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 Finds Furnisher’s Investigation Unreasonable in FCRA Dispute
A District Court judge in Kansas has granted a plaintiff’s partial motion for summary judgment in a Fair Credit Reporting Act case over the reasonableness of an investigation into a dispute conducted by a furnisher. More details here.
WHAT THIS MEANS, FROM JENNA WILLIAMS OF FROST ECHOLS: When responding to consumer disputes through eOSCAR, agencies must treat any documents attached by the consumer as a trigger for a new review. Account notes should clearly describe that the attached documents were reviewed and considered. For example: “3/16/2026 10:00am EST – eOSCAR FCRA dispute received. Consumer attached documents to dispute. Documents were fully reviewed as part of reasonable investigation.”
Ignoring consumer attachments submitted through eOSCAR may significantly increase the risk that a court will find the investigation unreasonable under the FCRA.
Judge Dismisses FCRA Claims Over BK Reporting, Cites Limits on CRA Responsibilities
A District Court judge in Illinois has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act, ruling that it has no obligation to determine whether a debt has been discharged in bankruptcy or not. More details here.
WHAT THIS MEANS, FROM STEPHANIE STRICKLER OF MESSER STRICKLER BURNETTE: Determining whether a debt is discharged in bankruptcy is generally a legal dispute which is not actionable under the FCRA. The FCRA imposes no obligation on CRAs to determine whether a debt has been legally discharged in bankruptcy or not. CRAs are not required to engage in legal interpretation of whether a debt is discharged – especially when bankruptcy schedules are incomplete or amended. Ultimately, FCRA claims cannot be based on unresolved legal questions about bankruptcy discharge.
This opinion is important because it supports the position that CRAs can rely on information provided by furnishers. The FCRA does not require CRAs to independently investigate bankruptcy dockets or records to confirm the discharge status of a debt.
This opinion also emphasized the importance of the consumer dispute process. In this case, the consumer never disputed the purported discharged debts with the CRAs and just filed suit instead. Because no dispute was submitted, the CRA’s reinvestigation duties were never triggered.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Appeals Court Reverses FCRA Liability in Tenant Screening Case
The Court of Appeals for the Second Circuit has reversed a ruling against a defendant that was found to have violated the Fair Credit Reporting Act, ruling the defendant did not place an “impossible condition” on the plaintiff to provide additional documentation that it requested. In a significant decision for companies operating in the tenant screening and background reporting space, the court held that the defendant did not violate the FCRA when it declined to accept a conservatorship certificate that was facially invalid and initially requested a power of attorney. The court also affirmed the dismissal of Fair Housing Act claims, concluding the screening platform did not proximately cause the denial of housing. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW CULBERTSON: The consumer protection laws cannot possibly provide clarity and guidance for all situations, and in some instances, our industry is put in an impossible position. This case presents one such instance. The plaintiff’s child was medically incapacitated, but the document she provided was facially invalid (because it was not endorsed by the Court). The company would not release the records associated with the child without something like a power of attorney, but the child was not capable of signing such a document. Notwithstanding the difficult and obviously sympathetic circumstances, the Second Circuit wisely held that this situation is not proper for a federal lawsuit.The Court noted that Plaintiff here could have submitted the correct document, and the failure to provide it did not bring about liability because the defendant’s policies (and the applicable law) did not provide for the nuanced circumstances presented.
Proposed FCC Rulemaking Could Push Companies to Reshore Call Center Jobs
The Federal Communications Commission is preparing to vote on a series of proposals that could significantly reshape how U.S. companies operate their call centers, particularly those located outside the United States. FCC Chairman Brendan Carr announced that the agency will consider new rules aimed at encouraging companies to move call center operations back to the United States, improving service quality for American consumers, and cracking down on illegal robocalls that originate overseas. More details here.
WHAT THIS MEANS, FROM MARTY STERN OF WOMBLE BOND & DICKINSON: It is really hard to understand the thinking behind the proposed Call Center Onshoring NPRM, which the FCC announced it will be taking up at its March 26 open meeting. The call center onshoring rules, as proposed, would be applicable in the first instance to local and wireless phone companies, interconnected VoIP providers, as well as cable and satellite television operators. Among other things the proposed rules would require that offshore CSRs be proficient in “American Standard English” and would limit the percent of calls that a provider can handle offshore. The proposal would also require that customers be informed that a CSR is offshore, and then, upon request, have the call transferred, without delay, to a U.S. call center. Finally, in addition to call center reporting requirements, the proposal would require calls and other communications (e.g., online chat, email, and text) involving sensitive consumer information be handled by a U.S.-based CSR.
Our initial impression is that bringing jobs to the U.S., one of the stated reasons for the proposal, is certainly not a core function of the FCC, and it is hard to understand where the Commission finds statutory authority or a basis for its proposal, let alone how the proposal might be justified under any sort of cost-benefit analysis. Typically, we do not see these type of overly regulatory consumer protectionist proposals from a Republican FCC, particularly involving competitive markets, and the Commission is littered with analogous protectionist proposals and rules from the Obama FCC, that were tossed by the Republican FCC and Congress during President Trump’s first term. We also expect that the Commission will be getting quite an earful on the significant cost impact that the onshoring requirements and the proposed limits on offshore call center volumes will have on providers, and the likely rate impacts that would then flow through to customers of their services.
Judge Denies Discovery Request for Plaintiff’s Retainer Agreements in FDCPA Case
A District Court judge in New Jersey has denied a defendant’s motion seeking the retainer agreements between a plaintiff and her attorneys in a Fair Debt Collection Practices Act case to potentially fight certification of a class, among other reasons. More details here.
WHAT THIS MEANS, FROM NICK PROLA OF BASSFORD REMELE: There are numerous reasons why a consumer’s fee agreement with counsel may be relevant in litigation. This is particularly true in fee-shifting consumer protection cases, where defendants have a legitimate interest in understanding the potential scope of a fee award when evaluating settlement or making an offer of judgment.
Nevertheless, this decision underscores the relatively high bar defendants face when seeking discovery of a plaintiff’s retainer agreement in FDCPA class actions. Courts often view such requests as speculative unless the defendant can articulate a concrete basis showing how the agreement bears on Rule 23 adequacy, potential conflicts, or counsel’s control of the litigation. Accordingly, defense counsel should tie any request for retainer or fee information to a specific class-certification issue rather than a generalized inquiry into the plaintiff-counsel relationship.
Absent that showing, courts are likely to deem such discovery disproportionate or irrelevant at the pre-certification stage. Notably, although the same plaintiff’s counsel had used a retainer agreement in prior cases that raised concerns about class representative adequacy, the court accepted counsel’s representation that those issues had been addressed through implementation of a revised retainer agreement.
New York Judge Strikes Down Paper Statement Fee Ban as Unconstitutional
A District Court judge in New York has granted a defendant’s motion to dismiss a class-action lawsuit over a bank’s practice of charging $3 for its customers to receive paper statements, ruling that a state law that banned charging a fee for receiving paper statements is unconstitutional. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: In this case, Plaintiff claimed that the Defendant bank’s $3 monthly charge for paper statements violated New York GBL § 399‑zzz. That law forbids banks from charging a fee for paper statements, but allows them to offer a “credit or other incentive” to customers who choose paperless statements.
In a classic example of “burying the lede,” the court first rejected the Defendant bank’s preemption argument based on the National Bank Act. But it then ruled the statute violates the First Amendment because it regulates commercial speech by dictating how businesses may describe price differences (allowing “credits” or “incentives” for paperless billing while forbidding paper statement “fees”). The court applied what’s known as “intermediate scrutiny” in determining the law was unconstitutional. That standard generally asks if the law is substantially related to an important government objective, without unnecessarily restricting protected activity although consumer protection is a substantial government interest. The court found the statute does not directly advance consumer protection and is more extensive than necessary, since banning fees has only a de minimis practical effect and suppresses truthful, non‑misleading speech. Therefore, the statute is unconstitutional in its entirety. This ruling could be useful in other cases involving claims based on “fee vs. incentive” issues.
Judge Finds Standing for Single Letter but Dismisses FDCPA Suit as Time-Barred
A District Court judge in Alabama has granted a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act when it sent a collection letter to the plaintiff, who was represented by an attorney at the time, on the grounds the statute of limitations had expired, denying the plaintiff’s attempt to argue that extraordinary circumstances were involved. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: There is an extensive discussion regarding federal standing and whether the receipt of a single letter can provide a basis for same. However, that is not the takeaway here. Although it is interesting how some courts liken receiving a single letter to an “intrusion upon seclusion” under common law thus providing Article III Standing. (Am I crazy? I can see a day when a debtor sues for casting an evil eye in their direction, but I digress)
It was the statute of limitations (“SOL”) defense, which the Court found barred the suit. What makes it interesting is the discussion by the Court and that it advocated filing two suits, in separate courts, on the same cause of action.
To explain: Alonso, the Plaintiff, initially filed a third party claim against Waldrop in the collection action for unpaid sorority dues initialed by Waldrop in an Alabama State Court on the part of their client, Alpha Phi. Alpha Phi subsequently moved for summary judgment and to strike the 3rd party complaint. Both motions were granted. On appeal the third party complaint dismissal was upheld by the Alabama Court of Civil Appeals (“CCA”) based on procedural grounds under Alabama’s Rules of Civil Procedure, adding that the claim against Waldrop did not have to be brought as a third party claim in the collection. However, by the time the CCA issued its ruling the SOL had run on the violation.
Alonso then filed the instant suit against Waldrop in the Federal Court for the Northern District of Alabama. Waldrop moved to dismiss based on a lack of standing (see above) and the SOL. Alonso argued that the SOL should be tolled, primarily based on the time it took the CCA to rule on the Appeal in the State Court. The District Court disagreed and stated that the instant suit could have been filed while the appeal was pending to preserve the SOL repeating that Alonsowas not required to bring the Third Party claim as part of the collection action. Additionally,reliance on the arguments “ignorance of the law” and ‘mistaken advice from counsel” were both found not to provide the “extraordinary circumstances” necessary for tolling. This was a strategic mistake not to file the 2nd suit to preserve the SOL. I should think this is a case the Plaintiffs’ Bar would want to circulate.
Judge Rejects Borrower’s Attempt to Block Collection Based on Old Bankruptcy Ruling
A District Court judge in Arkansas has granted a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act over attempts to collect on a debt that was part of a bankruptcy proceeding more than a decade ago. The decision came after a borrower argued that a student loan servicer had no legal authority to collect or report a student loan debt because of developments during a Chapter 13 bankruptcy proceeding that took place years earlier. More details here.
WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: Chapter 13 bankruptcy proceedings can take many twists and turns—issues about scheduled debts, notice issues, claim objections, unconfirmed plans, failed repayment, conversion to Chapter 7— that can preserve or abolish the right to collect. Courts are increasingly looking to these nuances in addressing FDCPA claims and the reasonableness of dispute investigations under the FCRA. Here, the plaintiff claimed that the servicer could not collect the debt because the Bankruptcy Court sustained objections to the servicer’s claim and amended claim. But the district court looked further in the bankruptcy proceeding, noting that the plaintiff did not complete her Chapter 13 plan. And, in any event, the debt—a student loan—was not dischargeable. Many bankruptcy issues can be nuanced, and this case is a good reminder that it pays to have bankruptcy counsel on hand.
Banking Trade Groups Urge Congress to Tighten Oversight of Debt Settlement Industry
The American Bankers Association and six other major financial trade groups are urging Congress to take a closer look at the debt settlement industry, warning lawmakers that current oversight under the Federal Trade Commission’s Telemarketing Sales Rule may not be enough to address what they describe as deceptive and harmful practices. In a letter sent last week to key Senate and House committee leaders, the associations called for proactive legislation to modernize federal oversight and close what they view as structural gaps in the current regulatory framework. More details here.
WHAT THIS MEANS, FROM ARI DERMAN OF CLARK HILL: Debt settlement remains one of the least understood business models in consumer finance. It is heavily regulated, perhaps because the industry has historically produced uneven results across the various players in the space. Some firms have built thoughtful compliance programs and transparent consumer processes, while others have drawn criticism for aggressive marketing or unrealistic expectations. That inconsistency has likely exacerbated a lot of misunderstandings. At the same time, relationships between debt settlement companies, creditors, and collection agencies have begun to evolve. In recent years, some of the historically icy dynamics have thawed through benchmarking efforts and more structured collaboration around settlements. But the fact that both the American Bankers Association and ACA International have joined the latest push for greater scrutiny suggests that tensions between these industry cousins still exist, and that the broader financial services ecosystem is still trying to figure out exactly where debt settlement fits.
Banking Groups Urge Fed to Begin Gradual Phaseout of Paper Checks
Two of the financial services industry’s largest trade groups are urging the Federal Reserve to begin planning for a future where paper checks play a much smaller role in the U.S. payments system. In a joint letter, the American Bankers Association and the Consumer Bankers Association told the Federal Reserve that check usage has been declining for years while fraud and processing costs continue to rise. Their message to regulators is not to eliminate checks overnight, but to start a coordinated, long-term effort to move consumers and businesses toward electronic payment alternatives while gradually reducing certain paper-based check services. More details here.
WHAT THIS MEANS, FROM CARLIN MCCRORY OF TROUTMAN PEPPER LOCKE: On March 4, 2026, the American Bankers Association (ABA) and the Consumer Bankers Association (CBA) submitted a response to the Federal Reserve’s request for information and comment. The ABA and CBA notes that check usage is declining while costs to process checks remain the same. Check fraud is also increasing. The industry groups submitted a proposal to support a transfer to electronic payments over a period of 10 years. Important considerations are state commercial codes that may require the acceptance of checks along with customer education and outreach on the benefits of electronic payment rails.
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.
