Dana Karni 2016-12-20 17:57:58
Consumer Debt Collection In July 2016, the Consumer Financial Protection Bureau issued an outline of proposed changes to the Fair Debt Collection Practices Act. Richard Cordray, director of the bureau, said, “We are considering proposals that would drastically overhaul the debt collection market … this is about bringing better accuracy and accountability to a market that desperately needs it.”1 The proposed protections are intended to make sure that debt collectors: (1) collect the correct debt; (2) limit excessive or disruptive communications; (3) make debt details clear and disputes easy; (4) document debt on demand for disputes; (5) stop collecting or suing for debt without proper documentation; and (6) stop burying the dispute.2 Fair Credit Reporting Act In May 2016, the U.S. Supreme Court issued its opinion in Spokeo, Inc. v. Robins.3 The court held that “Article III standing requires a concrete injury even in the context of a statutory violation.”4 Although a concrete injury must actually exist, it does not have to be tangible. 5 However, it found that “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.”6 In relation to the FCRA, the court stated: Robins cannot satisfy the demands of Article III by alleging a bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm. For example, even if a consumer reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate. In addition, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.7 The court found that the lower court ignored the concrete requirement of standing and only focused on the particularized requirement, so it vacated and remanded the case to be decided looking at both concreteness and particularity of injury.8 This case will have significant implications on litigation under consumer laws that allow for statutory damages even without actual damages. Consumers must now make sure to plead injury-in-fact in addition to statutory violations. However, since the Spokeo opinion, waste of time and aggravation, as well as invasion of privacy, have been held to suffice as concrete injuries.9 State and Federal Fair Debt Collection Practices Acts In Davidson v. Capital One Bank (USA), Inc.10 and Henson v. Santander Consumer USA, Inc.,11 the 11th and 4th circuits held that financial institutions not primarily engaged in debt collection as a business were not debt collectors under section 1692a(6) of the FDCPA, even though the debts did not originate from the financial institutions and the financial institutions were collecting on said debts. In Anarion Investments LLC v. Carrington Mort. Servs., LLC,12 the 6th Circuit held that a limited liability company may bring suit as “any person” under the FDCPA. In Maria Hernandez v. Williams, Zinman, & Parham PC,13 the 9th Circuit found that all debt collectors, first or subsequent, must comply with section 1692g(a) validation notice requirements. Notes 1) “Consumer Financial Protection Bureau Considers Proposal to Overhaul Debt Collection Market,” July 28, 2016, http://www.consumer finance.gov/about-us/newsroom/consumer-financial-protection-bureauconsiders-proposal-overhaul-debt-collection-market/. 2) Id. 3) 797 F.3d 1309 (11th Cir. 2015). 4) 817 F.3d 131 (4th Cir. 2016). 5) 794 F.3d 568 (6th Cir. 2015). 6) No. 14-15672, 2016 WL 3913445 (9th Cir. July 20, 2016). 7) 136 S. Ct. 1540 (2016). 8) Id. at 9. 9) Id. at 8-9. 10) Id. at 9. 11) Id. at 10-11. 12) Id. at 11. 13) Booth v. Appstack, Inc., C1301533JLR, 2016 WL 3030256 (W.D. Wash. May 25, 2016) and Krakauer v. Dish Network, LLC., 1:14-CV-333, 2016 WL 4272367 (M.D.N.C. Aug. 5, 2016). DANA KARNI is a solo practitioner at the Karni Law Firm in Houston and focuses on consumer rights litigation, with special attention to credit reporting disputes, debt collection abuse, and auto fraud in both federal and state court.
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