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 Clarifies When Vehicle Repossessions Cross the FDCPA Line
The Court of Appeals for the Ninth Circuit has affirmed a lower court’s ruling that the defendants in a Fair Debt Collection Practices Act case did not violate the statute when repossessing the plaintiff’s vehicle, ruling there was no breach of the peace. More details here.
WHAT THIS MEANS, FROM ÅNASTASIA CATON OF HUDSON COOK: In a highly unusual case that illustrates the interplay between state and federal law in regulating repossessions, the U.S. Court of Appeals for the Ninth Circuit considered a plaintiff’s claim against Ford Motor Credit and its repossession company over whether a breach of the peace during a repossession violates the FDCPA. Before getting to the question of whether a breach of the peace violates the FDCPA, the court first had to determine whether there was even a breach of the peace when the plaintiff simply orally objected to the repossession. Breach of the peace is a matter of state, not federal, law. In some states, a repossession following an oral objection is a breach of the peace, but in others it is not. The issue is unsettled in Arizona. The court considered state court case law in Arizona and other jurisdictions, and held that an oral objection alone is not a breach of the peace—even though no court in Arizona has found that to be the case. In other words, the federal court presumed that the Arizona Supreme Court would agree that a breach of the peace requires more than an oral objection by the debtor. Because this is a federal court decision, we strongly caution against reading into its definition of “breach of the peace.” A number of state courts have found otherwise, and state courts have primacy interpreting their state laws.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Judge Sends FDCPA Claims to Arbitration Over Challenges to Auto Purchase Contract
A District Court judge in Oregon has granted a defendant’s motion to compel arbitration after it was sued for allegedly violating the Fair Debt Collection Practices Act over issues with the contract that was signed when purchasing a vehicle. More details here.
WHAT THIS MEANS, FROM TOMIO NARITA OF WOMBLE BOND DICKINSON: I found a few interesting takeaways from case. First, it is important to note this case was prosecuted by a pro se litigant. As defendants and defense attorneys are painfully aware, pro se litigants can be very capable and can make cases very costly and time-consuming. I was struck by how many different arguments were raised by the Plaintiff in opposition to the motion to compel arbitration, and how Judge Baggio gave each of them serious and thorough attention. Next, this case was a great reminder of the importance of careful drafting of your arbitration provisions, and specifically drafting the delegation clauses. Here, the Plaintiff took the position that Defendant had waived the right to arbitrate, and after careful analysis, Judge Baggio concluded that, given the language of the arbitration clause, the issue of waiver had been delegated to the arbitrator. Finally, the case highlights the importance of carefully drafting a precise declaration in support of your motion to compel arbitration. You can always anticipate that your adversary will take shots and at the declaration and seek to exclude or limit the testimony and documents offered, and this case was no exception.
CFPB Opens Door to Changes That Could Make Filing Complaints More Difficult
The Consumer Financial Protection Bureau on Friday began the process to significantly reshape how consumers file complaints, particularly against credit reporting companies, a move that could also have ripple effects across debt collection, banking, and servicing. In a notice published in the Federal Register, the CFPB announced it is seeking public comment on extending and potentially modifying its Consumer Response Intake Form, the backbone of the Bureau’s complaint system. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The Consumer Financial Protection Bureau’s (“CFPB” or “Bureau”) complaint portal, commonly referred to as the “Financial Services Yelp”, has been a thorn in the side of the ARM industry since its inception, and since the CFPB started collecting debt collection complaints in 2013. The data collected in the portal has framed much of the Bureau’s policy not to mention a key driver in targeting enforcement. The most disturbing aspect of many of the consumer complaints was their lack of veracity. Additionally, as many in the ARM industry will tell you, the amount of duplicative and manufactured boiler-plate complaints was overwhelming and taxing to those on the receiving end. Nevertheless, both the ARM and the financial services industry did an exceptional job this last decade in timely responding and resolving consumer complaints, with a response rate of over 90%.
The recommendations from the CDIA, made a few days before the CFPB published its notice for comment, address the lack of veracity in consumer complaints. The complaint portal is clearly being abused to the detriment of those consumers who have real complaints. The FCRA demands truth and accuracy in the reporting of credit information by data furnishers. Those same requirements should be expected from consumers who lodge a complaint regarding their credit information.
Debt Buyer Judgment Overturned After Trial Court Lets Improper Witness Testify
A California Appeals Court has overturned a lower court’s ruling in favor of a debt buyer that obtained a judgment following a collection lawsuit, ruling the lower court judge erred by denying motions from the consumer to exclude a witness who testified during the trial. The appellate court concluded that the trial court should not have allowed testimony from a witness who was not properly disclosed before trial and should not have admitted key account records without the proper foundation. More details here.
WHAT THIS MEANS, FROM STEPHANIE STRICKLER OF MESSER STRICKLER BURNETTE: This opinion materially heightens the evidentiary standards applicable to debt buyers in limited civil cases and underscores the necessity of strict statutory compliance—both procedurally and evidentially. The court made clear that merely identifying a “custodian of records” does not satisfy the witness disclosure requirements of Code of Civil Procedure sections 96 and 97; the specific witness must be properly named and disclosed.
The decision also clarifies that a debt buyer’s custodian cannot authenticate original creditor records unless the witness is sufficiently familiar with the original creditor’s record-keeping practices to meet the foundational requirements of Evidence Code section 1271. Simply receiving, storing, or relying upon those records is insufficient to establish admissibility under the business records exception.
This case serves as a critical reminder for practitioners to (1) strictly comply with witness disclosure statutes, and (2) ensure that foundational testimony is properly established for chain-of-title documents and account records. Failure to do so may result in exclusion of key evidence and reversal on appeal.
Indiana Senate Advances Bill to Cap Medical Debt Wage Garnishment
A bipartisan bill regulating how medical debt can be collected was passed last week by the Indiana Senate and is one-half of the way to becoming law. More details here.
WHAT THIS MEANS, FROM AKEELA WHITE OF HINSHAW CULBERTSON: The bill has drawn support from health and consumer advocacy groups, who argue that medical debt is distinct from other obligations because no one chooses to become sick. However, critics of SB 85 have raised concerns that could complicate implementation or spark further legislative negotiation. For example, the American Collection Association has criticized the bill for not requiring income verification, arguing that this creates potential fraud exposure. The Association further noted that hospitals lack investigative authority to validate income claims, raising questions about how eligibility thresholds would be enforced in practice. Others have critiqued the bill for limiting hospitals’ discretion in negotiating repayment terms with qualifying patients, though hospitals would retain flexibility to offer more favorable terms and to negotiate with patients who fall outside the bill’s protected categories.
For hospitals, debt collectors, and creditors operating in Indiana, the message is clear: medical debt enforcement is under increasing scrutiny, and the legislative landscape may shift significantly if SB 85 becomes law. Stakeholders should monitor the bill’s progress through the House and be prepared to adjust collection practices accordingly.
When Service of Process Comes Up Short
Part of me decided to write about this ruling because it allowed me to start the article with, “I guess it’s true … size matters.” A Washington Appeals Court has affirmed a lower court’s ruling vacating a default judgment for an unpaid debt against a consumer, ruling that the differences in size between the plaintiff, who is six feet, six inches tall, and the description of the man provided by the process server who served the complaint, five feet, 10 inches, was one reason why the judgment should be vacated. More details here.
WHAT THIS MEANS, FROM JEFF TURNER OF SURDYK, DOWD & TURNER: As the old saying goes “the devil is in the details.” However, in Whatcom Educational Credit Union v. Simmons, the trial court and Washington State Court of Appeals agreed that the details didn’t quite add up.
The underlying facts of the case aren’t complicated. In 2016, Chester Simmons signed a retail installment contract with a seller who assigned the seller’s interest to Whatcom Educational Credit Union (“WECU”). The transaction was in connection with the purchase of a vehicle. Mr. Simmons allegedly defaulted on his payments in 2019, the vehicle was repossessed and sold by WECU, and a deficiency balance remained. WECU filed suit against Mr. Simmons to recover the deficiency balance, interest, late charges, and attorney fees. WECU filed proof of service and then obtained a default judgment. The subsequent attempt by WECU to garnish Mr. Simmons’s wages through his employer the University of Oregon, followed by Mr. Simmons filing a motion to vacate the default judgment, is what led to the current case.
The “long and short” of it is this. Mr. Simmons claimed that he had no knowledge of the lawsuit until WECU attempted to garnish his wages, that he was estranged from his spouse and not residing at the address where WECU claimed to have obtained service in 2020, and that the process server’s declaration stated that the person served was 5 feet ten inches tall and weighed 180 pounds. Mr. Simmons provided his driver’s license which reflected that he was 6 feet 6 inches tall and weighed 216 pounds. In granting the motion to vacate the trial court stated, “There’s no mistaking those two height differences.” The court of appeals affirmed, included a discussion of the general policy favoring cases to be determined on the merits, and awarded costs and reasonable attorney fees to Mr. Simmons as the prevailing party as provided in the installment contract.
While not the most exciting cutting-edge decision we’ll see this year, this case provides several good reminders. Most courts disfavor judgments that were not rendered on the merits; even the basic details of what a process server includes in the declaration can prove to be very important; and the provision in a contract for fees and costs often cuts both ways. While we can save an in-depth discussion of whether size matters for another day, at least as far as this case is concerned, we need to remember that it’s often the little things that count.
Court Dismisses FCRA Claims Over Post-Transaction Credit Pulls
A District Court judge in New York has granted a motion to dismiss filed by a creditor that was accused of violating the Fair Credit Reporting Act over access and use to the plaintiff’s credit reports when attempting to purchase a vehicle from one of the defendants. More details here.
WHAT THIS MEANS, FROM SKIP KOHLMEYER OF ZIMMERMAN, KISER & SUTCLIFFE: On January 28, 2026, the U.S.D.C. for the Southern District Court of New York in Polanco v. Spartan Auto Group d/b/a Victory Mitsubishi, Case No. 1:25-cv-02410-LJL, issued an order dismissing Plaintiff’s FCRA claim, stating that Plaintiff failed to demonstrate a cause of action under the “permissible purpose” requirement under 1681b(f). The court dismissed the complaint without prejudice, finding that the allegations failed to demonstrate both (1) that obtaining the credit report was an impermissible purpose and (2) that the conduct was willful or negligent. The court noted that under this portion of the FCRA, Congress intended this “extra hurdle” of negligence to assert a claim of liability under 1681b(f). In addition, the Court dismissed with prejudice the plaintiff’s attempt to bring a claim under 1681m, which governs the required notice of an adverse action. The court held that 1681m does not provide a “private cause of action” for consumers because “only Federal agencies and officials can enforce Section 1681m.”
Eighth Circuit Upholds FCRA Win for Furnisher Over Late Payment Dispute
The Court of Appeals for the Eighth Circuit has affirmed a ruling in favor of a defendant that was sued for violating the Fair Credit Reporting Act over information it furnished to the credit reporting agencies and then allegedly failing to conduct a reasonable investigation. More details here.
WHAT THIS MEANS, FROM CHAD ECHOLS OF FROST ECHOLS: Companies that furnish data to credit bureaus should take three practical lessons from the Eighth Circuit’s decision. First, accuracy remains paramount: reporting a payment as late is defensible when the payment is credited more than 30 days after the due date, even if a check was mailed earlier but was nonconforming to required instructions such as inclusion of a loan number. The court affirmed summary judgment where a May 1st payment was credited on June 9th , and the first payment lacked the loan number as required by the servicer’s instructions, making the account past due and the late payment report accurate. Second, investigation duties are scoped by the dispute notice: when a consumer dispute is brief and conclusory, it is generally sufficient to review account history, notes, and payment records and verify the status accordingly. The furnisher reasonably investigated by consulting account history, notes from the consumer’s call, and payment history after receiving short dispute letters merely asserting all payments were on time. Third, maintain clear payment-instruction communications and account-level documentation to show why payments may not be credited or end up credited at a different amount. This is especially true where multiple customers share the same name or remittances lack identifying information. Many agencies have multiple consumers with the same name. The servicer involved here had 34 customers with the same name and did not deposit the non-identifying check, underscoring the need for consumers to include the loan number and for furnishers to retain documentation explaining crediting decisions.
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.
