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.
W.V. Supreme Court Rule Litigation Conduct Did Not Waive Arbitration Rights
The Supreme Court of of West Virginia has reversed a ruling that stripped a creditor of its right to compel arbitration under the Federal Arbitration Act, ruling that it did not give up its right to send a dispute to arbitration just because it spent years pursuing the case in court first. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: Words matter and this is opinion is good news for anti-waiver clauses in arbitration agreements. In this case, Credit Acceptance Corp. v. Stanley, No. 24-305, 2026 W. Va. LEXIS 264 (W.Va. June 1, 2026), the key contractual words that ultimately paved the way, three years after the suit was filed, for a motion to compel arbitration of a fresh set of counterclaims were as simple andreliable as a country road:
Either You or We may require any Dispute to be arbitrated and may do so before or after a lawsuit has been started over the [d]ispute or with respect to other [d]isputes or counterclaims brought later in the lawsuit.” (Emphasis added by the court).
This court’s opinion reasoned that although the creditor had initiated litigation to enforce its rights under the retail installment contract, the business did not act so clearly inconsistent with its assertion of its arbitration rights as to demonstrate an abandonment of the contractual right to arbitrate. Said another way, the contract means what it states, and each party gets what they bargained for. Although this opinion ain’t like no “West Virgina, mountain momma” that John Dever every sang about, it is good reminder that “Country Roads, take me home, To the place I belong.”
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Appeals Court Sidesteps Cease-Communication Question, Affirms for Collector
The Court of Appeals for the Fifth Circuit has affirmed summary judgment in favor of a debt collector in a consumer’s federal Fair Debt Collection Practices Act lawsuit after the consumer failed to brief the only claim that remained alive on appeal. More details here.
WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: This case reached the Fifth Circuit after a consumer sued under § 1692c(c), claiming a debt collector improperly continued collection efforts after a cease-communication request. When the debt collector moved for summary judgment, however, the consumer pivoted and argued a brand-new § 1692g theory instead, while ignoring the original claim.
The district court ruled for the debt collector, and the Fifth Circuit affirmed. Although the court noted it has not yet addressed “whether a debt collector violates the FDCPA by sending a consumer a verification letter after the consumer directed the debt collector to cease communications” it declined to answer that question because the issue was not properly before it.
The lesson? Litigation is not a game of legal hide-and-seek. If you want a court to decide an issue, you have to timely plead and pursue it, not unveil it for the first time in response to summary judgment.
Judge Lets Most of FCRA Suit Against CRA Proceed
A District Court judge in Alabama has allowed most of a consumer’s Fair Credit Reporting Act lawsuit against a credit reporting agency to move forward, dismissing two claims while letting four others survive. More details here.
WHAT THIS MEANS, FROM JOHN MAREES OF MESSER STRICKLER BURNETTE: Yarbrough v. Experian is another example of how FCRA cases typically play out early on at the pleading stage. While the Court was willing to dismiss claims that failed as a matter of law, it left intact the claims that turned on “reasonableness,” particularly those tied to the adequacy of the dispute handling. Courts almost never resolve questions of reasonableness at the pleading stage and frequently avoid doing so at summary judgment as well. From a defense perspective, motions practice at the pleading state can be effective in narrowing the issues and eliminating unsupported theories. However, you will rarely obtain full relief on any claim that turns on reasonableness and, once those claims survive, the case is likely to proceed into discovery where the focus shifts squarely to the adequacy of the investigation.
Senate Banking Dems Move to Lock In a CFPB Funding Floor
All 11 Democrats on the Senate Banking Committee yesterday announced they were introducing legislation that would set a mandatory funding floor for the Consumer Financial Protection Bureau, a bid to insulate the agency’s budget from the cuts and withholding that have defined its past year. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: Senate Banking Committee Democrats are pushing back on the Trump administration’s efforts to gut the CFPB by proposing legislation that would set a hard floor on the bureau’s funding — essentially taking the power to defund the agency off the table for any future administration without a direct act of Congress. The thinking behind the move is straightforward: if the Bureau’s budget can be slashed at the stroke of a pen, its supervision powers become entirely dependent on who occupies the White House. For businesses operating in the consumer financial services space, that kind of stability could actually be a good thing — consistent funding means more predictable rules of the road, even if the agency is not always popular with the industry. That said, some will push back on the idea of locking in a spending minimum, arguing it makes the Bureau harder to reform down the line and ties the hands of future Congresses who might want to scale back federal oversight. For now, the bill faces long odds in a Republican-controlled Congress, but it is worth watching as a marker of where Democrats want to take consumer protection policy if the political winds shift.
Eleventh Circuit Tosses Lawyer’s FDCPA Suit for Lack of a Concrete Injury
The Court of Appeals for the Eleventh Circuit has dismissed a lawsuit brought by an attorney who tried to sue a debt buyer and a collection law firm in his own name over a collection case that “did not go smoothly” for his client. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW & CULBERTSON: Any Circuit level decision is immediately important, especially when it offers some clarity on an novel legal theory. In this case, the Eleventh Circuit dismissed an FDCPA lawsuit brought not by the consumer debtor, but by the debtor’s attorney from a state-court collection action. The court held that the attorney lacked Article III standing because his alleged injuries were entirely derivative of harm suffered by his client—the consumer against whom a default judgment had been entered—and did not constitute a “concrete injury in fact” as required under Article III. The decision reinforces the critical principle that while the FDCPA authorizes suit by “any person,” a technical statutory violation alone does not confer standing, and downstream harms experienced by third parties such as opposing counsel do not support an independent federal claim. The court also rejected the attorney’s reputational injury theory and found that discomfort within the attorney-client relationship does not rise to the level of a cognizable harm. The case provides reassurance that FDCPA exposure remains tethered to plaintiffs who can demonstrate real, personal harm.
CFPB Elevates Paoletta to Deputy Director Ahead of Vought’s Expected Exit
The Consumer Financial Protection Bureau is setting up its succession plan, and for anyone in the collections industry trying to read where the bureau is headed, the name to watch is now Mark Paoletta, according to a report published by Bloomberg Law. More details here.
WHAT THIS MEANS, FROM KHARI GRIFFIN OF CLARK HILL: On June 10, 2026, the White House announced that Brian Johnson will be nominated as the next permanent Director of the CFPB. In the interim, reports indicate that Mark Paoletta, the CFPB’s Chief Legal Officer, is slated to serve as Acting Director in the interim. Johnson previously served as the CFPB’s Deputy Director from 2018 to 2020 and is widely recognized as one of the leading experts in consumer financial law. During his prior tenure at the Bureau, Johnson was instrumental in helping shepherd Regulation F across the finish line, resulting in a final rule that many viewed as a thoughtful and evenhanded implementation of the FDCPA. While Johnson was more operational than political in his prior tenure, he is well known to industry participants and has historically been regarded as pragmatic, collaborative, and willing to engage with stakeholders. For those in the collections industry, Johnson’s nomination will hopefully lead to some clarity regarding the future direction of the CFPB.
CRAs Lose Bid to Dismiss AutoPay Inaccuracy Claim
A District Court judge in California has refused to dismiss a consumer’s Fair Credit Reporting Act lawsuit accusing three credit reporting agencies of inaccurately reporting his final car loan payment as overdue after a lender failed to process an automatic payment that he had authorized and funded on time. More details here.
WHAT THIS MEANS, FROM SARAH DOERR OF COZENS O’CONNOR: Although courts have historically gone the other way, arguing that it is not the province of the CRAs to resolve the validity of a debt, the Zimmerman decision should not be overlooked. The Court rightly invoked the analogy of a physical check that timely received by a lender but then lost before deposit. In that situation, the validity of the debt is not questioned; rather, the onus of the mistake falls clearly on the lender. There as here, the consumer’s creditworthiness should not be sullied with report of a delinquency. CRAs and furnishers alike are well-advised to consider the root of the alleged mistake.
Judge Dismisses Most Claims in FCRA Case Over Duplicate Reporting
A District Court judge in Louisiana has allowed one claim in a consumer’s Fair Credit Reporting Act lawsuit against two credit reporting agencies to move forward while dismissing the remainder of his claims. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: This case shows how easy it can be for companies, especially CRAs, to create liability exposure based on events in the business world. The Plaintiff alleged TU and Experian violated the FCRA in various ways. The only one relevant here is the CRAs’ alleged failures to ensure that Plaintiff’s Discover debt was accurately reported by identifying Capital One as the creditor. After Capital One’s purchase of Discover, the Plaintiff’s Discover debt allegedly remained labeled as being owed to Discover. The Court ruled that Plaintiff stated an FCRA claim by alleging “that the account was inaccurately reported and that [Defendants] continued to report conflicting and inconsistent creditor information after Plaintiff disputed the tradeline.” While the case involve only the CRAs, it provides a reminder that lender ownership can and does change hands. It’s therefore vital to keep up with what’s happening in that sphere to minimize simple mistakes that can create exposure under various consumer protection statutes.
New Philadelphia Program Reroutes Consumer Credit Card Collection Cases
The First Judicial District of Pennsylvania is rolling out a Consumer Credit Card Collection Diversion Pilot Program that adds a mandatory conciliation step to credit card debt suits filed against individuals in Philadelphia, a shift that will change how creditors and debt buyers litigate in one of the country’s busiest civil courts. More details here.
WHAT THIS MEANS, FROM CHRIS HAHN OF MAURICE WUTSCHER: The First Judicial District of Pennsylvania, which governs Philadelphia, has implemented a Consumer Credit Card Collection Diversion Pilot Program for credit card collection actions filed against individual consumers. Effective June 1, 2026, all newly filed cases are automatically diverted to a mandatory conciliation conference before arbitration, while pleading deadlines are deferred. Plaintiff creditors and debt buyers must also submit a certification form verifying key account information, including the identity of the current debt holder, the date of the original credit agreement, the date of default, and the timeliness of the action, and be prepared to submit supporting documentation as inaccurate certifications may subject the filer to penalties under Pennsylvania’s unsworn falsification statute. The program further requires attendance at an early conciliation conference by counsel with settlement authority or an authorized representative available to participate, with noncompliance resulting in potential dismissal of the action. In short, creditors pursuing collection actions in Philadelphia must be prepared for heightened upfront documentation requirements and earlier settlement discussions, making thorough pre-suit file review and litigation readiness more important than ever.
The First Judicial District’s General Court Regulation No. 2026-01, establishing the Consumer Credit Card Collection Diversion Pilot Program, along with the required Certification Form, is available for review here: General Court Regulation No. 2026-01 and Certification Form.
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.
