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Showing 23 posts from 2018.

Congress Waters Down Dodd-Frank for Small and Regional Banks, Updates Consumer Protections

After much anticipation, Senate bill 2155—which rolls back major aspects of the Dodd-Frank law—was approved by Congress and was signed into law by President Trump.

Among the most notable changes, the legislation waters down regulations for small and regional banks. The threshold for banks "too big to fail" will be raised from $50 billion in assets to $250 billion, so that fewer than ten major U.S. banks will now be subject to Dodd-Frank's strictest regulations, including the Federal Reserve's stress test.

While the bill is widely regarded as regulatory roll back, the legislation also updates certain consumer protections, mostly regarding credit reports and student loans. More ›

Credit Card Holder has Remedies under the TILA and FCBA against Issuer due to unauthorized use of Credit Card according to Third Circuit

In Krieger v. Bank of America, the plaintiff unknowingly gave a scammer access to his personal computer, which was used to make a $657 Western Union charge on his Bank of America (BOA) credit card. Upon realizing the scam, the plaintiff immediately contacted BOA and was told that nothing could be done until he received his monthly billing statement. On receipt of the statement one month later, the plaintiff again contacted BOA, which credited his account while it investigated. In a confirmatory letter, BOA stated that, although Western Union could provide additional facts, BOA considered the dispute resolved. Although the plaintiff's next statement showed the credit, BOA followed up with a subsequent letter, which stated that, based upon additional information from Western Union, BOA believed the charge was in fact valid and would reinstate it to the plaintiff's account. The plaintiff then sent a letter detailing the events, declaring the charge invalid, and requested it be removed. BOA denied his request. The plaintiff paid the charge and filed suit. More ›

Third Circuit Disagrees with Fourth and Ninth Circuit, Rules that Limitations Period for FDCPA Claims Starts on Occurrence

In Rotkiske v. Klemm, the Third Circuit ruled that the statute of limitations for a Fair Debt Collection Practices Act (FDCPA) claim begins to toll on the date of the alleged violation, not when the plaintiff discovers the violation. That's significant, because the Fourth and Ninth Circuits have ruled otherwise. More ›

TCPA Developments: Consumer's Attempt to Revoke Consent to Text Messages Found to be Unreasonable

In Nicole Rando v. Edible Arrangements, International, LLC, a consumer sued Edible Arrangements under the Telephone Consumer Protection Act (TCPA) arguing that the company sent her text messages after she had revoked her consent. The New Jersey federal court granted Edible's Motion to Dismiss, finding that the consumer's revocation was not "reasonable." The consumer was prompted to text "STOP" if she wished to revoke her consent, but the consumer responded instead with long sentences such as "Thank you. I'd like my contact info removed" or "I asked to be removed from this service a few times. Stop the messages." More ›

Eighth Circuit Joins Five Other Circuits in Applying a Materiality Requirement to FDCPA Claims

In Hill v. Accounts Receivable Services, LLC, a consumer sued a collection agency for violations of § 1692e of the Fair Debt Collection Practices Act (FDCPA) on allegations that the collection agency's exhibits submitted in a state court action—which proved the assignment of the debt from the creditor—were false, misrepresented the legal status of the debt, and threatened actions the agency did not intend to take. The FDCPA action followed the state court's decision to grant judgment in favor of the consumer. The district court granted the collection agency's motion for judgment on the pleadings, concluding that the complained of actions were not material. The consumer appealed. More ›

Hinshaw Obtains Major Win for Passive Debt Buyer Before Massachusetts Supreme Judicial Court

Hinshaw secured a major victory last week before the Massachusetts Supreme Judicial Court on behalf of passive debt buyers. At issue was whether LVNV Funding, LLC was operating as an unlicensed debt collector in Massachusetts. Passive debt buyers are investors who purchase debt, and then hire debt collectors to collect the debt on their behalf. The passive debt buyer takes no action in furtherance of the collection of debt it owns, and never has any contact with any debtor. More ›

Despite Acceleration of Debt Through Prior Dismissed Foreclosure Action, Bankruptcy Petition Tolls Statute of Limitations on Subsequent Action

In Lubonty v. U.S. Bank National Association, a mortgagor sought to void a mortgage loan claiming that the six-year statute of limitations to foreclose had expired. The mortgagor had commenced multiple bankruptcy proceedings that trigged automatic stays and prevented foreclosure from proceeding for approximately four and a half years. New York law, CPLR § 204, extends the statute of limitations "[w]here the commencement of an action has been stayed by a court or by statutory prohibition," and the trial court held that the six-year statute of limitations was extended by the time period during which the foreclosure was stalled through successive bankruptcy petitions. More ›

Federal Prohibition of Marijuana Restricts Lenders Ability to Issue Loans to Borrowers Employed in Marijuana Industry

A Rhode Island mortgage lender recently rescinded approval of a loan application because the prospective borrower reported income from his employment in Rhode Island's medical marijuana industry. The lender was aware of the borrower's source of income at the time it issued a pre-approval letter, but ultimately denied the loan because the Federal Housing Authority (FHA) will not purchase or invest in a loan where the borrower is employed by, or receives compensation related to, the marijuana industry. FHA's Single Family Housing Policy Handbook provides that a lender may only consider a borrower's income if it is legally derived. Since marijuana remains illegal under federal law, any income derived from the cannabis industry cannot be considered as effective income for purposes of underwriting a loan. The denial of the loan came days after the United States Attorney General rescinded the Cole Memorandum, an internal justice department policy enacted during the Obama administration, which directed federal prosecutors to limit enforcement of federal marijuana laws in states that legalized and regulated cannabis. More ›

Seventh Circuit Rules in Favor of a Debt Collector Regarding Steps to be taken in Compliance with the FDCPA and FCRA when a Debtor Disputes a Debt

Hinshaw obtained a significant ruling in the Seventh Circuit in Walton, which involved claims under both the FDCPA and the FCRA. The Defendant sent Deborah Walton a dunning letter, which stated she owed delinquent debt on an AT&T account. But the letter listed an invalid account number—the first three digits of the account number were transposed with the middle three digits. Walton called Defendant to dispute that the debt belonged to her, she acknowledged that her name and address were correct, but falsely denied that the last four digits of her social security number matched those given by the representative. Walton also sent a letter to Defendant asserting that she did "not own [sic] AT&T any money under the account number listed above." Defendant checked the information it had received from AT&T and sent Walton a letter reporting that, based on a records review, it had verified Walton's name, address, social security number, and the amount of the debt. Defendant also reported Walton's debt as disputed with two credit reporting agencies. Walton then disputed the debt to the credit reporting agencies, which triggered an ACDV[1] report to Defendant about Walton's dispute. The notice simply stated that the debt did not belong to her. More ›

Second Circuit Resolves Uncertainty Surrounding "Reverse Avila" Claims

The Court of Appeals seems to have halted much uncertainty surrounding "reverse Avila" claims by unanimously affirming the New York federal court's decision in Taylor v. Financial Recovery Services, Inc., No. 17-1650, 2018 U.S. Dist. LEXIS ------- (2d Cir. March 29, 2018) (found here). In the wake of Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016), savvy plaintiffs have argued that the failure to disclose that a debt is no longer accruing interest is false and misleading in violation of Section 1692e of the Fair Debt Collection Practices Act (FDCPA). The Second Circuit disagreed and held that "a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading " when the letter correctly states a consumer's balance when the letter was issued.

Distinguishing Avila, the Second Circuit explained that the collection letter in Avila was misleading because a consumer could pay the full amount listed on the letter but such payment would not settle the debt. Under the facts of Avila, a consumer who paid the amount due on the collection letter would still be on the hook for an unpaid balance because interest and fees "accumulated after the notice was sent but before the balance was paid." In Taylor, the creditor instructed the collector not to accrue interest or fees on the underlying debt. Thus, because a consumer could have satisfied their debt by "making reasonably prompt payment" of the balance stated on the collection letter, it was not misleading notwithstanding the creditor's right to accrue post-placement interest on that same debt. The Second Circuit noted that the worst "harm" to plaintiffs in Taylor would be to pay sooner rather than later in order to avoid interest or fees accruing, but acceleration of payment "falls short of the obvious dangers facing consumers in Avila." More ›

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