In an important decision for the debt buying industry, the Massachusetts Supreme Judicial Court held that passive debt buyers are not “debt collectors” under the Massachusetts Fair Debt Collection Practices Act (MDCPA). A copy of the decision in Dorrian v. LVNV Funding, LLC is available at: Link to Opinion. An amicus brief filed by Receivables Management Association International and written by Maurice Wutscher attorneys in support of the appellant is available at: Link to Amicus Brief. In Massachusetts, “debt collectors” must obtain a license from the Division of Banks, the state agency tasked with regulating debt collection in the Commonwealth. Under the MDCPA,…
In a data breach putative class action, the U.S. Court of Appeals for the Ninth Circuit recently held that the plaintiffs sufficiently alleged Article III standing based on an alleged “increased risk of future identity theft.” In so ruling, the Ninth Circuit rejected the defendant’s argument that Clapper v. Amnesty International USA, 568 U.S. 398 (2013), in which the Supreme Court of the United States held “an objectively reasonable likelihood” of injury was insufficient to confer standing, required dismissal. A copy of the opinion in In re Zappos.com is available at: Link to Opinion. In January 2012, hackers breached the servers of…
Joining with the Fourth and Ninth Circuits, the U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court’s summary judgment order in favor of a debt collector and against a debtor finding that the debt collector did not violate the federal Fair Debt Collection Practices Act (FDCPA) by only verifying the information in its records instead of contacting the creditor to verify the debt. In so ruling, the Court also held that the debt collector did not violate the federal Fair Credit Reporting Act (FCRA) because it conducted a reasonable investigation into the disputed information. A copy…
The U.S. Court of Appeals for the Fourth Circuit recently held that a completely unsecured lien may be stripped off in a Chapter 13 bankruptcy proceeding under 11 U.S.C. § 1322(b) even though a proof of claim has not been filed. A copy of the opinion in Edwin Burkhart v. Nancy Spencer Grigsby is available at: Link to Opinion. Debtors filed a Chapter 13 bankruptcy petition in 2012. At the time, the debtors’ principal residence was valued at $435,000 and encumbered by four liens. Creditor 1 held the mortgage lien with the highest priority in the amount due of $609,500. Creditor 2’s two…
The day before the Second Circuit shut down reverse-Avila claims with its decision in Taylor v. Financial Recovery Services, Inc., the U.S. District Court for the Eastern District of New York dismissed an FDCPA Avila claim involving potential future fees and costs in Derosa v. Computer Credit, Inc. A copy of the opinion is available at: Link to Opinion. This recent chapter in the post-Avila saga involves a consumer who incurred a small hospital debt. A collector sent a letter that used the words “PAST DUE AMOUNT: $174.15” to inform the consumer of the balance. The letter contained no mention of interest, fees,…
The U.S. Court of Appeals for the Eighth Circuit held that the plaintiff borrowers did not offer sufficient evidence to defeat the rebuttable presumption created by the signed acknowledgement that they received the required number of copies of the federal Truth in Lending Act (TILA) notice of right to cancel disclosures. In so ruling, the Court noted that the plaintiff borrowers did not claim personal knowledge of the number of copies of the disclosure provided at closing, but instead relied on the so-called “envelope theory,” which the Court held was inadmissible hearsay. Accordingly, the ruling of the trial court granting…
Just over two years to the day after it issued its opinion in Avila v. Riexinger & Associates, LLC, the Second Circuit Court of Appeals has issued a critical blow to a recent spate of FDCPA lawsuits attempting to create liability out of thin air. A copy of the opinion in Taylor v. Financial Recovery Services is available at: Link to Opinion. In Avila, the Second Circuit held that a debt collector violates the FDCPA by stating the “current balance” of a consumer’s debt without disclosing that the balance is increasing due to the accrual of interest or fees. In Avila, the debt…
The U.S. District Court for the Southern District of Florida recently granted summary judgment in favor of a defendant debt collector in a putative class action alleging violations of sections 1692g and 1692e of the federal Fair Debt Collection Practices Act (FDCPA), holding that the “debt validation notice” letter at issue was neither confusing nor misleading under the applicable least sophisticated consumer standard. In so ruling, the Court held that naming the payment processing company with whom the consumer had dealt, as well as the bank that had actually issued the credit at issue, did not violate the FDCPA. A…
The U.S. Court of Appeals for the Ninth Circuit recently held that the National Bank Act (NBA) did not preempt California’s state escrow interest law, which requires financial institutions to pay at least 2 percent simple interest per annum on escrow account funds. In so ruling, the Court also held that the federal Truth in Lending Act provisions for escrow accounts, at 15 U.S.C. § 1639d, did not apply to loans originated before the 2013 effective date of the provisions. A copy of the opinion in Lusnak v. Bank of America is available at: Link to Opinion. In July 2008, the…
The U.S. District Court for the Southern District of Florida recently denied a borrower’s motion to exclude testimony of an insurer’s expert regarding the reasonableness of lender-placed insurance premiums levied upon the borrower’s mortgage loan. In so doing, the Court rejected the borrower’s argument that the expert testimony failed to address claims that the insurer colluded with its mortgage servicer to inflate insurance premiums, concluding that the borrower’s objection goes to the weight, rather than the admissibility of the testimony, and that testimony concerning the insurer’s compliance with applicable rules, regulations and industry standards would assist the trier in fact.…
The U.S. Court of Appeals for the Sixth Circuit held that a plaintiff asserting only a bare violation of the federal Fair Debt Collection Practices Act (FDCPA) failed to identify a cognizable injury traceable to the defendant’s alleged conduct, and therefore failed to demonstrate Article III standing. In so ruling, the Sixth Circuit reversed the trial court, and dismissed the appeal and underlying case for lack of jurisdiction. A copy of the opinion in Hagy v. Demers & Adams is available at: Link to Opinion. After the borrowers defaulted on their mortgage loan, the loan servicer initiated foreclosure proceedings against them. Subsequently,…
In July of 2015 the Federal Communications Commission handed down an order that unreasonably expanded the reach of the 1991 Telephone Consumer Protection Act, exposing any business using a telephone to the risk of TCPA liability. A decision from the United States Court of Appeals for the District of Columbia in ACA International v. FCC, et al. serves to undo some of the damage caused by the FCC’s order. Among the restrictions provided for by the TCPA, it was those portions of the Act which prohibited the use of an “automatic telephone dialing system” that were adversely impacted by the 2015 order.…