal rules shift like this, borrowers can get confused about their options, which can lead to more missed payments and, eventually, more accounts being placed for collection. Agencies may also see an increase in disputes or requests for clarification as borrowers try to navigate new rules. This could be a good time for operations and compliance teams to review their compliance management systems to ensure policies and procedures, scripts, and consumer-facing staff understand the rules and are prepared to provide clear, accurate information in response to a potential rise in student‑loan‑related questions.
Frost Echols reputation has been built on aggressively protecting the rights of businesses throughout our local jurisdictions. Founding partners, Mike Frost and Chad Echols, developed a deep understanding of regulatory compliance, commercial litigation and business operations through years of advising executives in the collection industry. We are committed to a strategic, economic, and aggressive approach to your legal representation.
