Class Actions

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Recently, Lead Bank and its loan servicer Hyphen, LLC, an online lending platform operating Helix Financial, filed a motion to dismiss a purported class action alleging violations of the Georgia Installment Loan Act (GILA) and Georgia racketeering law arising out of a consumer installment or “payday loan.” Specifically, the plaintiff alleged that the loan agreement between herself and Lead Bank was “nothing more than a façade, and a temporary one at that” in an attempt to evade Georgia’s restrictions on payday lending.

In Career Counseling, Inc. v. Amerifactors Financial Group, LLC, the U.S. Court of Appeals for the Fourth Circuit upheld a district court’s decision denying class certification in a Telephone Consumer Protection Act (TCPA) case on the basis that the plaintiff failed to satisfy Rule 23’s “implicit further requirement of ascertainability.” The Fourth Circuit also upheld summary judgment against the defendant as to the individual claim finding the defendant was indeed the “sender” of the fax at issue. Each finding is discussed more fully below.

We are pleased to share our annual review of regulatory and legal developments in the consumer financial services industry. With active federal and state legislatures, consumer financial services providers faced a challenging 2023. Courts across the country issued rulings that will have immediate and lasting impacts on the industry. Our team of more than 140 professionals has prepared this concise, yet thorough analysis of the most important issues and trends throughout our industry. We not only examined what happened in 2023, but also what to expect — and how to prepare — for the months ahead.

On January 18, a court in the Eastern District of Wisconsin denied class certification in a Telephone Consumer Protection Act (TCPA) case concluding that the factual issue of whether the proposed class members had suffered an injury-in-fact sufficient to confer Article III standing based on the receipt of a ringless voicemail was an individualized issue that would predominate over common issues.

In a case of first impression, the U.S. Court of Appeals for the Ninth Circuit was tasked with determining whether the alleged extracting and retaining of consumer data and tracking of customers using an online payment platform exposes defendants to personal jurisdiction in the state where an online purchase was made. The court concluded it does not. “When a company operates a nationally available e-commerce payment platform and is indifferent to the location of end-users, the extraction and retention of consumer data, without more, does not subject the defendant to specific jurisdiction in the forum where the online purchase was made.”

On October 12, the U.S. Court of Appeals for the Third Circuit issued a decision rejecting a district court’s finding that the so-called informational injury doctrine established Article III standing for the named plaintiff and putative class in a class action brought under the Fair Debt Collection Practices Act (FDCPA).

On October 12, the U.S. District Court for the Northern District of Illinois denied certification of a putative class action asserting that TransUnion violated the Fair Credit Reporting Act (FCRA) and the Missouri Merchandising Practices Act (MMPA) by allegedly misleading consumers about the accuracy and popularity of VantageScore 1.0, TransUnion’s proprietary credit scoring model. The court held that the plaintiff was an inadequate class representative due to his lack of credibility, and the asserted class claims failed both the commonality and predominance prongs of Federal Rule of Civil Procedure (FRCP)23.

Recently, the New Jersey appellate division held that a debt purchaser is not liable under the New Jersey Consumer Fraud Act (NJ Fraud Act) for failing to obtain a license under the New Jersey Consumer Finance Licensing Act (NJ Licensing Act). Although the decision is unpublished, it is still a welcome relief for purchasers of defaulted debt.

A new enforcement action provides more detail on the expectations of the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) (collectively, the agencies) for the content of tenant screening reports.