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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.
Ruling Highlights Pleading Gap Between ‘Contact’ and ‘Communication’
A District Court judge in Florida has partially granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act lawsuit that centered on two weekday communications, finding that while the plaintiff plausibly alleged harm, she failed to sufficiently plead that a qualifying “communication” actually occurred under the statute. The decision highlights an important distinction for collection operations: alleging that contact occurred at an inconvenient time is not enough on its own if the nature of the communication itself is not clearly established. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: A federal judge in Florida partially dismissed an FDCPA lawsuit alleging that a debt collector contacted a consumer at inconvenient times, ruling that the plaintiff adequately alleged harm but failed to clearly plead that a qualifying “communication” occurred under the statute. The court emphasized that simply alleging contact during prohibited hours is not enough — the complaint must also plausibly show that the interaction conveyed information related to the collection of a debt. The decision reinforces a growing trend in FDCPA litigation requiring plaintiffs to distinguish between mere contact attempts and actionable debt-collection communications.
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Washington Supreme Court Extends Charity Care Notice Requirements to Collection Agencies
The Washington Supreme Court has ruled that collection agencies pursuing hospital debt must provide notice of charity care, answering a certified question that could reshape how medical accounts are handled once they move beyond the provider. In a decision rooted in both statutory interpretation and public policy, the court held that the obligations tied to charity care do not disappear when a hospital assigns a debt to a third-party collector. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER LOCKE: To mitigate compliance risk under the Preston ruling, collection agencies must immediately insert prominent, legally compliant charity care disclosures into all medical debt letters sent to Washington residents. Because liability flows through the entire debt chain, agencies also should consider hardcoding these automated disclosure modules into their collection software to prevent un-notified letters from being sent. Additionally, if possible, agencies should update onboarding protocols to require data-accuracy representations and indemnity clauses from hospitals confirming they provided the initial statutory notices. Finally, it may be worth executing an immediate lookback audit on past Washington mailings to identify non-compliant accounts and pause active collection efforts until proper notices are issued.
MTD Denied in Case Alleging Failure to Investigate ID Theft Dispute
A District Court judge in Florida has denied a motion to dismiss filed by a collection operation accused of violating the Fair Credit Reporting Act by failing to properly investigate a consumer’s identity theft dispute. The decision centers on whether the plaintiff sufficiently alleged both standing and a viable claim under the FCRA against a furnisher of credit information. The judge ultimately concluded that the allegations, while not extensive, were enough to survive dismissal. More details here.
WHAT THIS MEANS, FROM HEATH MORGAN OF MARTIN GOLDEN LYONS WATTS MORGAN: This order was just a denial of an agency’s motion to dismiss, which is a high standard to prevail on. This case will continue, and it is still unclear if the plaintiff will prevail on the merits.
I think is important to note is that the allegations of identify theft included in the Complaint may have weighed in the Court’s ruling, even though the judge called some of the allegations “thin.” This follows previous CFPB enforcement actions against agencies for the thorough investigations of identify theft disputes, and it is a good reminder for credit furnishers to make sure they have added additional steps in their investigation process of identity theft to avoid regulatory scrutiny and potential lawsuits. In addition to the fact that valid identify theft disputes are particular distressing, regulators have also taken a particular interest to this type of dispute.
Judge Sends FDCPA Case Back to State Court, Awards Fees Over Improper Removal
A District Court judge in Wisconsin has delivered a pointed reminder that removing an Fair Debt Collection Practices Act case to federal court can backfire when standing is not clearly established by not only granting a plaintiff’s motion to remand her case back to state court, but also ordering the defendant to pay attorneys’ fees and costs, finding that the removal lacked an objectively reasonable basis. More details here.
WHAT THIS MEANS, FROM SKIP KOHLMYER OF ZIMMERMAN, KISER & SUTCLIFFE: In light of recent challenges to Article III standing in federal-court debt-collection actions, the Defendant should be mindful of this issue when considering whether to remove a state-court-filed FDCPA lawsuit. The district court in the Eastern District of Wisconsin remanded to state court after the plaintiff alleged she lacked standing under Article III. A Defendant’s counsel must establish in the petition for removal that the Defendant has an objectively reasonable basis for removal, including that the plaintiff has standing under Article III to confer jurisdiction over the claim. The Seventh Circuit has ruled that the removal statute should be interpreted narrowly, and any doubt should be resolved in favor of the Plaintiff’s choice of forum. Under U.S. Supreme Court precedent, standing is demonstrated when the plaintiff has “(1) an injury in fact; (2) that is fairly traceable to the defendant and is likely to be redressed by a favorable judicial decision.” See Lujan v. Defs. Of Wildlife, 504 U.S. 555, 555,560 (1992). In this case, mere confusion about the letter’s representations was insufficient for standing under Article III. Before counsel elects to remove the case to federal court, careful analysis of the relief sought and whether the plaintiff is seeking sufficient harm or injury should be conducted.
Judge Rejects Claims Against Credit Bureaus and Collector in Dispute Over Vehicle Lease Charges
A District Court judge in New Jersey has dismissed Fair Credit Reporting Act and Fair Debt Collection Practices Act claims stemming from a disputed vehicle lease balance, ruling that the plaintiff’s allegations centered on a legal disagreement over the debt itself rather than inaccurate credit reporting or unlawful collection activity. The ruling involved claims against multiple defendants, including two credit reporting agencies and a debt collector, after the plaintiff disputed charges assessed following the early return of a leased vehicle and challenged a subsequent text message sent during collection efforts. The court ultimately granted the motions filed by the defendants and denied the plaintiff leave to amend the complaint again. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: What do these four things have in common, Bruce Spingsteen, Vladimir Lenin, the Rolling Stones and the ruling on the motion to dismiss in White v Hyundai Capital, et al., 2:25-cv-02321-WJM-CF, (D.N.J. April 20, 2025)? A: “one step forward, two steps back” and “two steps forward, one step back.” You could read Lenin’s book (entitled One Step Forward Two Steps Back: The Cris in Our Party) from 1904, but it is dense and not nearly as enjoyable as Springsteen’s classic album Tunnel of Love (released 1987), in which he poetically captured the sentiment in the song “One Step Up.” Listen to it in a quiet place to feel the weight of the song’s hook “One step up and two steps back.” By contrast, but equally emotionally rewarding is the hook of the song “You Can’t Always Get What You Want”, by the Rolling Stones, which is “You can’t always get what you want, But if you try sometimes, well, you might find, You get what you need.”
In the White case, the defendants probably experienced both. The plaintiff’s initial complaint and first amended complaint were the subject of an earlier motion to dismiss that granted plaintiff leave to file a second amended complaint (“SAC”),i.e., one step forward, two steps back. Plaintiff alleged inter-woven claims under the FCRA and FDCAP in the SAC, and this time, “the Credit Bureaus’ second argument is dispositive” and the arguments of the ‘debt collector’ were enough to convince the court to dismiss the entire case with prejudice, i.e., two steps forward, one step back and they got what they needed.
The arguments by the defendants against the claims were nothing new, some might say they were sing’n the same old tune. Despite their best efforts and the facts at play, the opinion isn’t bad but a bit empty at the end of the day. So, not to say much more, take a listen to U2: “But, I still haven’t found what I’m looking for.”
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.
