7th Circuit Dings Plaintiff’s Attorney Mario Kasalo On Attorneys’ Fees

In Paz v. Portfolio Recovery Associates, LLC, No. 17-3259 (4/2/19) the U.S. Court of Appeals for the 7th Circuit upheld the district court’s award of $10,875 in attorney fees to the plaintiff’s attorney, Mario Kasalo, despite his petition for $187,410 in fees after prevailing at trial in a lawsuit brought under the Fair Debt Collection Practices Act and Fair Credit Reporting Act.  The 7th Circuit criticized Mr. Kasalo for not settling the case early on, stating “Sometimes settling a case is the only course that makes sense. This case provides a good example.”  At trial plaintiff was awarded only $1,000 in damages on a single FDCPA claim while defendants had prevailed in lion's share of plaintiff's other claims. Importantly, the Court noted that plaintiff had disregarded multiple offers to settle the lawsuit both at outset of action and after defendant had prevailed on summary judgment. The 7th Circuit held that when determining the reasonableness of the fee request it was appropriate for the district court to consider the fact that plaintiff had rejected the defendant’s Rule 68 Offer of Judgment and series of settlement offers, the last one of which if accepted would have settled case for $3,501 plus reasonable fees. The 7th Circuit further held that the $3,501 plus fees offer was reasonable, where it was more than three times maximum statutory damages that plaintiff could receive, and the district court could conclude that vast majority of fees requested by plaintiff's counsel was for time spent on pursuing unsuccessful and ill-advised efforts to win a much bigger payoff than what was remotely possible. 


Moral of the Story 

This decision illustrates the importance of making and documenting a good faith offer to settle a lawsuit where liability is likely, and to do so early in the litigation before plaintiff’s counsel racks up substantial fees.  If plaintiff’s counsel persists and ultimately wins, the offer can be extremely helpful in reducing their fee award. 

MS Obtains Unanimous Jury Verdict in Favor of Clients in FDCPA Case


On April 8, 2015, a jury of seven sitting in the Southern District of California determined that a law firm and its asset purchaser client did not violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”) by including a request for 10% interest in the prayer for relief of a state court collection complaint.  In Hadsell v. Mandarich Law Group, LLP and CACH, LLC, a consumer filed an FDCPA claim against the two companies alleging a myriad of false claims, including that the companies had disclosed the debt to third parties and failed to abide by a request to cease and desist. After success on motions to dismiss and summary judgment, the case proceeded to a jury trial on one sole issue: whether a request for 10% statutory interest in the prayer for relief of a state court complaint violates the FDCPA where the credit card contract in question provided for an 8.9% interest rate. Like many consumer law claims against law firms, this complaint was spurred from a state court collection action on the debt. In late 2011, Mandarich Law Group, LLP filed a state court complaint on behalf of CACH, LLC to collect on a defaulted Bank of America account.  The state court complaint had two counts, breach of contract and account stated.  In the prayer for relief, the complaint requested that the court find that a 10% interest apply under the account stated theory.

Approximately 30 days after the state court suit was filed, the consumer filed suit in the U.S. District Court for the Southern District of California, claiming that the collection action, among other activity, violated the FDCPA. Plaintiff was represented by the San Diego law firms of Hyde & Swigart and Kazerouni Law Group.

The Plaintiff’s focal point during the jury trial was that the defendants intentionally violated FDCPA § 1692(f) and (f)(1) by requesting 10% interest when they were aware of the 8.9% interest rate that was set by the initial contract between the consumer and creditor.  Defendants argued, in contrast, that there was a valid factual basis to pursue the account stated claim and for the Court to assess 10% interest--- the default rate under the California Code---- based on the final charge-off statement on the account.  Further, Defendants’ argued that asking the state court to decide the question of interest was not an attempt to collect an authorized amount as the court had the legal ability to award it under the facts.  The jury unanimously agreed and found that no violation of the FDCPA occurred.

Lead trial counsel for Defendants was Nicole M. Strickler of MS&S. For more information on this case or any other FDCPA related issues, contact her at nstrickler@messerstrickler.com or at 312-334-3442.

When a Creditor is a “Debt Collector” Under the FDCPA


The Federal Trade Commission (“FTC”) recently released a statement that the meaning of “debt collector” may be more expansive under the Fair Debt Collection Practices Act (“FDCPA”) than previously thought. A “debt collector” is defined under the FDCPA as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” §803(6). With this definition, it has long been assumed that creditors who collect their own debts are not covered by the FDCPA. However, Section 803(6) goes on to say “the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.”

The FTC has asserted FDCPA claims against companies using other names to collect their own debts, characterizing them as “debt collectors” under the FDCPA. The FTC has issued a warning toremind creditors that the FDCPA can in fact apply to creditors who collect on their own behalf. Creditors should regularly review their policies to ensure their practices and procedures follow all applicable laws and regulations.

View the FTC’s Original Post Here

To learn more about the FTC’s warning and how to avoid FDCPA violations please contact Joseph Messer at 312-334-3440 or jmesser@messerstrickler.com.


On November 2, 2015, Big Lots Stores, Inc. became the most recent big-named retailer to be hit with a class action complaint alleging violations of the federal Fair Credit Reporting Act (FCRA).  The lawsuit, filed in the Philadelphia County Court of Common Pleas, alleges that Big Lots conducted improper background checks on employees in violation of the FCRA.  See Aaron Abel v. Big Lots Stores, Inc., Case No. 151100286.  Specifically, plaintiff claims that the consent form he signed in connection with an application for employment with Big Lots included extraneous information and failed to sufficiently disclose that a consumer report would be procured. The FCRA requires that a clear and conspicuous disclosure be made in writing to an applicant prior to the procurement of a consumer report in a document that consists solely of the disclosure that a consumer report may be obtained for employment purposes.  Notably, the disclosure must be in a separate document (i.e. it cannot be part of the employment application) and the disclosure cannot contain any additional information except for the consumer’s written authorization -- which is also required before procuring a consumer report.

This requirement for a “clear and conspicuous disclosure” has led to numerous recent FCRA class actions, including class actions against Home Depot, Chuck E. Cheese, and Whole Foods.  Markedly, the stakes in FCRA class actions can be quite high, considering the FCRA provides for statutory damages ranging from $100 to $1,000 per violation – even where the consumer suffered no actual harm.  For example, the class actions against Home Depot, Chuck E. Cheese, and Whole Foods each resulted in settlements, ranging from $802,720 to $1.8 million dollars.  This potential for high-value FCRA settlements and judgments leads to the unfortunate possibility of “professional job seekers” who seek out employment applications they know to be defective solely for the purpose of pursuing litigation.  Indeed, The National Law Review recently warned, in an article dated November 11, 2015, that a new breed of “opportunistic faux job applicants” – who have no intention of accepting employment with the targeted employers, are submitting employment applications in an attempt to position themselves as the named plaintiff in class action litigation.  To avoid such exposure, employers should re-examine their background check disclosure forms to ensure strict compliance with the FCRA.

For more information on the FCRA or to request a review of your background check disclosure forms, contact Katherine Olson at 312-334-3444 or kolson@messerstrickler.com.

Second Employment related FCRA Claim filed against AMAZON.COM

A second class action has been filed against Amazon.com in the U.S. District Court for the District of New Jersey alleging that Amazon violated the Fair Credit Reporting Act by failing to warn an applicant a negative reports it received and in turn, failing to allow the applicant an opportunity to clarify or fix what he deemed were errors on the report.   Plaintiff also alleges Amazon failed to provide him with a copy of that report or a list of his rights under the FCRA as required.  According to Plaintiff’s Complaint, Amazon allegedly offered him a position but later withdrew the offer after receiving negative information in a background check from a third party background screener.

The New Jersey Plaintiff seeks to represent a class of those people (employees or job applicants) at Amazon who did not receive a copy of their reports or correspondence explaining that the report would not be provided within 2 to five years from the date of filing.  As a best practice, employers should be aware of the requirements imposed by the FCRA and provide all applicable notices to employees or prospective employees as required.

For more information on the FCRA and its application in the employment law field, please contact Dana Perminas at 312-334-3474 or dperminas@messerstrickler.com.

MS&S Welcomes Adam T. Hill

Messer Strickler, Ltd. is pleased to welcome Adam T. Hill to the firm. With over 7 years of experience, Mr. Hill’s background in representing consumers gives him a unique perspective in consumer defense work. Licensed in Illinois, New York, and various district courts throughout the country, Mr. Hill’s arrival will allow us to continue to provide exceptional service to our clients in more places than ever before.

Class Action Lawsuit Against Paramount Pictures Dismissed with Prejudice


Soon after filing a class action lawsuit against Paramount Pictures Corporation, Michael Peikoff’s lawsuit was dismissed with prejudice. In the complaint filed in the United States District Court for the Northern District of California, Peikoff alleged that Paramount Pictures violated the Fair Credit Reporting Act (“FCRA”) when it ran credit report checks on potential employees. Peikoff claimed that, though Paramount had disclosed its intentions and received authorization from job applicants, the authorization form was included in the general job application in violation of the law.

Judge Vince Chhabria disagreed with Peikoff. The Court determined that Paramount did not act recklessly by including the authorization form within the job application nor did it violate the FCRA by using such language. Judge Chhabria found that although Paramount was not entirely upfront with its intentions to run credit checks, it did not violate federal law.

For more information about this case or the FCRA generally, contact Joseph Messer at


or (312) 334-3440.

New York Department of Financial Services Clarifies Debt Collection Regulations

On February 19, 2015, the New York State Department of Financial Services (the “Department”) issued answers to frequently asked questions to assist debt collectors and debt buyers in understanding and complying with the recently enacted rules regulating debt collection practices in the state of New York.  For a quick overview of the newly enacted New York regulations see December 8, 2014 Blog Post titled “New York Issues New Rules on Debt Collection.”  The FAQs are available on the Department’s website: http://www.dfs.ny.gov/legal/regulations/adoptions/faq-debt-collect.htm. Note that the Department is likely to update its website with additional information as it continues to receive questions regarding the new regulations.  Accordingly, debt collectors and debt buyers are encouraged to visit the website as the effective date for the regulations approaches. As a reminder, the new regulations will take effect on March 3, 2015, with the exception of Sections 1.2(b) (disclosure requirements) and 1.4 (substantiation requirements), which take effect on August 30, 2015.  Debt collectors who collect in the state of New York should examine the regulations and newly issued FAQs and prepare compliance plans to meet the new requirements.

For more information on the new regulations and/or compliance recommendations, contact Katherine Olson at (312) 334-3444 or kolson@messerstrickler.com.


On December 3, 2014, New York financial regulators announced the adoption of final rules regulating debt collection practices in the state of New York.  The new regulations are intended to curb abuse by debt collectors, requiring them to, among other things, advise consumers when the statute of limitations has expired on debts and confirm settlements agreements in writing.  Interestingly, both such rules have long been in place in New York City pursuant to City Rules and Regulations.  See New York City, N.Y., Rules, Tit. 6, §§ 2-191, 2-192. The regulations are the result of more than a year of meetings and public comments stemming from two earlier published versions of the regulations.  The new statewide regulations are far from surprising, considering that more than 20,000 complaints about debt collection practices were filed by New Yorkers in 2014 alone.  In announcing the new regulations, New York Governor Andrew M. Cuomo stated that New York “will not tolerate debt collectors who wrongfully take advantage of consumers.”

To address the perceived abuses in the debt collection industry, the new regulations of third-party debt collectors and debt buyers include the following key reforms:

  •    Improved Disclosures and Debt Information: Enhanced initial disclosures will be required when a debt collector first contacts an alleged debtor. These disclosures go beyond current federal requirements, by requiring that collectors disclose key information about the charged-off debts they collect, including: the amount owed at charge-off, and the total post-charge-off interest, charges, and fees.

  •    Protection Against “Zombie Debts”: If a collector attempts to collect on a debt for which the statute of limitations has expired, prior to accepting payment, the collector must provide notice that the statute of limitations may be expired and that, if the consumer is sued on such debt, the consumer may be able to prevent a judgment by informing the court that the statute of limitations has expired.

  •    Substantiation of the Debt Allegedly Owed: These regulations establish groundbreaking protections that require a collector to “substantiate” a debt upon a consumer’s request for same, which may be made at any time during the collection process.  This will assist consumers who fail to exercise their right to verification under the 30-day window established by the federal Fair Debt Collection Practices Act.

  •    Written Confirmation of Settlement Agreements: Collectors must provide consumers with written confirmation of any debt settlement agreement, and must also provide written confirmation upon satisfaction of the debt.

  •    Email Communications: Consumers may opt to communicate with collectors via their personal email.  This is intended to reduce harassing phone calls and allow consumers to maintain better records of their communications with the collector.

The new regulations will take effect on March 3, 2015, with the exception of Sections 1.2(b) (disclosure requirements) and 1.4 (substantiation requirements), which take effect on August 30, 2015.  The final regulations are available at: http://www.dfs.ny.gov/legal/regulations/adoptions/dfsf23t.pdf.  Debt collectors who collect in the state of New York should examine the new regulations and prepare compliance plans to meet the new requirements.

For more information on the new regulations and/or compliance recommendations, contact Katherine Olson at (312) 334-3444 or kolson@messerstrickler.com

Federal Judge Rules One Voicemail Message Is Not Enough to Sustain FDCPA Violation

In Hagler v. Credit World Services, Inc., a federal judge in Kansas decided that a debt collection agency was not in violation of the FDCPA by failing to identify itself as a debt collector in one voicemail message.  The judge explained that multiple calls must be made in order for “harassment” to occur.

Plaintiff was initially contacted by a Credit World Services employee to discuss the outstanding debt.  Plaintiff informed the employee that he would need to call him back.  After waiting about a month with no contact with Plaintiff, Defendant called Plaintiff and left the following voicemail:

“Hi, this message is for Charles.  Please call Bill Jackson at 913-362-3950 when you get a chance. 

 My extension is like 281.  Thank you.”

Plaintiff sued, arguing that Defendant’s voicemail violated several provisions of the FDCPA.  Specifically, Plaintiff alleges Defendant:

•Failed to disclose meaningfully the caller’s identity, in violation of 15 U.S.C. § 1692d(6);

•Failed to disclose that a debt collector had left the voicemail, in violation of 15 U.S.C. § 1692e(11); and

•Used misleading and deceptive language, in violation of 15 U.S.C. § 1692e.

Plaintiff also claimed that the voicemail message was otherwise deceptive and failed to comply with the provisions of the FDCPA.  Plaintiff and Defendant filed cross-motions for summary judgment on all four claims.

The judge agreed with the collection agency on all four counts.  The judge decided that the voicemail message did not provide a “meaningful” disclosure of the employee’s identity as a debt collector under § 1692d(6) as the employee only provided his name, which has no real meaning to the debtor.  The judge explained further that the employee must provide more about himself than his name to be a “meaningful” disclosure.  However, the judge ruled that a violation requires more than just one call.

Because the clear language of § 1692d(6) prohibits the placement of telephone “calls” without meaningful disclosure, the judge did not agree that this single voicemail message violated the FDCPA.  He supported this finding by citing other district courts who also focused on the plural usage of “calls” in the statute.  See Thorne v. Accounts Receivables Mgmt, Inc., 2012 U.S. Dist. LEXIS 109165 (S.D. Fla. July 23, 2012); Jordan v. ER Solutions, Inc., 900 F. Supp. 2d 1323 (S.D. Fla. 2012); Sanford v. Portfolio Recovery Assocs., LLC, 2013 U.S. Dist. LEXIS 103214 (E.D. Mich. May 30, 2013).

The judge also determined that the debt collector was not in violation of the FDCPA for failing to provide the “mini-Miranda” disclosure.  The judge noted that “in order to ‘convey information regarding a debt,’ a message must ‘expressly reference debt’ or the recipient must be able to infer that the message involved a debt.”  Since the employee did not mention the debt in the voicemail message, the judge did not consider it a debt collection communication under the FDCPA.

Finally, the judge disagreed that the message was misleading.  The employee merely left his name, phone number, and requested Plaintiff call him back.  The judge decided that nothing in the message was intended to mislead the Plaintiff.

For more information on this topic, contact Stephanie Strickler at 312-334-3465 or sstrickler@messerstrickler.com.



A class action lawsuit was recently filed in the Northern District of California against the world’s largest web-based professional network, LinkedIn Corp., for alleged violations of the Fair Credit Reporting Act (“FCRA”).  


Tracee Sweet et al. v. LinkedIn Corp.

, Case No. 5:14-cv-04531 (N.D. Cal. Oct. 9, 2014).  The four plaintiffs claim that LinkedIn violated the FCRA “through the use of its reference search functionality, which allows prospective employers, among others, for a subscription fee, to obtain reports containing ‘Trusted References’ for job applicants who are members of LinkedIn.”  By using the “Search for References” feature, prospective employers can access a report containing the names, locations, employment areas, current employers, and current positions of all persons in the user’s network who may have worked with the applicant.  The reference report encourages the prospective employer to contact references by allowing prospective employers to view each reference’s profile; to “connect” with each reference on LinkedIn; and to send each reference a message by “InMail,” LinkedIn’s internal electronic messaging system.  Members of LinkedIn, however, are allegedly not notified when prospective employers run the reference report on them. 

The plaintiffs claim that  LinkedIn violated the FCRA by “(1) fail[ing] to comply with the certification and disclosure requirements mandated by the FCRA for credit reporting agencies who furnish consumer reports for employment purposes, (2) fail[ing] to maintain reasonable procedures to limit the furnishing of consumer reports for the purposes enumerated in the FCRA and to assure maximum possible accuracy of consumer report information, and (3) fail[ing] to provide the users of the reference reports the notices mandated by the FCRA.”  In essence, the plaintiff claim, the reference reports allow any prospective employer to “anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather, without the knowledge of the member, and without any safeguards in place as to the accuracy of the information.” 

The plaintiffs seek to certify a class of all persons in the U.S. who have had a reference report run on them in the last two years that was initiated through LinkedIn’s “Search for References” feature.  The plaintiffs also propose a subclass of individuals who applied for employment through a LinkedIn job posting in the last two years, whose potential employer ran a reference report initiated through LinkedIn’s “Search for References” feature. 

Importantly, the lawsuit hinges on whether the reference reports constitute consumer reports, which are defined by the FCRA as “any written, oral, or other communications of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purposes of serving as a factor in establishing the consumer’s eligibility for – [among other things] employment purposes . . . .”  In the event the reference reports are deemed not to constitute consumer reports, the claims would fall outside the purview of the FCRA and the lawsuit should be dismissed. 

For more information on the LinkedIn case and/or the FCRA generally, contact Katherine Olson at (312) 334-3444 or kolson@messerstrickler.com.

Third Circuit Holds CRAs’ Compliance with the HEA Not Furnisher’s Concern

The Third Circuit recently considered for the first time the interplay between the Fair Credit Reporting Act (“FCRA”) and the Higher Education Act of 1965 (“HEA”), with respect to the responsibilities of an institution of higher education that furnishes information on student loan indebtedness to a consumer reporting agency (“CRA”).  In Seamans v. Temple University, Case No. 12-4298, plaintiff-debtor appealed an order of the United States District Court for the Eastern District of Pennsylvania, which granted summary judgment to defendant, Temple University, on plaintiff’s claims for negligent and willful violations of the FCRA.  In Seamans, the plaintiff argued that the defendant provided incomplete and misleading information to CRAs regarding an education loan when it never provided the CRAs with the collection history and date of delinquency of the loan.  The Third Circuit reversed the lower court’s decision, holding that furnishers of consumer credit data remain obligated to report fully and accurately under the FCRA regarding the collection history and date of delinquency for even an HEA-qualifying education loan. 

To protect consumersfrom having their credit forever impaired by aging debts, CRAs are precluded from reporting accounts which have been “placed for collection” or “charged to profit and loss” more than seven years prior to the report. See 15 U.S.C. § 1681c(a)(4).  When a furnisher provides information to a CRA regarding an account placed for collection or charged to profit or loss, the furnisher then has 90 days in which to notify the CRA of the account’s “date of delinquency,” which is defined as “the month and year of the commencement of the delinquency on the account that immediately preceded the action.”  See § 1681s-2(a)(5)(A).  The date of delinquency enables the CRA to calculate the seven-year window for “aging-off” purposes—without it, the CRA would be unable todetermine when the account had been placed for collection, rendering the “aging-off” date impossible to calculate.  The HEA, however, contains a provision that instructs CRAs to disregard the FCRA’s “aging-off” provisions when reporting data on certain federally backed education loans.  See 20 U.S.C. § 1087cc(c)(3). 

Defendant argued that by simply omitting from its report all facts that could trigger the “aging-off” provisions, it was helping the CRAs comply with the HEA and, in practice, furthering the congressional intent to prevent unpaid student loans from “aging off” credit reports.  The Third Circuit disagreed, finding that the question of whether a particular loan should or should not “age off” a credit report was the CRAs’ statutory concern, not an excuse for furnishers to report loan information in an incomplete or inaccurate manner. 

Although furnishers, such as the defendant in Seamans, are obligated to provide complete and accurate information to CRAs, the FCRA explicitly precludes private suits for failure to comply with that statutory duty and instead provides for enforcement of that provision by federal and state officials.  See 15 U.S.C. § 1681s-2(a), (c), (d).  Accordingly, the plaintiff’s claims in Seamans were limited to those which occurred after defendant was informed of plaintiff’s dispute of the information.

For more information on the Third Circuit decision or furnishers’ duties under the FCRA, contact Katherine Olson at (312) 334-3444 or kolson@messerstrickler.com.



In a recent Fair Credit Reporting Act (“FCRA”) case, Mohammad Babar v. Screening Reports, Inc., the U.S. District Court for the District of New Jersey granted defendant, Screening Reports, Inc.’s, motion for judgment on the pleadings, dismissing plaintiff’s complaint with prejudice.   Joseph Messer & Katherine Olson of Messer Strickler, Ltd. represented Screening Reports, Inc., with the assistance of local counsel. 

In the lawsuit, plaintiff sought to recover from Screening Reports, Inc., for a willful violation of Section 1681e(b) of the FCRA, which provides that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”  To prove a willful violation of Section 1681e(b), a plaintiff must establish, among other things, that the defendant prepared a report which was inaccurate.  Plaintiff alleged that defendant inaccurately reported an “eviction record match” on his credit report.  Plaintiff admitted that he was involved in the eviction action but alleged that he was never evicted because the action was dismissed without prejudice. 

Screening Reports, Inc. moved pursuant to Federal Rule of Civil Procedure 12(c) for judgment on the pleadings arguing that it could not be found liable under Section 1681e(b) because it provided an accurate report.  The Court reviewed the report, which defendant had attached to its Answer to the Complaint, and found that judgment on the pleadings was warranted.  Specifically, the Court relied on the report’s decision detail, which required any and all eviction actions filed against the plaintiff in the past 84 months be reported.  Accordingly, the plaintiff need not have been actually evicted for an eviction action to appear on his report.  Importantly, the Court also found that the eviction action was captioned in the report as “DSM W/O PR 1-5-12.”   The Court held that with this caption, the report clarified that while an eviction proceeding was filed against plaintiff, it was dismissed without prejudice.   As the plaintiff admitted that the eviction action was filed against him and dismissed without prejudice, the report was accurate.  Because the report was accurate, Plaintiff could not establish a violation of § 1681e(b), and the Court dismissed the complaint with prejudice.

For more information on this case or assistance in defending an FCRA claim, contact Joseph Messer at (312) 334-3440 or Katherine Olson at (312) 334-3444.  

Credit Reporting Agencies May Be Affected by SECURE Act Amendments to FCRA

Earlier this month, U.S. Senators Sherrod Brown (D-OH) and Brian Schatz (D-HI) held a news conference where they discussed their proposed legislation intended to protect consumers from inaccurate credit reports and credit scores.  The Senators’ legislation, Stop Errors in Credit Use and Reporting (SECURE) Act of 2014, will be introduced after Consumers Union releases a new report addressing credit report errors that affect 40 million of U.S. citizens. 

Under the Fair Credit Reporting Act (“FCRA”) (15 U.S.C. 1681 et seq.), credit reporting agencies (“CRAs”) are required to “Follow reasonable procedures to assure maximum possible accuracy” of information contained in credit reports.  Senators Brown and Schatz contend that many reports still contain many errors that can be prevented.  In fact, in a 2013 report the Federal Trade Commission (“FTC”) found that one in five consumers has an error on at least one of their credit reports.  Those errors were significant enough to impact the credit scores of half of those consumers.

Senator Schatz commented on the legislation: “Errors in a credit report can make the difference between whether someone can live the American Dream and buy a home or even get a job…  Our legislation will make credit reports more accurate, help people to correct any mistakes, give federal agencies more tools to enforce the law, and hold reporting agencies and data furnisher accountable for their mistakes.”

The SECURE Act proposes changes for credit reporting agencies intended to:

1)      Make credit reports more accurate from the beginning;

2)      Ensure that consumers are heard when they dispute information in their credit report;

3)      Provide consumers with a free, meaningful credit score once a year;

4)      Require CRAs and data furnishers to conduct meaningful investigations when consumers file disputes;

5)      Provide additional tools to agencies to adequately regulate and supervise creditreporting agencies; and

6)      Give consumers better legal tools to enforce their rights under the FCRA.

The SECURE Act would provide increased requirements on CRAs and data furnishers:

-          Requires CRAs to pass along documentation sent by consumers to data furnishers and requires data furnishers to consumer the documentation in their re-investigation;

-          Prevents CRAs from ignoring new or additional information provided by a consumer that is relevant to an on-going dispute;

-          Requires CRAs to gather report information on disputesand their resolution;

-          Directs the Consumer Financial Protection Bureau (“CFPB”) to establish minimum procedures that a CRA must follow to ensure maximum possible accuracy of consumer reports.

Among the amendments to the FCRA is section 612, where, among other changes, subsection (b) will be stricken and the following will be inserted:

(b)Free Disclosure After Notice of Adverse Action or Offer of Credit on Materially Less Favorable Terms.—

“(1) In general.—Not later than 14 days after the date on which a consumer reporting agency received a notification under subsection (a)(2) or (h)(6) or section 615, or from a debt collection agency affiliated with the consumer reporting agency, the consumer reporting agency shall make, without charge to the consumer, all disclosures required in accordance with the rules prescribed by the Bureau under section 609(h).

The SECURE Act is also intended to provide:

More disclosures to consumers:

1)      Provides consumers with access to meaningful credit scores free of charge annually; and

2)      Ensures that consumers get the information they need to understand their credit reports by enabling consumers to identify and correct errors on their report, understand how their credit report is being used and by whom, and see the same information that is used by lenders to deny a consumer credit or increase interest rates.

Legal redress:

1)      Holds CRAs accountable to the FTC for negligent violations of the FCRA; and

2)      Provides for injunctive relief as a remedy for consumers who sue CRAs under the FCRA.

Regulatory reforms:

1)      Creates a national registry of CRAs to provide consumers with opportunity to know which companies are collecting and disseminating information about them; and

2)      Directs the Government Accountability Office to conduct a study of existing public credit reporting systems and evaluate the feasibility, costs and benefits of creating a national credit reporting system in the U.S.

For more questions regarding the SECURE Act and the FCRA in general, you may contact Joseph Messer at (312) 334-3440, or at jmesser@messerstrickler.com.

New Disclosure Requirement for Out-of-Statute Debts in West Virginia

New changes to the West Virginia Code will require debt collectors to update any collection notices that will be sent to West Virginia consumers on out-of-statute debts (i.e., debts beyond the statute of limitations for filing a legal action for collection).  2014 H.B. 4360, a recently enacted bill, amends and reenacts §46A-2-128 of the Code of West Virginia relating to consumer credit protection, and specifically to unfair and unconscionable means to collect a debt.

Effective June 6, 2014, the new legislation will require debt collectors pursuing out-of-statute debts to inform consumers in their initial written communication that the creditor or collector cannot report the debt to the credit reporting agencies as unpaid and cannot sue for it.  Below is an excerpt with the required disclosure language (emphasis added):

(1)When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U.S.C. 1681c:

“The law limits how long you can be sued on a debt.  Because of the age of your debt, (INSERT OWNER NAME) cannot sue for it.  If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and

(2) When collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U.S.C. 1681c:

“The law limits how long you can be sued on a debt.  Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies.”

The bill also reinstates that no debt collector may use unfair or unconscionable means to collect or attempt to collect any debt.  Besides not including the necessary disclosures stated above, the following conduct will also violate §46A-2-128 of the Code of West Virginia:

-          Seeking or obtaining any written statement in any form that specifies that a consumer’s obligation is incurred for necessaries of life if this obligation was not incurred for such necessaries;

-          Seeking or obtaining any written statement in any form containing an affirmation of any obligation by a consumer who has been declared bankrupt, unless the nature and consequences of such affirmation are disclosed, as well as the fact that the consumer is not legally obligated to make such affirmation;

-          Collection or attempt to collect any interest or other charge, fee or expense incidental to the principal obligation unless they are authorized by the agreement creating the obligation and by statute;

-          Any communication with a consumer whenever they are appeared to be or are represented by an attorney unless the attorney fails to return calls or answer correspondence;

-          Collection or attempt to collect from the consumer debt collector’s fee or charge for services rendered (see restrictions in the 2014 H.B. 4360 bill).

For more information on this new legislation, the Code of West Virginia or fair debt collection statutes for other states, you may contact Joseph Messer at jmesser@messerstrickler.com or at (312) 334-3440 or Stephanie Strickler at sstrickler@messerstrickler.com or at (312) 334-3465.

Don’t Just Delete! CFPB Reminds Furnishers to Properly Investigate Disputes

Recently, the Consumer Financial Protection Bureau (“CFPB”) issued a bulletin to highlight the obligations that debt buyers, debt collectors and others who furnish information to credit reporting agencies (“CRAs”) have under the Fair Credit Reporting Act (“FCRA”) to investigate disputed information in a consumer report. 

Interestingly, one of the main concerns echoed by the CFPB is the practice of merely deleting a line item on a report in lieu of conducting an investigation. Proper investigations of disputes, according to the CFPB, are important because they provide critical checks on the accuracy of furnished information.  Investigations prompt a furnisher to reconsider information that a consumer has identified as incorrect, a process that not only helps the individual consumer at issue but also help furnishers identify systematic problems in their system. If a furnisher’s practice is merely to delete disputed entries instead of conducting an investigation, consumers are denied the full protections of the FCRA. For example, furnishers must provide notice of information found to be inaccurate to all consumer reporting agencies to which it reports. If a furnisher did not conduct an investigation, it may not provide this notice to all credit reporting agencies. Thus, furnishers should not assume that deleting an item will generally constitute a reasonable investigation.

The CFPB has been and will continue to monitor furnishers’ compliance with the FCRA and other federal consumer financial laws and regulations, especially regarding consumer disputes of information they have furnished to CRAs.  As a result, it is important to ensure that your organization is following the CFPB’s established protocol in handling disputes. For more information on the FCRA and CFPB’s enforcement and supervisory actions, contact Nicole Strickler at (312) 334-3442 or at nstrickler@messerstrickler.com.

Another $3.5 Million Penalty for FCRA Violations

In early 2014, the Federal Trade Commission (“FTC”) brought a complaint against one of the largest check authorization service companies in the nation, TeleCheck Services, Inc. (“TeleCheck”), and its associated debt collection entity for FCRA violations.  TeleCheck and the collection agency agreed to pay $3.5 million to settle the case.

TeleCheck is a Texas consumer reporting agency (“CRA”) that compiles consumers’ personal information and supplies it to U.S. retail merchants to aid them in their determination of whether to accept consumers’ checks.  Under the FCRA, consumers have the right to dispute the information TeleCheck provides to the merchants and have TeleCheck investigate and correct any inaccuracies if their checks were denied based on the information provided by TeleCheck.

The FTC alleged in its complaint that TeleCheck failed to follow reasonable procedures to assure maximum accuracy of the information it provided to its merchant clients and failed to timely correct mistakes in consumers’ reports.  The FTC also alleged that TeleCheck did not follow proper dispute procedures and even refused to investigate disputes. 

The complaint also included allegations against the associated collection agency, which provided information about consumers to TeleCheck.  The FTC alleged that the collection agency violated the requirements of the FTC’s Furnisher Rule, which requires entities supplying information to CRAs to ensure the accuracy of the information provided. 

TeleCheck and the associated collection agency stipulated to change their business practices going forward to comply with the FCRA requirements and the Furnisher Rule.  The stipulated payment of $3.5 million is one of the largest ever resulting from an FTC filed FCRA complaint.  Another check authorization company, Certegy Check Services, Inc., was charged with a $3.5 million fine for similar allegations earlier this year.  These cases are a part of FTC’s initiative to target practices of data brokers which help companies make decisions about consumers, such as their ability to pay for essential goods and services by check.  As Jessica Rich, the Director of FTC’s Bureau of Consumer protection commented: “If CRAs like TeleCheck provide merchants with inaccurate information, those merchants may wrongly deny consumers the ability to buy even the most essential items, like food and medicine.”

For more information about these cases or FCRA policies and regulations, please contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.

TCPA Traps in Health Care Collections: ACA International’s Article on Joe Messer & Nicole Strickler’s Presentation at ACA Fall Forum

Last month, Joe Messer and Nicole Strickler, partners at Messer Strickler, Ltd., gave two presentations at the ACA International’s 2013 Fall Forum in Chicago. The topics of their presentations were: “Avoiding TCPA Traps in Health Care Collections” and “The Forgotten and Misunderstood: Avoiding Liability under State Laws Affecting Debt Collection.” ACA International, the Association of Credit and Collection Professionals shared an overview, as well as valuable takeaways from one of these presentations with its audience by publishing an article “TCPA Traps in Health Care Collections” on the organization’s website. The presentation focused on the overview of the Telephone Consumer Protection Act (“TCPA”), vicarious liability for collectors and their health care provider clients, and recent TCPA case law that regulates medical debt collection. To emphasize the importance of Joe and Nicole’s message and information they shared, ACA International warned its audience in the article: “Violations of the TCPA can result in catastrophic class-action liability for collectors and their health care provider clients who may be sued on ‘vicarious liability’ grounds.”

Joe and Nicole have earned a national reputation for successfully defending lawsuits brought under the Fair Debt Collection Practices Act (“FDCPA”), Fair Credit Reporting Act (“FCRA”), TCPA, and other state and federal consumer protection laws. Both Joe and Nicole have substantial experience defending corporations, lending institutions, collection agencies, asset purchasers, lawyers as well as individuals; they have conducted many trials in state and federal courts and have served as lead counsel on multiple class action cases. Joe and Nicole are also active members and often presenters at ACA International, NARCA, NAPBS, ABA and other professional organizations.

To learn more about Telephone Consumer Protection Act and TCPA traps in health care collections, as well as potential liability for collectors in health care and other industries, contact Joe Messer at (312) 334-3440 or Nicole Strickler at (312) 334-3442.

Renewed Focus on Data Furnisher’s Duty to Investigate Credit Reporting Disputes

Recent guidance from the Consumer Financial Protection Bureau (CFPB) underscores the need for effective procedures for handling disputes from consumer reporting agencies (CRAs) and stresses furnisher’s responsibility in this matter. In its September 4, 2013 bulletin, the CFPB reminded the public about several requirements listed in the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681.  Under these requirements, a CRA is to notify a furnisher when a consumer disputes the completeness or accuracy of any information provided by the furnisher to the CRA.  The CRA must also timely provide the furnisher all relevant information regarding the dispute.  In turn, the furnisher must review the disputed information, conduct an investigation regarding the matter, and respond appropriately based on the results of the investigation.  The CFPB states that it expects furnishers and CRAs to comply fully with these requirements, thus supporting CFPB’s effort to keep the information in the consumer reporting system (e-OSCAR) complete and accurate.

The bulletin addresses CFPB’s expectation that furnishers have reasonable systems and technology available to receive and process information regarding the disputes forwarded by CRAs, as well as the expectation that every furnisher review and consider all relevant information relating to the dispute.  The CFPB stressed in the bulletin that it expects furnishers to comply with the FCRA in the following ways:

  1. Maintaining a system capable of receiving information and supporting documentation from CRAs;
  2. Conducting an investigation of the disputed information to include information from the CRA and the furnisher’s own information;
  3. Reporting the results of the investigation to the CRA that sent the dispute;
  4. Providing corrected information to all CRAs if the information is inaccurate;
  5. Modifying, blocking, or deleting information if it is inaccurate, incomplete or cannot be verified.

The CFPB further states in the bulletin that immediate steps should be taken to comply with these requirements if a furnisher doesn’t have them already in place.  The CFPB warns that it will appropriately address violations in appropriate way and seek corrective measures from those furnishers who fail to comply with these requirements.

Joseph Messer to Present at NAPBS 10th Annual Conference

Joseph Messer of Messer Strickler, Ltd. will be presenting at the NAPBS (National Association of Professional Background Screeners) 10th Annual Conference in Phoenix, AZ on Tuesday, September 17th.  The topic of the session is “Avoiding Class Action Liability under the Fair Credit Reporting Act.” Mr. Messer has been presenting before the industry for years.  He is a regular speaker for NARCA conferences and webinars, ACA International’s forums and conventions, and Illinois Collectors Association conferences.  Mr. Messer has also presented for the Chicago Bar Association.