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.
Late-Stage Standing Challenge Sinks FDCPA Class Action
A New Jersey federal court just pulled the rug out from under a long-running Fair Debt Collection Practices Act class action, dismissing the case for lack of standing after years of litigation and even after the parties had reached a settlement and were battling over attorney’s fees. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: Challenging standing has been an increasingly useful and successful defense strategy in FDCPA cases based on alleged violations that are technical in nature. It started to catch on with the Hunstein FDCPA case, and the industry wins on standing require plaintiffs’ lawyers to seriously consider whether they can convincingly argue that their clients have experienced actual harm as a result of the alleged violations – and it turns out that in many cases they cannot. This case reminds us the very important rule that jurisdiction cannot be waived, and a defendant can raise standing in the context of subject matter jurisdiction at any time. The opinion does not indicate how much the plaintiffs’ attorneys were asking for in attorneys’ fees in this just-about-settled case, but their motion seeking attorneys’ fees the debt collector found unreasonable cost the plaintiffs in this case their settlement. The magistrate judge pointed out very fairly that the plaintiffs had not alleged that they suffered any harm from the alleged collection letter violation (suggesting that interest and fees could accrue on the balance being collected) – and that failure helped defeat this case (at least temporarily – the judge dismissed the complaint without prejudice) on standing grounds. It’s a good case with a useful reminder for litigators that they can raise standing as an issue any time during the proceedings.
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Judge Dismisses FCRA Claims Against Credit Union Over Charged Off Auto Loan Reporting
Anyone who has been around this industry long enough knows that dealing with self-represented plaintiffs can be an adventure. When you layer in the fact that the plaintiff in this Fair Credit Reporting Act case also identifies himself as the founder of of a developing artificial intelligence company, you can imagine what that means, which is probably why a Magistrate Court judge in Oregon needed 44 pages to grant a credit union-defendant’s motion to dismiss claims it violated the statute by reporting information about a defaulted auto loan to the credit reporting agencies. More details here.
WHAT THIS MEANS, FROM STEPHANIE STRICKLER OF MESSER STRICKLER BURNETTE: The court emphasized that while pro se litigants are entitled to liberal construction of their pleadings, they are still required to comply with fundamental procedural rules, including Rule 8’s requirement of a clear and plausible claim. It rejected the plaintiff’s attempt to rely on voluminous exhibits and disorganized filings, making clear that courts will not sift through materials to construct claims on a litigant’s behalf. The opinion also strongly criticized the plaintiff’s use of generative AI, noting that he cited nonexistent cases and fabricated legal authority, which the court treated as a potential Rule 11 violation. Importantly, the court held that pro se status does not excuse a party from the obligation to verify legal citations or ensure arguments are grounded in existing law. Overall, the decision reinforces that pro se litigants are held to the same substantive and ethical standards as represented parties, particularly when invoking legal authority.
CFPB Final Rule Eliminates Disparate Impact Standard Under ECOA
The Consumer Financial Protection Bureau has finalized a rule that reshapes how fair lending laws will be enforced, eliminating the use of disparate impact analysis under the Equal Credit Opportunity Act and narrowing several long-standing protections tied to credit access. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: The CFPB issued a final rule revising Regulation B under the Equal Credit Opportunity Act. The changes narrow several areas, most notably removing the “effects test” when evaluating credit applications. Supporters contend the changes more closely align with the statutory text rather than the legislative intent and will make compliance clearer. Critics argue the changes will make it harder to identify discrimination.
As we have seen in recent years, the goals of the CFPB often align with those of the current administration. It is therefore too early to tell whether these changes will stick around for a while in their current form or whether the pendulum will swing back in the opposite direction. In the short term, however, this will certainly impact operations and compliance across the financial industry as lenders revise their guidelines and compliance to match the updated rule.
House Republicans Target State Data Privacy Patchwork with New Bills
If you’ve been waiting for Washington to finally step in and clean up the data privacy patchwork, this might be the moment to watch. House Republicans this week unveiled a pair of bills aimed at doing something the industry has talked about for years: creating a single, national standard for how consumer data is collected, used, and protected. More details here.
WHAT THIS MEANS, FROM KIM PHAN OF TROUTMAN PEPPER LOCKE: A joint effort by the House Financial Services Committee and the House Energy & Commerce Committee have resulted in the introduction of two bills that propose the first significant amendments to the Gramm-Leach-Bliley Act in over 25 years: the GUARD Financial Data Act and the SECURE Data Act. While these bills would preempt state privacy laws that impact financial institutions and financial data, they also capture many of the consumer protections from these state privacy laws, such as data minimization, rights to access and delete data, and opt-in consent to certain uses and disclosure of sensitive personal information. Replacing the patchwork of state laws with a national framework under existing federal financial privacy law and functional regulators will provide much-needed certainty for the financial industry and consistency for consumers.
Judge Grants MSJ For Defendant in FCRA Case Over Lack of Evidence of Inaccuracy
A District Court judge in Ohio has granted a defendant’s motion for summary judgment in a Fair Credit Reporting Act case, ruling the plaintiff did not do enough to make a case that the information being reported in his credit report was inaccurate. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: In McAfee v. TransUnion, the court granted summary judgment in favor of TransUnion on claims under the Fair Credit Reporting Act (“FCRA”). The plaintiff alleged that TransUnion reported inaccurate credit information and failed to reasonably reinvestigate his disputes regarding an American Express account. The court held that the plaintiff failed to produce evidence demonstrating that the reported information was actually inaccurate—an essential element of both FCRA claims—and therefore his claims could not proceed. This decision contributes to a growing body of case law emphasizing that unsupported or conclusory disputes are insufficient to survive summary judgment under the FCRA. It also helps thwart claims brought by pro se litigants influenced by AI-generated or social media driven theories that lack evidentiary support. Courts should continue to follow this approach, focusing on the evidentiary record and governing law in assessing FCRA claims.
Appeals Court Revives FDCPA Case Over Out-of-State Garnishment
The Court of Appeals for the Sixth Circuit has revived a Fair Debt Collection Practices Act case against a collection law firm, finding that its efforts to garnish a consumer’s wages across state lines may have been deliberately aimed at the consumer’s home state, creating enough connection to allow the case to proceed there. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: In Ross v. Robinson, Hoover & Fudge, PLLC, the Sixth Circuit addressed the jurisdictional risks that can arise when pursuing post-judgment garnishment across state lines. In the case below, the plaintiff and his ex-wife bought a used car in Oklahoma. After they divorced, he moved to Michigan where he became employed. Eventually, the loan went into default, and the defendant law firm was retained. They sued on the debt in Oklahoma and, after obtaining a default judgment, served a garnishment summons on the Oklahoma registered agent of the plaintiff’s Michigan-employer’s parent company. The parent company passed the garnishment summons to the subsidiary employer, which began garnishing wages the plaintiff’s wages earned in Michigan.
The plaintiff sued the law firm under the FDCPA and the Michigan Regulation of Collection Practices Act. The district court dismissed the Complaint on standing grounds, holding that the law firm had not purposefully established minimum contacts with Michigan sufficient to subject them to Michigan jurisdiction.
On appeal, the Sixth Circuit reversed, holding that the law firm purposefully directed its actions at the plaintiff, intentionally targeting him in Michigan by garnishing his wages, and causing him to suffer his injury in Michigan. The court’s analysis is thorough, and highlights the risks to of being drawn into a foreign jurisdiction when pursuing garnishment of an out-of-state employer. In other words, when collection activity is aimed at a consumer’s wages or assets in another state, companies (including law firms) should be aware that courts are likely to that they have purposefully availed themselves of the foreign state’s jurisdiction.
Workers’ Comp Angle Derails MTD in FDCPA Suit
A District Court judge in New York has denied a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act, ruling that the defendant “grossly mischaracterized” the plaintiff’s alleged injury — paying a medical debt that was incurred as a result of being treated after being injured at work. The decision centers on a relatively small dollar amount but highlights a much larger issue for collectors: the risks associated with pursuing medical debts that may be subject to workers’ compensation protections. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This decision sharpens where Article III standing may lie post-TransUnion. The court made clear that a plaintiff who actually pays money in response to a collection letter alleges a concrete “pocketbook injury,” not merely confusion or speculative future harm. It also underscores the risk of pursuing collection where the consumer may not be legally responsible—such as in the workers’ compensation context—presenting heightened exposure for collectors. Here, the court found that payment of a debt that may never have been owed was sufficient to state claims under Sections 1692e and 1692f, at least at the pleading stage.
Two Dozen State AGs Push Back on CFPB Strategic Plan, Warn of Weakened Oversight
A coalition of 23 state attorneys general, all of them Democrats, is escalating pressure on the Consumer Financial Protection Bureau, urging the agency to rethink a proposed strategic plan that would significantly reduce staffing, scale back enforcement, and narrow its supervisory focus. The pushback highlights growing tension between federal and state regulators and signals a potential shift in how consumer financial protection is enforced in the years ahead. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: Twenty-three state attorneys general submitted a joint comment letter opposing the CFPB’s draft FY 2026–2030 Strategic Plan, arguing it would undermine the agency’s core functions. They raise four main concerns:
- Severe staffing cuts — reducing supervision staff from 72 to 1 and enforcement staff from 254 to 50 — which the AGs say would prevent the CFPB from meeting its statutory mandate.
- Rollback of supervision — especially reduced oversight of non-depository institutions as nonbank lending grows, and a vague plan to eliminate “duplicative” supervision that the AGs argue cannot lawfully be shifted to states or prudential regulators.
- Withdrawal from enforcement — including dismissal of 22 enforcement actions (over $3.5B in potential consumer redress), termination of 23 consent orders, and a retreat from the state–federal enforcement partnership.
- Weaker consumer protections — through reduced emphasis on civil penalties, possible removal of consumer complaints from the CFPB database, and elimination of guidance that states rely on.
The AGs urge the CFPB to drop these changes, maintain supervisory and enforcement capacity as required by Dodd-Frank, and preserve state–federal coordination that has delivered billions in consumer relief.
The letter does not address several issues that could still create uncertainty for nonbank financial services companies:
- Consistency and predictability. How industry will get consistent enforcement across states if the leading federal consumer regulator focuses more on depository institutions and less on non-depository institutions.
- Federal preemption posture. How to reconcile prior CFPB positions on preemption (e.g., under the Fair Credit Reporting Act) with a broader retreat from federal oversight and enforcement.
- DEI, discrimination, and access to credit. How the CFPB’s final rule under Regulation B/ECOA and its changed view of “disparate impact” align with state laws (and potentially other federal regimes) that may reflect prior CFPB interpretations.
DC Council Committee Backs Medical Debt Bill, Adds New Guardrails for Collectors
A committee of council members for the Council of the District of Columbia has released a report on a medical debt collection bill that was introduced last year, moving the bill a step closer to being enacted. The legislation, now titled the Medical Debt Mitigation Amendment Act of 2026, was reported favorably by the Committee on Health and includes several revisions that directly impact how medical debt can be collected, reported, and enforced in the District. More details here.
WHAT THIS MEANS, FROM JOHN CULHANE OF BALLARD SPAHR: Another city is now poised to adopt medical debt relief measures. The Committee on Health of the D.C. Council recently recommended enactment of B26-0438, now titled the Medical Debt Mitigation Amendment Act of 2026, which would regulate the debt collection activities of “large health care facilities” and their “medical debt collectors” (both defined terms). If adopted as proposed, among other things, the Act would place restrictions on collection activity, limitations on credit reporting, and conditions, including income-based caps, on payment plans. It would also place limitations on the ability of large health care facilities to be involved with, and to promote, medical lending products, including medical credit cards and third-party installment loans.
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.
