Litigation & Enforcement Actions – Page 12 – Consumer Financial Services Watch

A Primer on Insurance Coverage Issues under the Telephone Consumer Protection Act

Mar 04 2015

By: Steven P. Wright, Gregory N. Blase, Samantha A. Miko

In the past several years, plaintiffs’ attorneys around the country have exploited a once-unknown 1991 law, the Telephone Consumer Protection Act (“TCPA”), to obtain headline-grabbing, multimillion-dollar judgments and settlements from some of the country’s largest financial services companies. Because financial services companies are often required to communicate with customers by telephone, these companies have attracted an undue amount of attention from the TCPA plaintiffs’ bar. Seemingly, each new day brings another lawsuit or settlement, and so, it is no surprise that the TCPA remains a hot topic in the financial services and related industries. In this alert, we explore current trends in insurance coverage claims attendant to TCPA class action claims.

To read the full alert, click here.

New York DFS Clarifies New Debt Collection Regulations

Feb 23 2015

By: Steven M. Kaplan, Gregory N. Blase, Christopher E. Shelton

Responding to industry questions about New York’s new debt collection regulations, most of which take effect on March 3, 2015, the Department of Financial Services has published a detailed FAQ on its website. We previously analyzed the regulations in a client alert.

As we anticipated in our alert, the FAQ confirms that “debt servicers, including companies that service student loans, home equity loans or mortgages … who collect or attempt to collect a debt that was not in default at the time it was obtained for collection are not” subject to the regulations. This parallels how the federal Fair Debt Collection Practices Act (“FDCPA”) is interpreted.

Department of Justice Settles Its First Discrimination Case against a “Buy Here, Pay Here” Used Car Dealership

Feb 16 2015

By: Melanie Brody, Anjali Garg

On February 10, 2015, the Department of Justice (DOJ) and the North Carolina Attorney General announced a settlement against two “buy here, pay here” used car dealerships and the companies’ presidents. The settlement resolves allegations under the Equal Credit Opportunity Act, its implementing regulation (Regulation B), the North Carolina Unfair and Deceptive Trade Practices Act, and the North Carolina Uniform Commercial Code, that the companies engaged in “reverse redlining” by allegedly targeting African American borrowers for used car loans using unfair and predatory terms.

Two for the Price of One? The First Circuit Holds that a Violation of the FDCPA is a Per Se Violation of the Massachusetts Consumer Protection Statute

Feb 06 2015

By: Brian M. Forbes, Laura P. Rich

A recent decision by the United States Court of Appeals for the First Circuit, McDermott v. Marcus, Errico, Emmer & Brooks, P.C., may have broad implications for persons and entities involved in debt-collection activities in Massachusetts. In McDermott, the First Circuit addressed the scope of the Massachusetts consumer protection statute, M.G.L. c. 93A, § 11 (“Chapter 93A”) and its interplay with the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”). While prior decisions from the First Circuit had suggested that a violation of the FDCPA may also be a per se (intrinsically or by itself) violation of Chapter 93A, the Court took a fresh look at the issue in McDermott and made clear that it is. Notably, the coupling of FDCPA claims with a state unfair and deceptive trade practices statute could provide plaintiff debtors with additional avenues of relief, including statutory damages and injunctive relief.

To read the full alert, click here.

Justices Sotomayor and Scalia Lead the Way as the Supreme Court Hears Argument on the Fair Housing Act Disparate-Impact Question

Jan 22 2015

By: Paul F. Hancock, Andrew C. Glass, Roger L. Smerage, and Olivia Kelman

On January 21, 2015, the United States Supreme Court heard oral argument in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc. (the “Texas DHCA case”). The case presents the question whether the Fair Housing Act recognizes a disparate-impact theory of liability. See Tex. Dep’t of Hous. & Cmty. Affairs v. The Inclusive Cmtys. Project, Inc., — S. Ct. —, 2014 WL 4916193 (Oct. 2, 2014) (No. 13-1371) (granting petition for writ of certiorari). Under that theory, a plaintiff may challenge a defendant’s policies or practices that are neutral on their face (that is, do not reflect any intent to discriminate) but that purportedly have a disproportionate effect on groups sharing certain statutorily-defined characteristics such as race or national origin. The Supreme Court has expressed strong interest in the issue, granting certiorari three times in the last four terms to decide the question, only to have the parties settle just before oral argument in the previous two matters. See Magner v. Gallagher, S. Ct. No. 10-1032, and Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., S. Ct. No. 11-1507. At argument in the Texas DHCA case, the public was finally able to hear the nature of the Court’s interest in the issue.

United States Supreme Court: TILA Does Not Require Consumers To File A Lawsuit Within Three Years In Order To Assert A Right To Rescind

Jan 21 2015

By: Brian M. Forbes and Gregory N. Blase

For several years, federal courts have struggled with the question of whether a consumer who wishes to rescind a loan pursuant to the federal Truth in Lending Act (“TILA”) may do so by sending a notice of rescission within three years after the closing date, or whether the statute also requires the consumer to file a lawsuit within that three-year time period. On January 13, 2015, the United States Supreme Court, in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684, slip op. (U.S. Jan. 13, 2015), resolved that question and held that sending a written notice of rescission within three years after closing is sufficient to exercise the right of rescission under TILA; the statute does not require a consumer to also file a lawsuit within that timeframe.

Removing a Barrier: The Supreme Court Holds That, Under CAFA, Notices of Removal Need Not Include Evidence Supporting the Amount in Controversy

Dec 18 2014

By: Irene C. Freidel, Ryan M. Tosi, Matthew N. Lowe

On December 15, 2014, the United States Supreme Court held in Dart Cherokee Basin Operating Co., LLC v. Owens that a class action defendant need only allege the requisite amount of controversy “plausibly” in the notice of removal and need not provide evidence supporting the amount in controversy unless challenged by the plaintiff or questioned by the court.[1]The Court’s holding is consistent with the requirement that a notice of removal contain only a “short and plain” statement setting forth the bases for removal. The decision resolves a significant circuit split regarding the pleading requirements imposed on removing defendants under the Class Action Fairness Act (“CAFA”).

Prior to Dart Cherokee,[2] the majority of the circuits had either expressly held that a defendant need not present evidence of the amount in controversy with its notice of removal[3] or that evidence of the amount in controversy submitted in opposition to a motion to remand would be considered even if it had been not presented in the notice of removal.[4] The Tenth Circuit, however, declined Dart Cherokee’s petition for review of the district court’s decision, which had refused to consider evidence Dart Cherokee offered in response to a motion to remand based upon its holding that a defendant is required to submit evidence in support of removal at the time a notice of removal is filed.

To read the full alert, click here.

Another CFPB Loan Originator Compensation Enforcement Action

Nov 17 2014

By: Kris D. Kully

The Consumer Financial Protection Bureau (CFPB) has once again charged a mortgage lender with paying compensation to loan originators based on loan terms, which is prohibited under the Truth in Lending Act and its Regulation Z. This week, the CFPB asked a federal court to approve an order requiring Franklin Loan Corporation (which lends in California and Illinois) to pay $730,000 for allegedly paying loan originators quarterly bonuses based on loan terms.

Eleventh Circuit Bolsters FCC Interpretation of “Prior Express Consent” under the TCPA

Nov 14 2014

By: Gregory N. Blase, Andrew C. Glass, Samantha A. Miko

The U.S. Court of Appeals for the Eleventh Circuit recently bolstered the Federal Communications Commission’s (“FCC”) interpretation of “prior express consent,” a key term under the Telephone Consumer Protection Act (“TCPA”).

In Mais v. Gulf Coast Collection Bureau, Inc., the plaintiff’s wife provided the plaintiff’s cellphone number on a hospital admittance form. The form disclosed that any information supplied could be shared with the hospital’s affiliates and used for any purpose, including for billing. After the plaintiff failed to pay a hospital affiliate’s invoice for treatment services rendered, the affiliate provided the plaintiff’s contact information to the defendant, which initiated collection activity, including contacting the plaintiff at the cellphone number that was provided on his admittance form by his wife. Read More

A Hard Rain Has Started to Fall A Product-by-Product Review of the CFPB’S First 60 Enforcement Actions

Nov 12 2014

By: Jon Eisenberg

Between July 17, 2012 and October 9, 2014, the Consumer Financial Protection Bureau brought 60 enforcement actions. According to our unofficial tally, they resulted in settlements requiring the payment of $2.2 billion in restitution, $174 million in CFPB civil money penalties, and, in a few cases, other forms of consumer relief. In this alert, we discuss the products and alleged practices that led to those recoveries. Our purpose is simple—what’s past is likely prologue when it comes to CFPB enforcement actions. Understanding the conduct that produced the first 60 enforcement actions will help companies avoid becoming one of the next 60 enforcement actions.

To read the full alert, click here.

Catagory:Litigation & Enforcement Actions