Invoking Bigfoot, the Eastern District of New York Highlights the Absurdity of New FDCPA Theories

Suggesting that the latest FDCPA plaintiff's theories in New York have morphed into something other than consumer protection, Judge Glasser of the Eastern District of New York ("EDNY") penned an extensive (and rather scathing) decision detailing the abuse by plaintiffs-consumers (or more precisely, their counsel) in filing lawsuits for non-existent harms. More ›

Northern District of New York Dismisses another Avila Claim Based on Accrual of New York Pre-Judgment Interest

One of the latest trends in the New York FDCPA space has been filing so called "Reverse Avila" cases, based on the Second Circuit's decision in Avila v. Riexinger and Assocs.. In Avila, the Second Circuit found that a debt collection letter violated the FDCPA because the letter failed to state that interest on the debt was accruing. Since Avila, new theories related to the accrual of interest claims have surfaced, including: (1) the "Reverse Avila" claim, and (2) claims requiring Avila safe harbor language in correspondence if there is any possibility (however small) that interest will accrue in the future--even if the debt was not actually increasing at the time of the correspondence. Courts have begun to deny these claims because they stretch the meaning of Avila into the realm of pure speculation. More ›

State and Local Governments Prepare to Fill the Consumer Regulatory Enforcement Void

Last week, the Democratic Attorneys General sent a letter to President Trump expressing concern over his choice for CFPB director, Mick Mulvaney and the future of consumer protection, more generally. As was expected, the states are preparing to take on more aggressive roles in consumer protection given the significant weakening of the CFPB. "State attorneys general have express statutory authority to enforce federal consumer protection laws, as well as the consumer protection laws of our respective states," the group said in its letter. "We will continue to enforce those laws vigorously regardless of changes to CFPB’s leadership or agenda." More ›

SEC Shuts Down Initial Coin Offering Using Blockchain for Failure to File Securities Registration Statement

On December 11, 2017, the SEC instituted cease-and-desist proceedings against Munchee Inc., the creator of an iPhone application that allows users to review restaurant meals, with regard to Munchee's planned initial coin offering (ICO) using blockchain or a distributed ledger. Munchee conducted the ICO to raise $15 million in capital by selling digital tokens that it created so it could improve the app and recruit users. The tokens were purchased by using either Bitcoin or Ether. The SEC proceedings contend that, in connection with the ICO, Munchee represented that its digital tokens would increase in value based on its efforts and that they would be traded on secondary markets.

The SEC, citing the 1946 Supreme Court decision in SEC v. Howey, 421 U.S. 837 (1946), took the position that the tokens were securities as defined by section 2(a)(1) of the Securities Act of 1933 as they are “investment contracts,” in large part, because the purchasers of the tokens had expectations of making a profit. Thus, the SEC took the position that Munchee should have filed a registration statement or otherwise qualified for an exemption from registration. More ›

Bill Introduced in Congress to Exclude Attorneys and Law Firms from the FDCPA's Definition of "Debt Collector"

Yesterday, December 5, 2017, Texas Democrat Vincente Gonzalez introduced a bill in the House of Representatives to amend the Fair Debt Collection Practices Act’s definition of a "debt collector." The Bill also seeks to amend the supervisory and enforcement authority that the Consumer Financial Protection Bureau has with respect to attorneys. More ›

New York Federal Court Demands that FDCPA Plaintiffs Read Entire Debt Collection Letter to Determine Creditor's Identity

In Goldstein v. Diversified Adjustment Serv., the Eastern District of New York may have walked back one of the new favorite Fair Debt Collection Practices Act  (the "FDCPA") claims—namely that the creditor was not properly identified pursuant to § 1692g of the FDCPA. Although the debt collection letter at issue listed Sprint several times, Goldstein's complaint nonetheless alleged that the debt collection letter violated the FDCPA by failing to adequately identify to whom the debt was owed and what Sprint's role was. More ›

Trouble With A Capital C: Cordray’s Move To Name His Own Successor At The CFPB

In contrast to his big wins on Jeopardy! in the 1980s, Richard Cordray lost badly in 2017 after staking so much on the Consumer Financial Protection Bureau’s (“CFPB”) Final Rule, which would have prohibited the use of class action waivers in the arbitration clauses of consumer financial contracts, such as credit card agreements and mortgages. The CFPB’s Final Rule drew sharp, valid criticism from both the U.S. Treasury Department and the Office of the Comptroller of the Currency. After the House of Representatives and the Senate acted pursuant to the Congressional Review Act to nullify the Final Rule, Mr. Cordray pleaded unsuccessfully with President Trump for a veto. It is unsurprising, really, that he decided to step down far earlier than anticipated.

Mr. Cordray’s parting-shot - his effort to name his own successor by appointing a presumably sympathetic Deputy Director - will likely miss its mark. Under the provision of Dodd-Frank that Senator Elizabeth Warren has cited in support of Mr. Cordray’s maneuver, the CFPB’s Deputy Director serves as acting Director only “in the absence or unavailability of the Director” (12 U.S.C. § 5491(b)(5)), not in the event the Director resigns. Moreover, 12 U.S.C. § 5491(b)(3) states that, “…the Director shall be appointed by the President, by and with the advice and consent of the Senate.”  Senator Warren’s November 24th “tweet,” that “if there is a [CFPB] Director vacancy, the Deputy Director becomes the Acting Director … [and] [President Trump] can’t override that[,]” simply appears to read too much into the provision of Dodd-Frank she cites. More ›

CFPB Director Richard Cordray Resigning

In news that is still breaking, the first and only Consumer Financial Protection Bureau director, Richard Cordray, has announced he will be resigning at the end of this month. He announced his departure in an email to staff that was reported out by several news agencies. His term was set to expire in July, 2018. Many predict Cordray will make a run for Ohio governor. More ›

Illinois Student Loan Bill of Rights Becomes Law

Yesterday, the Illinois House of Representatives voted 98-16 to override Governor Bruce Rauner's veto of the Illinois Student Loan Bill of Rights. The IL student loan bill provides for the licensing of student loan servicers and imposes numerous, detailed requirements concerning the servicing of student loans. Among other things, the bill sets forth certain information that must be provided to borrowers, some of which must be provided through a trained repayment specialist. Non-exempt servicers have until December, 2018 to become compliant. Illinois is the 4th jurisdiction to create such a law, following Connecticut, California and the District of Columbia. More ›

Buccaneers Could Lose On and Off the Field: Attempt to Reverse Auction TCPA Class Settlement Batted Down by Eleventh Circuit

A leading Plaintiff's TCPA firm filed a class action against the Buccaneers in 2013, arguing certain company faxes violated the TCPA. The faxes in question contained advertisements promoting football ticket sales, and were alleged to have been sent without consent. While the class certification motion was pending in the original class action, one of the plaintiff's attorneys left the firm and moved to another Plaintiff's firm. More ›