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.
CFPB Overhauls Consumer Complaint System, Citing Abuse and Record Credit Reporting Volume
The Consumer Financial Protection Bureau yesterday announced a series of changes to its consumer complaint portal, an overhaul that carries direct implications for credit reporting agencies, furnishers and debt collectors who respond to disputes routed through the system. More details here.
WHAT THIS MEANS, FROM ARI DERMAN OF CLARK HILL: For more than a decade, agencies, debt buyers, furnishers, and servicers have voiced concerns that the CFPB’s complaint portal had become increasingly saturated with credit repair organizations, mass-generated submissions, and disputes that often bore little resemblance to genuine consumer complaints. As complaint volume ballooned into the millions, many questioned whether the data remained a reliable indicator of marketplace misconduct or simply reflected sophisticated dispute-generation campaigns. In many respects, the CFPB’s announcement acknowledges concerns the industry has been raising for years, making these efforts to improve the legitimacy and integrity of the complaint process a welcome development.
That said, there is an important practical consideration. While the portal has undoubtedly been susceptible to abuse, it has also provided companies with an efficient avenue to engage directly with consumers, resolve misunderstandings, correct legitimate issues, and often prevent disputes from escalating into litigation, regulatory complaints, or other more formal proceedings. The hope is that, in making the complaint process more rigorous and more reliable, the Bureau does not inadvertently create enough friction that consumers bypass the portal altogether in favor of those more adversarial avenues.
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Judge Grants MSJ for CRA, Says Consumer Showed No Actual Inaccuracy
A District Court judge in Texas granted summary judgment to a credit reporting agency, dismissing a consumer’s Fair Credit Reporting Act lawsuit over accounts and inquiries he claimed were inaccurate or unauthorized. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: With the recent uptick in consumer litigation—notably FCRA litigation—this is a great ruling for the industry. We’re all aware FCRA cases are a completely different animal than a standard FDCPA case—more expensive to defend and greater exposure if you lose. That said, agencies can feel confident in knowing there are guardrails courts are willing to put in place to put an end to meritless claims with more consistency. Here, Plaintiff claimed that his credit report included inaccurate information and was entirely unable to support those claims. The Court was right in granting summary judgment for the defendants. When faced with FCRA litigation with an obnoxious demand—which is often the case—courts appear more willing to dispose of meritless cases rather than sending the case to trial.
Appeals Court: FCRA Is ‘Not a Strict Liability Statute’
The Court of Appeals for the Eighth Circuit has affirmed summary judgment for a background check company sued under the Fair Credit Reporting Act after it reported a speeding ticket that belonged not to the plaintiff, but to the plaintiff’s identical twin brother. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: “There is no crying in baseball!” (Tom Hanks, A League of Their Own (1992)) but they do have “robot umpires” now that the MLB has implemented the ABS in 2026. In the final paragraph of the 8th Circuit’s recent opinion in Fraase v. Advantage Credit Bureau, No. 25-1872, (8th Cir. June 25, 2026), the succinct summary of the court’ ruling (“Because Advantage followed reasonable procedures, we do not address the district court’s conclusion that Austin did not suffer actual damages”) seems like it is saying the same thing as Mr. Hanks’ character in that movie.
Baseball can be helpful with understanding FCRA litigation. A pitcher throws the ball to a catcher just like a furnisher sends information to a credit reporting agency (“CRA”). Just as there are technical rules that apply only to pitchers or catchers, there are technical rules that apply only to furnishers or CRAs. Pitchers are not supposed to hit the batter with the ball, if they do, the batter takes 1st base, there is no comparable rule or negative consequence for catchers hitting a player with a ball. Since the FCRA is not a strict liability statute, the concept of “reasonableness” is paramount. Only CRAs can be held liable under the FCRA for including inaccurate information in a credit file and then ONLY IF the CRA doesn’t follow “reasonable” procedures for accuracy. Furnishers have different rules under the FCRA. Only furnishers can be held liable under the FCRA for not conducting a “reasonable” investigation of a consumer’s dispute. Although the strike zone varies with each batter, most consider calling balls and strikes to be relatively objective. That sense of objective fairness is often missing at the beginning of most FCRA litigation matters.
For now, one should be thankful there are no robot umpires in FCRA dispute litigation, and maybe someday someone will declare there is no crying in FCRA litigation as well.
Calif. Appeals Court Rejects Consumer’s Bid to ‘Accept’ Her Way Out of Loans
A California appeals court has affirmed the dismissal of a consumer’s lawsuit that tried to erase three loan balances through a self-created “administrative process” built on the Uniform Commercial Code. More details here.
WHAT THIS MEANS, FROM RON CANTER OF THE LAW OFFICE OF RON CANTER: The unrepresented Plaintiff in this case filed suit to extinguish the debts she owed to Digital Federal Credit Union. The Plaintiff/debtor claimed that she discharged her debts using a common debtor scam centering on the delivery and filing of a UCC Financing Statement that purports to satisfy existing debts. Many creditors have received similar notices from debtors trying to avoid paying what is owed by use of this fraudulent scheme.
This unreported appellate decision affirmed the trial court’s ruling that the debtor’s suit for “judgment for satisfaction of line and damages” was not a viable claim and did not comment on the debtor’s scam. However, the court took the Plaintiff to task for using fake citations created by generative artificial intelligence (AI hallucinations). The use of fake citations is not limited to pro se parties. The use of fake citations by attorneys has reached pandemic levels leading to court-imposed sanctions on many lawyers. Courts are responding to the exponential growth of fake citations by implementing new rules. Once recent example is the amendment to Florida Rule of General Practice and Judicial Administration 2.515 which, effective June 15, 2026, requires that the signer of a document filed with the court to represent that “the legal authorities identified exist and are accurately cited.” The amended rule permits a court, on it own motion, to impose sanctions, including contempt of court for violations of this new rule.
Appeals Court Refuses to Let CFPB Resume Mass Layoffs
A federal appeals court declined Friday to let the Trump administration immediately gut the Consumer Financial Protection Bureau’s workforce, keeping the agency that supervises much of the credit and collection industry intact for now while a lower court weighs the latest downsizing plan. More details here.
WHAT THIS MEANS, FROM ANASTASIA CATON OF HUDSON COOK: The DC Circuit threw the CFPB a lifeline here by refusing to lift the injunction against the Acting Director’s RIF and sending the case back to Judge Jackson. Judge Jackson has viewed the Acting Director’s plans for the Bureau with great skepticism over the last year. She will likely once again closely scrutinize whether the Bureau can fulfill its statutory obligations under its proposed plan. We expect the Acting Director’s recent return to office order, requiring all employees to report to the Bureau’s downsized headquarters in Southwest DC, to act as a de facto reduction in force. Judge Jackson will likely take this into consideration as she reviews the agency’s proposed plan.
State Appeals Court Voids Decade-Old Default Judgment Over Faulty Service
A Florida appeals court has reversed a default judgment a debt buyer won nearly a decade ago, ruling the judgment was void because the defendant was never properly served under the state’s substitute-service law. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: Enough about zombie debt—let’s talk about zombie service. This case arose from events that took place a decade before the consumer challenged service, showing that not even the passage of time will protect your judgment where service is concerned. It is frustrating to learn, after so long, that what looked like appropriate substitute service turned out not to be what it seemed. So what’s a compliance professional to do? Keep receipts. Be prepared to defend service at any time. The circumstances resulting in this opinion were unique, to say the least—the likelihood of exact replication of facts like these is low. But service challenges are endemic and always will be, so take this opinion as the perfect opportunity to give your policies relating to service of process a good going-over.
Judge Denies Motion to Strike Debt Buyer’s Defenses in FDCPA Suit
A consumer’s Fair Debt Collection Practices Act lawsuit will move forward with all seven of the defendant’s affirmative defenses intact after a District Court judge in Florida declined to strike any of them. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: Different courts have different perspectives on affirmative defenses asserted by Defendants in consumer litigation. Certain courts are very strict and demand specificity that may not be available at the outset of a case. In those cases, generic defenses are the subject of motion practice by the consumer attorney to strike those defenses, and for those defenses to be only added later where the evidence supports a specifically detained defense. Elsewhere, courts are more lenient, and just like allegations contained in the complaint, a Defendant can assert general defenses to be proven at the conclusion of the case. Additionally, true “affirmative defenses” are only those in which the Defendant has the burden of proof. A denial of an allegation on which the Plaintiff has the burden of proof is just that – a denial – and not an affirmative defense. Here, the trial court rejected the plaintiff’s motion to strike, instead recharacterizing the denials as simply denials to allegations in the complaint, and allowing the Bona Fide Error defense to stand without requiring more specificity.
Appeals Court Affirms Dismissal of FCRA Suit Over Charged-Off Account Reporting
The Court of Appeals for the Second Circuit yesterday affirmed the dismissal of a consumer’s Fair Credit Reporting Act lawsuit that accused a credit reporting agency of inaccurately reporting his accounts, including by showing balances on debts that had already been charged off and closed. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: Plaintiff, proceeding pro se, appealed the dismissal of his claims against the credit reporting agency asserted pursuant to the Fair Credit Reporting Act. First, the Second Circuit determined that the District Court correctly found Plaintiff’s claims that his credit report was inaccurate because it contained: (a) partially redacted information, including account numbers, and (b) it did not include credit account balances or past due amounts were deficient. Plaintiff’s allegations of inaccuracy were not “patently incorrect” or so misleading “to have an adverse effect.” Second, the Court of Appeals determined that the District Court correctly disposed of Plaintiff’s claim that the credit reporting agency failed to conduct a reasonable investigation. Specifically, the Court found that the Complaint and accompanying exhibits demonstrated that the credit reporting agency initiated a reinvestigation, made modifications and communicated the results of the investigation.
Judge Grants Summary Judgment to Student Loan Guaranty Agency in FDCPA Case
A District Court judge in Ohio has dismissed a consumer’s Fair Debt Collection Practices Act lawsuit against a student loan guaranty agency, granting summary judgment after concluding the agency was not a debt collector because it was pursuing the debt as part of a fiduciary obligation to the Department of Education. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF BASSFORD REMELE: With pro se consumer complaints increasingly common, defendants should assert all applicable defenses. In this case, the defendant relied on the seldom-used “fiduciary exception.” Under 15 U.S.C. § 1692a(6)(F), collection activity that is “incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement” is excluded from the FDCPA’s statutory definition of a “debt collector.” Here, the Court found that the evidence established the defendant was a guarantor for the Department of Education and therefore was exempt from the FDCPA’s definition of “debt collector.”
Judge Won’t Hunt for the Claim in Consumer’s 330-Page Filing
A District Court judge in Pennsylvania has dismissed a consumer’s Fair Credit Reporting Act lawsuit against a credit reporting agency, ruling that nearly 250 pages of attached exhibits could not stand in for a plain explanation of how his credit report was wrong. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: Goldsmith is a refreshing ruling in which the district court put a stop to the lawsuit before the defendant even had to respond. Consumers seeking to proceed in forma pauperis (without paying filing fees and costs), are subject to gate keeping by the courts. Under 28 U.S.C. § 1915(e)(2)(B)(ii), in addition to having to meet the financial threshold to have their filing fees and costs waived, the claims of such consumers are also subject to dismissal by the court before the defendant has to answer if they fail to state claims upon which relief can be granted. That is exactly what happened here. The consumer petitioned to proceed in forma pauperis, the court reviewed the original complaint, determined it did not meet the minimum pleading standards, dismissed it once without prejudice but gave the consumer an opportunity to amend. And when the consumer amended the complaint by adding a Tolstoian level set of exhibits and allegations that were conclusory in nature, the court dismissed the amended complaint with prejudice rather than allowing it to proceed forward and burdening the defendant consumer reporting agency with the expense to do so.
The case highlights the difficulty and expense of defending pro se complaints. Even where the consumer is attempting to proceed in forma pauperis, one dismissal is rarely enough. Regardless of their financial status, the courts are inclined to allow pro se litigants an opportunity to amend their pleadings, often with guidance from the court as to why their initial pleadings were insufficient. It is only when the amended pleading likewise fails that the defendant is provided with a dismissal with prejudice. And while courts can gate keep consumers who are seeking to have their filing fees waived, that gatekeeping obligation does not extend to other pro se litigants who pay their filing fees. In those instances, the defendant must bear the expense of filing and briefing two motions to dismiss.
Judge Sends Bid to Void Debts Over Licensing Law to Arbitration
A lawsuit seeking to void a pair of credit card debts on the theory that the debt buyers who acquired them were never licensed under New Jersey’s Consumer Finance Licensing Act has been ordered into arbitration, including the question of whether the contract is even valid. More details here.
WHAT THIS MEANS, FROM DREW CICERO OF BALCH & BINGHAM: Need a case supporting a motion to compel arbitration? In re Luis Rodriquez-Ocasio is one to use. Here, Plaintiffs alleged that Defendants were in violation of New Jersey’sConsumer Finance Licensing Act when they “unlawfully purchased and enforced Plaintiffs’ consumer debts by failing to first obtain a license to do so.” After removal of state court actions to The United States District Court in New Jersey, Defendants moved to compel arbitration. Judge Padin, noting the federal courts’ “empathetic [] policy in favor of enforcing arbitration dispute resolution,” granted Defendants’ motion. Although this opinion reads like a hornbook on the standards for compelling arbitration in the Third Circuit, there are specific takeaways for debt buyers and their counsel. In a world where debt buyers frequently exchange paper (here, Plaintiffs’ debts were transferred 5 times), it’s important to remember and review an arbitration clause’s survival provision. In Rodriguez-Ocasio, the Court focused on the following language to side with Defendants: “This agreement to arbitrate shall survive changes in the Agreement and termination of the Account [] and any transfer or sale of your Account, or amounts owed on your Account, to another person or entity” (emphasis in original). Another thing to remember—if a plaintiff doesn’t request a stay of her claims, seek dismissal in your motion to compel. Here, “neither party [] requested that the Court stay the action,” so it was dismissed without prejudice.
South Carolina Strips Collection Provisions From Final Medical Billing Law
South Carolina lawmakers have finalized a medical billing transparency measure that drops the collection-specific provisions debt collectors had been tracking, leaving a law aimed squarely at healthcare facilities rather than the agencies that pursue their accounts. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The enacted version of this bill regulates healthcare facilities and not debt collectors. However, the Fair Debt Collection Practices Act and the South Carolina Consumer Protection Code both prohibit false representations of the amount of a debt. Therefore, even though language requiring collectors to cease collection of medical debts with known inaccuracies was omitted from this new statute, to enhance compliance with the FDCPA and the SCCPC collectors should maintain procedures reasonably adapted to avoid the collection of inaccurate debts.
Collaboration Over Litigation: How the CFPB’s Revised Enforcement Principles Now Work
The CFPB has put its newly published Enforcement Principles into practice for what may be the first high-profile time, resolving a wave of consumer complaints against Bilt Technologies through direct collaboration rather than a formal investigation or public enforcement action. More details here.
WHAT THIS MEANS, FROM DAVID ISRAEL OF SESSIONS, ISRAEL & SHARTLE: After years of the CFPB’s wrongminded enforcement where technical shortfalls were escalated to near-capital offenses, and with the industry suffering through unannounced rule changes through enforcement actions, the Bureau’s latest pivot favors the ARM industry. In Bilt, the Bureau worked with the company to correct an error by allowing Bilt to contact consumers and make them whole regarding an overpayment error. That collaboration tenor suggests the recently announced humility pledge and enforcement principles will be the Bureau’s new compliance approach. Said differently, maybe the Bureau will now work with companies to remediate potential consumer harm instead of enforcement actions and civil money penalties. While preventing the problem is the goal, this case gives some hope that if a mistake happens, a company need not get stuck in a years-long CFPB legal battle. Must mention: While one case is not a trend, we want to be optimistic that we have seen the Bureau’s future supervisory jurisdiction process.
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.
