Daily Digest - February 28, 2025

🎂🎉 Happy Birthday to: Lisa Kirk of Professional Credit. 🥳🎁

EDITOR’S NOTE: I did something different today. Rather than just give you the first part of an article and then link to the rest back on AccountsRecovery, you are getting the full text in today’s Daily Digest. The site is suffering from some technical issues that I am working through, but until they are fixed, the site is frequently crashing. So, to make sure you get the chance to read everything, it’s all here in the email. I know that makes the email really long, but it was the only way to make sure you got to see everything that is going on in the industry.

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Suit Accuses Collector of Communication with Plaintiff After Notice of Representation

• Right from the jump, there is a lot to unpack in this complaint, but I think it includes a lot of the potential concerns that companies have with respect to multi-channel communications and highlights what complaints may start to look more like as the industry engages more via email, text, and chat with consumers. It also highlights how attempts to collect with empathy can be used against companies in the credit and collection industry. 

  DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.

• The background: Back in December, the plaintiff received a letter from the defendant. The letter said, in part, that the defendant wanted “to help” the plaintiff out and that the defendant was “here to help.” The letter also informed the plaintiff that she had been approved for an interest free payment plan and that she would not be charged late fees or other fees as part of any repayment plan. 

  • Ten days later, an attorney representing the plaintiff send an email to four senior executives at the defendant informing them that the plaintiff was represented by counsel. The same notification was sent via mail to the address listed with the North Carolina Secretary of State for the defendant. 

  • Five days after that, the plaintiff informed the defendant via web chat that she was represented by counsel. 

  • The plaintiff’s counsel sent two more emails to the senior executives following up on his email informing them that the plaintiff was represented by counsel. 

  • The defendant allegedly sent the plaintiff a communication during this time attempting to collect on the debt. 

  • The plaintiff also started another web chat session with the defendant in which she allegedly told the representative that she was worried about the debt and it was causing her to lose sleep because she did not fully understand who the defendant was and the nature of the debt. 

  • The representative on the other end of the chat attempted to answer the plaintiff’s questions but also attempted to collect on the debt, according to the complaint, by offering to set up a payment arrangement. The plaintiff said that she was represented by counsel and the representative allegedly said she could set up a payment arrangement and asked the plaintiff how much she could afford. 

• The claims: The complaint accuses the defendant of violating Sections 1692e of the FDCPA by claiming it wanted to help the plaintiff out when its “financial interests are in direct conflict” the the plaintiff’s and because the defendant “merely wants to coerce” the plaintiff into paying the debt, making the statement misleading and deceptive, according to the complaint. The defendant further allegedly violated Section 1692e by indicating the plaintiff had been approved for an interest free payment plan when it waived interest as a policy, according to the complaint. 

  • The complaint also accuses the defendant of violating Sections 1692b(6) and 1692c(a)(2) by attempting to collect on the debt after being notified that the plaintiff was being represented by an attorney. 

  • The complaint also accuses the defendant of violating provisions of the North Carolina Collection Agency Act for largely the same reasons, although it tosses in a claim because the defendant’s website included information about its Google rating, but did not provide the reviews showing how that rating was attained, as well as claims made by the defendant on its website. 

• Learn more: 25-cv-00119, District Court for the Western District of North Carolina

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Breaking Down McKernan’s Confirmation Hearing

• I came to the realization about midway through yesterday’s Senate Banking Committee hearing vetting four nominees for posts in the federal government, including Jonathan McKernan to be the next director of the Consumer Financial Protection Bureau that the best use of the hearing was not to hear the viewpoints and objectives of the nominees — because they largely refused to say anything — but to serve as a drinking game. Next time you’re watching one of these hearings, take a shot every time someone says that he or she is going to “follow the statute” or any time that a pre-hearing meeting was referenced — that is probably the only way you’re going to enjoy what you’re watching. 

• The big picture: McKernan was one of four nominees before the committee yesterday and the real objective wasn’t necessarily to gain insights from any of them about how they would do their jobs if confirmed. The real objective is the soundbite or video clip of the committee members asking what they deem to be simple yes or no questions and getting non-answers from the nominees so that the committee members can show how they are doing their part to protect their constituents. It’s nothing more than political theater. 

• Democrats on the committee used their five minutes to grill McKernan — he was the overwhelming recipient of most of the committee’s attention during the two-hour hearing — as they sought to use the developments of the past month as fodder for what the CFPB will look like under McKernan’s leadership, especially the efforts to weaken or dismantle the agency under President Trump and his advisor Elon Musk. McKernan, a former FDIC board member, assured lawmakers that he would uphold the law (“follow the statute”) and execute the CFPB's statutory functions faithfully. He stressed his commitment to addressing what he called the agency's "crisis of legitimacy," particularly its past overreach and the need to refocus its efforts on consumer protection while streamlining operations.

• Why it matters: However, Democrats, led by Sen. Elizabeth Warren [D-Mass.], expressed concerns that McKernan would not be fully in control of the agency. This suspicion was fueled by the CFPB's recent actions, including the dismissal of several high-profile lawsuits against major financial institutions, such as Capital One, during yesterday’s hearing. Warren and other committee members, including Sen. Mark Warner, questioned McKernan's ability to lead the agency given the Trump administration's interference. McKernan defended his position, reiterating that he would "right-size" the Bureau and ensure that it operates within its legal framework. Still, Sen. Jack Reed, [D-R.I.], remarked, “I have the sinking feeling you’re departing Liverpool on the Titanic, so good luck,” signaling his belief that McKernan’s leadership would face overwhelming challenges given the current political climate surrounding the CFPB.

• To his credit, McKernan never wavered from his talking points and claimed to not be aware of what has happened at the CFPB this month. He did drop one little nugget when he agreed that the CFPB is not a “prudential regulator” like the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, and he did also offer a compliment to former Director Rohit Chopra. 

• What he said: “I do commend Director Chopra on his work to increase our attention on some of the very significant policy issues posed by data collection,” McKernan said. “Whether it's data aggregators, data brokers. There's privacy issues here. There's potentially national security issues here. And I think it's important that we both in the regulated space, and the rest of our elected officials continue to focus on this. As these entities are collecting more and more data and the analytics get more and more powerful, there's some real policy issues here. I think Director Chopra was on to something.”

As Expected, CFPB Reverses Course, Drops Five Lawsuits

• Was it a coincidence that the Consumer Financial Protection Bureau chose to dismiss five lawsuits it had filed against companies under the previous administration at the same time that its nominee to be the next director was having his confirmation hearing? The world may never know. Regardless, the Bureau did drop five enforcement actions it had launched, one of them going back as far as 2023. After dropping one other lawsuit last week, this is yet another indicator of the type of CFPB that you can expect to see under President Trump. The dismissed cases included high-profile actions against financial institutions and service providers, such as Capital One, Rocket Homes, Vanderbilt Mortgage & Finance, and others.

  • Capital One: The CFPB had accused Capital One of cheating customers out of more than $2 billion in interest payments on high-yield savings accounts. The agency claimed that the bank failed to disclose the true interest rates, depriving customers of expected returns. The case was dismissed with prejudice, meaning it cannot be refiled.

  • Rocket Homes: The CFPB had sued Rocket Homes, part of Rocket Companies, accusing the real estate referral service of providing kickbacks to real estate agents to steer clients toward its affiliated lender, Rocket Mortgage. This case was also dismissed with prejudice.

  • Vanderbilt Mortgage & Finance: A lawsuit filed against Vanderbilt Mortgage, owned by Warren Buffett’s Berkshire Hathaway, alleged that the company had trapped customers in unaffordable loans, leading many families into financial distress. The CFPB voluntarily dismissed the case without further action.

  • Pennsylvania Higher Education Assistance Agency (PHEAA): The CFPB filed a case against PHEAA, a student loan servicer, accusing the company of improperly collecting on loans that had been discharged in bankruptcy. This case was also dropped without further legal action.

  • Heights Finance: The CFPB had accused Heights Finance of “loan churning,” where borrowers were repeatedly refinanced into new loans, generating excessive fees and charges. This case was also dismissed.

• Why it matters: The move to drop these lawsuits comes amid a broader campaign by the Trump administration to drastically downsize and restructure the CFPB. Acting Director Russell Vought has implemented a stop-work order that has shuttered the bureau's offices and led to significant staff layoffs. This is the latest in a series of actions that have raised concerns about the future of consumer protection under the CFPB, especially as President Trump and his allies, including Elon Musk, have signaled their desire to dismantle the agency.

Judge Grants MTD in FDCPA Case Thanks to SOL

• A District Court judge in Washington has granted a defendant's motion to dismiss and denied a plaintiff's motion for sanctions in a Fair Debt Collection Practices Act case over a second collection letter and dispute passing each other from one party to the other.

• The background: This case stems from a dispute between a consumer and a debt collector. The plaintiff received two letters regarding a $1919.22 debt. The first, sent on July 13, 2023, outlined how to dispute the debt, with a deadline of September 27, 2023, to notify the collector. On August 16, 2023, the plaintiff filed a dispute electronically. However, two days before the dispute was filed, the plaintiff received a second letter, dated August 14, 2023, requesting payment and claiming a failure to secure a payment arrangement.

  • The plaintiff filed a lawsuit on August 19, 2024, claiming violations of the FDCPA, Washington Consumer Protection Act (WCPA), and the Washington Collection Agency Act (WCAA), arguing that the second letter violated FDCPA provisions concerning disputed debts. The plaintiff also sought sanctions for alleged misconduct. 

• The ruling: Judge David G. Estudillo of the District Court for the Western District of Washington ruled that the case was time-barred under the FDCPA's one-year statute of limitations. The court concluded that the plaintiff had filed the case more than a year after the second letter was allegedly mailed, which was critical in determining the timeliness of the claim. Despite the plaintiff's attempts to argue that the second letter may have been mailed later than its stated date, the court found that there was insufficient evidence to support this claim.

  • The judge also emphasized that even if the second letter had been mailed later, it still would not have violated FDCPA provisions, as the letter did not overshadow or contradict the consumer's right to dispute the debt, as the law allows for collection activities during the 30-day validation period.

  • Finally, the court denied the plaintiff's motion for sanctions, finding that the defendant's actions did not meet the threshold for sanctionable conduct.

  • Learn more.

WORTH NOTING: Predicting Sunday’s Oscar winners … The problems you start dealing with if you have just one night of bad sleep … Why consumers are holding an “economic blackout” today … High interest rates and high home prices are keeping a record number of potential homebuyers on the sidelines … A big tip to help you buy things cheaper on eBay … Could being a parent actually keep your brain from aging? New research says yes … Peppa Pig is getting a new sibling … The death of Gene Hackman, his wife, and a dog is getting weird. 

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Funny Friday, Part II

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