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On Wednesday, January 30th, from 2 – 3 pm ET, Troutman Sanders attorney, Cindy Hanson will be a presenter through a webinar held by PLUS Virtual Education. The webinar is called, “Employer Liability,” and will focus on exploring employer’s liability under the Fair Credit Reporting Act (FCRA) and provide an update on legal developments and insurance issues.

During this webinar, you will learn about:

  • What these types of claims look like and potential damages
  • Policies that could provide coverage
  • Recent legal developments and insurance issues

To register, click here.

In a recent opinion, the U.S. Court of Appeals for the Fifth Circuit recently confirmed that an original mortgage lender cannot be held vicariously liable for violations of the Real Estate Settlement Procedures Act (RESPA) regulations pertaining to loss mitigation allegedly committed by a loan servicer.

In defense to a Texas judicial foreclosure action, the mortgagor filed a thirdparty complaint against the lender that had originated her mortgage loan. The mortgagor asserted violations arising from 12 C.F.R. 1024.41, a RESPA regulation which, among other things, requires a mortgage loan servicer to consider a mortgagor’s complete and timely loss mitigation application and then notify the mortgagor of any loss mitigation options available to avoid foreclosure.

The original lender filed a motion to dismiss the mortgagor’s thirdparty complaint.  The district court agreed with the lender and dismissed it.

Granting an interlocutory appeal filed by the mortgagor, the Fifth Circuit affirmed the dismissal.  It explained that because the text of 12 C.F.R. 1024.41 only imposed obligations on the loan servicer and not the lender, the statutory text “plainly and unambiguously shields” a lender from “any liability created by the alleged RESPA violations of its loan servicer.”  The mortgagor could not circumvent this by alleging, for example, that the loan servicer was acting as the agent for the lender and therefore should be subject to vicarious liability.

This opinion, which appears to be the first from a U.S. appellate court on this issue, is a win for mortgage lenders in that it succinctly limits their potential liability under RESPA’s loss mitigation regulations.

 

ATLANTA – The Consumer Financial Services practice at Troutman Sanders LLP has been selected as one of Law360’s 2018 Practice Groups of the Year. The team was recognized in Law360’s Consumer Protection category for excellence in representing and advising clients with respect to high-stakes litigation and regulatory matters, as well as compliance issues. The firm also received the award in 2016.

“We are proud to be recognized as one of Law360’s Consumer Protection Practice Groups of the Year for the second time in three years. Our litigation, regulatory and compliance attorneys remain committed to providing the best service to our clients,” said Michael Lacy, a partner in Troutman Sanders’ Consumer Financial Services practice.

Troutman Sanders’ trial attorneys have litigated thousands of individual and class action lawsuits in the consumer protection area. The firm also provides national, regional and local banks with compliance advice in the areas of consumer credit and consumer protection.

“Clients appreciate our team’s geographic reach and our work and expertise spanning the full spectrum of industry verticals and legal scenarios,” said Ron Raether, a partner in Troutman Sanders’ Consumer Financial Services practice. “We appreciate Law360’s recognition of our team’s achievements.”

Law360 selects winners based on landmark matters and general excellence and this year received a total of 759 submissions. A profile of Troutman Sanders’ Consumer Financial Services practice will appear in Law360 later this month.

About Troutman Sanders
With a diverse practice mix, workforce and footprint, Troutman Sanders has cultivated its reputation for a higher commitment to client care for over 120 years. Ideally positioned to help clients across sectors realize their business goals, the firm’s 650 attorneys transact for growth, resolve mission-threatening disputes and navigate complex legal and regulatory challenges. See troutman.com for more information.

The federal government shutdown continues and, in the wake of the President Donald Trump’s Oval Office address in support of the border wall, it appears that it could continue for some time. Press reports say approximately 800,000 federal workers are furloughed or working without pay. Consumer-facing companies are asking: What is the impact of the shutdown on their regulatory and litigation docket, as well as anticipated regulatory matters?

At a high level, from a consumer protection point of view, the most notable emerging impacts are on the federal judiciary, the U.S. Department of Justice and the Federal Trade Commission; on the other hand, the banking regulators are fully operational and open for business. Here’s a summary of the state of the judiciary and the federal regulatory agencies under the shutdown.

Continue reading the article here.

 

 

On Oct. 4, 2018, in Smith v. Mutual of Omaha Insurance Company,[1] the United States District Court for the Southern District of Iowa ruled the plaintiff could not advance his putative class action under the Fair Credit Reporting Act if he qualified as an independent contractor rather than an employee. The decision presents another helpful reading of the “employment purposes” provision in the FCRA and becomes part of a small but growing body of law providing clarity on this recurring issue of importance. The decision highlights a limitation on the FCRA’s reach, but the issue has been unsettled and companies who utilize a large number of independent contractors may still find themselves defending against FCRA class actions.

Requirements for Reports Used for “Employment Purposes”

Some of the FCRA’s most litigated protections apply when a consumer report is obtained by an employer for “employment purposes.”[2] This includes obtaining the consumer’s written authorization in a “stand-alone disclosure” and providing a pre-adverse action notice and summary of rights if the consumer report will be used to make an adverse employment decision. Likewise, a consumer reporting agency furnishing a consumer report for employment purposes must follow certain certification requirements and provide a summary of rights with the report. Importantly, these steps are only required if the report is obtained for employment purposes. “Employment purposes” is defined by the FCRA as “a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.”[3] It’s these last three words that have caused confusion.

Continue reading the article on Law360.

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[1] Smith v. Mutual of Omaha Insurance Company , No. 4:17-cv-00443 (S.D. Iowa Oct. 4, 2018).

[2] 15 U.S.C. § 1681b(b).

[3] 15 U.S.C. § 1681a(h).

The recent courtroom battle over the admissibility in a criminal trial of statements made by former Deutsche Bank AG traders to Deutsche Bank’s outside counsel during its internal investigation into misconduct involving the London Interbank Offered Rate, or Libor, shines a spotlight on a potentially recurring problem in criminal prosecutions that arise out of or rely on evidence gathered during internal investigations — excessive entanglement between company counsel and government regulators conducting parallel investigations. The problem? The Constitution. Indeed, government entanglement in or direction of an internal investigation can lead a court to conclude that company counsel acted on behalf of the government, subjecting its otherwise private investigative activity to constitutional scrutiny.

Others have written on the specific problem that arose in the Deutsche Bank Libor-manipulation trial and lessons learned from that particular situation, in which the parties litigated whether company counsel’s allegedly coerced interviews violated the Fifth Amendment. But this article focuses more broadly on the host of “state action” problems that can arise when excessive entanglement exists between government lawyers and company counsel who are conducting an internal investigation, and provides some practical tips for how to avoid those problems.

To read full article go to Law360

Just about every week, there’s a reminder that cybersecurity remains important. But that doesn’t mean that many are taking it as seriously as they should. In the past month alone, Legaltech News has reported surveys that note how law firms are not adopting proper cyber protocols, companies haven’t mitigated third party risks, and attorneys are  vulnerable to biometric, cloud and phishing attacks. This isn’t just a U.S. problem either.

Meanwhile, the focus on privacy seems to be ever increasing. Sometimes, it’s a renewed focus on privacy regulations following the EU’s General Data Protection Regulation (GDPR) or the California Consumer Privacy Act of 2018. Other times, it’s a matter of court cases, like the U.S. Supreme Court’s Carpenter v. U.S. ruling. But in general, maybe it’s just public awareness, as consumers in both the U.S. and abroad become increasingly aware of how their personal data is used.

 

To read full article go to Law.com

On November 16, Sen. John Thune (R-S.D.), the current chairman of the Senate Commerce Committee, and Ed Markey (D-Mass.), a member of the committee and the author of the Telephone Consumer Protection Act, unveiled the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (“TRACED Act”). Among other things, this bill would require carriers to eventually implement “an appropriate and effective call authentication framework” and instructs the Federal Communications Commission to engage in rulemaking to protect consumers from receiving unwanted calls and text messages from unauthenticated phone numbers.

According to its proponents, an “ever increasing number … of robocall scams” prompted this bill. Indeed, one report touted by Markey estimated the number of spam calls will grow from 29% of all phone calls this year to 45% of all calls next year.

In its current form, the TRACED Act gives regulators more time to find scammers, increases civil forfeiture penalties for those caught, promotes call authentication and blocking adoption, and brings relevant federal agencies and state attorneys general together to address impediments to criminal prosecution of robocallers who intentionally flout laws.

More specifically, this act makes the following changes to the existing federal regulatory scheme:

  • Broadens the authority of the FCC to levy civil penalties of up to $10,000 per call for those who intentionally violate telemarketing restrictions.
  • Extends the window for the FCC to catch and take civil enforcement action against intentional violations to three years after a robocall is placed. Under current law, the FCC has only one year to do so. The FCC has told the committee that “even a one-year longer statute of limitations for enforcement” would improve enforcement against willful violators.
  • Brings together the Department of Justice, FCC, Federal Trade Commission, Department of Commerce, Department of State, Department of Homeland Security, the Consumer Financial Protection Bureau, and other relevant federal agencies, as well as state attorneys general and other non-federal entities, to identify and report to Congress on improving deterrence and criminal prosecution at the federal and state level of robocall scams.
  • Requires providers of voice services to adopt call authentication technologies, enabling a telephone carrier to authenticate consumers’ phone numbers prior to initiating any call.
  • Directs the FCC to initiate a rulemaking to help protect subscribers from receiving unwanted calls or texts from callers using unauthenticated numbers.

Announcing the TRACED Act, neither senator minced their words. “The TRACED Act targets robocall scams and other intentional violations of telemarketing laws so that when authorities do catch violators, they can be held accountable,” Thune said in a statement. He continued: “Existing civil penalty rules were designed to impose penalties on lawful telemarketers who make mistakes. This enforcement regime is totally inadequate for scam artists and we need do more to separate enforcement of carelessness and other mistakes from more sinister actors.” Markey added: “As the scourge of spoofed calls and robocalls reaches epidemic levels, the bipartisan TRACED Act will provide every person with a phone much needed relief. It’s a simple formula: call authentication, blocking, and enforcement, and this bill achieves all three.”

Troutman Sanders will continue to monitor this and related legislative proposals.

BTI Consulting Names Troutman Sanders a ‘Standout Law Firm’ in Three Litigation Categories

Troutman Sanders LLP has been designated a “Standout Law Firm” in BTI Consulting Group’s Litigation Outlook 2019 rankings in the following three categories:

The firm is regularly recognized by BTI. According to the 2018 BTI Client Service A-Team report, Troutman Sanders ranks within the top 15 percent of all law firms for client service performance. In recognition of the firm’s strong service culture, Troutman Sanders also has been on the BTI Client Service A-Team for 13 consecutive years.

BTI is an independent consulting group that provides client-based research to the legal community. Its Litigation Outlook 2019 survey is the result of more than 350 telephone interviews conducted between January 11 and August 28 with legal decision makers at companies with U.S. revenues of $1 billion or more.

Troutman Sanders’ litigators partner with clients to resolve their most challenging disputes across the United States and globally. Attorneys have prevailed on multi-million dollar, bet-the-company cases, high-stakes government investigations, and complex cases in many industries including energy, banking and financial services, insurance, pharmaceutical and life sciences, construction, telecommunications, and technology.

About BTI

Based in Boston, BTI Consulting Group has been providing market research and management consulting for more than 25 years. Billing itself as the leader in providing strategic market research to law and management firms, BTI advertises having the largest knowledge base of clients’ needs and satisfaction. BTI provides research, sales training, and consulting services to help companies learn how to better service and operate within their market.

On October 17, the Office of Information and Regulatory Affairs released the CFPB’s fall 2018 rulemaking agenda.  In the preamble to the agenda, the CFPB notes that the agenda lists the regulatory matters that the agency “reasonably anticipates having under consideration during the period from October 1, 2018 to September 30, 2019.”

Implementing Statutory Directives.  According to the CFPB, much of its rulemaking agenda focuses on implementing statutory directives.  Those statutory directives include:

  • The directive by the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) that the CFPB engage in rulemaking to (1) exempt certain creditors with assets of $10 billion or less from certain mortgage escrow requirements under the Dodd-Frank Act, and (2) develop standards for assessing consumers’ ability to repay Property Assessed Clean Energy (“PACE”) financing; and
  • The Dodd-Frank Act’s directive that the CFPB, prior to any public disclosure, modify or require modification of loan-level data submitted by financial institutions under the Home Mortgage Disclosure Act (“HMDA”) so as to protect consumer privacy interests.

Continuation of Other Rulemakings.  In addition, the CFPB notes that it “is continuing certain other rulemakings described in its Spring 2018 Agenda.”  Those continuing rulemaking efforts include:

  • Anticipated rulemaking to reconsider the 2017 Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule; 
  • Anticipated rulemaking to reconsider its 2015 HMDA rule, for instance, by potentially revisiting such issues as the institutional and transactional coverage tests and the rule’s discretionary data points; and 
  • Anticipated rulemaking to address how to apply the 40-year-old Fair Debt Collection Practices Act (“FDCPA”) to modern collection practices.

Further Planning.  The CFPB also notes that it “has a number of workstreams underway that could affect planning and prioritization of rulemaking activity, as well as the way in which it conducts rulemakings and related processes.”  Those workstreams include:

  • Ongoing efforts to reexamine rules that the Bureau issued to implement Dodd-Frank Act requirements concerning international remittance transfers, the assessment of consumers’ ability to repay mortgage loans, and mortgage servicing;
  • Ongoing efforts to reexamine rules implementing a Dodd-Frank Act mandate to consolidate various mortgage origination disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act;
  • Ongoing efforts to reexamine the requirements of the Equal Credit Opportunity Act (“ECOA”) concerning the disparate impact doctrine, in light of recent Supreme Court case law and Congressional disapproval of a prior Bureau bulletin concerning indirect auto lender compliance with ECOA and its implementing regulations; and
  • Ongoing efforts directed at determining whether rulemaking or other activities may be helpful to further clarify the meaning of “abusiveness” under section 1031 of the Dodd-Frank Act.