After nearly a decade of litigation, Judge Beryl A. Howell of the U.S. District Court for the District of Columbia has approved the Consumer Financial Protection Bureau’s $6.0 million settlement of class claims of alleged discrimination by the CFPB against 85 Black and Hispanic employees. The class consists of all “minority employees and women who work or worked as Consumer Response Specialists and have been subjected to and harmed by the Bureau’s agency-wide pattern or practice of discrimination and retaliation and discriminatory policies and practices,” according to the complaint. The settlement fund will be distributed to the 85 class members. In addition to the $6.0 million settlement fund, the settlement provides for an award of $1.5 million in attorney’s fees for class counsel.

The class action lawsuit was filed in 2018 against the CFPB’s former Acting Director Mick Mulvaney. Class representatives alleged that they were consistently paid less than their White male colleagues, unfairly denied promotions since 2011, and faced retaliation for making discrimination complaints.

The CFPB does not admit wrongdoing as part of the settlement. In a statement, the CFPB said it remains committed to ensuring all employees are treated fairly. The CFPB recently updated its pay structures, but advised that the compensation reform is independent of the discrimination allegations.

We view as ironic that the CFPB, which has been vigorously, and sometimes zealously enforcing fair lending laws, would be sued for employee discrimination and pay out $6.0 million in damages and 1.5 million in attorney’s fees. The optics are not very pleasant.

New Jersey Gov. Phil Murphy on Jan. 16 signed into law Senate Bill 332, making New Jersey the 13th state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut, Iowa, Indiana, Tennessee, Montana, Texas, Oregon, and Delaware.  The law will go into effect Jan. 16, 2025.

Applicability

The Act applies to controllers that conduct business in New Jersey or produce products or services that are targeted to New Jersey residents, and that during a calendar year either:

1. control or process the personal data of at least 100,000 consumers, excluding personal data processed solely for the purpose of completing a payment transaction; or
2. control or process the personal data of at least 25,000 consumers and the controller derives revenue or receives a discount on the price of any goods or services, from the sale of personal data.

Exemptions 

Exemptions include, but are not limited to:

1. A financial institution, data, or affiliate of a financial institution that is subject to Gramm-Leach-Bliley Act and implementing rules;
2. Protected health information collected under the Health Insurance Portability and Accountability Act of 1996;
3. Personal data collected, processed, sold, or disclosed by a consumer reporting agency as authorized by the Fair Credit Reporting Act.

Consumer Rights 

Consumers have the right to:

1. Confirm a controller’s processing of their personal data;
2. Correct inaccuracies in their personal data;
3. Delete their personal data;
4. Obtain a copy of their personal data held by the controller;
5. Opt out of the processing of their personal data if the processing is for the purpose of targeted advertising, sale of their personal data, or certain profiling.

Sensitive Data 

A controller may not process sensitive data concerning a consumer without first obtaining the consumer’s consent, or, in the case of the processing of personal data concerning a known child, without processing such data in accordance with the Children’s Online Privacy and Protection Act.

“Sensitive data” means personal data revealing:

1. Racial or ethnic origin;
2. Religious beliefs;
3. Mental or physical health condition, treatment, or diagnosis;
4. Financial information, which shall include a consumer’s account number, account log-in, financial account, or credit or debit card number, in combination with any required security code, access code, or password that would permit access to a consumer’s financial account;
5. Sex life or sexual orientation;
6. Citizenship or immigration status;
7. Status as transgender or non-binary;
8. Genetic or biometric data that may be processed for the purpose of uniquely identifying an individual;
9. Personal data collected from a known child; or
10. Precise geolocation data.

Contract Requirements 

A contract between a controller and processor must clearly set forth:

1. The processing instructions to which the processor is bound, including the nature and purpose of the processing;
2. The type of personal data subject to the processing, and the duration of the processing;
3. That the processor ensures each person processing the personal data is subject to a duty of confidentiality;
4. That any subcontractor engaged by the processor is subject to the same contractual obligations as between the controller and the processor;
5. That the controller and processor implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk;
6. That the processor deletes or returns all personal data to the controller as requested at the end of the provision of services;
7. That the processor makes available to the controller all information necessary to demonstrate compliance; and
8. That the processor allows for, and contributes to, reasonable assessments and inspections by the controller.

Data Protection Assessments 

A controller must conduct a data protection assessment for processing that presents a heightened risk of harm to a consumer, including:

1. Processing personal data for the purposes of targeted advertising or certain profiling;
2. Selling personal data;
3. Processing sensitive data.

Enforcement

The Act does not create a private right of action. A violation that is not cured within 30 days of notice is an unlawful practice under N.J. Stat. § 56:8-1, et seq., and the Attorney General may seek injunctive relief, costs, and penalties of not more than $10,000 for the first offense and not more than $20,000 for the second and each subsequent offense.

Rulemaking

The Attorney General, through the Division of Consumer Affairs, is charged with promulgating rules and regulations.

Impression

This legislation, which was introduced in 2022, is a good example of legislators listening to stakeholders and making appropriate changes in response. The bill was amended six times, with the next to the last gutting the bill and replacing it with provisions akin to those in laws adopted by most other states, which will be a relief to those incorporating the requirements into a compliance program. For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, click here.

WASHINGTON, D.C. — The National Creditors Bar Association (NCBA) today announced that Barron & Newburger, P.C. will sponsor an annual Scholarship, pledging $50,000 over five years to the NCBA Foundation. Funds will support a $10,000 per year college scholarship. Application forms can be found at creditorsbar.org/scholarship.  

Established in 2022, the NCBA Foundation was created to guide and complement the charitable initiatives of the National Creditors Bar Association. It is the mission of the Foundation to support financial, civic, and judicial literacy programs and programs dedicated to promoting equitable access to opportunity. As part of its mission, the Foundation continues the NCBA tradition of awarding annual scholarships. 

This scholarship, generously sponsored by the Barron & Newburger, P.C. Foundation, reflects NCBA’s commitment to investing in the education and future success of individuals within our legal community. 

“Barron & Newburger remains committed to providing equal opportunity to all students looking to further their education,” said Thomas Good, President and Chief Executive Officer of Barron & Newburger, P.C. “Partnering with NCBA, an association with a strong appreciation of community, allows us to give back by supporting educational and economic growth within our industry.”

Each year the scholarship application will include a timely industry relevant question. The 2024 industry essay question is: “Do restrictions on collection and credit reporting of medical debts affect the availability, cost, and quality of medical services and treatment?” NCBA encourages applicants to be creative and thoughtful in their submissions. A panel of judges, including the NCBA Foundation and Awards & Scholarship Committees, will evaluate the submissions based on originality, clarity, and insight of the subject matter. 

“NCBA is thrilled to be able to continue this great program and appreciates Barron & Newberger’s generosity to make it all possible,” said Liz Terry, NCBA Executive Director. “Their support not only alleviates the financial burden for students but encourages recipients to become independent thinkers.”

Scholarships will be awarded in May 2024. All applications are due no later than April 4, 2024. For more information visit: creditorsbar.org/scholarship.

About National Creditors Bar Association (NCBA)

NCBA is the premier bar association dedicated to serving law firms engaged in the practice of creditors rights law. Currently, our membership is comprised of over 350 law firms and individual members, totaling approximately 1,700 attorneys, in the areas of creditors rights law, defense and in-house counsel. Members practice in over 20 different practice areas in the 50 states, Puerto Rico, and Canada. Our attorney members are committed to being professional, responsible, and ethical in their practice and profession.

Media Inquiries:

Chip Bergstrom, Evergreen Communications, 617.784.6145, cbergstrom@evergreen-communications.com

January 2024 was another busy month for the CFPB. In this article, we’ll share some of our top CFPB “bites” of the month so you can stay on top of recent developments. 

Bite 10: CFPB Report on College-Sponsored Financial Products

On December 19, 2023, the CFPB issueda report on college sponsored financial products, which the CFPB warned could have higher fees and worse terms. The report addressed college sponsored credit cards and deposit accounts, noting that some of the college-sponsored deposit accounts include NSF and overdraft fees, two types of fees that many large banks have stopped charging. The CFPB claimed that as a result, organizations may be steering students into products that cost them more than they would pay on the open market. The report also found that the fees students paid varied by institution type; students at Historically Black Colleges and Universities, for-profit colleges, and Hispanic-servicing institutions all paid higher than average fees per account. Some students also faced unexpected fees upon graduation. The report found that some financial institutions imposed additional fees when a student graduates or reaches a certain age, relying on what the CFPB characterized as “sunset clauses” that change the terms of the account. The report noted that the CFPB will continue to examine these practices for potential violations of federal consumer protection law.

Bite 9: CFPB Reports on Challenges in Student Loan Repayment

On January 5, 2024, the CFPB published an issue spotlight on the CFPB’s oversight of student loan servicing practices. After a three-year pause of required payments due to the COVID-19 emergency, student loan repayments resumed in the fall of 2023. The report found that borrowers are experiencing long hold times of more than an hour and that average call wait times for a borrower to speak to a representative reached 70 minutes in October 2023. The CFPB claims that borrowers abandoned about half of all calls to servicers that month. Consumers submitted millions of applications for new income-driven repayment plans, and by October, 1.25 million applications were pending, with more than 450,000 pending for more than 30 days. The report also claimed that borrowers are receiving incorrect and confusing bills from their servicers. The errors include listing premature due dates before the end of the payment pause, inflating monthly payment amounts due to the servicer using outdated poverty guidelines, or using the incorrect income when calculating a borrower’s new income-driven repayment plan payment.

Bite 8: CFPB Issues Report on Neighborhoods and Mortgages

On December 21, 2023, the CFPB announced that staff have analyzed recent HMDA data to explore how the numbers of mortgage originators per capita varied on the neighborhood level. They also analyzed how that variation could impact lending outcomes. According to the CFPB, the data suggests that there is wide variation across neighborhoods in originators per capita, and that this measure was correlated with neighborhood-level characteristics like poverty, income, internet access, and racial and ethnic composition. Different financial institution types responded to these variations differently; credit unions originated a similar number of loans across all percentiles of originators per capita, bank originations fell with originators per capita, and originations by non-depository institutions increased with originators per capita. The report showed that even with groups of transactions that posed a similar credit risk, loan applications in neighborhoods with a larger number of originators per capita were less likely to be rejected. Additionally, consumers that took out mortgages in neighborhoods with more originators paid lower origination charges and lower total loan costs.

Bite 7: CFPB Report on Consumer Experience with Overdraft and NSF Fees

On December 19, 2023 the CFPB issued a new report that found many consumers are still experiencing unexpected overdraft and NSF fees, despite recent changes by many banks and credit unions to eliminate some of these fees. According to the report, more than 25% of consumers stated that financial institutions charged their household an overdraft or NSF fee in the past year, and that only 22% of those households expected the most recent overdraft. Many of these consumers appeared to have access to cheaper alternatives – like available balance on a credit card – when the overdraft occurred. The report also found that some of the consumers who experienced overdraft fees appear to use overdrafts intentionally and frequently; in households that experienced more than 10 overdrafts in a year, more than half said they expected the fees. The CFPB says that low-income households were the most likely to experience an overdraft or NSF fee. Financial institutions only charged 10% of households with over $175,000 in income with an overdraft fee in the past year, compared with 34% of households with an income below $65,000. Finally, the CFPB also noted that most account overdrafts are exempt from Regulation Z, which is designed to promote informed use of credit and allow consumers to compare the cost of credit products.

Bite 6: CFPB Issues Guidance on Credit Reporting Issues

On January 11, 2024, the CFPB issued guidance to credit reporting companies through two advisory opinions. The opinions address inaccurate background check reports and credit file sharing practices. The CFPB’s advisory opinion on background check reports highlighted that credit reporting companies must maintain reasonable procedures to avoid producing reports with false or misleading information. These procedures should prevent the publication of expunged, sealed, or other legally restricted information. They should also report disposition information for arrests, criminal charges, and evictions, and prevent the reporting of duplicative information. The advisory opinion on credit file sharing explained that individuals who are requesting their credit files only need to make a request and provide identification, and they do not need to use specific language or jargon to obtain their report. The CFPB says the organization providing the report must provide the complete file with information sources, with clear and accurate information presented in an understandable way, in a format that will help the recipient address inaccuracies.

Bite 5: FDIC Finalizes New Rule on Use of Name and Logo

On December 20, 2023, Director Rohit Chopra issued a statement on the FDIC’s new rule concerning use of its name and logo by nonbanks, saying that this rule is necessary to conform the FDIC framework with the modern banking experience. Chopra said that nonbanks are increasingly offering deposit-style products in partnership with banks, and that these nonbanks then state that the consumer funds benefit from FDIC insurance on a pass-through basis. According to the CFPB director, however, this pass-through protection is not automatic or guaranteed and it does not protect the public from risks associated with the possible failure of the nonbank, such as the potential for frozen funds. The new FDIC rule establishes a new official digital sign that banks will need to display near the name of the bank on all bank websites and mobile applications, and requires the signs to differentiate insured deposits from non-deposit products across banking channels and to indicate that certain financial products “are not insured by the FDIC, are not deposits, and may lose value.” The rule also clarifies that marketers may not use FDIC-associated terms or images to inaccurately imply or represent that any uninsured financial product or non-bank entity is insured or guaranteed by the FDIC.

Bite 4: New Proposed Rule on Overdraft Fees

On January 17, 2024, the CFPB proposed a new rule that it says is aimed at changing the way overdraft fees are disclosed. The CFPB indicated that the Truth in Lending Act has long exempted overdraft services from many of its provisions, which the CFPB now calls a “loophole” that financial institutions take advantage of. The CFPB says that this proposed rule is part of a continued effort by the CFPB to rein in “junk fees” and spur competition in the consumer financial product marketplace. Under the current Truth in Lending Act rules, the CFPB noted that banks do not need to disclose the cost of credit when they extend a loan to cover the difference on an overdrawn account. The proposed rule would require large financial institutions with more than $10 billion in assets to treat overdrafts like credit cards or lines of credit and provide clear disclosures to consumers about the cost of these credit products, including an interest rate. Alternatively, the institutions would be able to charge a flat fee at a cost that calculated based on demonstrated data. Comments on this proposed rule are due by April 1, 2024.

Bite 3: CFPB Files Amicus Brief in Debt Collection Case

On January 2, 2024, the CFPB filed a friend-of-the-court brief in a debt collection case, responding to a debt collector’s FDCPA argument. In that case a consumer filing for bankruptcy had received a letter from a debt collector during the bankruptcy process demanding payment and threatening a lawsuit. The individual sued the debt collector for this alleged misrepresentation. The debt collector argued that it was only responsible for intentional false statements, and that at the time it sent the letter, it was unaware that the consumer had filed for bankruptcy. According to the CFPB’s brief, that argument is incorrect and a debt collector can be liable under the FDCPA even if they claim that they did not know that their statement was false; however, a debt collector will not be held responsible in a lawsuit brought by an individual if they can show that they didn’t intend to make the false representation and that they had effective procedures in place designed to prevent the mistake.

Bite 2: CFPB Sues Lender-Developer

On December 20, 2023, the CFPB sued a lender-developer in Texas for alleged predatory lending. The CFPB announced that it joined the Department of Justice to sue the Texas-based lender-developer, alleging that the company operated an illegal land sales scheme that targeted Hispanic borrowers with false statements and predatory loans. The lawsuit alleges that the company sold flood-prone land without water, sewer, or electrical infrastructure, despite advertising claims that the homes came with all city services and that the lots have never flooded. The CFPB also alleged that the company advertised in Spanish, but only made important sale documents available in English. The CFPB further alleged that the company was “churning” borrowers through cycles of foreclosure and then re-selling the foreclosed properties at a profit. According to the CFPB, deed records show that the lender-developer repurchased at least 40% of the properties and resold them between two and four times over three years. The CFPB alleged that the company violated the ECOA, the Interstate Land Sales Full Disclosure Act, and implementing regulations. The DOJ joined the CFPB in its ECOA claims and separately alleged violations of the Fair Housing Act. The lawsuit seeks an injunction, consumer redress, and a civil penalty.

Bite 1: CFPB To Distribute Relief to Veterans

On January 2, 2024, the CFPB announcedthat it has distributed $6 million in financial relief to consumers that were harmed by alleged illegal lending practices that targeted veterans. According to the CFPB, five connected companies misled consumers, including veterans, into selling their pension and disability payments, which is illegal under federal and state law. The CFPB alleged that these transactions were not sales, but illegal, high-interest loans. These payments stem from years-old enforcement actions. In 2019, the CFPB and the state of Arkansas reached an agreement with one of the companies, and three others faced a lawsuit filed by the CFPB and the state of South Carolina. The 5th named defendant worked along with the others named in these actions. He settled with the CFPB in 2019 in response to allegations that he violated the CFPA by misleading consumers about interest rates and the validity of the contracts, as well as when the consumers would receive their funds from the transactions. The harmed consumers received a distribution in December 2023 that totaled $6 million, partially funded from the CFPB’s civil penalty fund.

Still hungry? Please join Hudson Cook for our next CFPB Bites of the Month. If you missed any of our prior Bites, including the webinar that covered the above topics, request a replay on the Hudson Cook website here. 

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This article is provided for informational purposes and is not intended nor should it be taken as legal advice.  The views and opinions expressed in this article are those of the authors in their individual capacity and do not reflect the official policy or position of the partners of Hudson Cook, LLP or clients they represent.

COPLEY, OH — DebtNext Software, a Recovery Management and Operations Solution Provider, today announced that it has completed its SOC 2 Type II audit, performed by KirkpatrickPrice. This attestation provides evidence that DebtNext Software has a strong commitment to security and to delivering high-quality services to its clients by demonstrating that they have the necessary internal controls and processes in place.

A SOC 2 audit provides an independent, third-party validation that a service organization’s information security practices meet industry standards stipulated by the AICPA. During the audit, a service organization’s non-financial reporting controls as they relate to security, availability, processing integrity, confidentiality, and privacy of a system are tested. The SOC 2 report delivered by KirkpatrickPrice verifies the suitability of the design and operating effectiveness of DebtNext Software controls to meet the standards for these criteria.

“Our team is extremely proud of the effort that has gone into attaining the SOC 2 Type II attestation and appreciates the partnership with Kirkpatrick Price and their efforts in the audit.  The protection of our clients’ data is a critical element of our success, and the policies and procedures we have put in place that are validated through this annual audit aid in our continual improvement in that area”, said Paul Goske, President of DebtNext Software.

“The SOC 2 audit is based on the Trust Services Criteria,” said Joseph Kirkpatrick, President of KirkpatrickPrice. “DebtNext Software delivers trust-based services to their clients, and by communicating the results of this audit, their clients can be assured of their reliance on DebtNext Software controls.”

About DebtNext Software 

DebtNext Software has been utilizing advanced technology combined with a breadth of industry knowledge to build function-rich solutions to drive recovery optimization and the management of third-party collection vendors since 2003. At DebtNext, we view our clients as the driving force behind what we do every day. We currently partner with many of the nation’s largest utility companies, telecommunications providers, financial services, and accounts receivables management firms, to fully illuminate their recovery management processes and help drive billions of dollars to our client’s bottom line.

About KirkpatrickPrice

KirkpatrickPrice is a licensed CPA firm, PCI QSA, and a HITRUST CSF Assessor, registered with the PCAOB, providing assurance services to over a thousand clients in North America, South America, Asia, Europe, and Australia. The firm has more than a decade of experience in information security by performing assessments, audits, and tests that strengthen information security practices and internal controls. KirkpatrickPrice most commonly performs assessments on SOC 1, SOC 2, PCI DSS, HIPAA, HITRUST CSF, GDPR, ISO 27001, FISMA, and FERPA frameworks, as well as advanced-level penetration testing. For more information, visit www.kirkpatrickprice.com, follow KirkpatrickPrice on LinkedIn, or subscribe to ourYouTube channel.

A look back at bankruptcy trends and litigation in 2023 reveals a spike in bankruptcy filings driven by economic factors and fallout from the pandemic while in upper courts several interesting cases were decided involving proofs of claim, stay violations, and discharge issues.

Bankruptcy filings in 2023 were up significantly, although the long-awaited tsunami that was anticipated did not arrive. In 2022, there were 383,000 total bankruptcy filings in the United States. In 2023, there were 445,186 filings for the year, which is an increase of approximately 5,000 cases a month. Chapter 7 filings, which include both consumer and business cases, increased by 17 percent. Chapter 13 consumer cases increased by 18 percent and Chapter 11 cases increased by 19 percent.

However, those increases are a far cry from the record-high filings in the early 2000’s. It is important to note that the numbers at times become skewed as some businesses that file bankruptcy have numerous subsidiaries, and each entity is filed as a separate bankruptcy action, with the cases ultimately being administratively consolidated.

Interest Rates, Inflation, Covid Lead to More Bankruptcies 

What are the causes of the increase in bankruptcies?

First and foremost, there were the Federal Reserve interest rate hikes, which caused variable-rate loans, credit card interest rates, and mortgage rates to increase. The rate increases coupled with the end of any state or federal government subsidies due to Covid-19 has made it more difficult for consumers and businesses to meet their obligations. Inflation has also been on the rise, which has caused consumers to cut back on discretionary spending.

In addition, with the lack of a return to the office and as more individuals continue to work at home, small businesses and restaurants in downtown locations are facing a rough business environment. Many landlords, both commercial and residential, are seeing increased defaults leading to vacancies that have not been re-let. As a result, we are seeing subsequent defaults with their mortgage lenders.

Student Loans Did Not Play a Role 

Student loans have not played a major role in the increase in bankruptcy filings. The White House signed an executive order setting forth procedures on how to handle adversary proceedings for hardship discharges of student loan debt. However, United States Attorneys have been instructed to accept the facts pleaded by a debtor to be true, which should allow for more summary judgments or judgments on the pleadings.

Although this initiative has been in place for approximately six months, we have not seen a large increase in complaints to discharge student loan debt due to hardship. This is mainly because only a small number of student loan obligations fall under this order. The standard to prove hardship student loan dischargeability has not changed from the well-established case law.

Bankruptcy Litigation in 2023 

There has been increased litigation of bankruptcy issues and the U.S. Supreme Court continues to address those issues. The appellate system saw various other bankruptcy litigation including proof of claim and stay violation issues.

LVNV Funding, LLC v. Myers (In re Meyers)

A case that could have had a major effect on creditors and debt buyers was recently decided by the U.S. Court of Appeals for the Ninth Circuit. In LVNV Funding, LLC v. Myers (In re Myers), No. 22-16615 (9th Cir. Nov. 21, 2023), the court held that a proof of claim is valid if it complies with the Federal Rules of Bankruptcy Procedure, rejecting the argument that a proof of claim needs to comply with Nevada judgment documentation requirements.

The court found that compliance with the Federal Rule of Bankruptcy Procedure 3001 substantiates a claim, and the bankruptcy court should not look at state law, following the Supreme Court’s 1938 decisions in Erie R.R. Co. v. Tompkins. The Ninth Circuit held that Nevada laws conflict with the Federal Rules of Bankruptcy Procedure and that the Nevada laws are not “applicable laws” that can render a claim unenforceable under Section 502(b)(1) of the bankruptcy code.

Golden One Credit Union v. Fielder (In re Fiedler)

The U.S. Bankruptcy Court of the Eastern District of California addressed the issue of filing complaints to determine dischargeability without conducting due diligence. Although Section 524 of the Bankruptcy Code provides a remedy for fees if such a complaint is not filed in good faith, the court in Golden One Credit Union v. Fiedler (In re Fiedler), No. 23-20862 (Bankr. E.D. Cal. Nov. 2, 2023), took it one step further.

In Golden, the credit union filed a complaint to determine dischargeability of debt due under Bankruptcy Code Section 523(a)(2) based on the incurrence of a $9,000 loan within 45 days of filing of the bankruptcy petition. The creditor’s counsel filed what the judge described as a boilerplate complaint. Counsel for the creditor did not conduct any thorough due diligence before the filing of the complaint. Further, before filing the complaint, the creditor did not attend the First Meeting of Creditors, have the debtor sit for a Rule 2004(a) examination, or reach out to the debtor’s counsel to discuss the potential of filing the complaint and learn more about the facts.

The court found that the filing of the complaint without reasonable inquiry constituted a violation of Rule 9011(b)(1). The court viewed the complaint as a tactic designed only to force the consumer into a non-dischargeable judgment. The court held that the complaint did not have a reasonable basis in law or fact. Since Rule 9011 (c)(2)(B) prevents the issuance of monetary damages, the judge created his own sanction to deter future behavior and required that for 19 months, any complaint to determine dischargeability of debt due filed by counsel in the district must be reviewed by the judge who issued the decision.

Golden is not the first case where we have seen a bankruptcy judge raise Rule 9011 issues on his or her own initiative. This is an issue that impacts both debtors, creditors, and their counsel. The ramifications can be substantial and due diligence must be conducted before legal pleadings are filed to prevent the ramifications that could follow. Unfortunately, we expect to see more cases of this type brought before bankruptcy courts in 2024.

Skaggs v. Gooch (In re Skaggs)

Another case dealing with sanctions against a creditor for violating the discharge injunction is Skaggs v. Gooch (In re Skaggs), No. 17-50941 (Bankr. W.D. Va. Jan. 19, 2023). This case concerns a bankruptcy discharge violation and considers whether a discharge injunction violation warrants an award of remedial damages to the debtor.

In 2000, the defendants obtained a judgment against the debtors. At the time of the judgment, the debtors owned no real estate, meaning the judgment debt was unsecured. In 2017, the debtors filed for bankruptcy and obtained a bankruptcy discharge in 2019. This discharged the unsecured debt and rendered the judgment effectively uncollectable. Months after the bankruptcy discharge, the debtors inherited real estate and were erroneously advised that the judgment would have to be paid before selling their inherited real estate. When the debtors contacted the defendants, the defendants provided the debtors with a payoff statement and offered a discounted payment for the judgment debt. In doing this, the defendants violated the discharge injunction.

The main issue the court considered here was to what extent the defendants should pay damages for their violation of the bankruptcy discharge injunction. Ultimately, the court held the defendants in contempt of the discharge order and imposed a remedial sanction upon the defendants for $25,000, which represented the debtors’ attorney’s fees. However, the court declined to award punitive damages.

The court also considered whether the defendants acted in good faith, which could affect the amount and type of sanction award, and determined that the defendants did not act in good faith. The court reasoned that all the defendants’ actions were unjustified, unreasonable, and harmful. For example, when the defendants emailed the debtors with the payoff letter for the prior judgment, the defendants committed an intentional debt collection act in violation of the debtors’ discharge injunction. As such, the court found the debtors’ request for $25,000 in attorney’s fees to be reasonable and necessary to compensate the debtors for the harm caused by the defendants.

Bartenwerfer v. Buckley (In re Bartenwerfer)

In Bartenwerfer v. Buckley (In re Bartenwerfer), 143 S. Ct. 665 (2023) the Supreme Court determined that Bankruptcy Code section 11 U.S.C. § 523(a)(2)(A) exempts a fraudulently obtained debt from discharge, even when the detor was not the person who acted fraudulently.

The question presented to the Supreme Court was whether the debtor must be the party that conducted the fraud, or whether a debt obtained by fraud is exempt from discharge, regardless of the actor. The court affirmed the ruling of the Ninth Circuit in holding the latter. Justice Barrett delivered the opinion of the court on the unanimous decision.

In this case, Kate and David Bartenwerfer (who were not married at the relevant time) purchased and remodeled a home, then sold it for a profit. David took the lead on the project. He did not disclose defects in the property to the purchaser. The buyer obtained a state court judgment against both debtors. The debtors then filed for Chapter 7 bankruptcy. The purchaser initiated an adversary proceeding seeking a declaration that the state court judgment against the debtors should not be dischargeable to either debtor under Section 523(a)(2)(A) of the Bankruptcy Code.

The Ninth Circuit Bankruptcy Appellate Panel held that Kate’s debt was non-dischargeable only if she knew or had reason to know of David’s fraud. The Ninth Circuit reversed on that point. The Supreme Court affirmed. In so ruling, the Court found that the use of the passive voice in Section 523(a)(2)(A) shows that the actor conducting the fraud is not relevant to non-dischargeability.

It further reasoned that, in the legal context of common law fraud, liability is not limited to the party committing the fraud but can extend to other parties (e.g., agents and partners). The court juxtaposed the express references to the debtor in other exceptions from discharge provisions against the absence of the same here, which supported that any debt obtained by fraud would be non-dischargeable, regardless of the actor.

Looking Ahead to 2024 

As seen by recent court rulings, the world of sanctions and non-dischargeability of debts could be a very active area in 2024. Debtors, creditors, and their counsel need to make sure to review all aspects of a case carefully and do their due diligence before proceeding with any complaints to determine dischargeability of debt due.

As we move forward into 2024, we expect to see an increase in bankruptcy filings both on the consumer and commercial end. The Federal Reserve has indicated that they expect to cut interest rates throughout the year. However, it will still be difficult for consumers and will require many to look for a fresh start. It seems that counsel has also become more litigious, so we expect to see increased litigation on claim and stay violation issues.

On January 11, the Consumer Financial Protection Bureau (CFPB or Bureau) issued two “advisory opinions” addressing the CFPB’s views of the obligations of consumer reporting agencies (CRAs) under the Fair Credit Reporting Act (FCRA). The advisory opinions are interpretive rules issued under the Bureau’s authority to interpret the FCRA pursuant to § 1022(b)(1) of the Consumer Financial Protection Act of 2010.

First, the CFPB advised that in order to assure “maximum possible accuracy” under § 607(b) of the FCRA, a CRA that provides background check reports must have procedures in place that: (1) prevent reporting public record information that is duplicative or that has been expunged, sealed, or otherwise legally restricted from public access; and (2) include any existing disposition information if it reports arrests, criminal charges, eviction proceedings, or other court filings.

Second, the CFPB advised that under § 609(a) of the FCRA, CRAs responding to file disclosure requests must also disclose to a consumer “the sources” of information, including both the original source and any intermediary or vendor sources.

In its first advisory opinion, the CFPB addressed FCRA § 607(b), which provides that “[w]henever a [CRA] prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” The CFPB advised of its view that, to comply with this section, CRAs must:

• Identify information that is duplicative to ensure that a report does not give the impression that a single event occurred more than once.

• Have procedures in place to ensure that information regarding the stages of a court proceeding (such as an arrest followed by a conviction) is presented in a way that makes clear the stages all relate to the same proceeding or case.

• Have reasonable procedures in place to check for any available disposition information in criminal and court proceedings.

  –  For example, the CFPB advised that it would be misleading to report that an individual has been arrested for the charges without also reporting that the charges have been dismissed.

  –  Similarly, the CFPB advised it would be misleading to report a bankruptcy filing without also reporting the result.

• Once a conviction has been sealed, expunged, or otherwise legally restricted from public access, the CFPB advised that it is misleading and inaccurate to include it in a consumer report because there is no longer any public record of the matter.

Relatedly, the CFPB addressed § 1681c, which generally prohibits the reporting of “[a]ny . . . adverse item of information . . . which antedates the report by more than seven years.” The CFPB advised that, to comply with this provision, CRAs generally should not report an adverse event that antedates the report by more than seven years and that each adverse item of information is subject to its own seven-year reporting period. The CFPB also stated that such reporting period is not restarted or reopened by the occurrence of subsequent events.

In the press release announcing the release of the advisory opinions, CFPB Director Rohit Chopra stated: “Background check and other consumer reporting companies do not get to create flawed reputational dossiers that are then hidden from consumer view … Background check reports, and all other consumer reports, must be accurate, up to date, and available to the people that the reports are about.”

In its second advisory opinion, the CFPB addressed FCRA § 609(a), which provides that “[e]very [CRA] shall, upon request . . . clearly and accurately disclose to the consumer, among other things: (1) All information in the consumer’s file at the time of the request . . .; and (2) The sources of the information.” The CFPB advised of its view that, to obtain a file disclosure, a consumer is not required to use any specific language, but may simply make a “request” and provide proper identification. Specifically, the CFPB advised that a consumer need not request “[a]ll information in the consumer’s file” or request a “complete file” or even use the word “file.” Instead, a consumer’s request for a “report” or “credit report” or “consumer report” or “file” or “record,” along with proper identification, triggers a CRA’s FCRA obligation. Further, the CFPB advised of its view that a CRA must:

• Disclose all information in the consumer’s file at the time of the request, including all information provided to a user.

  –  For example, the CFPB advised that a CRA must provide a file that allows a consumer to see criminal history information in the format that users see it, so that the consumer can check for any inaccuracies.

• Provide the information that formed the basis of any summary.

  –  For example, when a credit score or a tenant screening recommendation is provided to a user, the CFPB advised that the FCRA requires the CRA to include information that formed the basis for the score or recommendation.

• Disclose both the original source and any intermediary or vendor sources.

  –  For example, the CFPB advised that if a CRA discloses to a consumer only the vendor and does not also disclose the original source of the information, the consumer may not be able to correct any erroneous public records information that could be included in their files at all of the CRAs that receive data from the original source.

In both advisories, the CFPB concluded by warning CRAs of liability for a “willful” violation of the FCRA if they fail to heed the provided guidance. According to the press release, “the CFPB has taken action against consumer reporting companies when they have broken the law, as well as affirmed the ability of states to police credit reporting markets.”

Troutman’s Take:

The CFPB’s advisory opinions reflect the Bureau’s strategy of leveraging the FCRA to maximize the scope of its regulatory authority pertaining to consumers. The opinions also continue the CFPB’s use of every arrow in its quiver in an attempt to expand the reach of the FCRA. Other tools are “lawmaking” through enforcement actions, various guidance statements and formal rulemaking — all of which the CFPB has used aggressively for the FCRA.

On the specifics, the common theme here is a goal of limiting the data that can pass through the consumer reporting ecosystem about consumers, either by raising the compliance bar of having to report subsequent history on public records, or explicitly requiring CRAs to purge data about public records that have been expunged, and expanding the rights of consumers to contest data in the system. The CFPB continues to assume that less information about consumers is a net benefit for consumers, but this conclusion is highly debatable. In other words, these pronouncements are par for the course from the CFPB, but whether they will actually make a lasting change in the law is yet to be seen as, ultimately, the CFPB’s positions will have to pass through litigation in court to become real. After all, the CFPB’s advisory opinions are not the law.

HUTCHINSON, Kan. — National Credit Adjusters, a receivables management company headquartered in Kansas with offices in Arizona and Jamaica, looks back on community involvement during the second half of 2023 with gratitude for each team and their dedication to getting personally involved with service to our communities. From water drives to food drives and more, NCA was able to fulfill its ongoing commitment to giving back thanks to the caring individuals and employees who put each initiative into action. 

August Water Drives

In both the Chandler and Peoria, AZ offices, with the promise of a match by NCA, team members worked together to collect cases of bottled water for the homeless during the hottest months of the year. Average July temperatures in Central Arizona are about 105 degrees at the hottest part of the day. 

In Peoria, employees donated 26 cases of water, for a total of 52 cases after the match, which were all donated to the St. Vincent DePaul food bank. In Chandler, 64 cases (approx. 2,560 bottles) total were donated to Chandler Salvation Army.

“When we delivered the water to the local Salvation Army, the employees said they were running low and currently in need. It was all hands on deck to load the 64 cases, a police officer and the Salvation Army’s general manager came out to help Joe Rodriguez and I transfer the cases to their truck. It was a great feeling to fulfill an immediate need in our community,” said Karl Krum, Director of Operations at the Chandler office.

September United Way Work Day & School Supply Donations

In September, NCA provided a $300 donation to a local Hutchinson area elementary school to provide school shirts to low-income students. In addition, NCA purchased $700 of supplies from teachers’ wish lists at another local elementary school. Team members from the Hutchinson office delivered the donations. 

A crew of Hutchinson staff also volunteered with United Way for a Community Work Day. The group was assigned the project of repainting the house and garage of an elderly, disabled woman. 

October Trunk or Treat & Laps for Learning

In October, the Hutchinson site volunteered and donated candy to Trunk or Treat Hutch. Team members represented NCA well as they handed out candy to thousands of children on Halloween night. 

NCA also participated in the Laps for Learning fundraiser, where students collect donations for their school and show appreciation for the donations by jogging/walking laps around the school’s track. NCA donated $500 each to two local elementary schools. A group of employees also volunteered during the event at one of the schools. 

November Food Drive

During the Thanksgiving season, team members from the Chandler office worked together for the Salvation Army food drive. The team collected and donated a vast assortment of canned goods and boxed dry goods for the food pantry at the Salvation Army Community & Youth Center. 

A Heart for Community

NCA CEO, Tyler Rempel shares, “National Credit Adjusters is proud to be actively involved in the communities where we collectively live and work. It’s a privilege to have so many team members eager to join in and take a personal part in serving the community with a variety of local initiatives. Thank you to our teams across all offices for their hearts and for allowing NCA to come alongside and support these efforts.”

About National Credit Adjusters, LLC

National Credit Adjusters, a privately held company, has specialized in purchasing and servicing delinquent account receivables since 2002. Their primary area of acquisition is consumer installment and online lending. NCA stays current on industry standards through ongoing research, automation, analytics, and process evaluation. National Credit Adjusters focuses on strong performance while adhering to compliance standards through constant quality training and employee development. Whether purchasing, servicing, or selling debt, NCA conducts all business with respect and fairness. For more information, visit ncaks.com.

In November 2023, S.B. 668 was introduced in the Wisconsin Senate. S.B. 668 would make sweeping changes to the state laws governing financial service providers. The bill creates a pathway for the Wisconsin Department of Financial Institutions (DFI) to expand use of the Nationwide Multistate Licensing System and Registry (NMLS) across license types, modernizes money transmission laws, and revises the regulation of consumer lenders, collection agencies, check sellers, payday lenders, community currencies exchanges, sales finance companies, adjustment service companies, and insurance premium companies. The bill was read and referred to the Committee on Shared Revenue, Elections and Consumer Protection and a public hearing was held on December 19, 2023.

The 113 page bill further proposes broad changes to financial services licenses as summarized below. Financial service providers operating in Wisconsin should review the bill and contact their legislative representative or one of the bill sponsors to provide input prior to enactment. Ballard’s licensing team can help providers understand how these proposed changes may impact their business operations or help you file for licenses in the NMLS.

Expanded Use of NMLS

Current law limits the DFI’s use of NMLS to mortgage loan originators, mortgage bankers and mortgage brokers. This bill requires DFI to utilize the NMLS with respect to the licensing and regulation of financial services providers, including requiring applicants and licensees to provide information directly to the NMLS and to comply with application and reporting deadlines established by the NMLS. Specifically, the bill requires use of the NMLS system for consumer lenders, money transmitters, collection agencies, payday lenders, community currencies exchanges (check cashers), sales finance companies (companies that acquire motor vehicle installment sales contracts or consumer leases originated by a motor vehicle dealer), adjustment service companies, and insurance premium companies. The expanded use of NMLS is meant to standardize the license renewal process and renewal period for licensed financial services providers.

Money Transmitters and Check Sellers

The bill repeals provisions of current law governing the licensing and regulation of sellers of checks, and replaces them with provisions governing the licensing and regulation of money transmitters, titled the Model Money Transmission Modernization Law, which seeks to implement the Conference of State Bank Supervisors’ Model Money Transmission Modernization Act. The bill incorporates common exceptions, including exceptions for federally insured financial institutions, government agencies, registered securities broker-dealers, agents of a payee that collect and process payments on behalf of the payee if certain conditions are satisfied, electronic funds transfers of governmental benefits by government contractors, employees and authorized delegates of licensed money transmitters if certain conditions are satisfied, and any other person exempted by DFI, as long as the exempt person does not engage in money transmission outside the scope of the exemption. The bill defines money transmission and payment instrument as follows:

• Money transmission means “selling or issuing payment instruments to a person located in this state; selling or issuing stored value to a person located in this state; or receiving money for transmission from a person located in this state.” Money transmission specifically includes payroll processing services that are not performed by the employer (“receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries”).

• Payment instrument means “a written or electronic check, money order, traveler’s check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable.” Payment instrument does not include (i) stored value or any instrument that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value or (ii) any instrument that is not sold to the public and is issued and distributed as part of a loyalty, rewards, or promotional program.

The bill’s money transmitter licensing requirements include, among other things:

• Requiring applicants to submit applications and other information through the NMLS;

• Requiring a person or entity seeking control of a money transmitter to apply for a license and meet other conditions;

• Allowing a licensee to conduct business through an authorized delegate, which is a person designated by a licensed money transmitter to engage in money transmission on behalf of the licensed money transmitter; and

• Requiring certain business practices with regards to money transmission, sending receipts, refunding money in some circumstances, submitting audited financials, and maintaining a surety bond, the required net worth and a minimum amount of investments.

Further, the bill provides DFI with various powers relating to the regulation of money transmitters, including investigatory and enforcement powers, including the authority to examine its books, accounts, or records and those of its authorized delegates, and the authority to take possession of an insolvent licensed money transmitter under specified circumstances.

Consumer Lenders

Under current law, a lender (other than a bank, savings bank, savings and loan association, credit union, or any of its affiliates) generally must obtain a license from DFI to assess a finance charge for a consumer loan that is greater than 18% per year. The bill makes numerous changes related to the licensing and regulation of consumer lenders, including the following:

• Defines consumer loan for purposes of licensed lenders (“a loan made by any person to a customer that is payable in installments or for which a finance charge is or may be imposed, and includes transactions pursuant to an open-end credit plan, as defined in s. 421.301(27), other than a seller credit card, as defined in s. 421.301 (41)”);

• Applies to any person who takes an assignment for sale, in whole or in part, of a consumer loan with a finance charge in excess of 18% per year, without regard to whether the loan was originally made by a financial institution; but does not apply to collection agencies, payment processors, and certain persons involved in investment or financing transactions;

• Specifies the activities that require a person to be licensed as a licensed lender: making a consumer loan that has a finance charge in excess of 18% per year; taking an assignment of a consumer loan in which a customer is assessed a finance charge in excess of 18% per year; or directly collecting payments from or enforcing rights against a customer relating to a consumer loan in which a customer is assessed a finance charge in excess of 18% per year;

• Eliminates provisions related to consumer loan interest rates that apply to certain loans entered into before August 1, 1987 and the requirement that all loans must be consummated at the licensed location; and

• Requires a licensed lender to keep its loan records separate and distinct from the records of any other business of the licensed lender.

Collection Agencies

The bill makes numerous changes to the collection agency license provisions, including, among other things:

• Removes the requirement that an individual collector hold a license separate from the license of the collection agency that employs the collector;

• Excludes licensed mortgage bankers and credit unions from collection agency regulation;

• Requires that a separate license be maintained for each business location;

• Expands the reasons for DFI may suspend or revoke a license to include where the collection agency has violated DFI’s rules related to collection agencies, and the collection agency has made a material misstatement, or knowingly omitted a material fact, in an application for a license or in information furnished to DFI or the NMLS;

• Specifies the timing to deposit funds in trust account within 48 hours and submit funds to creditors on the last day of the month following the close of the month during which the collection was effected;

• Permits the use of unsigned collection notices;

• Amends various provisions related to assessing fees to creditors for returning accounts, record retention, identification of trusts accounts, use of “doing business as” names, compliance with federal and state laws, and contracting requirements.

We will continue to monitor the progress of this bill and blog further if the bill is enacted.

NEW YORK, NY — The Consumer Relations Consortium (CRC) is pleased to announce its 2024 Legal Advisory Board (LAB) members. The LAB is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB allows a limited number of law firms and is comprised of fourteen total attorneys. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.

Meet the 2024 LAB Members:

John Bedard – Bedard Law Group 

John is an AV-rated attorney and nationally recognized authority on the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. He serves as counsel to several professional trade associations, including the Georgia Collectors Association. John’s practice involves the defense of FDCPA claims, compliance audits, and creating solutions for ARM industry participants such as BLG 360, BLG Insight, and his newest offering, BLG Call Count. 

As a member of the 2022 LAB,  John co-authored comments to the Federal Trade Commission regarding its proposed rule to crack down on commercial surveillance. As a member of the 2023 LAB, John co-authored comments to the California Department of Financial Protection and Innovation (DFPI) regarding proposed updates to its complaints and inquiries regulation, to the New York City Department of Consumer and Worker Protection regarding its proposed update to debt collection rules.  The California DFPI adopted the language suggested by John and his co-author in their comment.

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Jedd Bellman – Orrick (Formerly Buckley)

Jedd assists banks, mortgage companies, auto lenders, debt collectors, money services businesses, and fintechs on a variety of licensing, regulatory, and enforcement matters, bringing a wealth of consumer financial services experience gleaned from more than a decade in government service. Prior to joining Buckley, Jedd was the Assistant Commissioner for Non-Depository Supervision in the Office of the Maryland Commissioner of Financial Regulation, where he coordinated the licensing and supervision of approximately 23,000 individuals and business entities, covering the mortgage, student loan, consumer finance, sales finance, debt services, credit reporting, and money services industries. He also managed the office’s regulatory investigations and enforcement actions, including playing a leadership role in every significant multistate enforcement matter handled by state regulators during his tenure. As part of the 2023 LAB, Jedd co-authored comments to the CFPB regarding its policy statement on abusive acts and practices.

Aryeh (Ari) Derman– Clark Hill

Ari supports and assists in the development and expansion of the regulatory and compliance group’s growing consulting and advisory services, targeting financial institutions and technology companies (fin-techs) looking to enter into the financial services sector. He leads and coordinates current and prospective examinations from state and federal financial regulators. He has extensive experience and knowledge of numerous consumer protection laws, including, but not limited to the FDCPA, FCRA, TCPA, GLBA, and HIPAA. He is a subject matter professional in compliance, risk management, and corporate governance. As part of the 2023 LAB, Ari co-authored comments to the CFPB regarding its policy statement on abusive acts and practices.

Jonathan P. Floyd – Troutman Pepper

Jonathan’s practice includes counseling to help businesses navigate and litigate the myriad consumer and financial services laws, with a particular emphasis on federal consumer protection statutes, such as the Fair Debt Collection Practices Act (FDCPA), Telephone Consumer Protection Act (TCPA), and Fair Credit Reporting Act (FCRA). He provides ongoing analysis and commentary on developments in the consumer financial services industry, with a focus on credit card lenders, through the Consumer Financial Services Law Monitor blog. As part of the 2023 LAB, Stefanie co-authored comments to the CFPB regarding its proposed “shame list.“

Stefanie Jackman– Troutman Pepper

Helping her clients navigate trying and complex issues, Stefanie Jackman is a zealous and untiring advocate. Stefanie brings her experience and knowledge to bear when assisting clients with compliance counseling and assessments relating to consumer products and services, guiding them through state and federal government inquiries and investigations, and defending them in individual and class action lawsuits. Her clients are represented in almost all sectors of the financial services industry, including banks and nonbank lenders and servicers, student loans, debt collectors and buyers, third-party service providers, healthcare and medical revenue cycle service providers, credit and prepaid card companies, direct and indirect auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws (UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA). 

As a member of the 2022 LAB, Stefanie co-authored comments to the California Department of Financial Institution’s proposed data retention regulations. As part of the 2023 LAB, Stefanie co-authored comments to the CFPB regarding its proposed “shame list.” Much of her thought leadership and analysis of relevant legal issues can be found on her Firm’s practice blog, the Consumer Financial Services Law Monitor. 

Aylix Jensen –Moss & Barnett

Aylix practices in the areas of compliance and litigation relating to the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), and additional federal and state laws and regulations. She provides insight and analysis regarding current legal issues on her blog, The Safe Harbor. 

Jessica Klander – Bassford Remele

Jessica defends businesses and professionals against liability and malpractice claims in the consumer law defense, professional liability, and general liability arenas. Also experienced in complex litigation, employment law, non-compete disputes, and class action lawsuits, she regularly represents clients in both state and federal courts across the United States. She defends creditors and credit professionals against federal consumer statute and liability claims, performs compliance audits and trainings, and consults with creditors and credit professionals on commonsense compliance with the FDCPA, FCRA, TCPA, TILA, and applicable state laws. As a member of the LAB, Jessica co-authored the CRC’s Amicus Brief in the Hunstein matter in 2021.

As a member of the 2023 LAB Jessica co-authored comments to the CFPB about its personal financial data rights proposal, comments to the California Department of Financial Protection and Innovation (DFPI) regarding proposed updates to its complaints and inquiries regulation, comments to the CFPB regarding its policy statement on abusive acts and practices, and comments to the New York City Department of Consumer and Worker Protection regarding its proposed update to debt collection rules. The California DFPI adopted the language suggested by Jessica and her co-author in their comment.

Issa Moe– Moss & Barnett

Issa is an attorney, focusing principally on litigation and finance matters. Issa most recently served as General Counsel and Vice President, Legal for ACA International. Issa also has experience defending clients in complex civil litigation matters in state and federal courts, including the defense of class action lawsuits. He has extensive experience defending claims under the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Telephone Consumer Protection Act (TCPA), and similar state statutes.

Joann Needleman – Clark Hill

Joann leads the firm’s financial services regulatory and compliance practice and advises banks, financial institutions, and financial services entities on regulatory compliance matters. She prepares and represents these same financial institutions during state and federal supervisory examinations and regulatory investigations before agencies such as the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and the Office of the Comptroller of Currency (OCC) as well as state financial services regulators and attorneys general. A former member of the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board, Joann provides her clients with useful strategies and common-sense solutions in order to prepare for areas of regulatory scrutiny. Joann is the host of the podcast “Credit Ecosystem to Go: Curbside Thought Leadership for Financial Services.” Listen to recent episodes here.

As a member of the 2022 LAB, Joann co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules, the California Department of Financial Protection and Innovation  (DFPI) regarding its proposed consumer complaint and inquiry regulations, and the DFPI’s proposed data retention regulations. In 2023, The California DFPI adopted several of the comments suggested by Joanna and her co-authors in their comment. As part of the 2023 LAB, Joann co-authored a comment to the CFPB about its personal financial data rights proposal, and comments to the CFPB regarding its proposed “shame list.“

Justin Penn – Hinshaw & Culbertson

Justin defends the interests of companies and individuals in the financial services industry in jurisdictions across the country. Justin is the co-chair of the firm’s Consumer Financial Services Practice Group. His extensive experience includes handling state and federal consumer statute litigation, including claims involving the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act (FACTA), False Claims Act (FCA), Telephone Consumer Protection Act (TCPA); and the Truth in Lending Act (TILA). He also advises corporations and professionals in professional liability and employment-related litigation. As part of the 2023 LAB, Justin co-authored comments to the CFPB regarding its policy statement on abusive acts and practices.

John Rossman – Rossman Attorney Group, PLLC

In his national practice dedicated to the financial services industry, John has shaped the law in numerous landmark cases that preserved and expanded the rights of financial services companies, including national banks, automobile lenders, fintech companies, collection agencies, debt buyers, mortgage lenders, creditors, and fellow lawyers. He advises and counsels financial services industry clients on regulatory compliance, defends them in claims and litigation, and advises them on best practices to prevent legal action. John also helps creditors navigate the Bankruptcy Code and courts and represents them to secure payments and collateral, make determinations for future services, and minimize preference liability. As a member of the 2022 LAB, John co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules, and comments to the Federal Trade Commission regarding its proposed rule to crack down on commercial surveillance. As a member of the 2023 LAB, John co-authored a comment to the New York Department of Financial Services regarding its proposed updates to its debt collection regulations and comments to the CFPB regarding its proposed “shame list.“.

David Schultz – Hinshaw and Culbertson

David defends Fortune 500 companies, debt buyers, debt collection agencies, lawyers, lending institutions, and others in consumer litigation, and counsels organizations throughout the consumer financial services industry on risk management. He has been lead counsel in more than 250 class-action lawsuits involving claims brought under various state and federal consumer laws, including the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Telephone Consumer Protection Act (TCPA), the Illinois Biometric Information Privacy Act (BIPA), and the Chicago Residential Landlord and Tenant Ordinance (CRLTO).  He also represents individuals and businesses in dozens of regulatory matters, including before the CFPB, FTC, Illinois Department of Financial and Professional Regulation (IDFPR), Illinois Attorney General, as well as other state and city regulators and Attorneys General.

Jim Schultz –  Sessions, Israel & Shartle

Jim’s primary role is to co-manage the firm’s consumer defense practice group, defending creditors, debt buyers and debt collectors in cases brought under various federal and state consumer protection laws, such as the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act. As part of the firm’s national reach, Jim is admitted to state and federal courts across the country, working to create consistent and uniform application of the ever-evolving consumer protection statutes so that his clients know the rules. Jim also works with these clients to stay current on regulatory and litigation trends to stay on the leading edge of compliance. As a member of the 2022 LAB, Jim co-authored comments to the New York Department of Financial Services regarding proposed amendments to its debt collection rules; when the New York City Department of Consumer and Worker Protection released its 2023  proposed update to debt collection rules, Jim co-authored the 2023 comments.

Bryan C. Shartle –  Sessions, Israel & Shartle

Bryan is one of the two managing partners of Sessions, Israel, & Shartle and assists in the management of the firm’s 10 offices. He specializes in representing collection agencies, debt buyers, student loan servicers, banks, credit issuers, financial institutions, and telemarketers. He assists clients with compliance, regulatory, bankruptcy, and licensing issues, has represented clients in CFPB readiness assessments and enforcement actions, and is familiar with many of the employment issues affecting the collection industry. Bryan has extensive experience in consumer litigation, including claims under the FDCPA, the TCPA, the FCRA, and the myriad of state consumer laws. He has been the lead attorney in several landmark decisions involving the collection industry and has special expertise in complex litigation and consumer class actions.

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About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

Learn more at www.crconsortium.org.