insideARM Weekly Recap - Week of September 2nd, 2024

A short week was still not short on news affecting debt collection! In our efforts to bring you the information you need to see, we found the most important pieces of news from around the industry. Keep on reading for highlights of what you need to know and why our editorial team thinks you need to know it! 

On Wednesday, we reported on Creager v. Columbia Debt Recovery, in which a district court partially granted the plaintiff’s motion for summary judgment. It ruled that the debt collector violated the FDCPA by attempting to collect an inflated balance, which included a forfeited security deposit. The case arose after the plaintiff moved out of her apartment early, and the creditor assigned the outstanding rent to the defendant for collection. Despite the defendant's belief that the debt was accurate based on the creditor’s information, the court held the debt collector strictly liable under the FDCPA, rejecting the bona fide error defense. The court emphasized that the debt collector failed to demonstrate that it had procedures in place to avoid the violation, relying solely on the creditor's representation. Knowing your client is crucial to trust the information they send.  Having procedures in place to flag accounts in question of accuracy or to stop collection efforts when flags pop up, is complicated but necessary to avoid this situation. Rely more on proving you are doing what you can to rely on the information you have.   

On Thursday, we brought you news on congressional developments. GOP members of the House Financial Services Committee sent a letter to CFPB Director Rohit Chopra expressing concerns over the CFPB's proposed rule to ban the use of medical information for credit eligibility determinations. The members argued that the rule, which would amend the FCRA to limit the reporting of medical debt, could weaken the accuracy of consumer credit reports, increase financial system risks, and negatively impact credit availability. They criticized the CFPB for lacking sufficient data to justify the rule and warned of potential unintended consequences, such as making it harder for low-income borrowers to obtain credit and increasing medical procedure costs. Not allowing CRA's to use medical debt to determine if a credit should be given to a consumer can cause debt that cannot be paid back to be created, causing the credit granting industry to lose money, making it more difficult and costly to consumers who should be granted credit going forward. This will put more consumers in collections and all that comes along with it.   

Have a question about how your company should react to the news above? We have a group for that! The weekly peer call hosted by insideARM’s Research Assistant is the perfect place to ask a question and get advice from industry colleagues who are facing the same challenges you are. Not sure if it is for you? Try it on for size with our 1-month free trial. Click here to learn more!