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.
Wisconsin Appeals Court Affirms Dismissal of FDCPA, State Law Claims Over Attorney Involvement and Fee Demands
A Wisconsin appellate court has affirmed the dismissal of a consumer’s claims under the Fair Debt Collection Practices Act and the Wisconsin Consumer Act, rejecting arguments that a collection law firm’s attorney was not meaningfully involved in preparing collection communications and that demands for unadjudicated legal fees were misleading. More details here.
WHAT THIS MEANS, FROM JOE DUGGAN OF FROST ECHOLS: The Johnson v. Prohealth Care, et al. decision from the Wisconsin Court of Appeals provided insightful precedent regarding 15 U.S.C. § 1692e claims where collection law firms demand payment for fees and costs in excess of the amount placed for collections. The court found that when a collections law firm clearly and explicitly identifies the additional amounts being sought as fees and costs, such requests for additional payment are not false, deceptive, or misleading within the plain meaning of 15 U.S.C. § 1692e. To avoid exposure under 15 U.S.C. § 1692e, collections law firms should be detailed and expressly state the amount of fees and costs included in the amount sought from the consumer.
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Judge Lets FCRA Claims Against Student Loan Furnisher Move Forward
A District Court judge in Illinois has refused to dismiss Fair Credit Reporting Act claims against a student loan furnisher, even after previously dismissing nearly identical claims against a credit reporting agency in the same case, creating an important distinction for furnishers responding to bankruptcy-related disputes involving student loans. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: Hatch sharpens the distinction between legal and factual inaccuracies under the FCRA by focusing on what the defendant actually knew—or could reasonably know—about the debt. The court viewed the dischargeability issue as a legal question for Equifax, but potentially a factual question for the originating creditor because it may have had direct involvement in the borrower’s bankruptcy proceedings. That nuance may limit the decision’s reach in cases involving collection agencies or debt buyers that lack the creditor’s access to underlying bankruptcy information.
Judge Rejects ‘Hyper-Technical’ Reading of Discovery Dispute, Denies Plaintiff’s Summary Judgment in FCRA Case
A District Court judge in Texas has denied a pro se plaintiff’s motion for partial summary judgment in a case asserting violations of the Fair Credit Reporting Act and state debt collection law, finding that an informal email exchange between the parties constituted a valid agreement to extend a discovery deadline. More details here.
WHAT THIS MEANS, FROM DAVID KLEBER OF BEDARD LAW GROUP: Turner v. Caine & Weiner Company Inc demonstrates one of the many pitfalls in dealing with Pro Se litigants. Here, a Pro Se Plaintiff tried to use requests for admissions to win an FCRA case without any actual evidence. Although the Plaintiff wrote in an e-mail that he was “willing to defer action” on his discovery requests for four days, he argued that this language did not create an “extension” to file, so he should win based on the admissions created by the Defendants “failure” to timely respond. The court saw through the attempted gamesmanship, and rejected his various “hyper-technical” arguments (warning him to follow the rules or face sanctions.) However, this should be a lesson to strictly comply with the rules, and to document agreements carefully, especially with Pro Se parties who often try to use their limited knowledge of the law to win through perceived technicalities and loopholes.
NJ Appeals Court Affirms Dismissal of Debt Buyer’s Collection Suit Over Improper Venue and Defective Service
A New Jersey appellate court has affirmed the dismissal of a debt buyer’s collection lawsuit after finding the plaintiff filed in the wrong county and failed to properly serve the defendant, despite having information pointing to his actual address. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: Sometimes service of process is simple, sometimes it is complicated. The complicated ones usually have a unique set of facts. In LVNV Funding LLC v. Carrasco, the Appellate Division affirmed dismissal of LVNV’s collection complaint because LVNV filed in Essex County even though the defendant resided in Hudson County, and LVNV failed to establish valid service at the Newark address where the summons and complaint were left with a third party. The court held that LVNV did not show Carrasco had sufficient connection to the Newark address, and did not attempt service at the Kearny residence.
Takeaways here are knowing the nuances of each state’s service rules, that a return of service is not automatically controlling, and the wrong venue can be fatal to the collection suit.
Ninth Circuit Revives FCRA Claims Against Bank Over Unauthorized Credit Pulls
The Court of Appeals for the Ninth Circuit has revived key portions of a proposed class action accusing a bank of violating the Fair Credit Reporting Act by obtaining consumers’ credit reports after allegedly opening unauthorized bank accounts in their names. The appeals court ruled the plaintiffs plausibly alleged the defendant lacked a permissible purpose to access the reports and adequately alleged willful violations of the FCRA. More details here.
WHAT THIS MEANS, FROM DAVID ISRAEL OF SESSIONS, ISRAEL & SHARTLE: In 2010, the 9th Circuit Court of Appeals upended much of the then current understanding of what was a permissible purpose for accessing a consumer’s credit report in the infamous Pintos decision. In Pintos, the 9th Cir. found that an involuntarily incurred debt did not give permission to pull a consumer’s credit report.
The 9th Cir. is at it again and making things worse for credit report checking. In Patterson, the 9th Cir. created more limitations on credit pulls for creditors and debt collectors. In Patterson, the court found that a creditor would not have permission to access a consumer credit report if the underlying transaction was not actually initiated by the consumer. What this means: Every time a creditor or debt collector pulls a credit report, there is an FCRA violation risk if the consumer did not voluntarily incur the debt (Pintos) or now, initiate the transaction that created the debt. This requirement is especially challenging considering that type of detail is not something the collection agency will typically know. Worse, if the agency had bad information, then there’s still a possible FCRA violation, as the Patterson court rejected a defense that a belief that the consumer had created the debt was not a defense, no matter how reasonable if the belief was wrong.
Judge Dismisses FDCPA and FCRA Claims Over Undelivered Pool Table
We’ve all had transactions go sideways. Products we purchased take longer to be shipped or received. They don’t look like they did on the website. Or, sometimes, they never make it to you for one reason or another. It can be upsetting. But upset consumers still need to direct their anger in the right direction. A District Court judge in Louisiana has dismissed a lawsuit accusing a fintech lender of violating the Fair Debt Collection Practices Act and Fair Credit Reporting Act after a dispute involving a financed pool table that allegedly was never delivered. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: This decision provides insight on two issues. The obvious first issue is that there is the distinction between a merchant and a third party financier. The buyer is making two deals, not one. A third party only loans the money, it is not responsible for the purchase transaction. A simple analogy is if you go to the bank borrow money and then make a purchase. Question, would it be different if the financier was related to the seller?
The second and less obvious issue is the use of AI by pro se parties. Right up front the Court points out that it was AI that told the debtor that he should not have to pay Affirm, the third party financier, since there was an issue with the product he purchased. So now that the Court dismissed the case, can Kavanaugh go after the AI tool he used for legal malpractice.
This is another example of the new normal. Its bad enough that every day we read about another attorney who let AI do their legal reasoning with disastrous results. We now have pro se Plaintiffs bringing and prosecuting cases with AI as their attorney and the ability to pump out paper, which notwithstanding the merits, take up time and energy to address.
Judge Dismisses Pro Se FCRA Suit Against Bank
A District Court judge in Massachusetts has granted a bank’s motion to dismiss a pro se consumer’s Fair Credit Reporting Act complaint, finding the plaintiff lacked standing and failed to allege facts sufficient to trigger the furnisher’s duty to investigate. More details here.
WHAT THIS MEANS, FROM COLIN WINKLER: Federal credit‑reporting suits continue to surge—they’re up about 40% compared to Q1 2025—but this recent dismissal order from the District of Massachusetts shows how these cases can falter at the pleading stage. Here, a pro se consumer challenged a bank’s reporting of his delinquency status, arguing the reported delinquency dates were illogical. Judge Angel Kelley dismissed the suit for both lack of standing and failure to state a claim, finding the complaint too nebulous to be actionable under federal law.
Judge Kelley found that the complaint failed to allege sufficient details tying the alleged inaccuracies to credit denials or a drop in credit score and that it contained only conclusory emotional‑distress allegations. Because she could not trace any injury to the alleged inaccuracies, Judge Kelley could not find Article III standing. Additionally, she found that the claim failed on the merits because the consumer did not allege that the CRAs had notified the bank of his dispute—a prerequisite to a furnisher’s duties under the FCRA in cases of indirect disputes. Kelley emphasized that such notice cannot be presumed in every case, as the FCRA does not require it in certain instances. Similarly, she found the consumer’s assertion that the CRAs had “verified” the account too vague to imply notice to the furnisher.
Judge Lets FDCPA Claim Survive, Dismisses RICO and Emotional Distress Claims
A District Court judge in Georgia has partially granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case stemming from collection efforts on a home equity line of credit that originated in 1999 and may have been legally unenforceable by the time the defendant came looking for payment. More details here.
WHAT THIS MEANS, FROM STEPHANIE STRICKLER OF MESSER STRICKLER BURNETTE: This opinion underscores how strictly courts will enforce the FDCPA’s definition of a “debt collector,” especially when an account is already in default. The court relied heavily on the collector’s own communications—repeatedly identifying itself as a debt collector—to find a triable issue, reinforcing that a company’s language and conduct can determine FDCPA exposure more than its internal characterization of its role. This decision also highlights the operational risks of incomplete onboarding and inadequate verification of loan history, bankruptcy status, and chain‑of‑title, which can open the door to FDCPA claims even when the collector believes it is acting in good faith. At the same time, the court rejected the plaintiff’s emotional‑distress and RICO theories, signaling that negligence or sloppy servicing alone does not equate to intentional misconduct. Overall, the case is a reminder that compliance failures, especially around verification and communication, can create liability even when more aggressive tort claims fail.
Appeals Court Rejects Collection Law Firm’s Attempt to Compel Arbitration
The Court of Appeals for the Fourth Circuit has ruled that a debt collection law firm could not force a consumer into arbitration based on an arbitration provision contained in the original loan agreement because the law firm was not a party to the agreement. The ruling affirmed a lower court decision denying the law firm’s motion to compel arbitration in a lawsuit accusing the firm and a debt buyer of suing on a time-barred debt. More details here.
WHAT THIS MEANS, FROM FROM CHUCK DODGE OF HUDSON COOK: Courts have decided consumer credit arbitration cases recently with close readings of the agreements or clauses, specifically focusing on the scope. In this case, the court spent a fair amount of time on definitions, looking for a definition of account “servicing” that was not in the law governing the consumer loan agreement (to my chagrin, it’s really not in the law in any meaningful way related to account servicing). The Fourth Circuit focused on the fact that the law firm who filed suit on the consumer’s debt was not a party to the arbitration agreement, and could only (based on the language of the arbitration agreement) be a party if its work on the account was tantamount to “servicing th[e] Note…” In some respects, law firms enforcing consumer loan agreements are servicers, but the court distinguished the firm’s legal work in this case from the work of an account servicer who engaged more regularly with the consumer. That seems like a fair reading in this specific case, where the facts in the opinion did not suggest that there was any sort of regular servicing, like taking payments on a workout plan, happening with the law firm. But the court did not foreclose the possibility that an arbitration agreement (or clause) to which a consumer agreed could not be more expansive and include a back-end “servicer” of the credit agreement. For the contract drafters, the takeaway is to review your arbitration agreements to see how inclusive they are with respect to assignees and agents, and maybe to expand the scope to its logical end so that providers to the originating creditor (or holder) can benefit from arbitration as well.
HHS Reorganizes Civil Rights Office, Raising Questions About HIPAA Enforcement Capacity
The Department of Health and Human Services reshuffled one of its most consequential enforcement arms this week, a move that industry observers say could slow HIPAA enforcement at precisely the wrong moment for healthcare-adjacent financial services firms. More details here.
WHAT THIS MEANS, FROM LESLIE BENDER OF EVERSHEDS SUTHERLAND: A year after making major cuts to its workforce, the Department of Health and Human Services is on track to exceed its previous headcount. Last year, HHS laid off 10,000 employees, and another 10,000 accepted deferred resignation or early retirement offers, shrinking the department to 62,000 full-time employees. HHS Secretary Robert F. Kennedy, Jr. told members of the House Appropriations Committee that the department now has a headcount of 72,000 employees and plans to hire 12,000 new staff.
Kennedy publicly stated that the department was ineffective at meeting its goals before the workforce reductions and that new hires are more aligned with the Trump administration’s priorities. Notably, some layoffs were reversed—the CDC reinstated 1,000 employees who had been laid off from the National Institute for Occupational Safety and Health (NIOSH). Acting CDC Director Jay Bhattacharya has also signaled plans to resume hiring in the CDC’s chronic disease operations to fill gaps from the prior year’s widespread layoffs.
Looking ahead, the administration’s FY 2027 budget request asks Congress to consolidate several major HHS agencies and programs into a new Administration for a Healthy America (AHA), which would entail billions of dollars in spending cuts. However, Congress rejected the administration’s calls for deep HHS spending cuts in the comprehensive spending deal for fiscal 2026, and Subcommittee Chairman Robert Aderholt (R-Ala.) has expressed doubt that agreement on further reductions can be reached.
On May 18, 2026, HHS announced a reorganization of its Office for Civil Rights (OCR), restructuring it into three distinct subject-matter divisions: (i) the Conscience and Religious Freedom Division, (ii) the Civil Rights Division, and (iii) the Health Information Privacy, Data, and Cybersecurity Division.
The Conscience and Religious Freedom Division was established in January 2018 during President Trump’s first term to oversee federal enforcement of laws protecting the rights of conscience and religious freedom. That division operated until March 2023, when the Biden administration dissolved it and combined it with the Civil Rights Division into a single Policy Division. According to HHS, the new structure is intended to improve OCR’s effectiveness in advancing conscience rights protections, addressing race-based discrimination, eradicating antisemitism and anti-Christian bias, and restoring what the department terms “biological truth.” Complaint intake and breach-of-health-information reviews will continue through a separate Enforcement Division, and the reorganization is not expected to result in any reduction of OCR’s workforce.
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.
