The Federal Regulatory and Legislative Committee has been squarely focused on analyzing the CFPB proposed rule on debt collection. The committee is reviewing section by section identifying issues of concern and is in the process of gathering data to support RMAI’s responses. Look for a series of surveys from RMAI to assist us in developing recommendations and providing supporting data.
The committee continues to move forward our data and documentation legislative proposal. RMAI has met with one consumer group, and plans to meet with others to gather their input. RMAI was in the process of developing written testimony for the upcoming HFS Hearing on Abusive Debt Collection Practices, however, as of this weekend, the hearing has been postponed and a future date has not yet been set.
STATE LEGISLATIVE ACTIVITY
RMAI is actively monitoring over 180 bills that may impact the receivables industry in both positive and negative ways. Here are a few noteworthy bills that have been introduced:
New York AB 6909-B/SB 4827-B – This bill called the “Consumer Credit Fairness Act” would: (1) reduce the statute of limitations from six to three years on consumer credit transactions; (2) “extinguish” the right to collect on consumer debt past the statute of limitations; (3) require the mailing of a notice by the court clerk after filing proof of service of the summons and complaint; (4) require specific data to be included in the complaint; and (5) require the provision of form affidavits. [RMAI has a New York lobbyist and is working closely with a coalition of industry lobbyists to fight this bill. The New York Legislature is in its final week of session and this bill is still in play. RMAI members who are based in NY or have operations in NY are strongly encouraged to contact their Assembly members and Senators to express their opposition to the bill and urge them to vote no.]
Ohio HB 251 – This bill would lower the statute of limitations on both written and oral contracts to three years. Currently written contracts are at eight years and oral contracts are at six years. The bill has strong support from the hospital and insurance industries. [RMAI will be testifying in opposition to the bill tomorrow.]
California SB 616 – This bill would exempt the first $2,000 dollars in a deposit account from a bank levies as a means to satisfy court-ordered judgments. [RMA is supporting an industry coalition in opposition to this bill.]
If you are interested in obtaining a copy of the RMAI state tracking list, please contact David Reid at email@example.com.
7th Cir Holds No FDCPA Violation for Naming Current Creditor as “Original Creditor”
The U.S. Court of Appeals for the Seventh Circuit recently affirmed two trial court rulings in favor of a debt collector, holding that correspondence that identified “the name of the creditor to whom the debt is owed” as the original creditor instead of the current creditor did not violate the federal Fair Debt Collection Practices Act (“FDCPA”) because it accurately and sufficiently disclosed the only creditor to whom the debtors owed the debt.
In both cases, a debt collector sent correspondence to the debtor providing the name of the “original creditor” (“Owner”) and the more familiar commercial name of the entity to whom the debtors made their payments (“Vendor”). The correspondence also noted that upon request the debt collector would provide “the name and address of the original creditor, if different from the current creditor.”
In separate suits, the debtors sued the debt collector on behalf of themselves and a putative class of similarly situated persons, alleging that the correspondence violated section 15 U.S.C. § 1692g(a)(2) because it did not identify “the name of the creditor to whom the debt is owed.”
In each case the trial court granted summary judgment because the letter complied with section 1692g(a)(2) and disclosed the creditor to whom the debt is owed by including the name of the original creditor, and also disclosing the Vendor consumers would be familiar with so even the unsophisticated consumer would recognize the debt.
On consolidated appeal, the only question was whether the debt collector’s letters “identify the creditor to whom their debt is owed in a manner clear enough for an unsophisticated consumer to understand.” The debtors argued that referring to the Owner as the “original creditor” instead of the “current creditor” could lead an unsophisticated consumer to believe that they owe the debt to a different creditor than the original creditor.
The debt collector responded that it complied with the FDCPA by identifying the Owner as the creditor and that it adhered to the spirit of the FDCPA by using the commercial name of the Vendor to helps consumers recognize their debt.
The Seventh Circuit held that the correspondence properly communicated the information to the debtors because the correspondence only identified one creditor and also provided the commercial name of the Vendor “to which the debtors had been exposed, allowing the debtors to easily recognize the nature of the debt.”
The Court also reasoned that because the correspondence notified the debtors that they may request the original creditor’s name if it differed from the current creditor’s name, it alerted the debtors that “the original and current creditor may be the same.”
Even though it did not use the word “current,” the correspondence provided consumers with “a whole picture of the debt” by “identifying the creditor to whom the debt is owed as well as the commercial name the consumer is more likely to recognize.” This practice, the Court held, “provides clarity for consumers; it is not abusive or unfair and does not violate § 1692g(a)(2).”
Thus, the Seventh Circuit affirmed the trial courts’ rulings.
11th Cir. Rules in Favor of Mortgage Servicer in FCRA Putative Class Action
In an unpublished ruling, the U.S. Court of Appeals for the Eleventh Circuit recently affirmed dismissal of a borrower’s putative class action suit filed against a mortgagee alleging violations of the Fair Credit Reporting ACT (“FCRA”) for failing to conduct a reasonable investigation into disputed information reported to the credit reporting agencies (“CRAs”).
In so ruling, the Court concluded that the borrower failed to demonstrate that a reasonable investigation would have uncovered an inaccuracy in certain information provided by the mortgagee to the credit reporting agencies, and the mortgagee had no duty to investigate a separate dispute because the borrower did not allege that it had received notice of the dispute from the CRAs triggering the requirements to investigate under § 1681s-2(b) of the FCRA, 15 U.S.C. § 1681, et seq.
After a borrower defaulted on his mortgage loan, the mortgagee began reporting the loan account as 120 days past due to the CRAs. The mortgagee filed an action to foreclose the mortgage loan in Broward County, Florida, and final judgment of foreclosure was entered in its favor in May 2014. After the borrower’s loan was transferred to another entity, the mortgagee closed the borrower’s loan account in March 2015. The borrower subsequently paid the foreclosure judgment in full in June 2015 to the mortgagee’s successor-in-interest.
Two years later, the borrower retrieved his credit reports and learned that the mortgagee had reported his account as 120 days past due between May 2013 and February 2015. The borrower sent letters to the CRAs disputing the mortgagee’s reporting, who in turn, provided the mortgagee notice that the borrower disputed its reporting.
During the course of its investigations, one of the CRAs asked the mortgagee to review and verify its furnished information and respond to the borrower’s claims. The updated credit report attached to the investigation showed that although the mortgagee had stopped furnishing monthly updates of the borrower’s payment status when it closed his account in March 2015, the loan was nonetheless reported as past due as of July 2017—more than two years after it was paid off in the foreclosure judgment amount.
After the mortgagee informed the borrower that its investigation concluded that it had provided accurate information to the CRAs, the borrower filed a putative class action lawsuit against the mortgagee alleging that it failed to comply with its duty to conduct an adequate investigation under subsection 1681s-2(b) of the FCRA.
Specifically, the borrower claimed that the mortgagee (i) “inaccurately” reported to the CRAs that he was 120 days past due for 22 months beginning in May 2013, because the filing of the foreclosure action relieved him of any obligation to make payments (while not disputing that he failed to make payments), and; (ii) failed to accurately and/or completely report to the CRAs that he fully satisfied his obligations under the loan after he paid the foreclosure judgment, as the updated credit reports indicated the loan account was past due as of July 2017.
The FCRA among other things imposes two obligations upon “furnishers” who provide customer information to the CRAs. First, a furnisher is prohibited from “furnish[ing] any information relating to a consumer to any [CRA] if the person knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A).
Second, upon notification from a CRA that a consumer disputes the accuracy or completeness of furnished information, a furnisher must “(A) conduct an investigation with respect to the disputed information;” “(B) review all relevant information provided by the [CRA];” and “(C) report the results of the investigation to the [CRA].” Id.; § 1681s-2(b)(1).
Notably, the borrower did not allege that he ever notified the CRAs or the mortgagee that he disputed the loan’s past-due status as of 2017.
The mortgagee moved to dismiss the borrower’s complaint, and the trial court granted the motion to dismiss with prejudice on the basis that (i) the mortgagee correctly reported the status of the borrower’s mortgage loan between May 2013 to February 2015 in satisfaction of its obligations under the FCRA; (ii) the borrower’s allegations that he had no obligation to make monthly payments following acceleration was “a legal conclusion devoid of factual support,” and insufficient to bring a claim under section 1681s-2(b) of the FCRA; (iii) the borrower provided no authority to support his claim that the mortgagee was obliged to inform the CRAs that the borrower had satisfied the foreclosure judgment after the loan account had been transferred, and; (iv) providing leave to amend was futile.
On appeal, noting its recent analysis in Felts v. Wells Fargo Bank, N.A., 893 F. 3d 1305 (11th Cir. 2018), the Eleventh Circuit explained that a consumer’s claims under subsection 1681s-2(b) of the FCRA contemplates three possible outcomes of a satisfactory investigation: (1) the information is accurate and complete, (2) the information is inaccurate or incomplete, or (3) the information cannot be verified. Id. at 1312. When an investigation concludes that the disputed information was verified as accurate, its obligations to conduct an investigation is evaluated under a reasonableness standard which “will turn on whether the furnisher acquired sufficient evidence to support the conclusion that the information was true.” Id.
As to the borrower’s first cause of action regarding the mortgagee’s purportedly inaccurate reporting for between May 2013 and February 2015, the Eleventh Circuit noted that neither the borrower’s complaint nor his arguments on appeal alleged that he in fact made payments during this time period; thus, the borrower could not demonstrate that a reasonable investigation would have uncovered an inaccuracy in the information reported, as required. Felts at 1313 (11th Cir. 2018).
The Eleventh Circuit also rejected the borrower’s argument that the filing of the foreclosure action and acceleration of the loan relieved him from any obligation to make payments, as his legal theory conflicted with Florida law. See Deutsche Bank Tr. Co. Americas v. Beauvais, 188 So. 3d 938, 946-47 (Fla. 3d DCA 2016). Even if he were correct about his legal obligation to pay, the Court noted, the borrower’s FCRA claim would nonetheless fail because a plaintiff must show a factual inaccuracy rather than the existence of disputed legal questions to bring suit against a furnisher under § 1681s-2(b). Chiang v. Verizon New Eng., Inc., 595 F.3d 26, 35 (1st Cir. 2010).
Next, the Court turned to the borrower’s separate claim that the mortgagee failed to update the CRAs that the foreclosure judgment was paid off, which resulted in his reports continuing to show the loan as past due as of July 2017. The Eleventh Circuit concluded that it need not decide whether or not a duty existed to update the CRAs after it had transferred the account to another lender, because even if it had a duty to refresh the previously-furnished information, the borrower’s claims arise under section 1681s-2(b), which only governs a furnisher’s investigation duties.
Here, the borrower never alleged that the mortgagee received notification from the CRAs that he disputed the loan’s past due status as of July 2017 or that the CRAs provided the mortgagee notice of any such dispute, and failed to allege that he even contacted the CRAs to dispute that aspect of his credit reports. Without receiving notification from the CRAs that the borrower disputed reports of his loan as past due as of July 2017, the mortgagee had no obligation to conduct a 1681s-2(b) investigation. See 15 U.S.C. 1681s-2(b)(1); see also id.; 1681i(a)(2)(A). As such, these claims, too, fail to state a claim under the FCRA.
Lastly, because the borrower could not overcome the factual deficiencies of his purported claims, the appellate court concluded that the district court did not abuse its discretion in dismissing the borrower’s complaint with prejudice because amendment would be futile.
Accordingly, dismissal of the borrower’s FCRA claims with prejudice was affirmed.
7th Cir. Rejects Plaintiff’s Effort to Run Up Attorney’s Fees After Rejecting Reasonable Offer
The U.S. Court of Appeals for the Seventh Circuit recently held that a trial court did not abuse its discretion when it reduced the plaintiff’s counsel’s $187,410 fee claim to $10,875 after the debtor recovered only a $1,000 statutory damages award on his federal Fair Debt Collection Practices Act (“FDCPA”) claim at trial and the debt collector had issued a Rule 68 offer of judgment early in the case that exceeded the amount the debtor recovered.
After a debt collector purchased a debtor’s credit card debt, the debtor sued the debt collector alleging a violation of the FDCPA.
The debt collector quickly issued an offer of judgment pursuant to Federal Rule of Civil Procedure 68. The debt collector offered to eliminate the debt, pay the debtor $1,001 plus reasonable attorney’s fees and costs through the date of the plaintiff’s acceptance of the offer in an amount agreed upon by the parties or, if no agreement, as determined by the Court. The offer terms disclaimed any liability. The debtor accepted the offer and the parties agreed to $4,500 in reasonable attorney’s fees.
Subsequently, the debt collector engaged in further conduct that caused the debtor to file a second suit against the debt collector alleging several violations of the FDCPA and the federal Fair Credit Reporting Act (“FCRA”).
The debt collector once again responded by trying to promptly resolve the case. The debt collector issued successive Rule 68 offers of judgment in the amounts of $1,500, $2,500, and $3,501, with additional terms that mirrored the accepted offer in the first case, but this time the debtor did not accept.
After cross-motions for summary judgment, the Court only allowed the debtor to proceed to trial on one of his alleged FDCPA and FCRA claims, and precluded the debtor from recovering any punitive damages. This left the debtor with the ability to recover up to $1,000 in statutory damages on his FDCPA claim and $21,000 in actual damages for his emotional distress claim.
One week before trial, the debt collector again tried to resolve the matter by offering the debtor $25,000 to resolve all remaining claims and to cover his attorney’s fees and costs. The debtor rejected the offer, hired two more attorneys to assist with prosecuting his remaining claims, and proceeded to trial. The jury found the debtor had no actual damages and awarded him $1,000 in FDCPA statutory damages.
The debtor’s counsel then sought $187,410 in attorney’s fees, and $2,744 in costs under the FDCPA.
A Rule 68 offer of judgment limits the plaintiff’s ability to recoup costs incurred after the offer date and may limit any attorney’s fee award, but section 1692k(a)(3) of the FDCPA creates an exception because it defines attorney’s fees separately from costs, allowing the prevailing debtor to recover reasonable attorney’s fees despite any offer of judgment.
However, the trial court noted, the attorney’s fees must still be reasonable. The trial court held that it must consider that the debtor rejected the debt collector’s Rule 68 offer of $3,501 and instead proceeded to trial. In so ruling, the court also held that it should consider substantial settlement offers when deciding the reasonable attorney’s fees amount to award.
Here, because the debtor obtained only limited success at trial, and rejected a settlement proposal more than three times the amount of his ultimate recovery, the trial court reduced the attorney’s fees award to the $10,875 that had been incurred when the debt collector made the third offer of judgment given that the debtor did not establish any new principles of law or suffer any ongoing harm.
The trial court awarded the debtor $436 in costs as the prevailing party and also awarded the debt collector $3,064 for the costs it incurred after issuing the third offer of judgment.
On appeal, the Seventh Circuit began its analysis by acknowledging that section 1692k(a)(3) of the FDCPA entitles the prevailing party to a reasonable attorney’s fee award. To determine a reasonable fee award, courts usually employ the lodestar method multiplying the attorney’s reasonable hourly rate by the reasonable hours expended and then adjusting the amount to account for the degree of success and the public interest advanced.
The Seventh Circuit rejected the debtor’s argument that he did not understand what the offer of $3,501 plus reasonable attorney’s fees and costs offer meant because he accepted an offer with the same terms in the first lawsuit and managed to negotiate and receive a reasonable amount to cover legal fees. Here, the Court noted, the debtor’s counsel only had to request a fee award that would cover the time necessary to finalize the settlement. The Seventh Circuit characterized this next step as easy given the relative simplicity of the claims.
The debtor next argued that the trial court abused its discretion in lowering the fee award to $10,875 because the terms of the offer disclaimed liability. The Seventh Circuit had little trouble concluding that this argument missed the mark because the debtor’s acceptance of the offer, by operation of Rule 68, would have resulted in a judgment being entered against the debt collector. As such, when the judgment hit the trial court’s docket, the prior disclaimer of liability would have been a dead letter.
The Seventh Circuit concluded by noting that the debt collector offered the debtor a substantial settlement offer at the beginning of the case that was more than three times the statutory damages available to the debtor and included reasonable attorney’s fees and costs. Despite this, the Court noted the debtor proceeded to incur $187,410 in attorney’s fees, only to walk away with $1,000 in statutory damages.
The Seventh Circuit noted the vast majority of the attorney’s fees the debtor incurred were for time spent pursuing an unsuccessful and ill-advised effort to win a much bigger payout than was even remotely possible in the circumstances giving rise to his claims.
As such, the trial court did not abuse its discretion, and the Seventh Circuit affirmed the trial court’s ruling.
Texas Supreme Court Upholds Contractual Waiver of Statute of Limitations for Deficiency Claims
The Supreme Court of Texas held that the contractual waiver of the statute of limitations on deficiency claims contained in a guaranty agreement was sufficiently “specific and for a reasonable time” as to be enforceable and not void as against public policy.
Accordingly, the Texas Supreme Court affirmed the ruling of the appellate court, although it disagreed with portions of the appellate court’s reasoning.
The lender extended a loan to the borrower which was secured by property owned by the borrower. A guarantor guaranteed the loan pursuant to a guaranty agreement. The agreement contained a number of waivers of defenses, including certain statutes of limitations.
After the borrower defaulted on the loan, the lender’s successor (“bank”) foreclosed on the real property securing the loan. The sale of the property took place in November 2011. As the purchase price of the property was not sufficient to satisfy the unpaid balance, the bank sued the guarantor to recover the deficiency in June 2015.
The guarantor moved for summary judgment, arguing that the bank’s claim was barred by the Texas Property Code’s two-year statute of limitations for deficiency claims. See Tex. Prop. Code § 51.003(a). In response, the bank moved for partial summary judgment, arguing that the guarantor waived the two-year statute of limitations when he signed the agreement.
The trial court denied the guarantor’s motion and granted the bank’s motion. The bank moved for final summary judgment on its deficiency claim, which was granted.
On appeal, the guarantor argued that under Texas appellate court decisions applying the Texas Supreme Court decision in Simpson v. McDonald, 179 S.W.2d 239 (Tex. 1944), a statute of limitations defense can only be waived if the language of the waiver is specific and for a defined period of time. The guarantor further argued that the waiver he agreed to was indefinite and thus void as against public policy under Simpson, which held that “an agreement in advance to waive or not plead the statutes of limitation is void as against public policy.”
The bank argued that under the Texas Supreme Court’s decision in Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1 (Tex. 2014), a party such as the guarantor can waive all statute of limitations defenses indefinitely by signing a broad waiver of all defenses.
The appellate court affirmed, holding that under Moayedi the agreement to waive “all rights or defenses arising by reason of . . . any . . . anti-deficiency law” was sufficient to waive the two-year statute of limitations under section 51.003(a.). However, the court did not decide whether the agreement’s waiver provision was sufficient to waive all possible statute of limitations defenses because the bank sued within the four-year limitations period applying generically to suits to collect debts. Thus, the appellate court concluded that the bank’s lawsuit was timely even if the guarantor could not contractually waive all limitations defenses.
The appellate court did not consider the guarantor’s argument that his contractual waiver of the limitations period was void as against public policy under Simpson, because it concluded he waived the argument by failing to affirmatively plead it as a “matter constituting an avoidance” under Texas Rule of Civil Procedure 94.
The matter was then appealed to the Texas Supreme Court.
There, the guarantor argued that he did not waive his argument that the contractual abandonment of the statute of limitations is void as against public policy. Further, he argued that, under Simpson, his agreement to waive section 51.003(a)’s two-year limitations period was void unless it was specific and for a predetermined length of time.
The bank argued that the guarantor waived all defenses under section 51.003, including the two-year statute of limitations and that the effect was that the four-year limitations period of section 16.004(a)(3) applied as a backstop, and that its lawsuit was filed within the four-year period.
The Supreme Court noted that since Simpson, appellate courts in Texas have built on its holding and require that a waiver of a statute of limitations is void unless the waiver is “specific and for a reasonable time.”
The Texas Supreme Court agreed with those subsequent appellate court decisions and held that “[b]lanket pre-dispute waivers of all statutes of limitation are unenforceable, but waivers of a particular limitations period for a defined and reasonable amount of time may be enforced.”
The court next analyzed the three discrete sections of the agreement that potentially waived the statute of limitations.
Section (E) stated that the guarantor “waives any and all rights or defenses arising by reason of . . . any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding indebtedness of Borrower to Lender which is not barred by any applicable statute of limitations.” Section (F) purported to waive “any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness.”
The Supreme Court held that under Simpson, sections (E) and (F) were both unenforceable with respect to statutes of limitation because they purported to completely waive all limitations periods.
However, Section (A) provided that “Guarantor also waives any and all rights or defenses arising by reason of (A) any ‘one action’ or ‘anti-deficiency’ law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender’s commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale . . .”
The Court determined that “[u]nlike sections (E) and (F), section (A) is both ‘specific’ and ‘for a reasonable time.’” In reaching its conclusion, the Court explained that section (A) was specific because it “waives a particular, identifiable statute of limitations – the two-year period provided by section 51.003.” Further, it was “for a reasonable time” because although it did not state a substitute limitations period or provide a specific end-date for the waiver, the law in this instance provided for a four-year limitations period as a backstop.
Specifically, “[o]nce section 51.003(a)’s two-year statute of limitations is waived by operation of section (A), the four-year statute of limitations applying to suits to collect debts found in section 16.004(a)(3) of the Civil Practice and Remedies Code becomes applicable.”
The Court therefore held that the agreement “does not run afoul of the policy concerns animating Simpson because it is specific and for a reasonable time,” and thus the agreement was enforceable.
9th Cir. Rejects Challenges to CFPB Structure and CID
The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court’s order requiring a law firm to respond to interrogatories and requests for production of documents pursuant to a civil investigative demand promulgated by the Consumer Financial Protection Bureau (CFPB”).
In so ruling, the Ninth Circuit cited prior Supreme Court separation-of-power opinions which indicate that the CFPB’s restriction permitting removal of its director only by the president “for cause” did not violate the Constitution’s separation of powers doctrine to conclude that its structure was constitutionally permissible.
The Ninth Circuit also held that the civil investigative demand was proper because the bureau was permitted to investigate the law firm for potential Telemarketing Sales Rule violations pursuant to an exception to the practice-of-law exclusion, and because the bureau complied with the demand requirements under section 5562(c)(2).
The CFPB opened an investigation to determine whether a law firm violated the Telemarketing Sales Rule, 16 C.F.R. pt. 310, in the course of providing debt-relief services to its consumer clients.
After the law firm refused to comply with the CFPB’s civil investigative demand requiring it to respond to seven interrogatories and four requests to produce documents (the “CID”), the CFPB filed a petition in the U.S. District Court for the Central District of California to enforce compliance. The trial court granted the CFPB’s petition and ordered the law firm to respond to the CID. The instant appeal ensued.
On appeal, the law firm argued that the CFPB’s structure violates the U.S. Constitution’s separation of powers doctrine, and that the CFPB lacked statutory authority to issue the CID.
In considering the law firm’s first argument, the Ninth Circuit analyzed the history of the formation and purpose of establishing the CFPB, the powers bestowed upon it to implement and enforce federal consumer financial laws, and the role of its single director appointed by the president with the advice and consent of the Senate. 12 U.S.C. § 5491(b).
As you may recall, the bureau’s director serves for a term of five years that may be extended until a successor has been appointed and confirmed, and may be removed by the president only for “inefficiency, neglect of duty, or malfeasance in office.” § 5491(c)(1)-(3). It is this “only for cause” provision that the law firm challenges and contends that an agency with the CFPB’s broad law-enforcement powers may not be headed by a single director removable by the president only for cause.
The Ninth Circuit reviewed prior Supreme Court separation-of-powers decisions to determine whether the CFPB’s structure is constitutionally permissible. In Humphrey’s Executor v. United States, 295 U.S. 602 (1935), the petitioner similarly challenged the structure of the Federal Trade Commission, which similarly allowed for removal of the agency’s five commissioners only by the president for cause. There, the Supreme Court held that the for-cause removal restriction was a permissible means of ensuring that the FTC’s commissioners would “maintain an attitude of independence” from the president’s control. Id. at 629.
The Ninth Circuit remarked that like the FTC, the CFPB exercises quasi-legislative and quasi-judicial powers, and Congress could therefore seek to ensure that the agency discharges those responsibilities independently of the president’s will. See PHH Corp. v. CFPB, 881 F.3d 75, 91-92 (D.C. Cir. 2018) (en banc) (noting that the CFPB acts in part as a financial regulator, a role that has historically been viewed as calling for a measure of independence from the Executive Branch).
As such, the Ninth Circuit opined the Supreme Court’s reasoning in its decisions in Humphrey’s Executor and Morrison v. Olson, 487 U.S. 654 (1988), applied equally to the CFPB, and the for-cause removal restriction protecting the CFPB’s director does not “impede the President’s ability to perform his constitutional duty” to ensure that the laws are faithfully executed. Morrison at 691.
Accordingly, the Ninth Circuit viewed the Supreme Court’s separation-of-powers decisions in those cases as controlling, and the CFPB’s structure as constitutionally permissible.
Next, the Ninth Circuit considered the law firm’s argument that the CFPB lacked statutory authority to issue the CID. First, the law firm argued that the CID’s investigation into its advertising of legal services violated the Consumer Financial Protection Act’s practice-of-law exclusion, 12 U.S.C. § 5517(e)(1), which provides that the bureau “may not exercise any supervisory or enforcement authority with respect to an activity engaged in by an attorney as part of the practice of law under the laws of a State in which the attorney is licensed to practice law.”
The Ninth Circuit rejected this argument and concluded that the trial court correctly applied one of the exceptions to the practice-of-law exclusion. Under Section 5517(e)(3), the CFPB’s authority is not limited with respect to any attorney, “to the extent they are otherwise subject to enumerated consumer laws or authorities under subtitle F or H” – including enforcement of the Telemarketing Sales Rule, which does not exempt attorneys from its coverage even when they are engaged in providing legal services. 15 U.S.C. § 1602; Telemarketing Sales Rule ,75 Fed. Reg. 48,458-01, 48-467-69 (Aug. 10, 2010).
The law firm’s second argument that the CID failed to “state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation” as required under § 5562(c)(2) was also rejected as the Ninth Circuit concluded that the CID properly identified the allegedly illegal conduct under investigation and provision of applicable law to put the law firm on notice of the conduct being investigated.
Accordingly, the trial court’s order requiring the law firm to comply with the CFPB’s civil investigative demand was affirmed.
Need re-certification credits? Working toward becoming a Certified Receivables Compliance Professional (CRCP)? Want the latest information in the Chief Compliance Officer world? RMAI has all this and more with live monthly and pre-recorded webinars.
RECORDED WEBINARS: Did you miss a live webinar? All recorded monthly webinars are FREE to our members. Special series and select required courses for certification are paid at member rate.
CURRENT ISSUES IN RECEIVABLES MANAGEMENT (RE-CERTIFICATION ONLY): In addition to the two (2) hour education session at the Annual Conference and Executive Summit, RMAI has identified the following recorded webinars which qualify for one (1) credit out of the four (4) credits of Current Issues in Receivables Management required for re-certification. Click to register.
- CCO: Bridging the Gap: Compliant Communications with Millennials & iGens
- Industry Hot Topics – A Year in Review
- Demand Letters and Disclosure Requirements
- Surveying the TCPA Litigation Landscape After Marks
- How to Get A Clean Bill of Health In Healthcare Debt Buying and Collection
- FinTech – What Receivables Management Needs to Know About This New Wave of Product
Need “live/in person” continuing education credits for certification? Members who are seeking to earn live credits in order to obtain RMAI’s Certified Receivables Compliance Professional (CRCP) designation can do so at the upcoming Executive Summit, July 30 – August 1, 2019 at the Hilton Sedona Resort at Bell Rock in Sedona, AZ. You can also contact one of our Authorized Education Providers who may have a live seminar in your area. Be sure to check out the certification tab on our website.
Congratulations to our new and renewed companies and individuals!
Velo Law Office
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John Tyler, CKS Financial
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Tomio Narita, Simmonds & Narita LLP
Evan Soape, InvestiNet, LLC
For help with certification, contact Michelle Wren at (916) 482-2462 or firstname.lastname@example.org
Welcome new RMAI members!
The RMAI membership continues to grow. Welcome to our newest members:
|Amos Financial, LLC||Associate Debt Buyer||IL|
|Credit Service of Logan, Inc.||Associate Collection Agency||UT|
|Elevation Capital Partners, LLC||Associate Debt Buyer||TX|
|Landmark Strategy Group, LLC||Associate Debt Buyer||NY|
|Plan Services, Inc.||Affiliate||FL|
Read more about these members and other members on the Member Search page
RMAI is planning a new in-person event to bring members and non-members together for an evening of fun, food and networking. Meet and mingle with other industry professionals all while watching an exciting major league baseball game between the Chicago Cubs and Cincinnati Reds. Registration will soon be available. Interested in being a sponsor? Read all about it here.
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Thank you to our June 2018 – June 15, 2019 legislative fund contributors!
Certified Debt Buyer
Cavalry Portfolio Services, LLC
Associate Collection Agency
Financial Recovery Services, Inc.
Certified Debt Buyer
Encore Capital Group
Certified Debt Buyer
Crown Asset Management, LLC
Second Round, LP
Unifund CCR LLC
Certified Debt Buyer
Jefferson Capital Systems, LLC
Plaza Services, LLC
Velocity Portfolio Group
Digital Recognition Network
Certified Debt Buyer
Absolute Resolutions Corp
Resurgence Capital, LLC
Security Credit Services, LLC
The Bureaus, Inc.
Associate Collection Agency
Glass Mountain Capital
National Loan Exchange NLEX
Certified Debt Buyer
First Financial Asset Management, Inc. FFAM360
Gemini Capital Group, LLC
HS Financial Group
Indiana Receivables, Inc.
The Cadle Company
Certified Law Firm
Peroutka, Miller, Klima & Peters, P.A.
Certified Collection Agency
Resurgent Capital Services
Associate Law Firm
Andreu, Palma, Lavin & Solis, PLLC
Malone and Martin, PLLC
Stenger & Stenger P.C.
RNN Group, Inc.
— In Memory of Trish Baxter
Kino Financial Co., LLC
Certified Debt Buyer
Acctcorp International, Inc.
Capio Partners, LLC
Collins Asset Group LLC
Credit Management Corporation
Dynamic Recovery Solutions
Federal Pacific Credit Company
Galaxy Capital Acquisitions, LLC
Icon Equities, LLC
Investment Retrievers, Inc.
Mid Atlantic Portfolios, LLC
NCB Management Services, Inc.
PCA Acquisitions V, LLC
Pharus Funding, LLC
Portfolio Group Investors, LLC
Portfolio Recovery Associates, LLC
Poser Investments, Inc.
Troy Capital, LLC
West Bay Recovery, Inc.
Certified Law Firm
Reynolds Sims & Associates, P.C.
Law Offices of Daniel C. Consuegra, P.L.
Law Offices of Steven Cohen, LLC
Certified Collection Agency
Full Circle Financial Services, LLC
Halsted Financial Services, LLC
Associate Debt Buyer
Alliance Credit Services, Inc.
Genesis Recovery Services
International Debt Buying Consultants, LLC
National Recovery Solutions, LLC
Phoenix Asset Group, LLC
Sandia Resolution Company, LLC
Western States Financial Management, LLC
Associate Law Firm
Butler & Associates, P.A.
Delev & Associates, LLC
Hudson Cook, LLP
Hunt & Henriques
Kirschenbaum & Phillips, PC
London & London
Maurice Wutscher LLP
Mullooly, Jeffrey, Rooney & Flynn, LLP
Pressler, Felt and Warshaw, LLP
Rausch, Sturm, Isreal, Enerson & Hornik, LLC
Simmonds & Narita LLP
Slovin & Associates
Sonnek & Goldblatt, Ltd.
Spencer Fane LLP
The Law Offices of Ronald S. Canter, LLC
Tobin & Marohn
Vargo & Janson, P.C.
Winn Law Group, APC
Associate Collection Agency
Capital Collection Management, LLC
Credit Control, LLC
Noble Financial Solutions, Inc.
Radius Global Solutions
Tate & Kirlin Associates, Inc.
Viking Client Services, Inc.
Accelerated Data Systems
CenterPoint Legal Solutions, LLC
Clear Payment Solutions
Comtronic Systems, LLC
Diversified Consultants, Inc.
FLOCK Specialty Finance
Harvest Strategy Group, Inc.
Metronome Financial, LLC
MRS BPO, LLC
Ontario Systems, LLC
Payment Brokers Group, LLC
PCI Group Inc.
Resource Management Services, Inc.
SAM, Inc. – Solutions for Account Management
Tag Process Service, Inc.
Vertican Technologies, Inc.
Capital Solutions Bancorp, LC