Over the last decade, financial institutions have seen an avalanche of claims regarding overdraft fees, especially in connection with debit card transactions. These claims are almost always brought as class actions. The early cases concerned the practice of posting “high to low” during nightly processing, allegedly for the purposes of generating more overdraft fees. The lead case was Gutierrez v. Wells Fargo, 704 F.3d 712 (9th Cir. 2012). Eventually, an MDL was created in the Southern District of Florida against a large number of banks, leading to a number of settlements. At about the same time, the Federal Reserve altered Regulation E, requiring deposit institutions to obtain express consent to charge overdraft fees on “everyday” debit card transactions, and providing far greater understanding by consumers of overdraft fees on electronic transactions.
Earlier this week, two Alabama businesses sued their insurers for refusing to pay losses related to COVID-19. The first lawsuit, Wagner Shoes v. Auto-Owners Insurance Co., No. 7:20-cv-465 (N.D. Ala. Apr. 6, 2020), was brought by a shoe store in Tuscaloosa. The second suit, Ollie Irene v. Farmers Insurance Exchange, No. 01-CV-2020-901319 (Jefferson County Cir. Court April 7, 2020), was filed by nationally recognized Mountain Brook restaurant, Ollie Irene.
On April 1st, the Consumer Financial Protection Bureau (“CFPB”) released a policy statement setting forth financial institutions’ obligations during the COVID-19 pandemic. In addition to providing clarity regarding the recently-enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the CFPB’s pronouncement outlines a flexible approach towards credit reporting agencies and furnishers who, despite good-faith efforts, have had difficulty complying with Fair Credit Reporting Act (“FCRA”) requirements during the crisis.
In its recent opinion in Deutsche Bank National Trust Company v. Walker County, the Alabama Supreme Court held Alabama Code § 35-4-50 does not impose a mandatory duty to record assignments of beneficial interests in residential mortgages. In the underlying action, Walker County brought suit against Deutsche Bank National Trust Company, Mortgage Electronic Registration Systems, Inc. (“MERS”), and CIS Financial Services, Inc., after the Bank allegedly relied on Walker County’s real property recording system, but used MERS to record subsequent transfers of the beneficial interests in residential mortgages.
In an important victory for mortgage servicers, the Eleventh Circuit rejected a RESPA claim based on a motion to reschedule a foreclosure sale in Landau v. Roundpoint Mortgage Servicing Corp.
Last month, the Eleventh Circuit affirmed the dismissal of a putative class action suit alleging violations of the Fair Credit Reporting Act thereby delivering an important victory to lenders and other entities that provide consumer information to credit reporting agencies. Under the FCRA, “furnishers” of consumer information are prohibited from providing inaccurate information to credit reporting agencies (“CRAs”) and must investigate when a consumer disputes such information. In Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, Case No. 18-11306, 2019 WL 1873419 (11th Cir. Apr. 25, 2019) (unpublished), a united panel held (in an unpublished opinion) that JP Morgan Chase had not violated its duties as a furnisher under the FCRA when it reported that a customer’s account was past due. Not only was such information accurate when it was provided, but the bank was never even required to investigate its accuracy because the plaintiff’s complaint did not allege that JP Morgan received notice that he disputed the information with the CRAs. The Court did not decide, however, whether JP Morgan had an obligation to “refresh” information it had previously provided.
According to the Eleventh Circuit, a municipalities’ lawsuit alleging lost tax revenue and increased costs for services case proceed against several large lenders. In City of Miami v. Wells Fargo & Co., 2019 WL 1966943 (11th Cir. 2019), Miami alleged that several large banks violated the Fair Housing Act by engaging in predatory lending that targeted racial minorities. These practices allegedly led to a higher rate of home foreclosures, which directly caused lost tax revenue and increased costs for services.
Last October, we reported here how the Eleventh Circuit in Muransky v. Godiva had broken with other circuits regarding the application of the Supreme Court’s opinion in Spokeo v. Robins. Last week, the Eleventh Circuit sua sponte vacated its October 2018 opinion and issued a new opinion.
When attempting to collect time-barred debts, law firms often send standard letters which merely omit an express threat to sue. Earlier this month, the Eleventh Circuit held a least sophisticated consumer might view such a letter as an implicit threat to sue and, therefore, the letter might violate the FDCPA. The Court reasoned it would be easy to include language to the effect, “Because of the age of your debt, . . . we will not sue you for it,” and noted that the debt collector had actually started using that exact language in its own letters. Balch’s Austin Alexander and Jason Tompkins provide an in-depth analysis of the Eleventh Circuit’s holding on the Past Due blog.
In Obduskey v. McCarthy & Holthus, LLP, the United States Supreme Court unanimously held the Fair Debt Collection Practices Act does not apply to a law firm conducting a nonjudicial foreclosure.
While the law firm prevailed in Obduskey, the Court’s opinion suggested several circumstances in which the law firm might have been subject to the FDCPA. Practically speaking, many firms instituting nonjudicial foreclosures will likely remain subject to the FDCPA.
According to Obduskey, a law firm conducting nonjudicial foreclosures might still be subject to the FDCPA if:
- The law firm has a regular debt collection practice above and beyond nonjudicial foreclosures, or if the firm otherwise engages in debt collection;
- The law firm sends an unnecessary letter (or engages in other communications) that is not required by state law;
- The foreclosure is a judicial foreclosure;
- The law firm engages in unfair practices related to the nonjudicial foreclosure.