Virginia is currently one of only two states that does not allow class-action lawsuits in its courts. However, that could change soon as House Bill (HB) 418, originally introduced on January 10, 2024, seeks to create a class-action framework loosely modeled on the Federal Rules of Civil Procedure. On February 9, HB 418 passed the House of Delegates and will be sent to the Senate for consideration.

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.

According to a recent year-in-review report by WebRecon, reversing the trend of the last two years, filings under the Telephone Consumer Protection Act (TCPA) increased in 2023 as compared to 2022. Likewise, complaints filed with the Consumer Financial Protection Bureau (CFPB) were up for the year. Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA) filings, however, were both down from the previous year. In all, the FCRA maintained its lead in the number of filings, followed by the FDCPA, and with the TCPA in third place.

The debt purchaser in In re McIntosh argued that because it was enforcing a debt that was not listed correctly on the debtor’s bankruptcy schedules, it was entitled to assume the debt had not been discharged. The U.S. Bankruptcy Court for the Southern District of Florida disagreed and entered an award of sanctions in the total amount of $64,686.93 — including $10,000 for emotional distress and over $21,000 in punitive damages.

This article was republished on insideARM on February 6, 2024.

On January 2, the Consumer Financial Protection Bureau (CFPB) filed an amicus curiae brief urging the U.S. Court of Appeals for the First Circuit to reverse a district court’s decision finding that a debt collector lacked the requisite knowledge and intent to violate the Fair Debt Collection Practices Act (FDCPA) when it sent a debt-collection communication prior to any knowledge of the debtor’s bankruptcy filing.

In a change of course, the Utah court of appeals has reversed the dismissal of a plaintiffs’ suit against a debt collector based on its alleged failure to register as a collection agency prior to filing collection suits. While the Utah Collection Agency Act (UCAA) was repealed by the Utah legislature last year, discussed here, cases asserting this theory of liability remain pending before state and federal courts in the state. Late last year, in Meneses v. Salander Enterprises LLC, discussed here, the court of appeals held that a violation of the UCAA was not a deceptive or unconscionable act. The court distinguished this case from Meneses by finding that the defendant made affirmative representations in the lawsuits at issue that precluded dismissal at this stage.

On December 15, the Consumer Financial Protection Bureau (CFPB) announced it had reached a settlement with medical debt collector Commonwealth Financial Systems, Inc. (Commonwealth) in its lawsuit over alleged illegal debt collection practices. Specifically, the CFPB alleged that Commonwealth failed to conduct reasonable investigations of disputes and violated the Fair Debt Collection Practices Act (FDCPA) by attempting to collect disputed debt without obtaining substantiating documentation. Under the settlement agreement, Commonwealth is banned from debt collection activities, must request CRAs to delete all consumer accounts to which it had previously furnished information, and must pay a $95,000 penalty to the CFPB’s victims relief fund.

On December 13, New York Governor Kathy Hochul signed into law S4907A, which prohibits hospitals, medical providers, or ambulance services from providing negative information about medical debt to consumer reporting agencies (CRAs). The law also requires that these entities include a provision in their contracts with collection agencies prohibiting the reporting of any portion of a medical debt to a CRA. Any debt that is reported to a CRA will be deemed void. The law became effective immediately after it was signed.

On November 20, a judge for the Southern District of New York granted a motion to dismiss a Fair Debt Collection Practices Act (FDCPA) class-action holding that a simple lack of a date on a model validation notice did not amount to a violation of the statute because it was not confusing to the least sophisticated consumer.