Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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It looks like everyone is shifting to FCRA lately.

The Fair Credit Reporting Act–which has been on the books for 50 years but has really created a ton of litigation over the last decade– is a tricky and comprehensive statute governing the nation’s critical credit reporting apparatus. The statute contains a private right of action for both individual and class actions and, like the TCPA, permits the recovery of enhanced damages in the event of a willful violation of FCRA’s rules.

And there is one little trick to FCRA litigation that makes it even worse than the TCPA– Plaintiffs can recover attorneys fees if they succeed in the litigation. That means a Defendant must deploy a different litigation strategy in approaching individual FCRA litigation–although class litigation in this space somewhat mirrors the TCPA when it comes to standing/damages/ascertainability arguments.

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You’ve heard Morgan & Morgan’s Head of Consumer Protection Tav Gomez talk about his firm’s shift to FRCA lately and, of course, Squire Patton Boggs’ team of financial services and privacy litigators have the FCRA market well covered, with years of experience litigating these cases and helping folks comply with the tricky enactment.

And with the fate of the TCPA in some jeopardy—although it looks like it just received a stay of execution due to a COVID19 related delay— we’re noticing a predictable shift by a number of other firms trying to dive into this area for the first time (we’ve seen that before). But we’re also seeing a shift from notorious TCPA repeat-players as well.

For example, J.E. Shelton—a well-known repeat-player in the TCPA space—is jumping into the FCRA game with both feet.

Just yesterday Shelton filed a putative FCRA class action against Comcast Cable. (The complaint is here: Shelton FCRA.) Its purported crime? Pulling his credit report without a permissible purpose to do so (just one of a litany of ticky-tack requirements under the FCRA.) Interestingly Comcast apparently claims Shelton had requested credit–which would have given it a “permissible purpose” to pull his credit history–but Shelton claims he never gave such permission. (Seems like a highly-visible and individualized question of fact that should thwart certification, but we’ll have to wait and see.)

The class Shelton purports to represent is something of a hybrid TCPA/FCRA class, tying class membership to the receipt of a solicitation call and the lack of an application:

All natural persons residing in the United States, who received a telephone solicitation from Comcast, whose consumer reports displays an inquiry by Comcast and for which Comcast has no open account or record of an application for an account within the last five years.

Pretty unique stuff.

The lack of an account application implies, perhaps, the absence of a permissible purpose and seems to spell out an objective criteria by which members of the class can be identified–but think about all the tricky data analysis that will be required to locate class members. This is a goldmine for data experts.

But enough free analysis– the point for TCPAWorld to keep in mind is that litigation-savvy repeat-players are not going to rest on their laurels and wait for the TCPA to evaporate. They’re already moving into the world of credit reporting. And with the COVID19 pandemic stretching operations and forcing greater reliance-than-ever on automation, the prospect of errant credit reporting—and process-wide impermissible credit pulls—is fast becoming a critical concern for all consumer-facing businesses (and employers that rely on credit scores and background reports in their hiring process.)

If you find yourself hampered by a suit of this sort–or just want more information on FCRA requirements generally–feel free to reach out. Always happy to assist.

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Want to be the first to learn about and track trends on industry-impacting issues like this? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

CHERRY HILL, N.J. — It is MRS’s pleasure to announce that Kelly Feoli has been promoted to Senior Vice President, overseeing all third party operations. Feoli has demonstrated attention to quality, compliance, and operation detail. Her competitive drive to meet performance metrics while simultaneously providing excellent customer experience will be an asset in exceeding client goals and objectives.

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Feoli started as an agent and has continued to grow within the organization due to her ability to demonstrate professional management capabilities, build rapport with all team members, and motivate each unit to achieve and exceed third party clients’ expectations.

Chief Operating Officer, Jim Beck, said, “I am excited to see the impact that Kelly will have in this larger role with all of MRS’s third party clients. Kelly has shown an ability to drive results, increase key agent and portfolio KPIs, and develop her team. She is a large part of the company’s success and I am excited to see her in this role.”

As MRS continues to grow our client base, Feoli will be instrumental in executing our vision of growth and financial profitability. On behalf of the Senior Executive Management team, we look forward to the impact Feoli will have on the entire organization and our clients in this new expanded role.

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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Yesterday, the Consumer Financial Protection Bureau (CFPB) released a policy statement outlining its supervisory and enforcement practices regarding credit reporting during the COVID-19 crisis. In the statement, the CFPB both encourages credit reporting agencies and furnishers to continue credit reporting while also providing some leeway in the Fair Credit Reporting Act’s timeline for companies who themselves are experiencing hardships—such as layoffs—due to the disaster.

According to the statement:

The continued operation of the consumer reporting system will play a critical role in the functioning of the consumer financial services market, promoting fair and efficient access to credit and benefiting consumers and creditors alike. 

For this reason, the CFPB urges furnishers to continue credit reporting during this time. The CFPB also urgers furnishers to work with consumers to be flexible and provide relief where appropriate and where required by the CARES Act. The CFPB makes a point, however, to point out that the CARES Act puts certain responsibilities on furnishers. Specifically, furnishers are required “to report as current certain credit obligations for which furnishers make payment accommodations to consumers affected by COVID 19.”

The CFPB continues:

The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflects the payment relief measures they are employing.    

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In the same vein as helping consumers who are suffering hardships due to COVID-19, the CFPB recognizes that data furnishers might be similarly suffering due to a reduction in staff. Because of this, the CFPB will ease its enforcement of meeting the FCRA’s strict dispute investigation timelines on a case-by-case basis. The CFPB “does not intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnished making good faith efforts to investigate disputes as quickly as possible.” (Emphasis added.)

Finally, the CFPB reminds companies that there are statutory and regulatory provisions “that eliminate the obligation to investigate disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant.”

Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

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The U.S. Court of Appeals for the Fifth Circuit recently affirmed entry of summary judgment against a consumer debtor who claimed that a collection letter’s language, implying that interest or other charges (which the debt collector did not collect on debts referred to it by the creditor and were not referenced in the subject credit agreement) could accrue in the event of a default, violated the federal Fair Debt Collection Practices Act (FDCPA).

In so ruling, the Fifth Circuit concluded that the subject language merely communicated that the balance “may” increase “in the event” such charges were accruing was not false, misleading or deceptive in violation of the FDCPA, 15 U.S.C. 1692, et seq., and did not disagree with the trial court’s ruling that the collection letter accurately conveyed that the creditor could elect to charge interest on the defaulted loan under Texas law. 

A copy of the opinion in Salinas v. R.A. Rogers, Inc. is available at:  Link to Opinion.

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A consumer obtained a loan from a credit union (“creditor”) for personal, family or household use.  The debtor eventually defaulted, and a debt collection agency mailed a collection letter to the debtor listing $4,629.96 as the “Principal Balance” and “Total Amount Due” on the account, and “Interest” and “Fee[s]” as $0.

 The collection letter included a statement that “[i]n the event there is interest or other charges accruing on your account, the amount due may be greater than the amount shown above after the date of this notice.”

The debtor characterized the statement as an improper attempt to induce payment because the debt collector was not permitted to collect interest or other charges on debts owed to the creditor and the loan agreement “does not allow” for interest or other charges to be added.  

On this basis, the debtor filed a putative class action complaint in federal court alleging that the collection letter’s language was false, deceptive and misleading in violation of section 1692e of the FDCPA, and seeking certification of a class of “[a]ll consumers within the State of Texas that have received collection letters from [debt collector] concerning debts from [creditor] within one year prior to filing of this complaint which falsely represent to the consumer that interest or other charges may accrue.”

The parties did not dispute that (i) the debt collector did not collect interest or charges on debts referred to it for collection from the creditor; and, (ii) the subject credit agreement was silent as to whether interest or other charges could accrue in the event of a default. 

The debt collector moved for summary judgment on the basis that the collection letter “clearly and unambiguously state[d] the amount of the debt” in compliance with the FDCPA and that the “plain statement” that the total amount due is $4,629.96 and interest and fees are $0 “is not undercut by the contingent (but obviously inapplicable rather than ‘applicable’) language of the [challenged] sentence.”

The trial court granted summary judgment in the debt collector’s favor on different grounds, reasoning that the letter was not false, misleading, or deceptive because the creditor could have elected to charge interest on the defaulted loan under the Texas Finance Code section 302.002, and the letter was “not confusing on its face.”  Salinas v. R.A. Rogers, Inc., No. SA-18-CV-733-XR, 2019 WL 2465325, at *5 (W.D. Tex. June 13, 2019) citing TEX. FIN. CODE ANN. § 302.002 (“Texas law stipulates that a six percent interest rate may be applied to the principal balance of the loan starting thirty days after payment is due when the obligor has not agreed on an interest rate.”).  The debtor appealed.

On appeal, the debtor argued that reversal was warranted because (i) the collection letter’s “utterly false” conditional statement violated the FDCPA, and (ii) the trial court improperly drew one or more inferences in the debt collector’s favor by inferring that the debt collector would collect interest based on the fact that it could under Texas law, and improperly required evidence of “subjective confusion” on the part of the debtor.

Addressing these arguments in order, the Fifth Circuit first turned to the plain language of section 1692e of the FDCPA, which prohibits (i) “[t]he false representation of (A) the character, amount, or legal status of any debt; or (B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt” § 1692e(2), and; (ii) “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” § 1692(e)(10).

The debtor argued on appeal that the collection letter implied a false proposition that interest or other charges could accrue on the account in the absence of payment despite the fact that no circumstances would allow his debt to increase due to interest or other charges while being collected upon by the debt collector.

To the extent the debtor claimed that the collection letter’s language was “false,” the Fifth Circuit rejected this argument as “downright frivolous,” (see Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 575 (7th Cir. 2004)), reasoning that the use of the term “in the event” merely expressed a truism the equivalent of “if,” and does not state that the lender or debt collector would or could collect interest.

Turning to whether the collection letter was “deceptive” or “misleading,” the Fifth Circuit concluded that reading the letter as a whole, even the ‘unsophisticated’ or ‘least sophisticated’ consumer (see Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016)) would not conclude that interest or other charges would accrue absent prompt payment, and instead merely warned of a possible outcome — an increase in the amount due — “in the event” interest or other charges are accruing.  

Moreover, the Fifth Circuit held, adopting the debtor’s argument “would lead to absurd results,” as even the mere mention of “interest” and “fees,” even if listed at $0 could suggest that these amounts may be accrued in the future and “force collection agencies to sift through applicable statutes and loan contracts to determine with absolute certainty, for each and every account, whether interest or other charges might possibly accrue, insofar as some debt collectors have been exposed to FDCPA liability for omitting statements similar to the one at issue here.” 

Thus, the Court concluded that because the collection letter’s language at issue “expresse[d] a common-sense truism” about borrowing and lending, it was not false, misleading or deceptive under the FDCPA.

Lastly, the Fifth Circuit declined to address the debtor’s argument that the trial court applied the wrong summary judgment standard by drawing inferences in the debt collector’s favor because its holding did not depend on either point raised by the debtor. 

Accordingly, the judgment of the trial court in favor of the debt collector and lender was affirmed.

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Want to be the first to learn about and track trends on industry-impacting claims like this? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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The Federal Communications Commission (FCC) unanimously approved a STIR/SHAKEN call authentication mandate that TCPAWorld previously reported was circulated by Chairman Pai.

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The Order adopted by the agency “requires all originating and terminating voice service providers to implement STIR/SHAKEN in the Internet Protocol (IP) portions of their networks by June 30, 2021, a deadline that is consistent with Congress’s direction in the recently-enacted TRACED Act.  The FCC laid the groundwork for these new rules when it formally proposed and sought public comment on mandating STIR/SHAKEN implementation in June 2019.”

In addition, the FCC adopted a Further Notice of Proposed Rulemaking (FNPRM). The FNPRM  seeks  “comment on expanding the STIR/SHAKEN implementation mandate to cover intermediate voice service providers; extending the implementation deadline by one year for small voice service providers pursuant to the TRACED Act; adopting requirements to promote caller ID authentication on voice networks that do not rely on IP technology; and implementing other aspects of the TRACED Act.” 

The FCC estimates that the “benefits of eliminating the wasted time and nuisance caused by illegal scam robocalls will exceed $3 billion annually, and STIR/SHAKEN is an important part of realizing those cost savings.  Additionally, when paired with call analytics, STIR/SHAKEN will help protect American consumers from fraudulent robocall schemes that cost Americans approximately $10 billion annually.  Improved caller ID authentication will also benefit public safety by reducing spoofed robocalls that disrupt healthcare and emergency communications systems.  Further, implementation of STIR/SHAKEN will restore consumer trust in caller ID information and encourage consumers to answer the phone, to the benefit of consumers, businesses, healthcare providers, and non-profit organizations.” 

The text of Report and Order and Further Notice of Proposed Rulemaking can be found here.

This article is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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The last two weeks. Just. Wow.

If ever there was a time that defined the meaning of “Thinking Differently” this is it. My team came into the year full of excitement and optimism to see the results of so much groundwork laid in 2019, only to see the promise evaporate in a matter of days as events unfolded. We were suddenly thrust into a mode of pivoting and pivoting again and pivoting yet again in order to support each other, our members, the industry, and our business.

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Like me, I am sure all of you have experienced a whiplash of emotions, including fear, depression, anger, determination, optimism, gratitude, and a sudden appreciation for really small wins.

We are in a period of constant ambiguity, and this requires a special kind of fortitude.

These are the moments when true team trust pays off. You know how everyone rolls their eyes at the strategic planning offsite when the facilitator wants you to share something personal… or do the dreaded trust fall? This is why those exercises were so important. Without trust you have disfunction, and disfunction will destroy a company in a time of crisis. 

I am grateful to the iA team for the way they’ve all risen to the occasion. I also want to express my gratitude to the members of our Consumer Relations Consortium (CRC) and Innovation Council. Remember all those ice-breaker activities we’ve done at our meetings over the years? Here’s the payoff.  One of our core beliefs is that communities can solve problems together. We have been privileged to provide a forum for true candor and collaboration, especially during this time of crisis.

Here are some of the pivots we’ve made in the last two weeks:

• Katie Neill, our General Counsel and Editor, has been covering the daily Covid-19 developments in our news, including our signature iA Perspective. 
• Mike Bevel, our Director of Education, has been responding daily to Research Assistant member questions and hosting working groups to support members in sharing resources and advice as they try to keep up with the moving train of information. 
• Our team has published a Covid-19 Resources page where you can find all of our related news, as well as state and federal notices, resources for small business, technology solutions specific to the crisis (like solutions that support work-from-home), and more.
• We have hosted twice-weekly Zoom conferences for CRC and Innovation Council members to collaborate and share facts, interpretations, and policies.
• We are modifying our content to support what’s urgent today, but also what you will need tomorrow to support the recovery that will follow this crisis.
• Amy Perkins, our President (and a former head of collections strategy for a major bank), has re-envisioned our June Strategy & Tech conference as a virtual event.
• We were one of the first organizations to cancel our upcoming live conferences and reconstitute them as virtual events, putting health and safety first. We recognize that this changes the calculus for many of you. It does for us too. What we also think is that a virtual platform provides many who would never have the budget or time to travel to a live conference with the chance to benefit from the incredibly substantive content that is the iA hallmark. We hope you’ll support this carefully planned experiment.  

I know how many of you feel. iA is a small business.

We too have seen our anticipated revenue for 2020 take a nose-dive. It’s scary. But we are going to keep our heads up, stay nimble, continue doing what we can each day, make contingency plans where possible, and focus on the future by pushing ourselves to keep thinking differently.

Please don’t hesitate to reach out to anyone on our team if there is any way we can support you.

Stephanie Eidelman
CEO, insideARM and The iA Institute 

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About the iA Innovation Council

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2020 members include:

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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If regulators and other government officials were wondering what the consequence of a blanket ban debt collection looks like, this is the canary in the coalmine. On March 20, the Department of Education (ED), following President Trump’s directive, announced it will grant a  60 forbearance to anyone who requests one and will waive interest. Now, the Star Tribune reports that a collection agency that collected these types of student loans filed notice with the state that it laid off 248 employees on March 22, just two days after the ED directive.

insideARM Perspective

insideARM learned that ED instructed its debt collection agencies to stop making outbound calls on its accounts. For many agencies, a large portion of the staff make outbound calls. These calls function as more than just an attempt to collect a debt—they allow collectors to proactively provide information to consumers about their accounts. If needed, the collector can set the consumer up with many hardship options, including but not limited to amending payment schedules, informing the creditor of the consumer’s inability to pay due to unemployment or a medical issue, and file disputes. Without outbound calls, consumers have to proactively seek this information (rather than it coming to them). 

While we can all agree that relief should be extended to those who have suffered loss of employment or some other financial hardship from this crisis, there are many other consumers whose roles and companies have successfully transitioned to a work-from-home model and can continue on with their obligations. This latter population is being unfairly advantaged by blanket collection bans.

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And, as stated above, without outbound calls, collection agencies and firms simply do not have the means to keep call representatives on the payroll, which leads to layoffs as seen here. 

Putting two-and-two together: Blanket collection bans lead to people losing their jobs on the backs of others who are unfairly advantaged. 

Regulators who issue blanket bans on collection efforts or outbound calls should pay attention—you are adding to the unemployed ranks. There are better ways to handle the situation. By allowing collectors to continue their operations and make outbound calls, collectors can provide relief assistance to those who need it and regulators can help keep thousands of Americans employed.

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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As TCPAWorld.com readers are now well aware, the clear majority of courts favor a narrow statutory reading of ATDS in assessing TCPA claims. To prove a valid claim a Plaintiff must demonstrate that the equipment used to make the call had the present capacity to dial randomly or sequentially—that’s a pretty high standard.

But the positive evolution in the law has not been all it’s cracked up to be for many Defendants that still find themselves stuck in lawsuits past the pleadings stage. Many courts have continued to apply pre-shift (i.e. pre-Gadelhak and Glasser) standards to assessing the pleadings. That means a Plaintiff can generally get past a motion to dismiss by alleging they heard a click and experienced a pause at the inception of the call.

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Obviously in a world where only random calls trigger statutory treatment encountering a pause at the outset of the call says little—if anything—about the viability of a claim. And that is exactly what one court just recognized in granting a Defendant’s motion to dismiss—perhaps setting a new TCPAWorld standard in so doing.

In Perez v. Quicken Loans, Inc., Case No. 19-cv-2072, 2020 U.S. Dist. LEXIS 53476 (N.D. Ill.  March 27, 2020) the Court granted the Defendant’s motion to dismiss the ATDS allegations in a TCPA case at the pleading stage. Plaintiff had alleged “click and pause” allegations—commonly sufficient at the pleadings stage to state a claim— but the Court found the Plaintiff must do more following Gadelhak.

Given that the law of the circuit “changed” since the filing of the FAC, however, the Court granted Plaintiff leave to file an SAC admonishing: “While it is true, as many courts have observed, that a plaintiff should not be required to plead specific facts as to the technical specifications of the type of call system employed by the defendant, it also cannot be the case that every barebones TCPA claim can survive a motion to dismiss by alleging unwanted calls and a short period of dead air when the call is answered. And it is not too much to ask that a plaintiff who was so frustrated over persistent calls from the same number to have contacted a lawyer actually recall and set down in a pleading the details of the interactions that led her to bring a federal case.”

Wow. This is exactly what the defense bar needed—a way to cut off TCPA claims at the pleadings stage. There are a large number of zombie TCPA claims out there—cases that have been killed by recent appellate court decisions but still live on because they have not yet been challenged at the summary judgment stage. If a claim can be cut down at the pleadings stage, however, great expense can be saved by a Defendant—especially in a class action where a court is not asked to, or does not, bifurcate discovery.  Perez could be a real “take the power back” moment for the Defense bar.

Keep Perez in mind Defense lawyers, and we’ll see if we can shift the pleadings requirements over time.

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Want to keep up with other pivotal TCPA court decisions? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

Here’s some positive news amid what has been undoubtedly a long and difficult couple of weeks for everyone. Laying to bed a long headache to debt collectors and their legal counsel, the Third Circuit issued an en banc decision in Riccio v. Sentry Credit that overturns Graziano and finds that there is no written dispute requirement in section 1692g(a)(3) of the Fair Debt Collection Practices Act (FDCPA). Over the past two or so years, plaintiffs and their counsel within the Third Circuit’s jurisdiction brought high volumes of litigation arguing that a validation notice that tracks the statutory language of 1692g violates the FDCPA. The era of the written dispute requirement claim is now over—the decision also applies the ruling retroactively to any claim still open on the issue.

In its decision, the court observes that the current environment supports overturning Graziano. United States Supreme Court precedent since the Graziano decision —decided in 1991—has consistently taken a strict “plain meaning” statutory interpretation method, including with FDCPA cases. The plain language of the FDCPA clearly foregoes the term “written” in section 1692g(a)(3), but contains the term in other sections. Accordingly, the court concludes that Congress meant what it said.

The court also notes the circuit split, stating that it is the “legal last-man-standing” as the other Circuit Courts of Appeal have all ruled that a written dispute is not required under section 1692g(a)(3). 

The most poignant reasoning cited by the court, however, is that the consumer’s—and thus, her counsel’s—request to continue following Graziano would actually limit a consumer’s choice and ability to dispute a debt, and thus hold her back from many protections, which is contrary to the policy of the FDCPA. The court states in a footnote:

[I]t bears noting that purposively reading the FDCPA underscores our textual conclusion. At bottom, expanding the ways a debtor can dispute a debt’s validity makes it easier for debtors to invoke its protections. So demanding written disputes not only flouts the FDCPA’s text—it also hoodwinks the Act’s purpose.

The court states:

By expressing our view today, we put an end to a circuit split and restore national uniformity to the meaning of § 1692g.

And, in order to put an end to this saga, the court provides protection to any debt collectors who included a written dispute requirement into their validation notice in reliance upon Graziano: 

We do not suggest that debt collectors who sent Graziano-compliant letters before today will be on the hook for failing to foresee our change in the law. Just as collectors who act “in good faith in conformity with any [agency] advisory opinion” cannot be liable if that “opinion is amended, rescinded, or” judicially invalidated, § 1692k(e), collectors should not be penalized for goodfaith compliance with then-governing caselaw. To that end, we note district courts can withhold damages for unintentional errors, § 1692k(b), award no damages for trivial violations, § 1692k(a)(1), and even award attorney’s fees to the collector if the debtor’s suit “was brought in bad faith and for the purpose of harassment,” § 1692k(a)(3). We have confidence in district courts to exercise that discretion appropriately.

(Internal citation omitted.)

The court ends with a bang, and what industry has argued all along with these claims:

A collection notice can never mislead the least sophisticated debtor by relying on the language Congress chose. And since that’s all this notice did, Sentry Credit did not violate § 1692g. 

insideARM Perspective

At long last, the circuit split is over. Motions to dismiss should be filed on any outstanding claims related to this issue, and—if we could be so bold as to suggest—motions for sanctions should be filed against plaintiffs’ counsel who bring or continue to prosecute any such claims, as the Third Circuit very clearly and conclusively shut the door on this issue.

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The real shame here is the tremendous amount of money that debt collectors had to spend on these claims, despite ultimately succeeding on the merits. Since the FDCPA contains a one-sided attorney fee provision, debt collectors cannot recover their fees even if they succeed on the merits. There are distinct members of the plaintiff’s bar who take advantage of this, and flood debt collectors with hundreds, if not thousands, of nearly identical lawsuits with the hope that the collectors will settle since they cannot afford to defend each and every claim. I’ll bet legal counsel within the industry could list them by name, due to the prevalence of this practice. This means that not only are collectors liable for their own defense fees even if they succeed on the merits, they also spent obscene amounts on legal settlements. For every case that a debt collector chooses to defend, there are likely tens—if not hundreds—that are resolved via settlement. insideARM previously wrote about this litigation dilemma. 

The kicker is that most of these high-volume, nearly-identical lawsuits are filed as purported class actions—but each purported class representative falls within the class definition of all of the other class actions. It’d be one thing if these lawsuits were brought against activities that cause actual harm to consumers, but instead, they are hyper-technical “lawyer’s cases,” as the Eastern District of New York previously noted.

Take, for example, the written dispute requirement line of cases. What happened here? A consumer—likely driven by her counsel—was trying to limit consumer protections under the FDCPA by limiting how consumers can dispute their debts. This was despite the fact that disputes of any form, including oral, can trigger many protections for consumers outside of just validation of debts, e.g. the requirement to note the dispute when credit reporting. Is the consumer’s—and her counsel’s—position really helping consumers? Whose side are these folks on, anyways? I’ll leave that as a rhetorical question, but we all know the answer.

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Want to be the first to learn about and track trends on industry-impacting claims like this? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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Update Added 3/30/2020 at 3:48PM Eastern: John Bedard of Bedard Law Group—and member of the Consumer Relations Consortiums’ Legal Advisory Board—reached out directly to the Department of Insurance to clarify the application of this bulletin. According to Angela Hatchell, Deputy Commissioner, Agent Services Division:

The statute specifically includes collection agencies as subject to provision 2. Should the consumer request a collection agency should defer ANY collection activity.

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North Carolina’s Department of Insurance issued a bulletin on Friday, March 27, that pertains to specific types of entities, including collection agencies, governed by Chapter 58 of North Carolina General Statutes (NCGS). The Insurance Commissioner enacted the emergency provisions of NCGS 58-2-46, which requires entities covered by this particular statute to give consumers the option to defer payments that are due during the disaster proclamation for 30 days. 

NCGS 58-2-46 states:

[Entites] subject to this Chapter shall give their customers who reside within the geographic area designated in the proclamation or declaration the option of deferring premium or debt payments that are due during the earlier of (i) [the time period covered by the proclamation or declaration or (ii)] the time period prior to the expiration of the Commissioner’s order declaring subdivisions (1) through (4) of this section effective for the specific disaster, as determined by the Commissioner. This deferral period shall be 30 days from the last day the premium or debt payment may be made under the terms of the policy or contract. 

The bulletin states that all entities subject to NCGS 58-50 Part 4—which refers to health benefit plan external review—”shall allow consumers, whose request may have been impacted by the disaster, additional time for their requests to be received and reviewed.”

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insideARM Perspective

One thing to note here is that the emergency statute requires collectors and other covered entities to give consumers the option to defer, but it does not mean that collection efforts must stop or that there is a blanket deferral on all payments due. However, agencies and firms should adjust their collection communications to offer this option in order to be in compliance.