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.
Judge Dismisses FCRA Claim Based on Sovereign Citizen Payment Theory
A District Court judge in New York has agreed with a Magistrate Court judge and dismissed a Fair Credit Reporting Act case filed against a creditor by a sovereign citizen who claimed the defendant reported his account as delinquent even though he used a “security interest” to make a payment. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: It always gives me a lift to see a judge dismiss a self-represented litigant’s blatantly meritless claim without leave to amend, and I hope this trend continues. Courts take care to ensure all litigants can access the courts, but they also have to keep a chronically over-burdened judicial system running. In years past, it wasn’t uncommon to see second, third and sometimes even fourth amended complaints before the court finally dismissed the matter without leave to amend. Now, though, as litigation volume increases while court capacity stays the same, will courts be as liberal with leave to amend as they have been? Don’t get me wrong, if there is even so much as a touch of grey (RIP Bob Weir) in whether amendment would be futile, courts should (and almost always do) choose amendment over dismissal every time. But how many opportunities should self-represented litigants get to fix their mistakes? Will courts be persuaded to show less deference to litigants who have access to law libraries, but lack law licenses? Change will come at a tortoise’s pace as large-scale change tends to do, but every inch in the right direction is progress. Here’s hoping for more!
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Judge Dismisses TCPA Case, Finds Texts Are Not ‘Telephone Calls’
A District Court judge in Georgia has granted a defendant’s motion to dismiss a Telephone Consumer Protection Act case, ruling that text messages do not meet the statute’s definition of “telephone calls.” The decision is a break from other federal courts that have ruled in the past that text messages are calls under the TCPA. More details here.
WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON & MESSER: This case is but another decision in the long and ongoing battle whether a call constitutes a “text” under the TCPA’s do not call provisions, section 227c of the TCPA. The DO NOT CALL rules only apply in the Telemarketing context, not the informational call space. A debt collection call has been deemed to be an informational call. And, under the informational call TCPA provision, section 227(b), a text message has been deemed to be a call by many courts. In the recent decision in Bradford v. Sovereign Pest Control (2026) from the Fifth Circuit Court of Appeals, the Court sought to do away with the distinction between informational vs. telemarketing calls when interpreting the TCPA’s plain language.
So far, in the interpretation of whether a text message constitutes a call under the do not call telemarketing rules, there have been 15 courts that have ruled that a text message in this context is a call, while seven have ruled that a text message is not a call. The count and the split seem to change weekly.
Regardless, and despite all of the federal district court challenges under the do not call rules, the Ninth Circuit Court of Appeals has reaffirmed in Howard v. Republican National Committee (2026) that text messages remain “calls” under the TCPA’s plain language. The Howard case is an informational call case regarding political calls. The 9th Circuit Court ruled in this manner without reference to the FCC’s prior interpretation that text messages constitute calls. The Court reasoned that a text fits the literal definition of a call, which is the “attempt to communicate by telephone”.
So, in the 9th Circuit, the issue of whether a text is a call in the context of an informational call is resolved. It remains to be seen if other federal courts of appeal will take the same position as the 9th Circuit has in the Howard case.
So, for now, under the TCPA, it is best to consider that a text is a call for the purposes of debt collection texts.
Tread carefully!! Everything is in flux.
Vermont Supreme Court Rejects FDCPA Claim in Credit Card Collection Case
The Vermont Supreme Court has affirmed a ruling in favor of a creditor that was accused of violating the Fair Debt Collection Practices Act because it allegedly told the consumer in a letter that a collection lawsuit had been filed against him before it was actually filed with the court. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: This Vermont Supreme Court case stemmed from a collection action brought by American Express. The consumer filed various counterclaims, including for violation of the FDCPA. The trial court granted summary judgment in favor of American Express and the consumer appealed. The Vermont Supreme Court affirmed. The Court declined to address the consumer’s FDCPA claim because it was inadequately briefed but, had the Court reached the merits, American Express’s status as a creditor collecting in its own name would have ended the inquiry.
While there is not much in the way of FDCPA claims to be gleaned from this opinion, it does highlight the importance of following procedure in every case. The consumer opposed American Express’s summary judgment motion, he did so only with argument, not evidence. Had he filed evidence in opposition, he may have been able to get to a trial on some of the issues. The consumer also failed to adequately brief his FDCPA claim on appeal. While he would have lost on the merits, following the proper procedure would have at least let the Court consider the issue. The ultimate outcome would likely not have changed in this case, but most cases are not as cut and dry. You certainly do not want to have a winning issue dismissed before the court decides it simply because you did not follow the court’s procedures.
New York Issues Wide-Ranging Proposal to Regulate Buy Now, Pay Later
The New York Department of Financial Services has proposed a comprehensive new regulatory framework for Buy Now, Pay Later products that would impose licensing and supervision requirements on BNPL providers, cap fees and interest, mandate credit-like disclosures and dispute rights, and tighten data privacy rules. The proposed rules, would apply to both zero-interest “pay-in-four” products and interest-bearing installment BNPL loans. More details here.
WHAT THIS MEANS, FROM TOM QUINN OF HUDSON COOK: With the CFPB largely sidelined on the issue, the developing New York regulatory framework to govern buy-now-pay later (BNPL) products should be closely watched. A key question is the intended scope of the New York rules. While the CFPB generally analyzed BNPL products as transactions payable in four (or fewer) installments with no interest, the New York rules appear broader. Both the New York BNPL statute (which is in suspended animation, pending rule promulgation) and its nascent regulation define a “BNPL Loan” as closed-end consumer credit provided to a consumer in connection with his/her purchase of goods (other than a motor vehicle) and/or services. While credit sales are excluded, the definition is generally silent regarding repayment term. This raises the concern that, absent clarification, both “pay in four” transactions and longer term installment loans would be covered. Traditional installment loans to purchase goods and services are likely not the target of regulator concern in the BNPL space. Further clarity on the rule’s scope would be helpful, particularly if the New York rules will be used as a template by other jurisdictions moving forward.
Judge Allows FDCPA Claim to Proceed Over Delayed Tradeline Deletion After Settlement
A District Court judge in Illinois has partially denied a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case related to a delay in how quickly the defendant deleted a tradeline from the plaintiff’s credit report that resulted from the settlement of an underlying collection lawsuit. More details here.
WHAT THIS MEANS, FROM MONICA LITTMAN OF KAUFMAN DOLOWICH: The takeaway from this case is to make sure you have a system set up to track all deadlines associated with filed cases and pre-suit matters. It is important to have reminders for all deadlines, including those associated with finalizing a settlement and dismissal of the case. It is good to keep tabs on whether a consumer signs the settlement agreement, because sometimes they never do. Keeping track of case management deadlines can help to prevent a potential lawsuit involving a breach of the settlement agreement.
Judge Tosses FDCPA Claim Over Commercial Lease, Allows FCRA Do-Over
A District Court judge in Wisconsin has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act by attempting to collect a business debt as a personal debt. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF BASSFORD REMELE: As pro se litigation increases, more pleadings are failing to state valid claims. In this case, the Court dismissed the plaintiff’s FDCPA claim with prejudice because the debt was for business purposes, which the Act does not cover. The Court dismissed the FDCPA claim with prejudice because no amended pleading would change the outcome. However, the FCRA claim was dismissed without prejudice, allowing the plaintiff to amend the complaint to include the necessary allegation that she had disputed the account with a credit reporting agency.
Judge Recommends Denial of FCRA Injunction, Warns Plaintiffs Over AI-Generated Citation
A Magistrate Court judge in Florida has denied a renewed motion for a preliminary injunction filed by the plaintiffs in a Fair Credit Reporting Act case while also admonishing them for using artificial intelligence to craft their argument. In her report, the judge concluded that private litigants cannot obtain injunctive relief under the FCRA and warned the plaintiffs that further reliance on fabricated legal citations could result in sanctions. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: The Pena decision is notable less for its FCRA holding—which aligns with existing authority—and more for its pointed warning about AI‑generated “hallucinated” citations. The court strongly suggests the plaintiffs relied on an AI tool when they cited to a non‑existent page of an Eleventh Circuit opinion and makes clear that pro se status does not excuse submitting false or unverifiable authority. Going forward, this kind of language will likely be cited as a cautionary example: self‑represented litigants are fully responsible for independently verifying that every case, page cite, and quoted proposition actually exists and says what they claim. Courts are signaling that repeated AI‑driven citation errors can prompt in‑person hearings and potential sanctions, not indulgence.
Judge Certifies FDCPA Class Over Added Interest in Collection Letters
A District Court judge in Michigan has certified a class action in a Fair Debt Collection Practices Act lawsuit that accuses a collector of adding interest to any debt, regardless of whether the underlying contract stated it was allowed. The ruling follows earlier decisions in the case rejecting the collector’s attempt to justify the practice under Michigan law and denying a request to end the case at the pleadings stage. More details here.
WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: This Order may be somewhat uncomfortable to read, as it leaves little doubt about the Court’s view of the Defendant. From the outset, the judge signals both how the Court intends to rule and its perspective on the Defendant’s attempt to challenge standing after more than three years of litigation.
That said, Article III standing is not a defense that can be waived, and that point is important. Even if standing is not addressed early in a case, a party may still raise the issue once it becomes apparent, even after the case has progressed substantively.
Notably, this Court also departed from the more recent trend toward a narrower view of standing, adopting a broader approach by stating: “Regardless of the amount of actual damages, the receipt of an illegal debt collection letter is itself an injury establishing standing.”
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.
