The Washington Attorney General has filed a lawsuit against internet and cable company Comcast, alleging more than 1.8 million violations of the Washington state Consumer Protection Act and seeks over $100 million in penalties as well as injunctive relief.  The Washington Attorney General’s Office says that the lawsuit is the “first of its kind in the nation,” noting that many of the alleged deceptive practices involve nationwide programs.             

The claims stem from the company’s Service Protection Plan, the fees it charges customers for service calls, and its practices of running credit checks on certain customers.  The suit alleges that Comcast “grossly misrepresented” the Service Protection Plan, which is an optional add-on that customers may purchase to allow them to avoid certain service fees.  The Attorney General claims that while Comcast advertised that the Plan provided comprehensive coverage, the Plan in fact only applies to a narrow scope of repairs.  For instance, while advertising that the Plan covers “inside wiring,” the Plan does not cover wiring inside the walls of a consumer’s home.  Similarly, Comcast advertises coverage of certain problems that are already covered for free by the Comcast Customer Guarantee.  The complaint notes that over 500,000 Washington residents subscribed to the Plan in the past five years, and have paid at least $73 million to Comcast during that time.   

The complaint further alleges that customers were improperly charged for service fees that should have been covered for free by the Comcast Customer Guarantee.  The complaint notes that until June 2015, Comcast provided its technicians with a service code that allowed them “to add service charges to a normally not charged fix code.”   

Finally, the complaint accuses Comcast of improperly charging deposits or running credit checks on more than 6,000 customers. 

Attorney General Bob Ferguson stated in a press release, “This case is a classic example of a big corporation deceiving its customers for financial gain.”

Among other things, the lawsuit highlights the importance of having meaningful communication with the Attorney General’s Office.  The Washington A.G. noted in its press release that it brought up concerns with Comcast over a year before filing the action, but stated that the company did not make any internal changes until litigation was imminent. 

Members of Troutman Sanders’ Regulatory Compliance and Investigations Group have experience providing advice and assisting businesses engaged with attorney general investigations.  



In IKO Roofing Shingle Products Liability Litigation, the Seventh Circuit Court of Appeals reversed a denial of class certification in a products liability multidistrict litigation on the grounds that the plaintiffs’ two damages theories complied with the U.S. Supreme Court’s holding in Comcast Corp. v. Behrend, even though these theories would not allow for the calculation of damages on a class-wide basis.  This holding is another step by lower courts towards limiting Comcast’s impact on Rule 23 and class-wide proof of damages at the certification stage.

The plaintiffs in IKO Roofing alleged, in consolidated class action claims, that the roofing company IKO Manufacturing misled customers about the quality of certain organic asphalt shingles. Due to the various differences in consumers’ experiences with TKO tiles (e.g., some failed to meet industry standards, some were poorly installed), the defendant argued that class certification was improper under Fed. R. Civ. P. 23(b)(3) and Comcast.  The defendant argued that, under Comcast, damages were required to be provable on a class-wide basis (i.e., Comcast barred class actions where the damages question required many mini-trials).  The district court agreed and denied certification.

On appeal, the Seventh Circuit rejected the district court’s “mistaken belief that ‘commonality of damages’ is legally indispensable.”  Instead, the appellate court interpreted Comcast to mean that class treatment is appropriate where the theory of loss matches the theory of liability.  As to the plaintiffs’ theories, the appellate court found that neither of their damages approaches ran “afoul of Comcast: both the uniform and buyer-specific remedies match the theory of liability, as Comcast requires.”  For instance, the court found that the damages applied to all consumers who purchased the tiles could be calculated by the “difference in market price between a tile as represented and a tile that does not satisfy the D225 standard” – a diminution in value theory.

The Seventh Circuit’s view is that Comcast would permit class certification even when the calculation of class damages would require mini-trials.  The court also ruled, however, that certification is still a discretionary exercise that may not be appropriate where significant manageability problems are evident: “A district judge has discretion to evaluate practical considerations that may make class treatment unwieldy despite the apparently common issues.  On occasion the problems are so grave that it is an abuse of discretion to certify a class.”

Therefore, the prospect of many mini-trials could result in denial of class certification – but that would be decided on a case-by-case basis by the trial court in its discretion.  Ultimately, the IKO Roofing decision makes clear that the Seventh Circuit does not require class-wide proof of damages.  According to the appellate court, only in cases where manageability problems are particularly egregious should a court deny certification (i.e., because of the individual inquiries necessary to administer the class).

In Hearn v. Comcast Cable Communications, LLC, the Eleventh Circuit Court of Appeals reversed a district court holding denying the defendant’s motion to compel arbitration regarding the plaintiff’s Fair Credit Reporting Act claim and remanded the matter for further proceedings.

In that case, the plaintiff obtained services from the defendant in 2016, and signed a subscriber agreement with an arbitration provision stating that “[a]ny dispute involving [the customer] and Comcast shall be resolved through individual arbitration.” The plaintiff terminated his services in 2017, but subsequently called the defendant in 2019 to “inquire about pricing and obtaining services” again. The plaintiff alleged that one of the defendant’s representatives impermissibly checked his credit information during the call, and his credit score consequentially dropped. Accordingly, the plaintiff filed a putative class-action suit, alleging the defendant violated the FCRA when the defendant’s representative checked his credit without his consent. The defendant moved to compel arbitration pursuant with the subscriber agreement.

The district court denied the defendant’s motion to compel arbitration, holding that the plaintiff’s FCRA claim was outside the scope of the subscriber agreement as it did not “ar[ise] out of” or “relate to” the subscriber agreement. The plaintiff claimed that he called to open a new account with the defendant rather than to reconnect services. Conversely, the defendant claimed that the plaintiff “called and inquired about pricing for reconnecting services.” The district court resolved the factual dispute in favor of the plaintiff, and thus, denied the defendant’s motion to compel arbitration. The defendant appealed.

On appeal, the Eleventh Circuit Court of Appeals reversed the district court holding and remanded the matter for further proceedings. On appeal, the defendant contended that: (1) the court should enforce the arbitration agreement provision in the subscriber agreement pursuant with Eleventh Circuit precedent demonstrating that “the FAA requires courts to enforce valid arbitration agreements, including agreements as broad as the one at issue here”; and (2) the plaintiff’s FCRA claim was subject to arbitration because, even under “the district court’s limited construction of the FAA,” the FCRA claim “relate[d] to the Subscriber Agreement.”

Although the court did not analyze whether the full scope of the arbitration provision within the subscriber agreement was enforceable, it reasoned that the plaintiff’s FCRA claim arose out of and related to the underlying subscriber agreement for a few reasons. First, consistent with precedent, it reasoned that the defendant’s representative was able to check his credit information “only because of its previous relationship with [the plaintiff].” Second, it reasoned that the reconnection, credit inquiries, and termination provisions of the subscriber agreement established “duties relating to [the defendant’s] alleged unlawful credit inquiry,” thus establishing a “direct relationship between the dispute and the performance of duties specific by the contract.” Although the plaintiff contended that he terminated his services in 2017 and was not attempting to “reconnect” services within the meaning of the reconnection provision in the agreement, the court disagreed. It held that, within the context of the entire agreement, including language utilized in the termination provision, it was clear that the reconnection provision was applicable to the plaintiff.

Further, the court held that even if it accepted the plaintiff’s claim that he called to open a new account with the defendant rather than to reconnect services, the plaintiff’s FCRA claim still related to the subscriber agreement, as the plaintiff was calling to “inquire about obtaining Comcast’s services at [his address] again,” and the reconnection provision “explicitly addresse[d] situations where customers seek to resume and reinstate Comcast services.”

Therefore, the Court of Appeals held that the FCRA claim related to the subscriber agreement, reversed the district court’s holding denying the defendant’s motion to compel arbitration, and remanded the matter for further proceedings.

Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.

Our bank and loan servicing clients also face novel challenges affecting their industry due to COVID-19, particularly the ever-changing rules and regulations concerning evictions and foreclosures. We closely track these updates and have assembled an interactive tracker containing state orders and guidance documents regarding residential foreclosure and eviction moratoriums.

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest COVID-19 driven events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

  • On February 5, U.S. Treasury Secretary Janet Yellen issued a statement on the historic impact of economic crises on people of color. For more information, click here.
  • On February 4, Acting Director of the Consumer Financial Protection Bureau (CFPB) David Uejio issued a statement regarding the CFPB’s efforts to address housing insecurity, promote racial equity, and protect small businesses’ access to credit. Uejio said he was directing CFPB’s Division of Research, Markets, and Regulations to “explore options for preserving the status quo with respect to [the qualified mortgage rule] and debt collection rules.” The debt collection rule is currently scheduled to go into effect on November 30, 2021. For more information, click here.
  • On February 3, the Federal Trade Commission (FTC) provided the Consumer Financial Protection Bureau a summary of its activities enforcing the Equal Credit Opportunity Act. The summary also outlines the FTC’s business and consumer education efforts on fair lending issues. For more information, click here.
  • On February 2, the U.S. Treasury Borrowing Advisory Committee issued a report on the securities industry and financial markets. The report stated that economic activity rose in the fourth quarter of 2020, with a 4% annualized increase in real GDP. It also stated that the economy has recovered rapidly since the early stages of the pandemic but has decelerated as the winter virus resurgence weighs on the economy. For more information, click here.
  • On February 2, U.S. Senators Tammy Baldwin, Sheldon Whitehouse, Sherrod Brown, Elizabeth Warren, and Richard Blumenthal introduced the Medical Bankruptcy Fairness Act of 2021. The act would reform the current bankruptcy code due to the COVID-19 pandemic. Specifically, it would waive procedural hurdles, such as the credit counseling requirement, and increase protection for homes by allowing the retention of at least $250,000 of home equity. For more information, click here.
  • On February 1, the U.S. District Court for the District of New Jersey granted two national banks’ motion to dismiss a lawsuit alleging discrimination over Paycheck Protection Program (PPP) funds. The suit alleged that the banks refused to honor checks or electronic payments presented against the plaintiff’s account, and the basis for the decision was due to the businesses being predominately minority and women owned. The plaintiffs alleged violations of Section 1981 of the federal Civil Rights Act, violations of the New Jersey Civil Rights Act, and breach of contract. For more information, click here.
  • On January 27, the U.S. Department of Agriculture (USDA) announced the temporary suspension of past-due debt collections and foreclosures for distressed borrowers under the Farm Storage Facility Loan and the Direct Farm Loan programs administered by the Farm Service Agency. USDA also announced that it will temporarily suspend nonjudicial foreclosures, debt offsets or wage garnishments, and referring foreclosures to the Department of Justice (DOJ), and it will work with the U.S. attorney’s office to stop judicial foreclosures and evictions on accounts previously referred to the DOJ. Additionally, USDA extended deadlines for producers to respond to loan servicing actions, including loan deferral consideration for financially distressed and delinquent borrowers. For more information, click here.

State Activities:

  • On February 5, New Mexico Senate’s Health and Public Affairs Committee passed the Patients’ Debt Collection Practices Act, which would prevent health care providers from placing collection accounts or initiating lawsuits against “indigent patients” or patients whose household income does not exceed 200% of the federal poverty level. The bill will now head to the state Senate’s Judiciary Committee for consideration. For more information, click here.
  • On February 4, the California Department of Financial Protection and Innovation published an invitation for comments on proposed rulemaking regarding enforcement of the California Consumer Financial Protection Law, which makes it illegal for service providers to engage in unlawful, unfair, deceptive, or abusive practices. Comments must be submitted by March 8, 2021. For more information, click here.
  • On February 3, Pennsylvania Attorney General Josh Shapiro announced an agreement with Comcast to delay the planned implementation of usage-based data overage charges until July 2021 in its Northeast Division. Attorney General Shapiro stated, “As Pennsylvanians continue to navigate this pandemic, we know millions are relying on the internet for school and work more than ever. This is not the time to change the rules when it comes to internet data usage and increase costs.” The amended rollout plan will also make it easier for Pennsylvania consumers to terminate their existing contracts without fees. For more information, click here.
  • On February 3, the California Department of Financial Protection and Innovation announced an investigation into whether student loan debt relief companies operating in California are engaging in illegal conduct under the new California Consumer Financial Protection Law and Student Loan Servicing Act. The Student Loan Servicing Act, which took effect on July 1, 2018, requires persons engaged in the business of servicing student loans in California to obtain licenses and be subject to the state department’s oversight. The California Consumer Financial Protection Law, which took effect on January 1, 2021, expanded the state department’s regulatory and enforcement authority to cover previously unregulated consumer financial products and services. For more information, click here.
  • On February 2, the Virginia Senate unanimously passed a measure changing foreclosure mechanisms. Senate Bill 1327, which restricts the circumstances under which a court may order a person’s primary residence to be sold to enforce a judgment lien, prohibits a trustee from selling a property in a foreclosure sale without sending notice of the sale to the owner and signing an affidavit attesting to such notification, increases the notice period for a foreclosure sale from 14 to 60 days, and requires the landlord of a manufactured home park to provide tenants who own their manufactured home information about housing assistance and legal aid organizations. For more information, click here.
  • On February 2, California Governor Gavin Newsom announced that Suzanne Martindale has been appointed senior deputy commissioner of consumer financial protection at California’s Department of Financial Protection and Innovation. Martindale has been senior policy counsel and western states legislative manager at Consumer Reports since 2010. She will need to be confirmed by the state Senate. For more information, click here.
  • On February 1, New York Attorney General Letitia James announced that the state has renewed, for the tenth time, an order to halt “the collection of medical and student debt owed to the state of New York.” This tenth renewal runs through February 28, 2021. Attorney General James stated, “In an effort to counter the financial hardships of the COVID-19 pandemic, my office is, once again, renewing the suspension of state and medical debt referred to my office for another month. We must do everything in our power to rebuild our state’s economy and give New Yorkers a helping hand.” For more information, click here.

Privacy and Cybersecurity Activities:

  • On February 5, the Federal Trade Commission (FTC) warned consumers not to share their COVID-19 vaccination card information on social media. COVID-19 vaccination cards have personal information that may be valuable to identity thieves, such as “full name, date of birth, where you got your vaccine, and the dates you got it.” Scammers can “guess most of the digits of [a] Social Security number” by just knowing the date and place of birth. The FTC reminds consumers that if they must share their vaccination cards, to do so only with a small group of family and friends. To read more, click here.
  • On February 4, the Cybersecurity and Infrastructure Security Agency (CISA) and industry members of the Information and Communications Technology (ICT) Supply Chain Risk Management (SCRM) Task Force announced a six-month extension to its task force. The task force previously reported on its goal relating to impacts of COVID-19 on ICT and to “make practical recommendations that can support policy and operational decisions to strengthen and build additional resilience into ICT supply chains in the future.” In its report, the task force found three key issues that impacted the ICT supply chains due to the pandemic:
    • The pandemic underscored the need for an approach already underway over the last six years: diversifying supply chains to a broader array of locations and away from single-source/single-region suppliers.
    • The pandemic exposed how some manufacturing companies were unprepared because they relied on lean inventory models, which provide great efficiency and cost-effectiveness in typical environments.
    • COVID-19 also underscored the difficulties companies face in understanding their junior-tier suppliers and their location.

To read last week’s announcement, click here. For the full November 2020 report, click here.

  • On February 4, the FTC announced it had received over 2.1 million fraud reports in 2020 — the most common type of fraud reported to the FTC related to “imposter scams.” The second most common, with an elevated surge during the start of the pandemic, relates to online shopping. Compared to 2019, consumers reported a $1.5 billion increase in loss in 2020, totaling nearly $3.3 billion in losses. For those interested in reviewing the full breakdown of reports received last year, click here. To read last week’s announcement, click here.
  • On February 3, U.S. Congresswoman Jackie Speier (D-CA) announced that she and other Congress members introduced legislation that would aid states to adopt better user privacy protections for contact-tracing systems. “Several states are already using [contact-tracing systems], but it will only succeed if users can trust their information is safe. Our bill ensures that users can feel confident if they do their part and download a contact tracing app because their private data will be protected and secure.” The Secure Data and Privacy for Contact Tracing Act would include several critical privacy protections, which include:
    • Requiring that contact tracing is voluntary.
    • Requiring that information collection shall be minimized and proportionate to achieve contact-tracing objectives.
    • Offering individuals the assurance that contact-tracing information is anonymized, “allowing only authorized public health authorities or other authorized parties to have access to personally identifiable information.”

To read the full bill, click here. To read the announcement, click here.

  • On February 1, the Consumer Financial Protection Bureau (CFPB) reminded subscribers of COVID-19-related scams and offered resources to avoid them. With scammers taking advantage of people during continued uncertainty due to the COVID-19 pandemic, the first step individuals should take is in trying to avoid them. Specifically, the CFPB reminds consumers to watch out for several types of scams, including COVID-19 vaccine scams, charity scams, Social Security pandemic relief scams, and more.
  • On February 1, the FTC launched its “Identity Theft Awareness Week.” The week included a series of events to help consumers take steps to “reduce their risk of identity theft and recovery if identity theft occurs” during the COVID-19 pandemic. The FTC participated in several webinars and highlighted certain events to assist consumers in protecting their personal information. FTC experts discussed identity theft during the pandemic, and a Facebook Live discussion took place, focusing on “COVID-19-related theft [and] current trends[.]” To learn more, click here.

The Tenth Circuit developed a new rule under the Employee Retirement Income Security Act of 1974 (ERISA) in Ellis v. Liberty Assurance Company of Boston (case number 19-1074), holding last week that courts should adhere to choice-of-law provisions in ERISA health benefits plans.

In Ellis, the Tenth Circuit considered whether Michael Ellis’ health benefits policy through his employer, Comcast, was governed by Pennsylvania law — as it declared in a choice-of-law provision — or subject to a Colorado statute forbidding insurance policies from giving insurers, plan administrators or claim administrators discretion to interpret the plan’s terms to make benefits decisions. The Court noted its analysis would proceed as follows:

(1) Because Ellis’s claim for benefits is a federal cause of action, federal law governs the elements of the claim. (2) But when federal law is silent on the specific question at issue (here, whether the Policy’s grant of discretion to Liberty is enforceable), the federal court may incorporate state law instead of constructing a uniform federal rule. In our view, the enforceability question should be answered by state law; that is, federal law should incorporate a state rule of decision to resolve the question. (3) When federal law incorporates a state rule of decision, the choice of which state’s law to incorporate is a matter of federal law. (4) As a matter of federal law, to effectuate ERISA’s goals of uniformity and ease of administration, the law of the State selected by a choice-of-law provision in the plan documents should ordinarily provide the rule of decision for claims brought under the plan.

The Tenth Circuit considered whether there was a federal interest requiring the creation of a uniform federal rule to allow (or prohibit) discretion-granting provisions in ERISA plans. The Court recognized that allowing discretion-granting provisions federally would result in decisions by administrators always being subjected to abuse-of-discretion review by the courts; conversely, prohibiting discretion-granting provisions would always subject ERISA administrators to de novo review. Ultimately, based on Supreme Court precedent, the Court determined that requiring or prohibiting discretion grants are both consistent with ERISA, and thus there was no need for a uniform federal rule on that matter, so state law could be applied.

The Court then considered the question of whether the choice-of-law provision should be enforced, noting the choice-of-law doctrine must take into account the centrality of the plan in ERISA matters. Emphasizing the “aims of uniformity and reduced administrative costs that are essential to ERISA’s purposes,” the panel held that if there were a legitimate connection to the state whose law was chosen by a plan, then that state’s law should govern the enforceability of any discretion-granting clauses. Critically, this holding clarified whether Ellis’ policy was governed by Pennsylvania law — as it declared in a choice-of-law provision — or subject to a Colorado statute that forbids insurance policies from giving insurers, plan administrators or claim administrators discretion to interpret the plan’s terms to make benefits decisions. In short, the Tenth Circuit’s holding allowed the plan administrator here, Comcast, to avoid a less favorable standard of review via its choice-of-law provision.

Finally, the Court considered whether Liberty had abused its discretion in denying Ellis benefits, ultimately finding for Liberty and holding that it had “sound reasons” for making its decision. “Because the record shows Liberty and the experts it retained considered all the pertinent evidence submitted by Ellis and that Liberty reasonably gave less weight to much of Ellis’s evidence, we cannot say that Liberty abused its discretion in denying Ellis’s claim for benefits,” the Court noted. Thus, the Court reversed the lower court’s order and remanded it to have judgment entered in favor of Liberty.

The case is significant for its holding that courts should follow choice-of-law provisions in ERISA plans across the board. As exemplified here, such a ruling allows plan administrators to more strategically select their forum-of-choice to avoid states with less deferential standards of review (among other non-administrator friendly regulations).

On March 31, the United States District Court for the Eastern District of Michigan ruled in favor of a furnisher that reporting a dispute using the Compliance Condition Code of XB, and updating its reporting to XH after completing its investigation, does not violate the Fair Debt Collection Practices Act when the collection agency receives no additional communication from the debtor and there is no basis for ascertaining whether or not the debtor still disputes the debt. 

Factual and Procedural Background

The subject case arose out of a debt collection letter that AFNI sent to Vashonda Foster concerning a $315 debt that she incurred to Comcast. Foster did not respond to AFNI’s letter, but obtained a copy of a credit disclosure statement from a consumer reporting agency, which indicated that the debt remained outstanding several months later. Roughly six months after receiving her credit score, and nearly one year after the initial collection correspondence, Foster sent AFNI a letter disputing the Comcast debt. In response to Foster’s dispute letter, AFNI reported the Comcast debt to a consumer reporting agency using the Compliance Condition Code “XB” (denoting that the completeness or accuracy of the account information was disputed to the data furnisher by the consumer, and that the investigation of the dispute was in progress by the data furnisher). After which, AFNI finalized its investigation and sent Foster a letter advising her that the account had been verified. The letter to Foster also included information about the debt itself, as well as a copy of the Comcast bill showing an overdue amount of $315.24. Two days later, AFNI updated its credit reporting to mark Foster’s with the Compliance Condition Code of “XH” (debt previously in dispute, investigation completed), rather than “XB.”

Shortly after the Compliance Condition Code was modified to “XH,” Foster obtained another credit report and discovered that the trade line associated with AFNI was reporting the status of the alleged debt as “dispute resolved; reported by grantor.” Foster then filed suit against AFNI alleging that the debt collector reported information that it knew, or should have known, was false to a consumer reporting agency, in violation of the FDCPA, 15 U.S.C. § 1692, et seq., the Michigan Collection Practices Act, M.C.L. § 445.251, et seq., and the Michigan Occupational Code, M.C.L. § 339.901, et seq.

No Article III Standing Without Sufficient Concrete Harm

In its motion for summary judgment, AFNI argued that Foster failed to sufficiently demonstrate a concrete injury capable of conferring standing. In response, Foster sought to establish concrete injury in the form of harm to her credit score and ability to obtain credit, and emotional distress as a result of AFNI’s refusal to report its trade line as disputed (“XB”) and, instead, reporting that the dispute had been resolved (“XH”). Foster attempted to rely on a declaration that she filed alongside her own motion for partial summary judgment in support of her emotional distress claims; however, the declaration was not personally signed by her and there was no indication that she had given counsel the permission to sign on her behalf electronically. Consequently, the declaration could not be considered as Rule 56(e) evidence. Foster attempted to rely on the same deficient declaration and inadmissible credit reports to demonstrate harm to her credit score and ability to obtain credit, which also missed the mark.

FDCPA § 1692e(8) Alone Confers Article III Standing

Turning to the issue of whether the FDCPA alone confers standing, the Court looked to the specific statutory provision at issue [§ 1692e(8)] and noted that the “the risk of harm being alleged – failing to report a debt as disputed – [was] precisely the type of harm – abusive debt collection practices – that the FDCPA was designed to prevent.” Thus, Foster’s allegations that AFNI violated § 1692e(8) – standing alone – might be capable of conferring Article III standing; however, at the summary judgment phase, the question of whether those same allegations and the evidence submitted in support thereof actually raised genuine issues of material fact as to AFNI’s knowing failure to report the Comcast debt as disputed, and ultimately was what turned on the merits of Foster’s FDCPA claim.

Analysis of the Merits of Foster’s FDCPA § 1692e(8) Claim

To determine whether a debt collector’s conduct runs afoul of the FDCPA, courts must view any alleged violation through the lens of the least sophisticated consumer. It is worth noting that § 1692e(8) turns on not only the perspective of the everyman, but also the state of mind of the debt collector. As such, proof of the debt collector’s knowledge is essential for the purposes of any § 1692e(8) claim or defense, and whether or not the debt collector has communicated or threatened to communicate credit information that is known or should be known to be false (including the failure to communicate that a disputed debt is disputed), must be evaluated alongside the consumer’s subjective understandings of the situation.

With these guiding principles in mind, the Court determined that the only reasonable interpretation that the “least sophisticated consumer” could reach – after receiving a letter from a debt collector confirming that the consumer owed the debt – would be to realize that the collector believed that the debt was valid, and that if the consumer disagreed, he or she should respond by reaffirming his or her dispute of the debt and the reasons for disputing it. Particularly where, as in this case, Foster never argued that any specific language in AFNI’s notice affirming the Comcast account was false or misleading. Accordingly, the Court could find no genuine issue of material fact as to whether AFNI provided false or misleading information to a consumer reporting agency in violation of § 1692e(8) by changing its Compliance Condition Code from “XB” to “XH” following the conclusion of its investigation, and granted AFNI’s motion for summary judgment.


DirecTV was on the receiving end of a proposed class action in the Central District of California earlier this week alleging the direct broadcast satellite service provider violates the Fair Credit Reporting Act and California state law by pulling credit reports on consumers without a permissible purpose.  A copy of the complaint is available here.

The complaint, filed by consumer Jon Wulf Amadeus Adler, claims DirecTV LLC and a number of affiliates “routinely and systematically” run “hard” credit checks on consumers who have had no interactions with the company and who have not consented to the inquiries.  Adler claims these impermissible hard credit pulls are visible to potential creditors and have negatively affected his and the putative class members’ credit scores.

Adler alleges in his complaint that “Defendants, without permission, conducted hard credit pulls … on Plaintiff and Proposed Class Members’ credit histories, without any authorization, prior relationship or interactions initiated by Plaintiff or Proposed Class Members, which necessarily adversely affected their credit scores.”  Adler claims that he “and Proposed Class Members did not even know about the hard pulls until viewing their own credit reports.”

The FCRA allows for a “soft pull” of a consumer credit report under certain specified purposes – including when a creditor plans to extend a firm offer of credit.  Soft pulls are only visible to the consumer and do not alter a consumer’s credit score.  Hard pulls, on the other end, typically occur when a lender with whom a consumer has applied for credit reviews a credit report.  Hard pulls can impact consumer credit scores and can be seen by others.

Adler alleges violations under both the FCRA and California’s Consumer Credit Report Agencies Act and California’s Unfair Competition Law.  He seeks to represent a proposed class of individuals who were subject to a hard credit pull by DirecTV without their permission within the five years prior to the filing of the complaint.  The suit seeks statutory and punitive damages, injunctive relief, civil penalties, interest, and attorneys’ fees and costs.

The claims against DirecTV are similar to other cases we have previously reported on, including Patel v. Comcast Corporation and Heaton v. Social Finance, Inc., the latter of which resulted in a $2.4 million class settlement.

On August 23, a federal judge in Illinois ruled that a consumer who had multiple accounts with different creditors assigned to the same collection agency did not effectively revoke consent for all accounts merely by revoking consent for one.  Specifically, the Court said that when a consumer told a collection agency to stop calling him in response to a call made on a specific creditor’s account, it was not a “global” revocation with respect to all remaining creditors.

In Michel v. Credit Protection Association, L.P., et al., plaintiff Matthew Michel incurred debts with two separate creditors – Comcast and Commonwealth Edison (ComEd).  Defendant Credit Protection Association (CPA) received both accounts for collection, but at different times.  CPA first received the Comcast debt and began placing multiple calls to Michel’s cell phone to collect on that debt.  Michel called CPA and revoked his consent to be contacted on his cell phone.  Per Michel’s request, CPA ceased calling on the Comcast account.

Soon thereafter, CPA received the ComEd account to collect on, and it began calling Michel’s cell phone in an attempt to collect that debt.  Michel claimed that when CPA contacted him and left messages, it failed to inform him that the calls were for the ComEd account.  CPA replied it had sent letters to Michel regarding the ComEd account, which contained an eleven-digit account number.  Further, CPA referenced that account number when leaving messages for Michel.

Michel sued CPA, claiming it violated the FDCPA and the TCPA when it continued to contact his cell phone using an automatic telephone dialing system (“ATDS”) after Michel revoked consent.  Both parties moved for summary judgment on the sole issue of whether Michel’s revocation of consent for the Comcast account also applied to calls made on the ComEd account.

Claiming he should recover for all calls made to him after revocation of consent, Michel argued that:

(1)     His call to CPA revoked any prior consent regardless of whether it was for Comcast or ComEd;

(2)     He should not have had to decipher the eleven-digit account number to determine which account CPA was calling on; and

(3)     CPA had the ability to perform searches within its database to determine whether Michel had multiple accounts and, therefore, should have placed his cell phone number on a “do not call” list.

In turn, CPA simply argued that Michel’s revocation of consent to his Comcast account did not apply to other subsequent accounts placed by different creditors.  If Michel wanted to revoke consent, he needed to do so on each individual account.

In holding for CPA, the Court found that revocation of consent for one creditor was not revocation of consent for all creditors.  Even though Michel could show he revoked his consent for the Comcast account, that alone was not enough to constitute a global revocation.

The Court noted that when Michel revoked his consent for the Comcast account, he was also returning a call to CPA made on behalf of Comcast.  The Court stressed the “creditor specific” nature of Michel’s actions and found he could not anticipatorily revoke consent for future calls placed by CPA on behalf of other creditors.  Further, the court observed that, though tedious for Michel to distinguish which account CPA was calling upon, the burden fell upon him to make that distinction if CPA provided sufficient identifying factors to separate the accounts.

Lastly, the Court was unpersuaded by Michel’s argument that CPA must cross-reference accounts submitted by all creditors to determine if a consumer had revoked consent for a different creditor merely because CPA has the capacity to do so.  Rather, the Court stated the TCPA simply required CPA to refrain from calling Michel using an ATDS on the Comcast account once consent was revoked.  It does not place an additional burden on CPA to proactively mark a consumer’s cell phone number in anticipation of additional creditors placing accounts that would allow calls to the consumer’s cell phone.

This case provides valuable insight for those collection agencies that represent multiple creditors against the same consumer.  We will continue to monitor this area of the law as these cases develop.

In Patel v. Comcast Corporation, plaintiff consumer Mounang Patel brought a purported class action lawsuit against defendant Comcast Corporation, arguing that Comcast unlawfully obtains background checks (also referred to as consumer reports) on consumers under false pretenses.  On July 17, Comcast moved to dismiss this class claim on the ground that Patel failed to allege that Comcast made any actionable misrepresentations regarding its reasons for obtaining a consumer report.

In the complaint, Patel alleged that he signed up for new Comcast cable service, which included his leasing of “valuable Comcast equipment.”  In connection with his cable service, Comcast gave him the option of providing a $100 deposit for the leased equipment or, instead, having Comcast run a credit check.  Because he was concerned about the impact a credit check would have on his impending home mortgage application, Patel alleges that he elected to provide the deposit to Comcast.

Despite his decision to place a deposit, Patel claims that Comcast ran a credit check on him anyway.  According to Patel, this credit check lowered his credit score and impacted his ability to close on his mortgage loan.  As a result, Patel filed a class action complaint against Comcast.  In the first count of this complaint, Patel alleges that Comcast violated § 1681q of the Fair Credit Reporting Act by “knowingly and willfully obtaining information on [him] from a consumer reporting agency under false pretenses.”

On July 17, Comcast moved to dismiss Patel’s FCRA class claim.  According to Comcast, a “false pretenses” claim requires Comcast to have made a false statement to the consumer reporting agency from whom it obtained the consumer report.  In other words, the claim turns on what Comcast said to the consumer reporting agency, not the consumer.  In Comcast’s view, because Patel claimed that Comcast made false representations to him, and not to the consumer reporting agency, he cannot state a claim under § 1681q.

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