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.
FDCPA Letter Case Heading to Trial After Judge Rules on Competing Summary Judgment Motions
In a case that has been circling the legal system for more than three years, a District Court judge in Arizona has partially granted a plaintiff’s motion for summary judgment in a Fair Debt Collection Practices Act case involving the timing of when a dispute letter and attorney representation letter were received by the defendant and a documentation letter that was sent to the plaintiff. The ruling marks the latest development in a case that has already drawn attention due to its implications around Article III standing and what constitutes a concrete injury under the FDCPA. While earlier decisions in the case focused heavily on standing, this latest order shifts the focus back to the underlying statutory violation itself. More details here.
WHAT THIS MEANS, FROM JENNA WILLIAMS OF FROST ECHOLS: This case highlights the importance of having clear policies and procedures for processing incoming mail and updating consumer accounts. One of the main issues identified by the Court was that IQ Data’s policies did not require incoming mail to be processed within a specific timeframe and did not require accounts to be updated within a certain period after receiving attorney representation notices.
“The record reflects that IQ Data does not require incoming mail to be processed within any specified timeframe. (Doc. 158-1 at 29-30, 75-76.) And it does not require that an account be updated within a certain period after receipt of correspondence indicating attorney representation.”
The practical takeaway is that agencies need clear written deadlines for processing mail and updating accounts. Agencies should strongly consider a written policy that requires incoming mail to be processed the same day it is received and that accounts be updated the same day based on any important information received, especially attorney representation notices.
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Does “Reject to Pay” Trigger a Cease? Colorado Judge Says It Might
A Magistrate Court judge in Colorado has denied a debt collector’s motion for summary judgment in an Fair Debt Collection Practices Act case that turns on a deceptively simple question: when a consumer says “I reject to pay,” is that enough to trigger a cease in communications? The judge did not definitively answer that question. Instead, she ruled that a reasonable factfinder could interpret the consumer’s language as a refusal to pay, meaning the case must proceed to trial rather than being dismissed early. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: Alvin Lucier was a composer and the creator of a piece called “I am sitting in a room.” He recorded himself reading a paragraph aloud, and then played the recording back into the room while re-recording it, over and over again. The end result is complete distortion of his speech, with his words and voice replaced by the room’s characteristic resonance. You can’t even hear the cadence of his original speech.
Sometimes I feel like FDCPA cases have morphed from clear speech to muffled, unintelligible sounds. “I refuse to pay” has become “I decline to resolve this balance,” “I will not be settling this account with you,” “This balance will not be reconciled,” and now, in this case, “I reject to pay.” When even one court rules that any one of these might be the same as “I refuse to pay,” the statute’s clear language distorts a little bit further, the creative litigation types get a little more emboldened, and the industry has to reconcile with yet another attempt to create FDCPA liability where none should exist.
Hopefully this opinion becomes the exception rather than the rule. In the meantime, treating phrases like “I reject to pay” as refusals to pay will reduce your likelihood of winding up on the receiving end of a similar claim.
FDCPA Class-Action Lives On After Plaintiff’s Death as Court Allows Substitution
You don’t often get to see or write about fatalities when it comes to debt collection, but a Magistrate Court judge in New Jersey has approved a request for the daughter of the plaintiff in a Fair Debt Collection Practices Act to replace her deceased mother as the plaintiff in a decade-long running case over a statute of limitations disclosure in a letter. The decision addresses a procedural question that could have ended the case entirely. Instead, the judge found that the claims survive and that the case can move forward through the plaintiff’s estate. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: The first thing that jumps out in this Opinion is not the ruling itself. It is instead the fact that the Plaintiff Stromberg died in April 2023 and her counsel didn’t alert the court to that fact for nearly two years. Counsel then had problems locating next-of-kin. Despite the absence of a plaintiff, the Judge ordered the case to mediation. No settlement was reached—hardly shocking. In December 2025, the court administratively closed the case and set a January deadline for counsel to move to substitute a new plaintiff. When a motion to substitute was filed, Defendant argued that the putative new plaintiff—the deceased Plaintiff’s daughter—failed to demonstrate “how she will be able to establish [] standing to sue now that [Plaintiff] is dead.” This seems like a valid point considering that the deceased Plaintiff died before “merits-based discovery began.” But the judge side-stepped the issue as irrelevant holding that the question of whether the new plaintiff “can establish standing on her own is not party of the survivability analysis.” That was a swift kick of the can down the road. The case is now back on track with the new plaintiff. It’ll be interesting to see where it goes from here. My expectation is that defense counsel will tee up the new plaintiff for deposition to determine what evidence she has that would show her mother was “injured” by receiving the letter at issue. The case law on claiming injury by receiving a collection letter has raised the bar on the type of evidence needed. It seems likely that any evidence the daughter might have would be inadmissible hearsay.
Judge Grants Partial Summary Judgment for Plaintiff in FDCPA Case Over Pre-Validation Lawsuit
A Magistrate Court judge in Ohio has partially granted a plaintiff’s motion for summary judgment in a Fair Debt Collection Practices Act case against a collection law firm, finding that the firm failed to sufficiently support its defense after filing a lawsuit while a debt verification request was allegedly pending. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: While the result in this case is not what the collection agency wanted, it remains another illustration of how courts apply the Bona Fide Error (BFE) defense. The defendant agency attempted to assert the BFE to excuse its failure to provide validation after not logging a dispute letter that a consumer could show was received by the agency. Instead, the agency filed a collection action (i.e., continued collection activity) against the consumer. The federal court, in the subsequent FDCPA action, concluded that the agency did not have specific procedures tailored to avoid the “error” the agency claimed occurred and rejected the BFE as a matter of law. This case serves as a reminder to the ARM industry that the BFE defense is not a catch-all protection. It applies in limited circumstances and when prevention of the specific error is outlined in written policies. Agencies should not be discouraged from asserting the defense, but they should not believe that it is an absolute guarantee to avoid liability.
Report Flags Risks in Fast-Moving Debt Collection Cases in Small Claims Courts
A new report from Harvard Law School’s Consumer Protection Clinic is examining how high-volume debt collection cases are handled in small claims courts, focusing on the widespread use of “coverage attorneys” and the pace at which cases move through the system, according to a published report. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: The reform agenda outlined in the article is intentionally ambitious and, if implemented, would significantly increase the cost and complexity of high‑volume debt litigation by pushing counsel of record either to appear personally or to invest more heavily in supervision, training, and authority protocols for substitutes. As a practical matter, courts may be reluctant to abolish substitute appearances altogether given their own capacity constraints, but they may adopt narrower measures the article highlights, such as stricter enforcement of appearance rules, authority requirements as a condition of proceeding, or sanctions and dismissals when appearing counsel are unprepared or unreachable. For institutional litigants and firms, the article underscores the risk that coverage‑attorney arrangements, if loosely managed, can be framed as breaches of ethics rules and as contributing to systemic unfairness in consumer dockets; it thus functions as both a policy critique and a roadmap for regulators and advocates seeking to challenge or reshape high‑volume debt collection practices.
Appeals Court Affirms Defense Win in Workplace Bias Lawsuit Against Collection Firm
The Court of Appeals for the Eleventh Circuit has upheld a lower court’s decision in favor of a collection law firm and its affiliate, rejecting an employment discrimination lawsuit brought by a former employee and reinforcing the evidentiary burden plaintiffs must meet to survive summary judgment. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM:
No Dispute, No Claim: Judge Narrows Case Against Collector, Healthcare Provider
A District Court judge in California has dismissed Fair Credit Reporting Act claims against a collection agency and healthcare provider, finding that the plaintiff failed to allege a critical step required to trigger liability under the statute: a dispute submitted through a consumer reporting agency. More details here.
WHAT THIS MEANS, FROM KHARI GRIFFIN OF CLARK HILL: The District Court for the Northern District of California recently dismissed a consumer’s Fair Credit Reporting Act (FCRA) claims against a healthcare provider and collection agency because the plaintiff failed to dispute the charges through a consumer reporting agency. The court clarified that the FCRA’s furnisher provisions require this statutory dispute process and noted that certain provisions do not allow for a private right of action. Although the plaintiff may still amend their allegations, this ruling provides clarity for the defense of FCRA suits.
Judge Tosses FCRA, ADA, ECOA Claims in Repossession Lawsuit Against Credit Union
A District Court judge in Nevada has dismissed a consumer’s Fair Credit Reporting Act claim tied to the repossession of her vehicle, finding that the complaint failed to establish one of the most fundamental requirements for triggering a furnisher’s duties under the statute. The ruling underscores a recurring issue in FCRA litigation: the difference between complaining to a regulator and properly disputing information through a credit reporting agency. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF BASSFORD REMELE: With the rise in pro se plaintiff litigation, claims premised on misguided legal theories have become increasingly common. In this case, Plaintiff asserted sixteen claims, including one under the Fair Credit Reporting Act, alleging that the creditor failed to conduct a reasonable investigation after receiving a dispute. The Court granted the creditor’s motion to dismiss—without prejudice to Plaintiff filing an amended complaint—observing that Plaintiff alleged only that the disputes were submitted to the CFPB, not to a consumer reporting agency as required to state a claim under 15 U.S.C. § 1681s‑2(b). The decision serves as a reminder that each claim must be carefully reviewed to ensure the plaintiff has adequately pleaded every required element.
Judge Finds No FCRA Violation Where Late Payments Were Accurately Reported Despite Autopay Error
Who among us hasn’t entered a wrong digit when setting up autopay? A District Court judge in New York has ruled that credit reporting agencies did not violate the Fair Credit Reporting Act when they reported late payments tied to an autopay error, finding the information was accurate and not misleading even under unusual circumstances. More details here.
WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW & CULBERTSON: The basics in Miller v Trans Union, et al are: (1) an autopay had an error so plaintiff’s bills were paid but by a different person’s credit card, (2) plaintiff noticed and corrected the situation, (3) the 3 CRAs said the plaintiff’s payments were late, and (4) plaintiff sued, alleging the reports were false and misleading.
The court laid out the analysis. First, the threshold question is whether the credit information is accurate; if accurate, no further inquiry into the reasonableness of the CRA’s procedures is necessary. Second, a credit report is inaccurate either when it is patently incorrect or when it is misleading in such a way and to such an extent that it can be expected to have an adverse effect.
Here, the credit reports were literally accurate in identifying the plaintiff’s payments as late. Thus, plaintiff had to show the late notations were nonetheless materially misleading. The court concluded that regardless of the circumstances surrounding the payments, “there is nothing misleading about the CRA Defendants documenting late payments as such.” It granted the joint motion to dismiss and denied the motion to amend as futile.
The case presents a nice tight analysis of some common FCRA issues we regularly see.
Judge: Reliance on Furnisher Data Was Reasonable, But Dispute Handling Heads to Jury
A credit reporting agency’s reliance on data from a collection firm, even when that data is later disputed, is not automatically unreasonable under the Fair Credit Reporting Act, a District Court judge in Illinois has ruled, while leaving key questions about dispute handling and reinvestigation procedures for a jury to decide. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: This decision concerns the credit reporting and reinvestigation of a Credit Reporting Agency (“CRA”), which is subject to different rules than debt collectors and furnishers of information. However, the decision focuses on a topic of great interest, and concern, to the entire credit and collection industry: mass produced dispute letters. The dispute in this case was handled in accordance with the CRA’s “suspicious mail” procedure, which was presumably established to help the CRA sort through a heavy volume of frivolous and unverified disputes so that it could focus on legitimate disputes from actual consumers. The court held that the reasonableness of the CRA’s procedure must be determined by a jury, thus it could not enter summary judgment on this issue.
Bankruptcy Omission Leads to Dismissal of FDCPA Case Against Collector
A lawsuit that you have filed against someone or something is an asset because it has the potential to provide you with financial benefit. Consumers are required to disclose their assets when filing for bankruptcy protection. A District Court judge in Washington refused to overlook a plaintiff’s omission of a Fair Debt Collection Practices Act lawsuit against a collection operation in her bankruptcy filing and granted the operation’s motion for judgment on the pleadings. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: This case stands for the fact that as a defendant, bankruptcies can be your friend. In this instance the Court ruled on one avenue of defense. “In the bankruptcy context, the federal courts have developed a basic default rule: If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action.”
Another tactic, using a bankruptcy filing to prove a debt. Debtor claims I never had that account or the amount is wrong and then lo and behold, he lists it on his bankruptcy filing. Or, to defeat a class action. There, when the account is listed, depending on the economics, it might make sense to settle the claim with the bankruptcy trustee who is likely to be a lot less piggy than the FDCPA attorney.
Moral of the story, it can pay to check for bankruptcy filings when facing a consumer lawsuit.
ID Theft Claims Fall Short as Judge Backs Creditor’s Investigation Process
A District Court judge in New York has sided with a creditor in a Fair Credit Reporting Act case, concluding that its investigation into an identity theft dispute was not only reasonable, but in several respects went beyond what the law requires. The ruling offers a detailed look at how far furnishers must go when evaluating disputes and where courts may draw the line when consumers fail to provide substantiating evidence. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: Defendant was an assignee of a Retail Installment Contract (the “Contract”) concerning the purchase of the vehicle. Plaintiff denied executing the Contract, possessing the vehicle or making the two payments received by Defendant. Like Plaintiff’s prior disputes, Plaintiff’s 7th dispute at issue here claimed identity fraud. This dispute included a copy of Plaintiff’s driver’s license, social security card, health insurance card and FTC identity theft report. Defendant’s employee investigated the dispute and confirmed, among other things, that Plaintiff’s name and social security number matched the information on the origination documents, that the title application contained Plaintiff’s driver’s license number and the wet signature on the origination documents was similar to the signature on Plaintiff’s social security card. While the ACDV submitted by Defendant verified the account, the Defendant later deleted the tradeline as a business decision. In granting Defendant summary judgment, the Court determined that Defendant’s investigation was objectively reasonable as a matter of law. In addition, the fact that Defendant later deleted the tradeline after is original investigation does not render the original investigation unreasonable because “[c]oncluding otherwise would disincentive furnishers from taking proactive efforts to resolve disputes with consumers.”
Signed Documents and Payment History Sink FCRA Case Involving Alleged Vehicle Purchase Fraud
A District Court judge in New York has granted a motion to dismiss filed by defendants in a Fair Credit Reporting Act lawsuit where the plaintiff claimed that someone else was purchasing a vehicle for him, but the documents indicate otherwise, even after the plaintiff claimed to have been taken advantage of and had his identity stolen by the someone else. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW & CULBERTSON: This case is helpful and interesting for three reasons. First, it reinforces a positive trend in the case law explaining that credit furnishers and consumer reporting agencies are not required to look beyond a consumer’s own documented actions—such as signing purchase agreements—when verifying the accuracy of an account, even when the consumer claims identity theft. The court held that a consumer’s inability to recall signing documents, or a claim that he was deceived into signing them, does not create a reportable “inaccuracy” under the FCRA. Such disputes, the court reasoned, are not “objectively and readily verifiable” by CRAs or furnishers. Second, the decision highlights the importance of thorough reinvestigation procedures. Both Trans Union and Experian flagged the identity theft claim as suspect—Trans Union because of a year of positive payment history, and Experian because of atypical formatting of the FTC identity theft report. The furnisher’s fraud team independently denied the claim based on 28 monthly payments and multiple phone contacts with the consumer. Together, these steps demonstrated the kind of reasonable investigation that courts expect. Finally, the case underscores that courts can—and should—resolve these disputes on summary judgment in the appropriate circumstances. Here, the court correctly held that where no reasonable jury could find otherwise, there was no need for further litigation.
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.
