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.
Judge Grants MSJ to Lender in FCRA Suit
A consumer’s Fair Credit Reporting Act lawsuit claiming a lender inaccurately reported a charged-off credit card account has been dismissed on summary judgment after the consumer could point to no evidence of inaccuracy beyond his own assertions. More details here.
WHAT THIS MEANS, FROM DAVID GRASSI OF FROST ECHOLS: At first glance, this case appears to be an important win for a furnisher facing an FCRA claim. In reality, while a win, the victory is more of a function of the plaintiff’s failure to comply with the Rules of Civil Procedure and the Local Rules. The pro se plaintiff opened, used, and defaulted on a credit card issued by Bank of America. Bank of America reported the delinquency (which included several returned payments) and subsequent charge off. The consumer disputed the reporting, claiming the charges were fraudulent, and then filed this case.
Bank of America eventually filed for summary judgment, included the required statement of undisputed material facts. The pro se plaintiff failed to respond to the statement, so Bank of America’s recitation was deemed undisputed. The plaintiff also failed to point to any evidence in the record showing the supposed fraud and, instead, relied on his complaint and opposition. At the summary judgment stage, that is simply not enough. The plaintiff therefore could not establish the first element of an FCRA claim – i.e. he could not establish the reporting was inaccurate or incomplete. Had plaintiff properly presented competing evidence, he may have been able to get this case to trial. The takeaway? Follow the rules!
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Georgia Appeals Court Affirms Fee Award Against Collection Attorney in anti-SLAPP Case
The Court of Appeals of Georgia has affirmed an award of attorney fees under the state’s anti-Strategic Lawsuit Against Public Participation statute against a collection attorney who argued that the Fair Debt Collection Practices Act preempted the fees. More details here.
WHAT THIS MEANS, FROM JAMES K. SCHULTZ OF SESSIONS, ISRAEL & SHARTLE: For those involved in legal collections, this case is a great reminder of a state law tool when consumers and their enterprising lawyers try to use the FDCPA and similar laws to thwart the legal process. All too often consumers will use the FDCPA as a shield to a collection lawsuit. Consumers will file a counterclaim or a separate lawsuit taking issue with some alleged technical defect in the debt collector’s litigation tactics as a way to avoid an adverse judgment on the debt. There are about 40 states that have Anti-SLAPP (Strategic Litigation Against Public Participation) statutes that can be used to strike these frivolous consumer lawsuits that are usually nothing more than thinly veiled attempts to deter lawful collection activity. Not only can a strategically timed SLAPP motion be used to get rid of a silly consumer claim, but as Johnson shows ,Anti-SLAPP laws will also allow you to recover your attorney fees if successful. That should put a chill down the consumer’s spine.
Texas State Appeals Court Wipes Out Debt Buyer’s Win Because Its Evidence Was Never Admitted
A state Court of Appeals in Texas has wiped out a debt buyer’s $4,534.48 judgment, finding the evidence was legally insufficient because the company’s own documents were never admitted into evidence at trial. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF MUCH SHELLIST: A Texas appellate court reversed a trial judgment in favor of a debt buyer on a $4,500 debt. While it appears that the records necessary to prevail on the claim – the promissory note, proof of missed payments, and chain of title – were available and attached to the complaint, they were never admitted into evidence.
At the bench trial, the debt buyer did not present any witness testimony to admit the account records, but instead relied solely on a business records affidavit. However, certain exhibits to the affidavit were missing and the judge never ruled on evidentiary challenges to the affidavit, including a hearsay objection. Instead, the judge entered judgment in favor of the debt buyer, leaving the objections open and never admitting a single document into evidence. The appellate ruled that it had no choice but to reverse the judgment in those circumstances; “[d]ocuments attached to pleadings are not evidence unless admitted into evidence at trial.”
This case is a good reminder that, even in cases involving a minimal sum, care must be taken to ensure evidentiary requirements are strictly satisfied. Calling a live witness, although not necessarily mandatory, is prudent when admitting corporate records, although cost and case value considerations are likely a factor in making that decision in the absence of permission to testify remotely. Even after an apparent trial win, a case still may fall apart if the rules of evidence were bypassed. This matter is a good reminder that even courts may overlook technical evidentiary requirements at times, especially in small claims jurisdictions that infrequently have the opportunity to try contested cases and resolve evidentiary disputes.
Judge Keeps Student Loan Servicing Suit in Federal Court, Refuses to Dismiss Claims
A District Court judge in California has denied a student loan servicer’s motion to dismiss claims that it violated the Rosenthal Fair Debt Collection Practices Act, the state’s Student Borrower Bill of Rights, and other consumer protection laws, while also denying the plaintiff’s motion to remand the case to state court. More details here.
WHAT THIS MEANS, FROM AKEELA WHITE OF HINSHAW & CULBERTSON: This decision reinforces that high-volume collection calling, coupled with employer contacts will survive a motion to dismiss with little difficulty under the Rosenthal Act. Servicers should review call frequency protocols and third-party contact policies, particularly when a borrower has a pending dispute or discharge application.
The ruling on the SBBR is significant for any servicer that maintains a voluntary school-misconduct discharge process. Servicers that deny applications without explanation while continuing aggressive collection activity invite claims that their own servicing conduct is independently actionable, and the court’s treatment of Navient’s concession as “largely dispositive” shows how quickly a statute-of-limitations defense can collapse. Denials should include substantive explanations, and collection activity should be tempered while applications are under review.
The Holder Rule holding is notable. Judge Blumenfeld concluded that borrowers need not default and wait to be sued to seek a declaration that loans originated for attendance at a school with documented fraud are unenforceable. Holders of private student loans tied to institutions subject to federal or state fraud findings should expect this theory and prepare accordingly.
Finally, the CCRAA analysis is a cautionary tale: even where FCRA preempts the dispute-notation requirement, furnishers could remain exposed under section 1785.25(a) if they report loans they know were induced by fraud without disclosing that information.
Judge Sends FDCPA Suit Back to State Court
A District Court judge in New York has granted a plaintiff’s motion to remand his Fair Debt Collection Practices Act lawsuit back to state court after he convinced the judge that he lacked the standing required to be there in the first place. More details here.
WHAT THIS MEANS, FROM NICK PROLA OF BASSFORD REMELE: The plaintiff’s theory in D’Agostino required a bit of procedural gymnastics: he demanded $50,000 in damages based on allegedly false debt-ownership representations, then persuaded the federal court that those same allegations did not cause the type of concrete injury required for Article III standing. Judge Donnelly accepted the invitation, holding that federal jurisdiction was lacking and remanding the case to state court. It’s hard to miss the irony here, especially when litigating a strict liability statute. According to the plaintiff, the alleged misconduct was serious enough to warrant substantial damages, yet not harmful enough to create a federal case or controversy. Welcome to the continuing evolution of FDCPA standing litigation after TransUnion.
Judge Dismisses FCRA Suit Over Late Payments the Consumer Says Weren’t His Fault
A District Court judge in Arizona has dismissed a consumer’s Fair Credit Reporting Act lawsuit against two credit reporting agencies, ruling that accurately reported late payments do not become inaccurate simply because someone other than the consumer may have caused them. More details here.
WHAT THIS MEANS, FROM LORAINE LYONS OF MARTIN GOLDEN LYONS WATTS MORGAN: The core lesson from Bullard is this: the FCRA does not make CRAs responsible for figuring out who caused a late payment, only for accurately reporting that it happened.
For CRAs, a consumer dispute saying “the payment was late, but it wasn’t my fault” is not an actionable inaccuracy under Ninth Circuit law. The reinvestigation obligation under § 1681i does not require the CRA to resolve fault among the consumer, the furnisher, and the consumer’s bank. Accurate reporting of a confirmed delinquency is sufficient, even when the consumer has a good explanation for the late payment.
For furnishers, the Bullard court repeatedly pointed out that the plaintiff’s grievance properly belongs against the furnisher or the originating bank. Furnishers who cause processing errors that result in late payments are more likely to face FCRA exposure based on how they investigate and report.
Judge Denies MJOP in ID Theft Credit Reporting Claim Against Furnisher
A consumer’s Fair Credit Reporting Act lawsuit accusing a furnisher of reporting a credit card account he never opened will move forward, after a District Court judge in Texas ruled that whether the account was his is exactly the kind of fact the defendant could readily verify. More details here.
WHAT THIS MEANS, FROM LORI QUINN OF MESSER STRICKLER BURNETTE: Plaintiff alleged that Bank of America inaccurately reported a credit account that he never opened and that resulted from identity theft or a mistaken identity mix-up. Bank of America verified the account after receiving a dispute from the credit reporting agencies. The Court held that Garcia plausibly alleged an objectively and readily verifiable factual inaccuracy and denied Bank of America’s motion for judgment on the pleadings. The Court found that whether Garcia actually opened the account was a factual question that could be verified.
Collections Named Riskiest Banking Function for AI-Driven Consumer Harm in New Survey
Collections and recovery is the banking function where artificial intelligence poses the greatest risk of customer harm or regulatory exposure, according to a new survey of 230 banking professionals from Wolters Kluwer, which found the function outpacing credit risk and underwriting by 10 percentage points. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER LOCKE: Continued oversight of AI in debt collection is essential to mitigate high risks of regulatory penalties and reputational damage. Companies utilizing AI in debt collection must establish a rigorous, multi-faceted risk management framework that includes strict human-in-the-loop oversight, continuous audit logging, and automated compliance guardrails
Strong model governance, transparency, and vendor management will be key when defending agentic AI from inevitable scrutiny. Ultimately, successful deployment and use of these tools will depend on the user’s ability to strike a balance of efficiency and strong consumer protections.
Judge Grants Debt Collector Summary Judgment Over Disputed Rent Reported to CRAs
A District Court judge in Maryland has granted summary judgment to a debt collector in a consumer’s lawsuit under the Fair Credit Reporting Act and Fair Debt Collection Practices Act, ruling that the underlying dispute hinged on a legal question too unsettled for a furnisher to resolve. More details here.
WHAT THIS MEANS, FROM ISSA MOE OF MOE LAW GROUP: This decision reminds us that under the FCRA, accuracy of the amount of a reported debt isn’t necessarily the same thing as legal enforceability. Here, the court granted summary judgment to the debt collector where the amount of the reported rent balance was accurate, and the consumer’s dispute instead challenged whether a portion of the debt was legally collectible due to a licensing issue. The court determined that was not an objectively and readily verifiable fact, but rather called for resolution of an unresolved legal dispute. Because the collector followed its procedures and reasonably confirmed the accuracy of the amount reported, it satisfied its investigative duties.
Collection agencies may want to take this opportunity to review and stress-test their credit reporting and dispute investigation procedures to ensure they consistently meet FCRA standards. In cases like this, your ability to show a reasonable investigation, and to document how you verified the accuracy of what was reported, may be your best defense against a potentially high-exposure FCRA claim. When the dispute crosses into legal territory, that documentation becomes even more critical.
Judge Reverses Course, Tosses Willful FCRA Claim in Mixed File Case
A District Court judge in Texas has reconsidered his own ruling from earlier this year and granted summary judgment to the defendant on a willfulness claim in a consumer’s Fair Credit Reporting Act lawsuit over a credit file that was mixed with the file of the plaintiff’s son. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: Garcia Delgado v. Experian is a significant mixed-file FCRA case in which Experian allegedly commingled a father’s credit information with his son’s. Although Experian challenged liability, causation, and damages, the court initially declined to grant summary judgment to Experian, finding that factual disputes remained regarding the reasonableness of Experian’s procedures and the harm allegedly caused by the reporting inaccuracies. Upon Experian’s Motion for Reconsideration, the Court dismissed the consumer’s willfulness claims under the FCRA, but left the negligence claim for the jury. The decision underscores that mixed-file claims often present jury questions, particularly where the underlying identity mismatch is undisputed.
This case illustrates that courts remain skeptical of resolving mixed-file disputes as a matter of law. Even where a CRA can point to established matching and reinvestigation procedures, the existence of a clear file contamination issue may be enough to create fact questions on reasonableness and damages. For CRAs, furnishers, and debt collectors, the case highlights the importance of robust identity-verification controls, heightened scrutiny of disputes involving family members with similar identifying information, and thorough documentation of investigation efforts. Once a consumer alleges a mixed-file issue, organizations should treat the matter as a high-risk compliance event because failures to promptly identify and correct the problem can significantly increase litigation exposure.
CFPB Deletes 15 Years of Public Records, Including Supervisory Highlights
The Consumer Financial Protection Bureau has deleted thousands of webpages published before President Trump’s second term, erasing roughly 15 years of agency records that industry professionals have long used to gauge regulatory risk. More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The CFPB’s wholesale deletion of over 15 years of publicly available records (supervisory highlights, advisory opinions, compliance circulars, and consumer educational guides) will result in more harm to the ARM industry than it will for consumers and their advocates. These materials were not merely historical artifacts; they were the foundational architecture of compliance and served as guidance for regulatory expectations of existing law. Industry, not to mention the attorneys who provided counsel to these clients, used these documents to calibrate policies, train staff, build compliance management systems, and make defensible judgment calls in the absence of bright-line rules. Many attorneys, myself included, have created and downloaded libraries of these materials, but with this institutional record removed, industry participants are left without a reliable roadmap and without a documented basis for demonstrating that their practices were built in good faith reliance on prior agency guidance.
To be clear, there was far from a consensus upon the guidance provided by the CFPB, especially under the Chopra era. However, the guidance provided when it came to Reg F was extremely helpful. We all recall when the CFPB acknowledged their error in not including a date on the model validation notice and affirmed that such an admission was not a violation of the FDCPA. The larger issue now may be the shear uncertainty for all participants. The ARM industry does not have to think that far back to the pre-Reg F days when guidance was dependent upon a myriad of judicial decisions that lacked consistency or even aligned with industry best practices; that inconsistency itself creates new complications. Compounding this, reduced federal activity does not eliminate legal exposure, as civil lawsuits remain active nationwide. Industry now faces the worst of both worlds: the loss of the guidance it relied on to build defensible programs, while retaining full legal liability under statutes like the FDCPA, FCRA, and CFPA that remain unchanged and fully enforceable.
Judge Recommends Summary Judgment for Collector in TCPA, FDCPA Case Over Text Messages
A defendant has won a recommendation of summary judgment in a lawsuit accusing it of violating the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act by texting a consumer about an unpaid medical debt and allegedly failing to send a validation notice. More details here.
WHAT THIS MEANS, FROM DAVID KAMINSKI OF CARLSON & MESSER: This case and decision demonstrates that claims for violation of the TCPA based on alleged use of an automatic telephone dialing system (“ATDS”) are claims that are generally DOA on arrival. The reason? The now famous 2021 United States Supreme court Facebook decision which held that: a device must have the capacity to use a random or sequential number generator to either store or produce phone numbers to be called to be considered an ATDS under the TCPA.
The Third Circuit’s 2022 ruling in Panzarella v. Navient Solutions held that a caller must actually use a system’s capacity to generate random or sequential numbers to violate the statute. Also, countless decisions post Facebook have held post that a pre-prepared list of numbers that is uploaded to a dialing system to dial automatically negates that a random and sequential number generator was used to create and dial such numbers.
TCPA litigation based on the use of an ATDS are not often brought because companies that make calls and send texts changed their systems years ago so that the systems do not contain random and sequential number generation and do not even have code that can be altered to create the capacity for random and sequential number generation.
There is plenty of TCPA litigation currently pending throughout the United states, but extremely few of those cases allege violations due to use of an automatic telephone dialing system. Kudos to industry for heeding the Facebook decision.
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.
