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.
Appeals Court Affirms Ruling for Law Firm in FDCPA Case Over Counter-Complaint
The Court of Appeals for the Ninth Circuit has affirmed a lower court’s ruling granting summary judgment in favor of a defendant that was accused of violating the Fair Debt Collection Practices Act by filing a counter-complaint against the plaintiff while collecting unpaid assessments for a condominium association in Hawaii. More details here.
WHAT THIS MEANS, FROM KAREN SCHEIBE ELIASON OF FROST ECHOLS: The Ninth Circuit’s recent unpublished opinion in Nolan v. Porter McGuire Kiakona & Chow is worth a quick read for anyone handling collection litigation against represented consumers. The plaintiff argued that by e-filing a counterclaim against her on a public docket, the firm had communicated it to the world and violated the FDCPA. The court disagreed, holding that a communication directed only to a debtor’s attorney is not actionable under the statute so long as it carries no threat to contact the debtor, and that the counterclaim qualified because it was served solely on her attorneys through the state’s electronic filing system. The fact that the public could access the filing did not change the analysis, because the court drew a line between who receives a communication and who can merely retrieve it. The court also tossed her emotional distress claim, reasoning that a counterclaim compelled by the state’s own rules of procedure can hardly be called outrageous or beyond all bounds of decency. The practical lesson is an old one but still worth repeating: once you know a consumer has counsel, keep your litigation communications pointed at counsel of record and resist the urge to copy the consumer just to make a point.
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CFPB Nominee Pledges ‘Open Mind’ on Staffing, Doesn’t Break with Vought at Confirmation Hearing
Brian Johnson, President Trump’s nominee to serve as the next Director of the Consumer Financial Protection Bureau, told the Senate Banking Committee yesterday that he would keep an “open mind” about the agency’s staffing levels and make his own decisions if confirmed, while repeatedly declining to distance himself from Acting Director Russell Vought’s efforts to dismantle the Bureau. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: CFPB staffing is the subject of litigation that is stayed until after a new CFPB Director is confirmed. Meanwhile, several states continue to increase supervision and enforcement activity. Interesting developments to watch include the appointment of former CFPB Director Rohit Chopra as Secretary of California’s Business and Consumer Services Agency and the nomination of Professor Christopher Peterson to serve as Director of the New Jersey Division of Consumer Affairs.
State Appeals Court Rules Citing Fake AI-Generated Cases is Sanctionable, Regardless of Intent
The Arizona Court of Appeals has sanctioned a self-represented litigant for filing a brief containing case citations that were hallucinated by generative artificial intelligence, ruling for the first time in a published Arizona opinion that submitting fake AI-generated authorities to a court is sanctionable conduct, even without any intent to deceive. More details here.
WHAT THIS MEANS, FROM ROSHNI PATEL OF TROUTMAN PEPPER LOCKE: For the first time in a published Arizona opinion, an appellate court held that submitting hallucinated case citations to a court is sanctionable conduct, even without intent to deceive. In Dineen/Shibata v. Kotchka, No. 1 CA-CV 25-0606 PB (Ariz. Ct. App. July 15, 2026), the self-represented appellant relied on generative AI for legal research and admitted he did nothing to independently verify the citations before filing, including two citations to nonexistent cases. Notably, the court was unmoved by the appellant’s lack of legal training and lack of intent to deceive, writing that accepting ignorance as a defense would “legitimize reckless indifference to the truth and accuracy of court filings” and making clear that no litigant may offload the duty to ensure the truth and accuracy of court filings to any technological tool. The decision joins a growing body of authority from courts across the country imposing sanctions on both attorneys and self-represented litigants for the abusive use of generative AI in litigation.
FCC Votes to Tighten Rules for Robocall Mitigation Database
The Federal Communications Commission voted unanimously yesterday to advance new proposals aimed at strengthening the Robocall Mitigation Database, the registry it uses to keep illegal callers off U.S. phone networks. The 3-0 vote on a Further Notice of Proposed Rulemaking (FCC 26-49) opens a comment period on rules that would raise filing standards for voice service providers and streamline the removal of bad actors from the database. More details here.
WHAT THIS MEANS, FROM JOSH STEVENS OF MAC MURRAY & SHUSTER: For the past couple years, the FCC has been ramping up pressure on voice service providers to police their networks with removal, or threatened removal, from the Robocall Mitigation Database the FCC’s new go-to enforcement mechanism. Downstream voice service providers are only allowed to accept traffic from registered providers. These proposed regulations, if enacted, would broaden who must register, clarify and expand filing content requirements, and enhance the FCC’s ability to identify and remove voice service providers who it finds are not living up to their commitments. Although the vast majority of these obligations will fall on voice service providers, callers will likely see an impact from increased Know Your Customer obligations when signing-up for or renewing voice service, more diligent monitoring by the provider of calls made, heightened response obligations when complaints occur, and greater risk of disruption or service outages when their provider acts first and investigates later as concerns arise. The FCC is accepting comments on this rulemaking for 30 days after publication in the Federal Register. Comment can be filed online via the FCC’s ECFS portal at FCC.gov.
Judge Dismisses FDCPA Class Action Accusing State Agency, Collection Attorneys of ‘Zombie’ Student Loan Scheme
A District Court judge in Maine has granted motions to dismiss a class action accusing a state agency, its outside collection counsel, and a state court administrator of violating the Fair Debt Collection Practices Act and a series of state laws in trying to collect a defaulted student loan. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: It always cheers me up to see a court acknowledge that collection attorneys are allowed to rely on their clients’ records, unless there is a specific, identifiable reason why counsel should know the records are inaccurate. In this case, the court held that the complaint did not plead facts showing counsel knowingly made false representations regarding the debt, and likewise had no facts to show that counsel were aware of purported deficiencies in the creditor’s records but disregarded them. By emphasizing that collection attorneys are entitled to rely on information supplied by their clients absent some known issue, courts remind all would-be plaintiffs that collection attorneys are no different than other attorneys when it comes to reasonably relying on a client’s records. This is important, because too often plaintiffs characterize collection counsel as debt collectors first, and attorneys second. Opinions like this one help chip away at that fiction.
Inconsistent Isn’t Inaccurate: Judge Dismisses FCRA Suit Against CRA
A District Court judge in Maryland has granted a defendant’s motion to dismiss a Fair Credit Reporting Act lawsuit filed against a credit reporting agency, ruling that alleging two pieces of reported information are inconsistent with each other is not the same as alleging that either one of them is actually inaccurate. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: In Johnson v. Equifax Info. Servs, LLC, a Maryland federal court dismissed a pro se plaintiff’s FCRA claims against Equifax arising from four allegedly inaccurate or internally inconsistent tradelines. The plaintiff asserted that Equifax failed to use reasonable procedures, conduct a reasonable reinvestigation, and delete inaccurate or unverifiable information after receiving her disputes. The court found that she had Article III standing because she alleged that Equifax disseminated inaccurate information to third parties and that she suffered reputational harm, emotional distress, and lost credit opportunities.
The claims nevertheless failed because the plaintiff did not plausibly identify any inaccurate information. For one account, she alleged that the report showed both a February 90-day delinquency and an April payment, but she did not dispute that either fact was true or explain why the two entries were incompatible or misleading. Her allegations concerning the remaining accounts merely stated that certain dates or payment histories were “inaccurate,” “incomplete,” or “inconsistent,” without identifying the correct information or explaining the alleged error. Because both reasonable-procedures and reinvestigation claims require a sufficiently pleaded inaccuracy, the court granted Equifax’s motion to dismiss.
This growing body of case law requiring an inaccuracy, as the FCRA intended, is helping filter out the frivolous and manufactured claims. Hopefully we see more decisions like this for both furnishers and reporting agencies.
Judge Tosses FDCPA, FCRA Suit, Won’t Hunt for ‘Truffles’ in 237 Pages of Exhibits
A District Court judge in Pennsylvania has dismissed, with prejudice, a Fair Credit Reporting Act and Fair Debt Collection Practices Act lawsuit against a defendant accused of reporting inconsistent balances and using deceptive collection communications, ruling that a three-page amended complaint accompanied by 237 pages of exhibits still failed to state a plausible claim. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: A truffle is a type of subterranean fungus. But unlike the greater Western cultural reaction to fungi (e.g., black mold, mildew, and Ophiocordyceps unilateralis (aka the “zombie-ant” fungus that underpinned the plot of the hit TV series “The Last of Us”), some types of truffles are nicknamed “black gold” because of their use in fancy cuisine around the world. Nonetheless, one must dig in the dirt, usually between tree roots, to find these nuggets of black gold. Because wild truffles grow underground without any visible trace on the surface of the ground, finding them is both difficult and messy work that requires the use of a well-trained dog or pig, who can smell the truffles.
In Goldsmith v Absolute Resolutions, no. 25-cv-7428, ED PA July 14, 2026, the court granted a motion to dismiss with prejudice and quoted the 3rd Circuit Court of Appeals for a colorful admonition to litigants who mistakenly think that ‘more is more better’ or that ‘everything including the kitchen sink’ is a viable litigation strategy. The attention-grabbing quote is:“Judges are not like pigs, hunting for truffles buried in the record.” Doeblers’ Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 820 n.8 (3d Cir. 2006) and it is seasonably relevant to the rising tide of the prodigious AI slop being presented to courts. In the Goldsmith case, it wasn’t just the poorly written complaint that lacked coherent allegations of fact to state a claim under the FCRA or the FDCPA, but also the nearly 240 pages of exhibits attached to the complaint that exhausted the court’s demonstrated patience with the pro se party. The lesson here is that litigants should not waste a court’s time. Serving up slop relegates it to the rubbish, even if you try to put some truffle shavings on it.
State Appeals Court Affirms Judgment for Collector in Medical Debt Case
The Court of Appeals of Indiana has affirmed a judgment in favor of a collection agency seeking to recover an unpaid medical debt, ruling the defendant waived her arguments on appeal by failing to follow the state’s appellate rules and, even setting the waiver aside, failed to show the trial court got it wrong. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH:This case represents both the best and worst of litigating against pro se plaintiffs. The worst, as described incessantly by the lawyers on these pages and in webinars, is that pro se plaintiffs do not go away. They litigate the most ridiculous positions, do not take “no” for an answer, and appeal every issue ruled upon by trial courts – including many times demanding recusal of the trial judge who is inevitably biased because he or she does not side with the pro se. On the other hand, the pro se is almost always wrong, cannot comply with court rules and process, and rarely “win” their cases. The choice for the agency defendant is to fight a long term war that it will win at the cost of legal fees. Here, the agency won at trial and on appeal. It experienced all of the facets of pro se litigation. It got its desired result but likely paid for it.
Judge Grants MJOP for CRAs in FCRA Case Over Disputed Rental Debt
A District Court judge in Wisconsin has granted a motion for judgment on the pleadings filed by the defendants in a Fair Credit Reporting Act case, ruling that credit reporting agencies were not required to resolve the legal validity of a disputed rental debt when reinvestigating it. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This case is another brick in the wall of authority rejecting the idea that a dispute over whether a debt is legally enforceable is necessarily the same thing as a factual dispute about whether the debt exists or was accurately reported. This decision is part of a growing line of cases recognizing that CRAs—and, importantly, those involved in the reporting and collection process—are not required to resolve underlying lease, contract, or other legal disputes through the reinvestigation process. The court also reinforced the importance of specific factual allegations, rather than simply labeling conduct as “malicious,” “false,” or “negligent,” particularly where the FCRA may preempt state-law claims. For companies in this space, the practical takeaway is to continue focusing defenses on the distinction between factual accuracy and legal validity, while maintaining documentation showing how disputed information was evaluated and reported.
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 strate
