Category Archives: Educational News

The Trichell Offspring Saga: M.D. Fla. Dismisses FDCPA Suit for Lack of Standing

Interesting things are happening within the Eleventh Circuit and, finally, things are looking up for the industry in the litigation sphere. Back in July, the Eleventh Circuit Court of Appeals rocked the boat with its decision in Trichell v. Midland Credit Management, where it established a no-harm, no-foul approach to standing for FDCPA claims. Trichell‘s progeny are flowing in at a fast clip, and we are tracking this very closely with the iA Case Law Tracker. The latest update in this sphere comes from the  Middle District of Florida’s dismissal of an FDCPA claim for lack of standing.

Trichell established that a consumer that did not suffer the harm he or she alleges does not have standing to bring the relevant FDCPA claim. In Trichell, the claim alleged that letter language could mislead consumers, but the consumer himself was not actually misled by the letter.

The most recent court decision out of M.D. Fla. citing Trichell is Ruffin v. Dynamic Recovery Sols. (M.D. Fla. Oct. 19, 2020).

So, what happened in Ruffin?

In Ruffin, the defendant debt collector sent a letter to the consumer on a time-barred debt account. The letter included disclosures similar to what the Consumer Financial Protection Bureau (CFPB) proposed in its Supplemental Notice of Proposed Rulemaking: that, due to the age of the debt, the defendants will not sue the consumer and that a partial payment may restart the statute of limitations period.

The consumer filed an FDCPA lawsuit alleging that the letter contained a misleading representation because, in Florida, the statute of limitations does not revive with a partial payment. Revival requires a written acknowledgment by the consumer.

Notably, the consumer did not make any payments nor stated how she was damaged in any way.

Defendants filed a motion to dismiss.

The Court’s Decision

The court granted the defendants’ motion, finding that the consumer lacked standing to bring the FDCPA claim under the precedent set by the Eleventh Circuit in Trichell. The court summarizes Trichell:

In addressing the plaintiffs’ standing, the Eleventh Circuit observed that “neither plaintiff alleges that he made any payments in response to the defendants’ letters—or even that he wasted time or money in determining whether to do so,” but rather that they “asserted only intangible injuries, in the form of alleged violations of the FDCPA.” The Eleventh Circuit noted that, even in the context of a statutory violation, “Article III standing requires a concrete injury.” It concluded that the plaintiffs did not allege reliance or actual damages. Instead, the plaintiffs alleged harm only to “unsophisticated consumer[s],” which was insufficient.

[Internal citations omitted.]

In determining its result, M.D. Fla reasons:

Ruffin generally alleges the Letter “misleads the consumer regarding Florida law.” She does go a step further in claiming that she was misled. However, she fails to allege she made a payment towards the debt as a result of having received the Letter, and otherwise fails to allege any sort of reliance on the alleged misrepresentation. Also, despite claiming she was damaged, Ruffin fails to explain how she was damaged or how the alleged misrepresentations caused her damages.

At best, Ruffin alleges she is at risk of incurring damages as a result of being misled. But the complaint’s allegations reflect that this alleged risk was dissipated by the time she filed her complaint because her complaint identifies the Florida statute on reviving a time-barred debt. In other words, if the Letter was actually misleading, Ruffin knew that before she filed her complaint and any risk of harm associated with the language in the Letter had dissipated.

The court concludes:

Because the Eleventh Circuit does not recognize an “anything-hurts-so-long-as-Congress-says-it-hurts theory of Article III injury,” Ruffin’s complaint is dismissed without prejudice for lack of standing.

insideARM Perspective

As mentioned above, we are tracking Trichell and its progeny very closely in the iA Case Law Tracker. Subscribers get our weekly legal trends and analysis report, which gives them the inside scoop from someone who closely monitors industry-related court decisions: me! The Trichell saga, including its trend details, has been the subject of this report on 3 separate occasions. This means that subscribers already know this issue from all angles: where it’s held up, when it failed, what facts supported dismissal, etc. The weekly report also contains a rundown of all of the new cases added to the CLT in the prior week, so subscribers get an exclusive, detailed glimpse of what’s going on in the courts in minutes (so they don’t have to spend hours of their week getting up-to-date).


Article by Katie Grzechnik Neill

Debt Collection Should be on Congress’ Mind, Congressional Research Service Suggests

Debt collection seems to be a hot item this month. Not only is the Consumer Financial Protection Bureau’s (CFPB) final debt collection rule slated to be released at any time, Congress seems to have taken an interest in debt collection issues as well. (Curious timing, eh?) The Congressional Research Service released an in-depth report titled, “The Debt Collection Market and Selected Policy Issues.” The report suggests that, depending on what the CFPB final rule says, Congress may be interested in keeping an eye on things.

The report discusses where the debt collection market stands as of right now: the size of the market (“As of 2019, there are over 7,000 collection agencies in the United States, and the industry’s annual revenue is about $12.7 billion.”), and current regulatory developments. On the latter front, the report discusses the pending CFPB rule as well as complaint volumes and supervision/enforcement actions.

The report then delves into 5 separate policy issues that might be ripe for congress’ review:

  1. Communication frequency
  2. Time-barred and obsolete debt
  3. Validation issues
  4. Medical debt and credit reporting
  5. Federal, state, and local government debt exemptions

Below is a brief summary of the first four issues.

Communication frequency

The report discusses the hot button issue of whether the CFPB’s proposed rule regarding call caps is too restrictive or too permissive. There are two sides of this debate, according to the report, both of which may be moot since a CFPB survey that found consumers prefer email communications anyways. The CFPB rule would allow without limit but would grant consumers the power to stop such communication channels at their desire. This opens up another can of worms, as some consumer advocates believe that such communications should be opt-in rather than opt-out.

Time-barred and obsolete debts

The topic of time-barred debts tends to be one that is getting a lot of attention. The report discusses many sides of the debate, including the proposal by certain consumer advocates to outright ban collection on time-barred debt. There is a discussion about how consumers may not know what it means if their debt is time-barred, little less that certain actions they take could restart the statute of limitations. The report mentions that the CFPB’s proposed rule on time-barred debts would address this.

However, the CFPB proposed rule does not address another area of consumer confusion: credit reporting of time-barred debts. Specifically, there is no mention or education to consumers about when their account becomes obsolete (meaning, when a debt can no longer be included in a consumer’s credit report).

Validation issues

The report brings up an interesting issue about debt validation: that in some instances, there is no master database of account information that a debt collector can check against to ensure that the debts they are collecting are valid and correct. Instead, some debt collectors are only able to rely on the limited account information sent to them by the creditor, which often does not include account-level documentation unless and until a consumer disputes the debt.

Editor’s Note: This is not the case in all instances. Many larger financial institutions are beginning to use certain vendor resources to store all account-level information to allow debt collectors to pull validation themselves from the moment the account is placed rather than rely on the creditor to provide the information only after a dispute.

Medical debts and credit reporting

The report discusses “inconsistent billing and reporting practices” when it comes to medical debt, which often leaves consumers—who are “unlikely to know how much various medical services cost in advance”—lost. The report discusses the IRS rule from 2014, which required separating billing and collection policies of nonprofit hospitals as an attempt to alleviate this issue.

The report then discusses the credit reporting of medical debts:

Concerns about the impact of medical debts on credit reports continue. Some observers may believe it is unfair for medical debts to appear on credit reports because these debts are generally incurred for medically necessary reasons and are less likely to indicate whether someone is financially responsible.

The report’s conclusion

The report concludes that there are several areas of the debt collection market—specifically, those referenced above—that are ripe for congressional review:

As the CFPB finalizes and implements its debt collection rulemaking, stakeholders may be able to see how new regulations could impact the market. For these reasons, the debt collection market may continue to be the subject of congressional interest and legislative proposals.


Article by Katie Grzechnik Neill

California Attorney General Proposes Additional Modifications to CCPA Regulations

The California Office of the Attorney General issued a Notice of Third Set of Proposed Modifications to its regulations relating to the California Consumer Privacy Act on Oct. 12. Written comments will be accepted until 5 pm on Oct. 28, 2020.

There are four modifications, which the AG summarizes in its notice.

First, “[p]roposed section 999.306, subd. (b)(3), provides examples of how businesses that collect personal information in the course of interacting with consumers offline can provide the notice of right to opt-out of the sale of personal information through an offline method.”

This proposed modification is not surprising since the examples are similar to how § 999.305(b) and (c) describe how a business that interacts with consumers offline can provide the notice at collection with printed forms, signage or orally by telephone.  The notice provided by an offline method must “facilitate[] consumers’ awareness of their right to opt-out.”  Section 999.306(d) still provides that the opt-out notice is not required if the business does not sell personal information and so states in its privacy policy.

Second, “[p]roposed section 999.315, subd. (h), provides guidance on how a business’s methods for submitting requests to opt-out should be easy and require minimal steps. It provides illustrative examples of methods designed with the purpose or substantial effect of subverting or impairing a consumer’s choice to opt-out.”

This proposed modification explains that it must be easy for consumers to opt-out of the sale of their personal information, and that it can take no more steps to opt-out than it takes to opt-in.  There can be no language intended to dissuade opt-out, the opt-out link cannot force consumers to search through text to find the mechanism for submitting a request, and only personal information necessary to complete the request may be collected. Additionally, no confusing language may be used, and the AG provides this example of a double-negative: “Don’t Not Sell My Personal Information.”

Third, “[p]roposed section 999.326, subd. (a), clarifies the proof that a business may require an authorized agent to provide, as well as what the business may require a consumer to do to verify their request.”

The current regulations provide that when a consumer submits a request through an authorized agent, the business may require that the consumer “[p]rovide the authorized agent signed permission to do so.”  This proposed modification shifts the business’s focus to the agent, who may be required “to provide proof that the consumer gave the agent signed permission to submit the request.”

Fourth, “[p]roposed section 999.332, subd. (a), clarifies that businesses subject to either section 999.330, section 999.331, or both of these sections are required to include a description of the processes set forth in those sections in their privacy policies.”

Section 999.332 relates to notices that must be provided when consumers are under the age of 16.  This proposed modification is simply a clean-up that changes an “and” to “and/or.”  Section 999.330 pertains to the opt-in process when a business “has actual knowledge that it sells the personal information of a consumer under the age of 13 . . .”  Section 999.331 applies when consumers are 13 to 15 years of age.

Overall, these proposed modifications seem straightforward and likely won’t be the cause of much consternation, particularly in comparison to the looming ballot initiative vote on the California Privacy Rights Act of 2020.

Article by Eric Rosenkoetter

CFPB Settles with Encore for $15MM Civil Penalties and $78K Monetary Relief

A little over a month after the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Encore Capital and its subsidiaries, the parties have reached a settlement. Just like that, the case is now over. On Thursday of last week, the CFPB filed a stipulated judgment that effectively extends the CFPB’s prior consent order with Encore for five more years in addition to applying certain monetary penalties. The penalties include $15 million in civil penalties and $78,000 in monetary relief. The judge signed the order on Friday.

In the instant lawsuit, the CFPB alleged that Encore and its subsidiaries violated the 2015 consent order in several ways.

The 2015 consent order required Encore and its subsidiaries, prior to filing collection litigation, to provide consumers with a disclosure that the companies would provide original account-level documentation at no cost to the consumer within 30 days of a request. The complaint alleged that the defendants failed to state that the documentation would be provided at no cost in 750,000 incidents since the effective date of the consent order, and failed to state that such documentation would be provided within 30 days upon request in 25,000 incidents. The complaint also alleged that, after consumers requested the account-level documentation, the defendants failed to provide them in 250 incidents.

The 2015 consent order also prohibited the defendants from filing collection litigation on accounts that were time-barred by the applicable statute of limitations. It also required that the defendants provide a specific time-barred debt disclosure if defendants were engaging in non-legal collection efforts on such accounts. The complaint alleged that the defendants failed to do both of these. Specifically, the complaint alleges that the defendants sued on 100 time-barred debt accounts since the 2015 consent order and failed to provide the time-barred debt disclosure in 425,000 letters. Of the latter, 845 consumers made payments totaling $125,000.

Lastly, the complaint alleged that defendants began using a foreign payment processor, which resulted in consumers’ banks charging the consumers international transaction fees.

insideARM Perspective

Sounds like regulation by enforcement is not dead after all. This lawsuit was very conveniently timed. Despite the fact that the CFPB is set to release a rule regarding the collection of time-barred debt—a rule that went through a public comment period—the agency filed the instant lawsuit on the eve of the prior 2015 consent order’s expected expiration. The 2015 order was entered on September 9, 2015, and had a 5-year duration. The instant lawsuit was filed on September 8 of this year, just a day shy of the prior order’s expiration. Now, with the extension, the order lives on for 5 more years.

Did the entire consent order need to be extended? Probably not. As stated above, the CFPB already has a set of rules coming out soon on time-barred debts. On top of that, at least the section where the CFPB alleges defendants failed to provide account-level documentation after a consumer request seems like overkill. It occurred in only 250 instances, which is a ridiculously small number considering how large Encore’s portfolio is, and it could very easily and reasonably be attributed to bona fide error.

Article by Katie Grzechnik Neill

NYC Department of Consumer Affairs Releases Glossary and Translations of Commonly Used Terms Just Before Expiration of Enforcement Grace Period

The enforcement grace period for the New York City Department of Consumer Affairs’ (DCA) new debt collection rules, ended October 1, 2020.

Among the provisions of the new debt collection rules is the requirement for entities engaged in debt collection procedures to include a link to the DCA’s glossary and translations of commonly used terms in debt validation letters and/or on their public websites, along with a disclosure to consumers that a translation and description of commonly used debt collection terms is available in multiple languages on the DCA’s website. On September 29, the DCA released the glossary and translations of commonly-used terms on its website. The glossary can be found here:

Although the new rules only expressly require entities to provide a link to the DCA’s website, the best practice is to provide a link directly to the glossary to avoid any Fair Debt Collection Practices Act claims that it was misleading or deceptive to send consumers to the general DCA website. The industry also understands that to be what DCA wants from a compliance standpoint, notwithstanding the literal language of the rule.

Article by Christine Emello