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A 2022 Review of FDCPA, FCRA and TCPA Opinions from the Second and Third Circuits

second circuitThe U.S. Court of Appeals for the Second Circuit was relatively quiet when it came to the Fair Debt Collection Practices Act, only issuing three opinions. One was a remand to allow a plaintiff to replead her claims to comport with the pleading standards set forth in TransUnion, LLC v. Ramirez and the second affirmed the dismissal of a complaint where the debt in issue was not a consumer debt but rather was a personal guaranty of a business loan. The third opinion also had Fair Credit Reporting Act claims and involved attempts to collect from an individual who was dismissed from a foreclosure action. Telephone Consumer Protection Act cases were limited to solicitations and did not involve collection activity.

The U.S. Court of Appeals for the Third Circuit only issued one opinion concerning the FDCPA, which was an interesting interpretation of Pennsylvania law that formed the basis of the alleged FDCPA violation. The Third Circuit’s FCRA cases dealt with accuracy and investigations as well as an opinion that found that a consumer may sue a government agency for violations of the FCRA. Finally, although there was only one opinion discussing the TCPA, that case had a lengthy analysis of the distinction between having an automatic telephone dialing system and using one.


Sergey Viktorovich Paushok v. Ganbold, 2022 U.S. App. LEXIS 12154 (2d Cir. May 5, 2022)

The plaintiff filed suit against the defendants who were attempting to collect on his personal guaranty of a commercial loan. The district court dismissed the complaint finding that the plaintiff failed to allege that the debt was a “debt” within the scope of the FDCPA.

The Second Circuit affirmed the district court’s ruling, holding that the plaintiff’s “conclusory assertion that the purported debt arose from a consumer transaction, rather than a commercial one, is insufficient to support a viable claim under the FDCPA.”

The plaintiff did not help his case by conceding that the underlying agreements were commercial in nature and the court did not agree with his argument that a subsequent agreement he entered into somehow converted the original debt from commercial to consumer.

Macris v. Specialized Loan Servicing, LLC, 2022 U.S. App. LEXIS 30802 (2d Cir. Nov. 7, 2022)

The plaintiff previously owned real property with his ex-wife who assumed sole possession of the property upon their divorce. The plaintiff also executed deed to his ex-wife, but he remained a party to the underlying mortgage note. The plaintiff was originally a party to a foreclosure action but was later dismissed from the suit. Thereafter, the servicer contacted him and attempted to collect past due mortgage payments and also furnished information to the credit reporting agencies regarding the delinquent loan. The plaintiff disputed the debt which was investigated and confirmed as accurate by the servicer. The plaintiff filed suit under both the FCRA and FDCPA.

The Second Circuit affirmed the dismissal of both claims finding that the reporting was accurate and collection activity was permitted because the plaintiff did in fact owe the debt. A unique element of New York law came into play as lenders are required to first pursue either a foreclosure action or a deficiency action against a mortgage debtor and cannot pursue both simultaneously.

The plaintiff argued that by dismissing him from the foreclosure suit, the lender was precluded from pursuing a deficiency action against him on the underlying debt. The Second Circuit disagreed, finding that there was nothing in the record that indicated that the lender released the plaintiff from the mortgage note by dismissing him from the foreclosure action.

Katz v. Focus Forward, LLC, 22 F.4th 368 (2d Cir. 2022)  

This case asked the question whether an unsolicited faxed invitation to participate in a paid market research survey constituted an “unsolicited advertisement” under the TCPA. The Second Circuit found that it did not and affirmed the dismissal of the complaint.

The plaintiff, a professional corporation, filed a class action lawsuit against a market research company that faxed an offer of $150 to participate in a telephone interview. Beginning with the text of the TCPA, the Second Circuit noted that “unsolicited advertisement” is defined as “any material advertising the commercial availability or quality of any property, goods, or services” which on its face would not apply to the fax at issue. However, in 2006 the FCC issued a rule prohibiting faxed surveys “that serve as a pretext to an advertisement.”

Analyzing a paid survey fax was an issue of first impression in the Second Circuit who noted that the Third Circuit recently held that such faxes are advertisements while multiple district courts in other jurisdictions held that they were not. The Third Circuit had reasoned that such faxes are advertisements because they are offering the recipient to engage in a commercial transaction (complete the survey in exchange for money).

The Second Circuit disagreed, siding instead with the majority of courts who instead looked to the plain text of the statute and found that the fax did not encourage the purchase or rental of any property, goods or services.

Bais Yaakov of Spring Valley v. Educ. Testing Serv., 2022 U.S. App. LEXIS 30131 (2d Cir. Oct. 31, 2022)

This case is more notable for its interpretation of Rule 23 than it is for the TCPA. At issue in the TCPA case was the distinction between solicited and unsolicited fax advertisements, only the latter of which is prohibited by the TCPA.

The named plaintiff received unsolicited fax advertisements from the defendant who made an offer of judgment for the number of faxes sent to the plaintiff. The district court entered judgment for the plaintiff on the individual claim, denied class certification and dismissed the case as moot upon entry of the judgment.

The Second Circuit agreed with the district court, finding that making the distinction between solicited and unsolicited faxes in this case would require individualized factfinding and that questions of law or fact common to the class members did not predominate over questions affecting only individual members.


Lutz v. Portfolio Recovery Assocs., LLC, 49 F.4th 323 (3d Cir. 2022)

At issue in this FDCPA case was the defendant’s attempts to collect a credit card debt from the plaintiff, which originally had interest accruing at the rate of 22.9%. Although the defendant did not add interest to the balance, the amount that it sought to collect did include pre-charge off interest.

Pursuant to Pennsylvania’s Consumer Discount Company Act, only licensed entities may charge or collect interest above 6%. Specifically unlicensed entities “in the business of negotiating or making loans or advances of money on credit, in the amount of $25,000 or less . . . may not charge collect, contract for, or receive interest at an annual interest rate above 6%.”  The original creditor is not subject to the CDCA and there was no dispute that it was permitted to charge interest at 22.9%.

The collector argued that it was not subject to the CDCA because it was not in the business of negotiating or making loans or advances and the Third Circuit agreed. The focus of the opinion was not on whether the collector made loans or advances which really was not disputed but rather whether it “negotiated” them.

The Third Circuit defined negotiate in connection with the initiation of the loans and not their subsequent sale and found that the collector was not subject to the CDCA and thus did not violate the FDCPA by attempting to collect the interest that the original creditor had charged.

Bibbs v. Trans Union, LLC, 43 F.4th 331 (3d Cir. 2022)

In this FCRA matter, the plaintiffs had various student loans that were charged off and sold to new creditors. After they were transferred, the original lenders’ tradelines reflected a current balance of $0 and that they were 120 days past due. The plaintiffs disputed the information asserting that if the balance were $0, they could not be past due.

In analyzing the accuracy of the reports under 15 U.S.C. § 1681e(b), the Third Circuit focused on whether the 120 days past due notation was misleading. The plaintiffs argued that there was no qualifier on the 120-day notation so one could infer that the loans were “currently” 120 days past due. However, this ignored the rest of the tradeline which stated that the account was closed on a date certain and stated in all capital letters “ACCT CLOSED DUE TO TRANSFER; TRANSFERRED TO ANOTHER OFFICE.”

The Third Circuit held that a reasonable reader of the credit report could not reasonably believe that the plaintiffs currently owed the original lenders and affirmed the district court’s dismissal.

Kirtz v. Trans Union, LLC, 46 F.4th 159 (3d Cir. 2022)

At issue in this case was whether the plaintiff could pursue a claim against the U.S. Department of Agriculture for alleged violations of the FCRA. The Third Circuit started with the premise that the United States and its agencies enjoy sovereign immunity from suit, but that Congress could waive that immunity via statute if the statute waives sovereign immunity.

At issue here was whether the FCRA waives sovereign immunity. The Third Circuit held that it does because the FCRA provides that any “person” may be liable for damages for its violations of the statute and “expressly defines ‘person’ to include any ‘government or governmental subdivision or agency.’”

The Third Circuit thus joined the Seventh and D.C. Circuits who previously held that the plain text of the FCRA waives sovereign immunity as opposed to the Fourth and Ninth Circuits who went the other way.

Scarbo v. Wisdom Fin., 2022 U.S. App. LEXIS 31020 (3d Cir. Nov. 9, 2022)

This case involved the reasonableness of an investigation under the FCRA, and the Third Circuit affirmed the grant of summary judgment to the defendants holding that their investigation of the plaintiff’s disputes was reasonable.

The district court and the Third Circuit both drew distinctions between the reasonableness of the investigation and the accuracy of the reports noting that immaterial errors were not actionable and the mere fact that an entity furnishes inaccurate information does not prove that the investigation was unreasonable.

Panzarella v. Navient Sols., Inc., 37 F.4th 867 (3d Cir. 2022)

The plaintiffs are the mother and brother of a borrower who listed them as reference on his loan application and promissory notes and provided their cell phone numbers to the defendant. When he defaulted on his loans and failed to respond to the defendant’s attempts to contact him, defendant contacted the plaintiffs on their cell phones. At issue was whether the defendant called the plaintiffs using an automatic telephone dialing system.

The district court granted summary judgment for the defendant holding that its dialing equipment standing alone lacked the present capacity to store or produce telephone numbers using a random or sequential number generator. The Third Circuit disagreed, however, finding that the dialing equipment when paired with a connected server did have the capacity to store or produce telephone numbers using a random or sequential number generator.

Nevertheless, the Third Circuit affirmed summary judgment finding that the defendant did not actually use an ATDS to call the plaintiffs. The Third Circuit made a distinction between the ability to randomly dial numbers, which the defendant’s equipment could do, and dialing specifically targeted numbers from an internal list. Because the calls to the plaintiffs were intentional and targeted, the Third Circuit held that the defendant did not make the calls using an ATDS and thus affirmed summary judgment in favor of the defendant.

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Tom Dominczyk is based in Maurice Wutscher's New Jersey office and supports the firm's matters in its New York and Pennsylvania offices, practicing in the firm's Commercial Litigation, Consumer Credit Litigation and Bankruptcy groups. Tom has successfully represented financial institutions and law firms throughout the country for claims filed under the Fair Debt Collection Practices Act, Fair Credit Reporting Act and various state consumer protection statutes. In addition to his litigation practice, Tom represents national, regional and local creditors in a variety of bankruptcy matters ranging from the defense of adversary actions to complex non-dischargeability litigation and preference defenses. He served as a Judicial Clerk to the Honorable Graham T. Ross, P.J.F.P., Superior Court of New Jersey, Somerset County. For more information, see

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