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.
Illinois State Court Applies Common Law Standing Standard to FDCPA Lawsuit
In a case that was defended by David Schultz and Todd Stelter of Hinshaw & Culbertson, a Cook County judge has dismissed a proposed Fair Debt Collection Practices Act class action accusing a collection agency of improperly displaying account-related information on the outside of collection letter envelopes, finding the plaintiff lacked standing because he failed to allege a concrete injury. The ruling is notable because it applies recent Illinois Supreme Court standing analysis from an Fair Credit Reporting Act case to FDCPA claims, an issue that has become increasingly important in Illinois state court litigation. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: The recent Fausett opinion gave us good reason to hope that hyper-technical violations which caused no true injury would lose their teeth in Illinois state court. This opinion confirms this hope was warranted. Historically, these types of claims became rampant in federal court within the 7th Circuit after an unfavorable Opinion was issued by the 7th Circuit on the same. After that, these claims began to die at the federal court level due to Article III standing. At that point, the consumer bar began to flood state court with these claims. We now have confirmation from at least one state court judge confirming that displaying “a string of numbers, a QR code, and a barcode on the front and back of [an] envelope” without more is not enough to give rise to standing in state court. This was a great case to add some real teeth to the recent Fausett opinion. Great work by the attorneys involved and to the agency for fighting the good fight.
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Judge Rules FDCPA Validation Notices Can Be Sent by Text and Hyperlink
In a case that was defended by Dale Golden and the team at Martin Golden Lyons Watts Morgan, a District Court judge in Florida has ruled that a debt collector may satisfy the Fair Debt Collection Practices Act’s validation notice requirements by sending a text message containing a hyperlink to the required disclosures instead of mailing a paper notice, marking a notable ruling on how courts may view electronic communications in collections. The ruling came in a lawsuit accusing a collection agency of violating multiple FDCPA provisions through text messages, phone calls, and credit reporting activity tied to an alleged debt owed to an advising company. The court ultimately granted summary judgment to the defendant on all claims. More details here.
WHAT THIS MEANS, FROM MONICA LITTMAN OF KAUFMAN DOLOWICH: This is a good decision recognizing that modern communication methods are in compliance with the law. We will need to see if other courts follow this decision. There should be caution in following this result as the law is not settled with respect to sending model validation notices via text messages.
Judge Dismisses FDCPA Suit Over Threat to Withhold College Transcripts
A federal judge in Missouri has dismissed a Fair Debt Collection Practices Act lawsuit accusing a collection agency of threatening to withhold the plaintiff’s college transcripts over unpaid tuition, finding the plaintiff failed to show the school was prohibited from taking that action under recently updated Department of Education regulations. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF MESSER STRICKLER BURNETTE: Plaintiff filed litigation against Defendant debt collector alleging it violated FDCPA by stating Plaintiff’s college transcripts could be withheld if she did not pay her debt. Plaintiff claimed this was false or misleading under the FDCPA. Plaintiff relied on federal regulation that limited withholding a transcript but admitted her Winter 2024 tuition debt was not paid. This admission and non-compliance with the regulation led to the Defendant’s motion being granted because Plaintiff did not state a plausible claim under the FDCPA as required. The regulation Plaintiff relied on also required that tuition be paid or a payment agreement must be made before transcripts are released. Therefore, Defendant’s statement was neither false nor misleading.
Appeals Court Affirms Dismissal of FCRA Lawsuit Over ‘In Collections’ Credit Reporting
The Court of Appeals for the Third Circuit has affirmed the dismissal of a Fair Credit Reporting Act lawsuit accusing a credit reporting agency and debt buyer of inaccurately reporting a debt as “active and in collections” after a prior collection lawsuit had been dismissed with prejudice. The ruling is notable because the court stopped short of deciding whether legal disputes about the enforceability of a debt can create an actionable inaccuracy under the FCRA, but still found the plaintiff’s theory failed because the alleged legal issue was not “objectively and readily verifiable.” More details here.
WHAT THIS MEANS, FROM JAMES SCHULTZ OF SESSIONS, ISRAEL & SHARTLE: Does the dismissal of a collection lawsuit mean that a debt is no longer owed so that reporting that debt as “in collections” becomes inaccurate under the FCRA? The Third Circuit Court of Appeals had to answer that question in Bandes, and found that it does not. The reason why is what this makes this case noteworthy though: as the recent case law has made clear, a plaintiff bringing a successful FCRA claim must first show that there is something inaccurate in the furnished information. Here, the court was in search of that inaccuracy, and concluded there was none. That is because determining whether the dismissal made the debt uncollectible under state law did not have an obvious answer, and therefore, a furnisher could not be found liable for the way it resolved a factual question of a dispute that was not “objectively and readily verifiable.” This objectively and readily verifiable test is gaining steam in the appellate courts and provides some shelter for furnishers that are asked to resolve complicated factual and legal disputes, then get sued if the consumer does not like the result. Remember this test next time someone complains about how you answered a fraud claim.
Judge Rules Dispute Over Returned Merchandise Refund Was Not an FCRA Reporting Inaccuracy
A District Court judge in Arizona has dismissed a Fair Credit Reporting Act lawsuit against a credit reporting agency, ruling that it is not required to resolve underlying contractual disputes between a consumer, a retailer, and a credit card company when reporting charged-off debt information. The judge granted judgment on the pleadings in favor of the defendant after finding the plaintiff failed to plausibly allege that the reporting itself was inaccurate. More details here.
WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: In this case, the plaintiff alleged that she used her credit card to purchase a bike and she did not pay the resulting balance. But she nonetheless claimed reporting the debt was inaccurate because she returned the bike and instead of receiving a credit, received a gift card. The court held there was no prima facie inaccuracy for the CRA to address. Rather, plaintiff was essentially requesting the CRA to act as a tribunal and adjudicate her obligation to pay the debt under her agreements with the credit card issuer and the retailer. Yet, “courts have been loath to allow consumers to mount collateral attacks on the legal validity of their debts in the guise of FCRA reinvestigation claims.” Even though the court rejected the “objectively and readily verifiable” standard adopted by some courts, it nonetheless observed that even that standard would not impose upon the CRA a duty of “bespoke attention and legal reasoning.” And, here, that’s exactly what would be required: the CRA would have to obtain an interpret the retailer’s purchase and return policies, as well as the credit card agreement with the issuer.
California Taps Former CFPB Director Rohit Chopra to Lead New Consumer Protection Agency
California is preparing to take a more aggressive approach to consumer protection and business oversight with Gov. Gavin Newsom announcing plans to appoint former Consumer Financial Protection Bureau Director Rohit Chopra to lead the state’s newly created Business and Consumer Services Agency. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The new Business and Consumer Services Agency (“BCSA”), is a cabinet-level agency focused on business regulation and consumer protection. The BCSA will act as an umbrella agency and sit above the Department of Financial Protection and Innovation (“DFPI”), (among other departments), that receive complaints, issue licenses, supervise regulated entities, and pursue enforcement actions. DFPI will retain its existing independent statutory authority. The significance of the BCSA and Chopra’s role will be in its coordination, priority-setting, and increased cross-department oversight, rather than direct exercise of each underlying agencies’ enforcement powers. Nevertheless, there is no doubt that Chopra’s influence will be significant.
Chopra’s appointment also appears consistent with his broader efforts to encourage expanded state level consumer protection enforcement following his departure from the CFPB in early 2025. Shortly before leaving the CFPB, Chopra and CFPB General Counsel, Seth Frotman, published an article discussing how states could increasingly utilize authority under the Dodd-Frank Act to pursue consumer financial protection enforcement actions independent of federal regulators. The article noted that all fifty states collectively had participated in approximately fifty actions utilizing this authority and emphasized that state enforcement could serve as an important complement to reduced federal supervision and private enforcement activity by individual citizens. Following his departure from the CFPB, Chopra also became involved with a new consumer protection working group with the Democratic Attorneys General Association (“DAGA”), which has been described as focused on coordinating state level consumer protection and affordability initiatives. These developments suggest an effort to expand state level consumer enforcement, especially in the consumer protection space.
For the ARM industry, the relationship between the BCSA and DFPI is important. The DFPI will remain as California’s financial services regulator and will continue to examine, enforce and issue licenses. California’s strong position suggests that it may take the lead in coordinated activity among multiple state regulators and attorney generals. Therefore, companies operating across multiple states should consider whether their compliance programs are robust enough to address potentially more aggressive state level regulatory standards across all their state operations and not just in their California operations.
Judge Dismisses FDCPA Lawsuit Claiming Debt Buyer Violated Arbitration Agreement by Filing Collection Suit
A District Court judge in Alabama has dismissed a lawsuit accusing a debt buyer of violating the Fair Debt Collection Practices Act by filing a state court collection lawsuit instead of pursuing arbitration under a credit card agreement. The ruling is notable because the court found that merely filing a collection lawsuit, even where an arbitration clause allegedly applies, does not by itself amount to false, deceptive, unfair, or unconscionable conduct under the FDCPA. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF MUCH SHELIST: A judge in the Middle District of Alabama recently dismissed FDCPA claims raised against a debt buyer and its third party collection agency. The debtor, who filed pro se,claimed that that act of filing a collection lawsuit in state court, rather than initiating an arbitration proceeding, was a false, deceptive, misleading, unfair or unconscionable act pursuant to the FDCPA, Sections 1692(e) and (f). The court dismissed the claims, broadly holding that the act of “filing a lawsuit rather than invoking the arbitration agreement … does not support a plausible claim under the FDCPA, as it is not expressly prohibited by the FDCPA and is not false, deceptive, misleading, unfair or unconscionable.”
This is a great defense case to hold onto for anyone facing similar claims in the future. It also serves as a good reminder for debt buyers and collection agencies to assessunderlying credit agreements and terms for arbitration obligations as part of diligence prior to purchasing portfolios or filing suit. It is necessary to understand at the outset the scope of any arbitration requirements: If there is an arbitration clause, does it apply only to the initial creditor or does it extend to the creditor’s assignees and/or the agents or servicers of the creditor or its assignees? What types of disputes are subject to arbitrationand does the duty to arbitrate extend to collection actions? Are there any exceptions to arbitration, such as the right to file in a county court or small claims division? Notably, it appears that the arbitration agreement at issue in this case may not have extended to the state court collection action, as the district court noted that the debtor’s motion to compel arbitration in state court already had been denied.
Judge Dismisses FCRA Lawsuit While Criticizing Plaintiff’s Use of AI, Fake Legal Citations
A District Court judge in Pennsylvania has dismissed a Fair Credit Reporting Act lawsuit accusing a consumer reporting agency of failing to block allegedly fraudulent accounts tied to identity theft, while also sharply criticizing the plaintiff’s court filings for including fake case citations, fabricated quotations, and apparent AI-generated legal arguments. More details here.
WHAT THIS MEANS, FROM LORAINE LYONS OF MARTIN GOLDEN LYONS WATTS MORGAN: The outcome in the Berry case is good. The court dismissed the FCRA claims under Rule 12(b)(6). The court then noted in the plaintiff’s opposition to the motion to dismiss, there were “legal citations to cases that do not exist, fake quotes from real cases, and inaccurate legal arguments attributed to real cases” and the plaintiff “undoubtedly used artificial intelligence to craft his opposition.”
Even though the court stated Rule 11 applies to pro se parties, citing Third Circuit precedent, Mala v. Crown Bay Marina, 704 F.3d 239, 245 (3d Cir. 2013), the court stopped short of actually sanctioning Berry the way it likely would have sanctioned an attorney for the same conduct. Instead, the court strongly cautioned the plaintiff that any future use of fictitious case law could result in Rule 11 sanctions.
While the court articulated the principle of equal treatment, the practical outcome reflects the typical leniency pro se litigants receive – a reprimand and a forward-looking warning. An attorney submitting fabricated citations would almost certainly face more severe consequences than a warning. If courts consistently treat AI-generated fabrications by pro se parties as first-offense teachable moments while holding attorneys to immediate accountability, are they effectively creating a two-track standard on how Rule 11’s “reasonable inquiry” obligation scales with legal sophistication?
CFPB Fight Intensifies as Senate Rejects Effort to Reinstate Consumer Rules
Senate Republicans on Wednesday blocked a series of Democratic-led efforts to restore consumer protection policies that were rolled back after the Trump administration took control of the Consumer Financial Protection Bureau, underscoring the growing political and regulatory battle over the future of the agency. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER LOCKE: Last week, the Senate voted on more than a dozen measures to reinstate CFPB policies reversed by the current administration. Although all of the measures ultimately failed, a proposal to restore Regulation F’s limits on medical-debt collection had a particularly close vote, with three Republicans crossing party lines to support the bill. Other measures sought to reinstate guidance on affirmative consent for overdraft fees, as well as provisions addressing credit report privacy and mortgage lending.
These issues are likely to remain in focus heading into the midterm elections, particularly in light of companion House legislation introduced last week, which seeks to reinstate more than 20 CFPB guidance documents and interpretive rules. Compliance teams should closely monitor rulemaking activity and any guidance reversals and be prepared to adjust policies, procedures, and controls quickly as the Bureau’s policy direction continues to be a political flashpoint.
Judge Certifies FCRA Class Action Over ID Theft Block Requests
A District Court judge in Pennsylvania has certified a nationwide class action accusing a credit reporting agency of violating the Fair Credit Reporting Act by improperly denying consumers’ requests to block allegedly fraudulent information resulting from identity theft. More details here.
WHAT THIS MEANS, FROM AKEELA WHITE OF HINSHAW & CULBERTSON: This ruling signals that the order of operations in identity theft block procedures matters just as much as the outcome. The court reads Section 605B (1681c-2) as requiring a “block first, investigate second” approach, meaning internal screening criteria applied before placing the initial block may not pass muster, even if they track the statute’s three permissible grounds for denial. With a certified class of over 280,000 consumers and potential statutory damages of $100 to $1,000 per violation plus punitive damages, the aggregate exposure is significant. For furnishers, the case is a reminder that once a block is in place, they may not continue reporting the blocked information or sell, transfer, or place the underlying debt for collection, so an uptick in block volume could have operational implications.
For CRAs, the takeaway is straightforward: review identity theft block workflows to confirm that the initial block is placed within four business days of receiving complete documentation, and that any denial or rescission comes only after the block is in place and supported by a specific, reasonable determination tied to one of the statute’s three exceptions. Furnishers should confirm that their procedures are designed to stop reporting and cease collection activity promptly upon receiving a block notification from a CRA. Denial letters should identify which exception applies, rather than citing all three generically.
Missouri Appeals Court Revives FDCPA Lawsuit After Settlement Agreement Dispute
A Missouri appeals court has reversed a lower court ruling enforcing a settlement agreement in a Fair Debt Collection Practices Act lawsuit, finding there were disputed factual issues about whether the parties actually agreed to the same material settlement terms. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: In Apperson v. Davis et al., the Missouri Court of Appeals reversed a trial court order enforcing an alleged settlement agreement in an FDCPA and negligence case, holding that genuine disputes of material fact existed regarding whether the parties ever reached a binding agreement. The dispute arose from email and phone negotiations between a pro se plaintiff and defense counsel after the plaintiff threatened litigation over an allegedly improper debt collection demand. Although the defendants argued that the parties agreed to settle the matter for $1,000 in exchange for a release of claims and “usual and customary” settlement terms, the plaintiff contended that key provisions—particularly the scope of the release and the confidentiality and non-disparagement clauses—were never mutually agreed upon. The plaintiff’s response to the settlement email, stating there was “some vagueness” and that he would conduct a “final review” of the paperwork, further raised questions about whether there had been unequivocal acceptance.
The appellate court emphasized that settlement agreements are governed by ordinary contract principles requiring a definite offer, unequivocal acceptance, and a true “meeting of the minds” on essential terms. Because the parties disputed both what terms were essential and what those terms actually meant, the court held that the trial court improperly enforced the settlement without first conducting an evidentiary hearing. The opinion is significant because it highlights the risks of informal email settlement negotiations, especially with pro se litigants, and demonstrates that terms often viewed as “standard”—such as confidentiality provisions, non-disparagement clauses, and broad releases—may themselves be material and heavily negotiable. The case serves as a cautionary reminder that parties should clearly identify all essential settlement terms and expressly state whether negotiations are intended to be binding before execution of a formal written agreement.
Vermont Legislature Passes Coerced Debt Bill
The Vermont legislature has passed a coerced debt bill that will create new protections for consumers who claim debts were incurred through domestic abuse, economic abuse, human trafficking, intimidation, fraud, or unauthorized use of their personal information. The legislation, H.385, passed the Senate and now heads toward the governor’s desk. More details here.
WHAT THIS MEANS, FROM LAURIE NELSON OF AUTOSCRIBE: My view is that H.385 is a significant signal to the debt collection community; the industry can no longer assume that every account in a consumer’s name represents a debt that the consumer freely incurred. Coerced debt sits at the intersection of consumer protection, credit reporting, domestic violence, trafficking, identity theft, and contract law. For collectors, that means the issue is not just whether the balance is accurate or whether the original creditor’s records are complete. The deeper question may be whether the consumer’s obligation was ever voluntary in the first place. Vermont law has already recognized, as in Quazzo v. Quazzo, that coercion can undermine genuine consent to a financial obligation. H.385 takes that principle and gives it practical meaning in the consumer-debt and collections space.
This law should push collection agencies, creditors, and debt buyers to update their dispute procedures. A coerced-debt claim should trigger a careful pause, review, and documentation process, not a routine demand-letter cycle. Agencies that build clear workflows, train collectors to identify these claims, and communicate effectively with creditor clients will be in a much stronger position than those that treat these disputes as ordinary nonpayment. In my opinion, the bill does not eliminate legitimate collection activity; it draws a line between collecting valid debts and enforcing obligations that may have been created as part of abuse. For an industry already operating under intense regulatory scrutiny, that distinction matters.
When ‘Inaccuracy’ Isn’t So Simple: Court Rejects FCRA Claims Over Fraud Dispute
A District Court judge in Virginia has dismissed Fair Credit Reporting Act claims against a lender, finding that a borrower’s dispute over a vehicle loan tied to an undelivered car raised legal questions that fall outside the scope of what the FCRA is designed to address.The decision centers on a relatively unusual fact pattern. The plaintiff entered into a financing agreement for the purchase of a vehicle that was never delivered, after the lender sent more than $54,000 to what allegedly turned out to be a fraudulent seller. Despite reporting the suspected fraud and never receiving the vehicle, the plaintiff was told he remained responsible for repaying the loan. More details here.
WHAT THIS MEANS, FROM JOHN MAREES OF MESSER STRICKLER BURNETTE: The takeaway here is straight forward. In order to be actionably inaccurate under the FCRA, the reported information must be objectively and readily verifiable. That means the alleged error must be capable of confirmation through concrete facts and not dependent on complex fact gathering or in-depth legal analysis. A legal dispute over whether a debt is enforceable generally will not give rise to furnisher liability under the FCRA.
Connecticut Advances Bill Expanding Exemptions for Joint Bank Accounts
The Connecticut legislature has advanced a bill that would establish an additional exemption for certain assets in joint bank accounts. The proposal, Substitute Senate Bill 300, would expand the state’s list of exempt property by shielding funds in joint accounts where the debtor has no equitable ownership interest, a move that could have meaningful implications for post-judgment collection strategies. More details here.
WHAT THIS MEANS, FROM BILL MAROHN OF TOBIN & MAROHN: COMING SOON to a state near you? During this legislative session the Connecticut Legislature sought to create a new exemption for joint bank account holders. Currently, joint bank accounts are jointly and severally owned by each account holder. Senate Bill 300 sought to create a new exemption requiring the court to determine an account holder’s equitable ownership interest in the funds within the account. Other states have various exemption rules governing joint bank accounts; however, an equitable ownership interest standard would be new and unique. While it did not pass the legislature this session, it will surely be raised again next year.
Appeals Court Backs Dismissal After ‘Egregious’ Filing Errors and Rule Violations
The Court of Appeals for the Eleventh Circuit has affirmed the dismissal of a Fair Credit Reporting Act lawsuit against two credit reporting agencies, concluding that the plaintiff’s repeated procedural violations and reliance on nonexistent legal authority justified the lower court’s decision to dismiss the case with prejudice. More details here.
WHAT THIS MEANS, FROM NICK PROLA OF BASSFORD REMELE: The Eleventh Circuit just delivered a reminder that while federal judges may extend patience to pro se litigants, that patience has a very real expiration date, especially when hallucinated AI-generated case citations start appearing in court filings. In Williamson v. TransUnion & Experian, the plaintiff brought an FCRA lawsuit alleging the credit bureaus improperly removed information from his credit report, but the merits quickly became secondary to the procedural chaos unfolding on the docket. After the court flagged the complaint as a classic “shotgun pleading,” the case spiraled into a barrage of defective motions, questionable legal arguments, and citations to authorities that, unfortunately for everyone involved, did not actually exist. The plaintiff eventually conceded that some of the cases had been generated through AI, apparently without a follow-up step where a human checks whether the cases are real before filing them in federal court.
By the time the case reached the Eleventh Circuit, the appellate court barely had to engage with the underlying FCRA allegations. Instead, it focused on the plaintiff’s repeated disregard of court orders, continued reliance on fabricated or misrepresented authority, and a litigation strategy that seemed to treat procedural rules as more of a suggestion than a requirement. The court affirmed dismissal with prejudice, emphasizing that this type of sanction is reserved for cases involving a “clear pattern of delay or willful contempt”, a standard the plaintiff managed to satisfy through what the court described as “countless vexatious filings.” The opinion also serves as a cautionary tale for the AI era, where judges are increasingly willing to distinguish between using AI as a drafting tool and using it as a substitute for verifying the accuracy of legal citations. In other words, “ChatGPT made me do it” continues to rank somewhere below “the dog ate my homework” in terms of persuasive federal litigation defenses.
Ed. Dept. Finalizes Sweeping Student Loan Changes Impacting Repayment and Borrowing Limits
The Department of Education has finalized a new rule that will reshape how borrowers take on debt and repay it, with major implications for default rates and collection activity. The changes, which take effect beginning July 1, introduce new borrowing limits, eliminate certain repayment options, and establish a new income-driven repayment framework, while also making targeted updates to the loan rehabilitation process. More details here.
WHAT THIS MEANS, FROM VAISHALI RAO OF HINSHAW & CULBERTSON: On the default side, the Department of Education’s final rule expands rehabilitation rights (a second chance beginning July 1, 2027), streamlines enrollment into the new Repayment Assistance Plan, and broadens consolidation pathways, which theoretically should shrink the pool of federal accounts defaulting. On the origination side, new annual and aggregate loan limits for graduate, professional, and Parent PLUS borrowers will expand the private lending market. For the debt buying and collection community, this shift from federal to private paper presents both opportunity and risk: while the volume of purchasable and collectible accounts may grow on the private side, state regulators, who are already attuned to the historically high levels of student loan default, may again increase scrutiny of private student loan servicing and collection practices. Entities operating in this space should prepare for heightened examination activity, evolving state licensing requirements, and potential enforcement actions focused on borrower communications, and loss mitigation options as private student loan portfolios expand.
FCC Advances KYC Rulemaking as Broader Robocall Enforcement Strategy Takes Shape
The Federal Communications Commission has unanimously advanced a proposal that would significantly reshape how voice service providers vet customers, signaling a shift toward mandatory identity verification and stricter enforcement tied directly to call volume. The Further Notice of Proposed Rulemaking, approved last week, asks whether providers should be required to verify customer identities using government-issued IDs and other data before enabling service, while also exploring penalties based on the number of illegal calls placed. More details here.
WHAT THIS MEANS, FROM MARTY STERN OF WOMBLE BOND DICKINSON: The idea behind the FCC’s recent KYC Further Notice of Proposed Rulemaking is that voice robocall scam and spam calls originate with subscribers to high-volume voice services. The proposal’s premise is to add some teeth to current general requirements in the FCC’s rules that require originating voice providers to “take affirmative, effective measures” to prevent customers from using its network to originate illegal calls, including “knowing its customers and exercising due diligence in ensuring that its services are not used to originate illegal traffic.” For the accounts recovery sector, the proposal would add requirements that new and renewing subscribers to high-volume services provide certain basic information that presumably would not be an issue for businesses in the sector. The proposed rules, however would also add new forfeiture penalties on voice providers of $2500 per call for violations of the KYC rules, as well as heightened verification requirements. What is particularly concerning for the sector, and what we need to watch for, is, of course, the details of the new rules, and the potential that they will result in voice providers imposing various flow down, audit and other requirements on customers. The risk is that such requirements will add friction to the system in terms of delay in obtaining or renewing service, or even interruptions in service, as well as the imposition of compliance costs on high-volume voice service customers.
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.
