Consumer Finance Litigation

In line with the recent trend of courts giving increased scrutiny to standing in consumer finance cases, the Sixth Circuit Court of Appeals dismissed an appeal this week under the Fair Debt Collection Practices Act (“FDCPA”) for lack of Article III standing in Ward v. National Patient Account Services Solutions, Inc., No. 20-5902, 2021 WL 3616067, -- F.4th -- (6th Cir. Aug. 16, 2021).  The plaintiff alleged that NPAS, Inc. left him voicemails regarding his medical debt which simply identified itself as “NPAS” rather than “NPAS, Inc.,” which confused him as to the correct ...

On June 14, 2021, the Eleventh Circuit Court of Appeals issued a one-line order stating that the Court was withholding issuance of the mandate in Hunstein v. Preferred Collection and Management Services, Inc. The appeals court’s April 21, 2021, published ruling in Hunstein sent shockwaves through the collection industry when it held that debt collectors who share information about consumers’ debts with collection vendors can violate provisions in the Fair Debt Collection Practices Act (“FDCPA”) aimed at protecting consumer privacy.

The withholding of the mandate was ...

When President-elect Joe Biden takes office in January, it is safe to bet that addressing the pandemic-related financial pressures facing millions of Americans will be at the top of his agenda.  And in particular, the administration is expected to focus on consumer finance, which should give renewed energy and purpose to the Consumer Financial Protection Bureau, an agency the Trump administration all but grinded to a halt.

Pursuant to a recent Supreme Court ruling that gives the President the right to remove the head of the CFPB at will, President-elect Biden will be able to select a new ...

On Monday, April 13, 2020, the Attorneys General of 25 States submitted a letter to the U.S. Department of Treasury urging Secretary Mnuchin to take action to ensure that relief payments issued to consumers pursuant to the CARES Act will be exempt from garnishment by creditors and debt collectors. The letter states that, “in what appears to be a legislative oversight,” the $1,200 stimulus checks payable under the Act to those adults with income under $75,000 are not explicitly designated as exempt from garnishment like other federal benefits such as disability and veterans’ ...

On April 7, 2020, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau, in consultation with state financial regulators (hereinafter the "agencies") issued a revised interagency statement regarding loan modifications and reporting for borrowers affected by COVID-19. The revised statement clarifies the relationship between the March 22, 2020 interagency statement and section 4013 of the ...

On April 1, 2020, the Consumer Financial Protection Bureau ("CFPB") released a policy statement providing guidance on credit reporting companies' and furnishers' responsibilities during COVID-19. The CFPB's policy statement encourages lenders to voluntarily provide relief and to accurately report any relief to credit bureaus. The policy statement further indicates furnishers should comply with the CARES Act, which, with certain exceptions, requires lenders to report accounts as current if consumers have sought relief from their lenders due to the pandemic, or, if an ...

In the wake of the D.C. Circuit's ruling in ACA International v. Federal Communications Commission, 885 F.3d 687 (D.C. Cir. 2018), which struck down the FCC's interpretations of "automatic telephone dialing system" ("ATDS") under the TCPA as "unreasonably, and impermissibly, expansive," courts are reevaluating what it takes to qualify as an ATDS under the statute. In Maddox v. CBE Group, Inc., No. 1:17-cv-1909-SCJ (N.D. Ga. May 22, 2018), the Northern District of Georgia found the defendant's calling equipment required human intervention to place calls, and thus did not qualify ...

On June 12, 2017, the Supreme Court in Henson v. Santander Consumer USA Inc. unanimously held that a debt buyer is not a "debt collector" as defined by the Fair Debt Collection Practices Act ("FDCPA") if it is regularly collecting debts that it owns, even if the debts were originated by a third party and purchased after default. Rather, according to the plain text of the statutory definition at issue, a debt buyer must be collecting debts owned by (and owed to) a third party in order to be considered a "debt collector" and therefore subject to the FDCPA.

The Court's analysis examined the ...

In Midland Funding, LLC v. Johnson, No. 16-348 (May 15, 2017), the U.S. Supreme Court held that a debt collector does not run afoul of the FDCPA by filing a proof of claim in bankruptcy on a stale debt. In its 5-3 decision, the Court sided with the majority of the federal courts of appeals to have considered the issue and reversed the Eleventh Circuit Court of Appeals, which had held that filing a proof of claim on a debt for which the statute of limitations had expired amounted to a "false," "deceptive," "misleading," "unconscionable," and "unfair" means of debt collection.

The case arose ...

In Dubois v. Atlas Acquisitions LLC, Case No. 15-1945 (4th Cir. Aug. 25, 2016), the Fourth Circuit Court of Appeals held in a 2-1 decision that filing proofs of claim on time-barred debts does not violate the Fair Debt Collection Practices Act ("FDCPA"), at least where state law preserves the right to collect on the payment. In so holding, the court sided with the Second and Eighth Circuit Courts of Appeals in a circuit split regarding the viability of FDCPA claims premised on proofs of claim filed in a debtor's bankruptcy case.

The Fourth Circuit first held that filing a proof of claim is ...

In Hernandez v. Williams, Zinman & Parham PC, No. 14-15672, -- F.3d --, 2016 WL 3913445 (9th Cir. July 20, 2016), the Ninth Circuit Court of Appeals held that each subsequent debt collector is required to send a § 1692g(a) validation notice within five days of its initial communication with a consumer, even if the validation notice has been previously provided to the debtor by another debt collector for the subject debt. The Ninth Circuit's ruling is the first published opinion by a federal court of appeals addressing this issue.[1]

The ruling interpreted section 1692g(a) of the Fair ...

In Jenkins v. Midland Credit Management, Inc.,[1] the U.S. Bankruptcy Court for the Northern District of Alabama held that the filing of a proof of claim based on a time-barred debt cannot give rise to a claim for damages under the Fair Debt Collection Practices Act ("FDCPA"), reasoning that any such claim is precluded by the Bankruptcy Code's comprehensive claims-allowance procedure. The court further held that the filing of a proof of claim on a stale debt does not merit sanctions under Bankruptcy Rule 9011 where the proof of claim is filed in compliance with the Code. Accordingly, the ...

In Davidson v. Capital One Bank (USA), N.A., a case closely followed by the financial services industry and handled by Burr & Forman, LLP, the Eleventh Circuit held that an entity collecting a debt that was acquired after default, and which the entity now owns, is not a "debt collector" under the Fair Debt Collection Practices Act ("FDCPA") unless the principal purpose of the entity's business is the collection of debts or the entity regularly collects debts owed to others. In so holding, the Eleventh Circuit broke from the large majority of courts (including the Third, Seventh, and ...

In Haynes v. McCalla Raymer, LLC, No. 14-14036, __ F. 3d __, 2015 WL 4188459 (11th Cir. July 13, 2015), the Eleventh Circuit Court of Appeals affirmed the Northern District of Georgia's grant of summary judgment in favor of Bank of America, N.A. ("BANA") on the mortgagors' wrongful foreclosure claim. The court held that the mortgagors lacked standing to challenge any alleged deficiencies in the assignment of the security deed from MERS to BANA and that the borrowers' own default, rather than any alleged defect in the foreclosure notice, led to the foreclosure. With respect to the ...

In Crawford v. LVNV Funding, LLC, the Eleventh Circuit became the first federal circuit court of appeals to hold that filing a proof of claim on a time-barred debt in a bankruptcy case violates the Fair Debt Collection Practices Act ("FDCPA").[1] See No. 13-12389,__ F.3d __, 2014 WL 3361226 (11th Cir. July 10, 2014). The case arose when LVNV filed a proof of claim in Crawford's bankruptcy case on a debt for which the statute of limitations had expired. In response, Crawford filed an adversary proceeding against LVNV, alleging that LVNV routinely filed proofs of claim on time-barred debts ...

The United States District Court for the Eastern District of Kentucky recently held that an assignee of a debt may request prejudgment interest in a collection complaint dating from the time the debt was charged off by the original creditor, even where the original creditor had stopped charging interest on the account post charge-off. In Stratton v. Portfolio Recovery Associates, LLC, Case no. 5:13-cv-147-DCR (E.D. Ky. Nov. 26, 2013), the plaintiff filed a putative class action complaint alleging that the debt collector, who had been assigned a debt owed by the plaintiff, violated ...

In Charvat v. Mutual First Federal Credit Union, 2013 WL 3958300 (8th Cir. Aug 2, 2013), the Eighth Circuit Court of Appeals held that actual damages in the form of an economic injury is not required to confer standing under the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. § 1693. The plaintiff sought statutory damages in a putative class action, alleging that the defendants failed to provide the required notices on their ATM's before charging him a transaction fee for withdrawing cash. The EFTA prohibits charging a transaction fee unless the ATM provides notice of the fee on both ...

In Schlegel v. Wells Fargo Bank, N.A., 2013 WL 3336727, (9th Cir. July 3, 2013), the Ninth Circuit held that Wells Fargo did not qualify as a "debt collector" under the Fair Debt Collection Practices Act ("FDCPA"), even though the mortgage debt it sought to collect was in default at the time it was assigned to Wells Fargo. The facts of this case are relatively simple. After the plaintiffs' defaulted loan was assigned to Wells Fargo, the plaintiffs entered into a loan modification agreement with Wells Fargo and proceeded to make payments under the agreement. However, Wells Fargo began ...

In Young v. Wells Fargo, Case No. 12-1405 (1st Cir. May 21, 2013), the First Circuit Court of Appeals reversed a district court's dismissal of plaintiff Susan Young's breach of contract claim premised on Wells Fargo's alleged failure to comply with its obligations under the Trial Period Plan ("TPP"), a temporary loan modification period during which Young applied for a permanent loan modification. Young alleged that, after falling behind on her mortgage payments, she entered into a series of discussions with Wells Fargo in an attempt to negotiate a loan modification. Eventually ...

In Mais v. Gulf Coast Collection Bureau, Inc., the United States District Court for the Southern District of Florida addressed the question of whether providing one's cell phone number during a hospital admission amounts to prior express consent under the TCPA to receive collection calls arising out of the hospital visit. __ F. Supp. 2d __, 2013 WL 1899616, at 11 (S.D. Fla. May 8, 2013). Under the particular facts of Mais, the court answered the question in the negative. During a hospital visit, the plaintiff's wife had provided the plaintiff's cell phone number to the hospital's ...

In a consolidated appeal of two cases from the United States Bankruptcy Court for the Middle District of Alabama, the United States District Court for the Middle District of Alabama held last week that the filing of a proof of claim in a debtor's bankruptcy case does not amount to an FDCPA violation. See Crawford v. LVNV Funding, LLC, Case No. 2:12-cv-701-WKW, Doc. 18 (M.D. Ala. May 9, 2013). The plaintiff-debtors had appealed the dismissal of their adversary complaints which asserted FDCPA claims against creditors who allegedly filed proofs of claim on time-barred debts in their ...

In Riddle v. Bank of America Corp., et al., 2013 WL 1482668 (E.D. Pa. Apr. 11, 2013), the federal district court for the Eastern District of Pennsylvania held plaintiffs' allegation that the defendants actively concealed a reinsurance kickback scheme was sufficient to equitably toll the running of RESPA's one-year statute of limitations and, as such, that plaintiffs' RESPA claim could survive dismissal.

The plaintiffs filed a putative RESPA class action suit against Bank of America and various mortgage insurers claiming that the defendants engaged in an illegal scheme whereby ...

A federal court in Illinois recently denied a motion for class certification of a TCPA claim due to the predominance of individualized issues of proving whether the putative class members had consented to the defendant's phone calls. The case illustrates the point that defining a class to include only those debtors who had not provided their phone numbers to the original creditor in a transaction does not always eliminate the individualized nature of the issue of consent. In the case, Jamison v. First Credit Services, Inc., 2013 WL 1248306 (N.D. Ill. Mar. 28, 2013), the named plaintiff ...

An Alabama federal court recently rejected an attempt by certain merchant defendants to dismiss claims brought under the Fair and Accurate Credit Transactions Act ("FACTA"), 15 U.S.C. § 1681, et seq., on the basis of the plaintiffs' failure to allege actual damages. In the case, Amason v. Kangaroo Express, the plaintiffs sued merchants with whom they had transacted business, alleging that the defendants willfully violated FACTA by printing more than the last five digits of the plaintiffs' credit and debit card numbers on receipts. No. 7:09-2117-RDP, 2013 WL 987935, at 3 (N.D ...

A New Jersey federal district court recently denied a motion to reconsider its previous holding that state law limitations on class actions do not apply to TCPA claims filed in federal court. At issue in the case, Landsman & Funk, P.C. v. Skinder-Strauss Associates, No. 08-3610, 2013 WL 466448 (D.N.J. Feb. 8, 2013), was a New York procedural law, C.P.L.R. § 901(b), which prohibits statutory class actions unless the statute creating liability explicitly provides for recovery in the form of class actions. The court had previously determined that the statute would apply under a choice of ...