Daily Digest - March 24, 2025

Brought to you by: TCN’s C3 User Conference | By Mike Gibb

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Mike Gibb
March 24, 2025

🎂🎉 Happy Birthday to: Herb Orengo of Commercial Credit Group, Caylon Cannon of Capio (March 23), James Mastriani of Velocity Portfolio Group (March 23), Roxanne Bartley of TRAKAmerica (March 22), and Lance Wickham of BankruptcyWatch (March 22). 🥳🎁

Congratulations to Anthony Lorenzo, the new COO of BriteBand Receivables Management.

🏀 NCAA March Madness Pool 🏀

Clint, aka NightStalker777 is in first place after the first weekend of the March Madness Pool. But nine others are within three points!

PRIZES, PRIZES, PRIZES: I am excited to announce that the winner of the challenge will get a $250 gift card from Clerkie. Second prize will get a $200 gift card from Provana. And third place will win a $100 gift card from Applied Innovation. Thanks to those companies for donating prizes!

Logo Madness is Back! Today is the Last Day to Submit

AccountsRecovery is once again thrilled to be hosting it’s annual Logo Madness tournament, to identify the best logo in the credit and collection industry. This year’s competition is sponsored by Drop Cowboy.

Appeals Court Rules Plaintiff Lacked Standing in FDCPA Case over Dispute Timing

In a case that was defended by the team at Barron & Newburger, the Court of Appeals for the Seventh Circuit has reversed a lower court’s ruling in favor of a plaintiff in a Fair Debt Collection Practices Act (FDCPA) case over the timing of when the defendant notified credit reporting agencies that the debt was being disputed, ruling the plaintiff didn’t have standing to sue in the first place because she did not suffer any injury while the dispute was not being reported.

📖 The background: The lawsuit arose when the plaintiff disputed a debt of $187. The defendant received a dispute notification from the plaintiff, but did not alert the credit reporting agency until its next regular reporting cycle, which was 29 days later. Arguing this delay was a violation of the FDCPA, the plaintiff sought statutory damages, asserting the late reporting could negatively affect her credit reputation.

  • Initially, a jury awarded the plaintiff $250 in statutory damages after the district court judge agreed with the plaintiff’s assertion that failing to timely report the dispute was inherently harmful, citing defamation by implication — suggesting that someone who disputes a debt looks less irresponsible than someone who ignores it.

⚖️ The ruling: In reversing the lower court’s decision, the Appeals Court, led by Judge Frank Easterbrook, emphasized that standing to sue under the FDCPA requires proof of actual harm or injury, rather than simply pointing to the availability of statutory damages. The Court cited precedents highlighting that a plaintiff must demonstrate tangible harm — financial, reputational, or otherwise.

  • Judge Easterbrook’s decision notably underscored that “no publication means no defamation,” clarifying that without evidence that a real person viewed and understood the negative implication of the missing dispute notice, there could be no reputational damage.

  • The ruling pointed out that the plaintiff presented no evidence showing that the delay in reporting affected her credit score, insurance costs, or credit opportunities during the 29-day window.

  • The Court concluded that the plaintiff had “zero evidence of injury,” rendering her without standing.

  • Thomas v LVNV Funding, LLC, No. 24-1993 (7th Cir. 2025)

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Appeals Court Affirms Ruling Over Default Judgment

The Court of Appeals for the Eighth Circuit has upheld a ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act, deciding that a default judgment obtained in state court is “conclusive” from the perspective of establishing the facts of a case.

📓 The background: The case began when the plaintiff was sued in Minnesota state court over an unpaid debt. After the plaintiff failed to respond to the summons or participate in the court proceedings, a default judgment was entered against her. Under Minnesota law, securing a default judgment required the defendant to provide evidence proving a valid chain of assignment demonstrating that it owned the debt.

  • Rather than appealing or seeking reconsideration of the default judgment, the plaintiff initiated a new lawsuit in federal court, alleging the defendant violated the FDCPA.

  • Specifically, the plaintiff claimed the defendant attempted to collect a debt it did not own.

  • A district court judge dismissed this suit, concluding the question of debt ownership had already been settled by the default judgment in state court.

⚖️ The ruling: The Eighth Circuit Court of Appeals affirmed the dismissal, applying the legal doctrine of collateral estoppel, which prevents parties from re-litigating issues already conclusively decided in previous litigation. The Appeals Court wrote: “[T]he default judgment stands as a final determination of the facts essential to its existence,” regardless of the plaintiff’s lack of participation.

  • Addressing arguments that this application was unjust, the court noted that the plaintiff received ample warning about the consequences of not responding to the summons, including losing the opportunity to dispute the claims. The court emphasized that even pro se litigants must adhere to procedural rules and accept the consequences of failing to participate.

  • Delgado v. Midland Credit Mgmt., Inc., No. 24-1786 (8th Cir. 2025)

Bill in Senate Would Give FCC Power to Collect TCPA Fines

A bill has been introduced in the Senate that would empower the Federal Communications Commission to go after and collect on its own fines it assesses for violations of the Telephone Consumer Protection Act, instead of relying on the Department of Justice to do it.

📌 Why it matters: The FCC issues hundreds of millions in fines for illegal robocalls and other TCPA violations, but has long lacked the authority to enforce those penalties on its own. The FCC Legal Enforcement Act, reintroduced by Sen. Ben Ray Lujan [D-N.M.], seeks to close that enforcement gap and accelerate the pace at which violators are held financially accountable.

🧾 Background:

  • The TCPA, passed in 1991, restricts telemarketing calls, robocalls, and the use of autodialers and prerecorded messages.

  • The FCC can investigate and issue fines but must currently rely on the Department of Justice (DOJ) to enforce them in court.

  • DOJ backlogs often mean violators face no real consequences — sometimes for years — while fines go unpaid and scammers disappear.

  • A report back in 2019 revealed that the Justice Department had collected only $6,790 out of $200 million in fines that had been assessed.

⚖️ What the bill does:

  • If the DOJ declines to act within 120 days of the FCC referring a case, the Commission can initiate and supervise its own court proceedings to collect penalties.

  • The FCC will prioritize cases involving unpaid fines over $25 million.

  • It also clarifies the FCC’s authority to issue rules as it deems necessary “to protect subscribers from unwanted calls.”

👀 The big picture: The bill responds to growing public frustration with robocalls, which remain the top consumer complaint to the FCC. The agency has struggled to deter repeat offenders, who often change names or create new shell companies to avoid enforcement. The new legislation gives the FCC the tools to act more swiftly and decisively.

🗣️ What they’re saying: “Robocalls aren’t just a nuisance, they also scam Americans out of millions of dollars every year,” Sen. Lujan said in a statement. “This bill would empower the FCC to hold telecom companies accountable for the disruption they cause.”

📎 What’s next: The bill is co-sponsored by five Senate Democrats and has been referred to committee. It’s the latest in a series of efforts to strengthen the FCC’s ability to police robocalls and could set a precedent for broader enforcement authority over telecom practices.

Compliance Digest – March 24

WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: In light of the majority in both the House and Senate, it is no surprise that many of the CFPB’s final rules would be subject to the Congressional Review Act (CRA). For the ARM industry, the Medical Debt Credit Reporting Rule (the “Rule”) was the one we all were following closely. Given the change in the CFPB director and the “dismantling” of the CFPB, at present, it’s unlikely that this CFPB administration would even enforce this Rule. However, the CRA is important for the simple reason that should Congress approve a resolution to repeal the Rule and the President signs it, the CFPB or any other agency for that matter, are prohibited from promulgating a substantially similar rule in the future. This is an important check by Congress on administrative agencies.

There are two other CRA resolutions currently in Congress that look to repeal rules that the CFPB finalized at the end of 2024.

  • Large Market Participant Rule for Supervision of Digital Apps (Apple, Google, Venmo etc.).  A CRA joint resolution passed in the Senate with a companion provision pending in the House; and

  • Overdraft Rule. The House Financial Services Committee passed as CRA resolution. Both the House and Senate are actively pursuing resolutions in both chambers.

Unfortunately the Late Fee Rule was finalized in March 2024 and the opportunity for a CRA resolution has passed. The rule is still pending in the Texas court, but there are indications from the industry Plaintiffs (The U.S. Chamber, American Bankers Association and Consumer Bankers Association) that the CFPB is “re-evaluating the rule”. However, unlike a CRA, even if the rule and the litigation go away, a CFPB under a different administration, could pursue a similar rule.

WHAT THIS MEANS, FROM MARISSA COYLE OF FROST ECHOLS: It’s not often I want to do a Tiger Woods’ fist pump when I read a case, but this one had me considering such a move (and I loathe golf)! We’ve all seen these cases – a consumer disputes an account, the agency marks the account as disputed, and then the “consumer” (usually the consumer’s attorney) changes course and wants the dispute notation removed. That happened here. Plaintiff took issue with the fact the agency did not remove the dispute notation from her credit report. As a result, the consumer sued the agency under the FDCPA. At LVNV’s behest, the Court analyzed whether marking a debt as disputed on a credit report is done in connection with the collection of any debt. The Court found that “no”, such notation is not done in connection with the collection of any debt; therefore, the dispute notation was not a false or misleading statement made in connection with the collection of a debt. Thus, no FDCPA violation as alleged.

While it’s probably not best to ignore consumers’ requests to remove a dispute notation from the credit report, hopefully we will see this theory further develop across the country.

WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: The plaintiffs in this case got into some standard cardholder agreement language and made a case out of it. And like cases with difficult industry outcomes before this one (think of Foti and Hunstein), there is something to the findings that requires our attention. The dissent correctly identifies the “universal practice of allowing credit card companies to make changes as long as they provide card holders with notice and the opportunity to accept or reject the changes…” and takes issue with the majority’s holding that the practice is inconsistent with Maryland law. But even though the practice is widespread and accounted for in open-end credit rules in the Truth in Lending Act and Regulation Z, the Fourth Circuit’s majority decision is impactful. The case came out of a motion to compel arbitration, but the outcome calls into question the creation of the entire cardholder agreement – not just the arbitration provision – because of the rights the change-in-terms provision reserved to the creditor. The parties may decide to litigate the issue of contract formation in the courts (or the creditor might appeal), but that will take time. In the interim, banks and other creditors should review their open-end credit agreements (closed-end agreements do not include a mechanism to change terms during the life of the agreement) – especially credit card agreements – in Fourth Circuit states to see if their agreements are affected by this case.

WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: In Washington, the only certainty has been uncertainty. The Bureau is in flux at the moment, and that flux is not only affecting the Bureau’s current (and former) employees, but also industry. Enforcement isn’t the only thing that is unpredictable right now, as several rulemakings have either had compliance dates or comment periods extended in response to the ongoing changes. The hope for all involved is that, if Jonathan McKernan is in fact confirmed as the next Director, he will bring a steadying hand that will bring a little predictability back to the agency.

WHAT THIS MEANS, FROM AYLIX JENSEN OF MOSS & BARNETT: A medical debt credit reporting bill, Senate Bill 5480, has passed the Washington state Senate and is now one step closer to becoming law. While the CFPB’s rule to remove medical bills from credit reports has been paused by the Trump administration and faces legal challenges, this state legislation may push forward similar restrictions on reporting. The Washington bill not only prohibits medical debt from being reported but also introduces protections against the repossession of certain medical devices. As the bill moves to the House for consideration, furnishers will need to monitor these developments closely to ensure compliance while navigating medical debt recovery.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: A district court in New York recently dismissed an FDCPA lawsuit arising from a collection email sent the day after the consumer responded to a prior email with a refusal to pay. The Court did not address the claim’s merit, but instead assessed two jurisdictional issues: Article III standing and personal jurisdiction.

After the plaintiff filed in state court, the defendant removed the action to federal court. In a tactic seen frequently in recent years, the plaintiff moved to remand, alleging that her own allegations failed to assert the type of harm required for injury-in-fact standing, a prerequisite for subject matter jurisdiction in federal court. The Court, pointing to plaintiff’s laundry list of physical and emotional harm pled in the Complaint (arguably included for the sole purpose of claiming damages beyond mere statutory harm), rejected this argument.

The Court then tackled the second jurisdictional hurdle, this one raised by the defense: a lack of personal jurisdiction over the collection agency. The Court found that the plaintiff had failed to plead facts to demonstrate that the defendant, a California limited liability company, was at-home in New York (general jurisdiction) and had repeatedly refused to disclose her state of residence at the time of the email to attempt to establish that the alleged violation occurred in New York (specific jurisdiction). This argument was well-handled by the defense team, who asserted that the consumer was a resident of Texas and pressed the issue to a final decision before an attentive federal judge.

Although not a merits decision, the opinion highlights a few important reminders for collection agencies facing FDCPA claims. First, don’t overlook jurisdictional defensesand pay attention to associated pleading deficiencies, which may be intentional. Second, if you send electronic collection communications, there must be a process to review and take action on response emails or text messages. Whether the process is manual, semi-automated, or fully-automated, there must be a reliable and accurate system in place to, within a reasonable amount of time, recognize and trigger action to address cease demands, disputes, and other requests to exercise statutory rights. The cadence of electronic campaigns should account for the amount of time an organization requires to identify and process consumer responses.

WORTH NOTING: A philosophy to help you avoid clutter around your house and in your life … “Fam Travel” is one of the top travel trends this year … If you want to see how Michael Douglas and Catherine Zeta-Jones lived, here is your chance … How to teach employees to embrace, not fear, the growth of AI … A man worth $16 billion credits this one habit for his success … A handful of doctor-approved tips to keep your bones healthy … A dozen things you need to know about cholesterol … Hard truths about marriage that most couples learn too late in life.

Music Monday, part I

Music Monday, Part II

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