FDCPA: 2024 in Review

This article examines the most significant 2024 FDCPA developments, including summaries of all reported circuit court of appeals decisions, the latest approaches to dealing with FDCPA standing problems, CFPB guidance on collection of medical debt, and important FDCPA claims relating to new legislation limiting credit reporting of medical debt. 

2024 Reported Circuit Court of Appeals FDCPA Decisions

--Article III Standing

Barclift v. Keystone Credit Servs., L.L.C., 93 F.4th 136 (3d Cir. 2024). Consumer alleged that the collector violated § 1692c(b) by disclosing information to a third-party letter vendor. The majority held that the consumer did not have Article III standing because the harm that the consumer claimed—public disclosure of private information—was not analogous to the common law tort claim since the disclosure was “functionally internal” and thus not similar to the kind of privacy harm associated with a public disclosure. A dissenting justice concluded that the consumer had demonstrated standing.

Brown v. CACH, L.L.C., 94 F.4th 665 (7th Cir. 2024). Consumer alleged that the collector violated § 1692e by collecting on a debt without informing her that the bank had not verified the balance. Consumer alleged that she was injured due to interruptions to her self-employment but failed to produce evidence at summary judgment regarding her self-employment or how any interruption led to a loss of income. Affirming the lower court’s dismissal for lack of standing, the Seventh Circuit held that “[i]nterruption of self-employment could cause a loss, but whether it did cause a loss must be established by evidence.”

Calogero v. Shows, Cali & Walsh, L.L.P. (Calogero II), 95 F.4th 951 (5th Cir. 2024). Consumers alleged violations of § 1692e due to threats of suit on a time-barred debt, misrepresentation of the amount owed, and improper threats to assess attorney fees. The Fifth Circuit affirmed that “emotional distress” satisfies the concreteness element of Article III standing and that the amended complaint sufficiently alleged emotional distress in this case. Additional holdings in this case are summarized below. 

Freeman v. Ocwen Loan Servicing, L.L.C., 108 F.4th 520 (7th Cir. 2024). Consumer alleged violations of the FDCPA arising from servicing her mortgage loan and foreclosure proceedings. The Seventh Circuit found that she did not have Article III standing. First, the consumer could not establish monetary harm due to the court’s exclusion of evidence regarding attorney fees for representation during a foreclosure proceeding. Next the court concluded that reputational injuries due to inaccurate credit reporting were not analogous to the common law tort of defamation because the consumer had not provided evidence that a third party “understood the defamatory significance” of these communications. The court also concluded that the consumer failed to establish a common law analogue to false light and defamation because she did not allege that the collector “had knowledge of or acted in reckless disregard as to the falsity of the foreclosure action.” The court held that the consumer’s fear of foreclosure caused by phone calls and door knocking was not analogous to invasion of privacy because she had no admissible evidence of any physical symptoms of her fear. Similarly, the court found that psychological pressures from defending against the foreclosure was not akin to abuse of process because the consumer could not point to a physical manifestation.

George v. Rushmore Serv. Ctr., L.L.C., 114 F.4th 226 (3d Cir. 2024). Consumer alleged violations of § 1692g(a)(2) and § 1692e for naming the incorrect party as the creditor in the validation notice. After an arbitrator denied her claims, the consumer filed an unsuccessful motion to vacate that arbitration award and this appeal followed. The Third Circuit held that the consumer did not have standing due to informational injury because the complaint did not allege specific adverse effects that resulted from the failure to correctly name the creditor. Furthermore, the consumer failed to establish standing using the tort of fraudulent misrepresentation as a common law analogue because she did not allege that she was confused or that any “cognizable harm” flowed from that confusion. The Third Circuit also rejected the consumer’s assertion of standing based on the tort of unreasonable debt collection because this tort appeared to only be recognized in Texas and the consumer failed to allege “physical illness and mental and emotional pain”—one element of the tort. Due to the lack of standing, the court vacated the motion to compel arbitration and the denial of the motion to vacate the arbitration award but did not determine whether the arbitration award remains valid.

Hekel v. Hunter Warfield, Inc., 118 F.4th 938 (8th Cir. 2024). Consumer alleged violations of § 1692f(1) and § 1692g(a) arising from collection of an alleged utility debt to a former landlord. The Eighth Circuit dismissed for lack of Article III standing because: a “bare” statutory violation is not a concrete injury; there was no specified “downstream consequence” as the result of the alleged informational injury; the alleged risk of harm was “neither imminent nor concrete;” alleged confusion, worry, and sleeplessness were not sufficient without supporting factual development; and allegations of “out-of-pocket costs” and lost “time and money” were conclusory without any factual development.

Patterson v. Howe, 96 F.4th 992 (7th Cir. 2024). Consumer alleged violations of § 1692e and § 1692f where the collection attorney failed to warn him that requests for admission would be deemed admitted if not answered within 30 days. The Seventh Circuit held that the consumer lacked Article III standing because he did not suffer a concrete harm from his failure to deny the requests for admission where the collection attorney did not use the admissions against him in the state court collection lawsuit. The court also rejected the theory that the consumer had standing because his failure to deny the requests for admission diminished his negotiating leverage when settling the state court collection lawsuit. Since standing must exist when a lawsuit is filed and the FDCPA lawsuit was filed before the state court collection lawsuit was settled, the court concluded that any diminished negotiating leverage could not serve as a basis for standing.

--Collecting After the Limitations Period Has Expired; Collection of Debt Not Owed

Calogero v. Shows, Cali & Walsh, L.L.P. (Calogero II), 95 F.4th 951 (5th Cir. 2024). Consumers alleged violations of § 1692e due to threats of suit on a time-barred debt, misrepresentation of the amount owed, and improper threats to assess attorney fees. The court then held that the collector’s statement that the consumers needed to pay or it would sue within 90 days was misleading under § 1692e because the statute of limitations had run on the alleged debt. The court next held that the collection letter was misleading in violation of § 1692e because it stated that the consumers owed a certain amount in “insurance proceeds” when the amount allegedly owed contained a significant additional penalty. Finally, the court held that the collector violated § 1692e(5) by threatening to collect attorney fees when it had no legal basis to do so. The court’s holding on standing in this case is discussed above.

Avoiding Limitations of Federal Court FDCPA Standing Requirements

The seven reported circuit court FDCPA decisions in 2024 are far fewer than past years, and in large part can be attributed to standing limits on federal court FDCPA claims.  In fact, all seven decisions deal with standing. Another factor is increasing attempts by debt collectors to bootstrap onto the creditor’s arbitration provision to move FDCPA cases into arbitration.  This section explains three approaches for FDCPA practitioners to obtain individual and in some cases widespread relief despite these limitations.

--Bringing FDCPA Claims in State Court to Avoid Federal Court Standing Requirements

To deal with federal court standing problems, some FDCPA practitioners are bringing FDCPA claims in state court. When a defendant removes a case to federal court, it is the defendant that has the burden of proof that there is federal court standing, because it is the party invoking federal jurisdiction.  See NCLC’s Fair Debt Collection § 11.15.13. Any doubts regarding the propriety of removal should be resolved in favor of the plaintiff’s choice of forum in state court.

If a federal court concludes that standing is lacking, the proper remedy is not to dismiss the case, but to remand the case to state court. The federal court should do so without addressing the merits of the suit, as its finding of a lack of standing means that it has no jurisdiction to reach the merits. Where the defendant invokes federal jurisdiction by removing a case, and then argues in federal court for dismissal based on the plaintiff’s lack of standing, courts may be willing to award the plaintiff attorney fees incurred because of the removal.  For more on remands of FDCPA cases from state court, see NCLC’s Fair Debt Collection § 11.15.13. For a recent case, see Aslani v. Credit One Bank, N.A., 2024 WL 4836344, at *4 (E.D.N.Y. Nov. 20, 2024). See also NCLC’s Fair Credit Reporting Act § 11.3.1.2 (discussing the same approach in FCRA cases).

When a case remains in or is remanded back to state court, state court standing may be less of an issue than federal court standing, as state court standing may be more flexible.  Subscribers to NCLC’s Fair Debt Collection have digital access to a 50-state analysis of state court standing in consumer cases at Appendix I.  Certain other NCLC treatises also grant access to a similar appendix on state court standing.

Of course, another way to stay in state court is to bring state debt collection claims.  State tort claims are examined at NCLC’s Fair Debt Collection Chapter 15. State debt collection statutory and regulation claims are examined at § 16.2 and a state-by-state analysis is found at Appendix D.  The remainder of Chapter 16 considers application to debt collection abuses of state UDAP statutes, state credit repair organization statutes, and other state claims.

--Bringing FDCPA Claims in Arbitration Avoids All Standing Requirements

An underutilized approach is bringing FDCPA claims directly in arbitration. Neither federal nor state court standing standards apply. The arbitration is a private dispute resolution established by private contract and the contractual agreement to arbitrate includes no restrictions concerning standing. Collectors when sued in court often try to enforce the creditor’s arbitration provision to move the case to arbitration, so collectors may not dispute the validity of the consumer’s application of the creditor’s arbitration provision to raise a dispute against the collector in arbitration.

There is a benefit in bringing a case directly in arbitration instead of first filing the case in court and proceeding to arbitration only later when the court requires it.  This way, the consumer can avoid standing challenges later in the case, even after the case goes to arbitration. For example, in George v. Rushmore Serv. Ctr., L.L.C., discussed above, the consumer first filed in federal court and then proceeded to arbitration. When the consumer sought to vacate the arbitration award, the Third Circuit found no standing in the original federal court filing, so that all subsequent actions were void, including the arbitration proceeding.

Under AAA and JAMS consumer arbitration rules, the total of arbitration fees and costs the consumer must pay is around $200, and the debt collector pays all other arbitration fees, costs and expenses, which will run into thousands of dollars. Debt collectors in this circumstance may be eager to settle the case. 

Practice tips on bringing individual arbitration cases are detailed in NCLC’s Consumer and Worker Arbitration Provisions Chapter 9.  The same chapter covers consumer options where the defendant refuses to pay arbitration fees or participate in the arbitration.

Individual arbitration is not a substitute for a class action and most arbitration agreements prohibit class arbitration.  But where the arbitration provision fails to explicitly prohibit class relief, a court or arbitrator may allow for the case to proceed on a class-wide basis in arbitration.  See NCLC’s Consumer and Worker Arbitration Provisions Chapter 10. 

In the last few years, there is also increasing use of mass arbitration, where the same attorney brings hundreds or even thousands of individual arbitration cases before the same arbitration provider raising the same claims. Modern technology makes this far more practical than one might assume.  NCLC’s Consumer and Worker Arbitration Provisions § 10.6 examines both the nuts and bolts of managing a mass arbitration and the legal issues involved in the defendant’s attempt to avoid the mass arbitration. 

--Bringing TCPA Debt Collection Claims in Federal Court Avoids Standing Problems

Most FDCPA practitioners are familiar with raising Telephone Consumer Protection Act (TCPA) claims against debt collectors. See NCLC’s Fair Debt Collection § 14.3.2.  Standing issues are rarely a problem in TCPA cases because invasion of privacy and similar injuries are sufficient to find Article III standing. See NCLC’s Federal Deception and Abuse Law § 7.4.

Bringing TCPA claims against debt collectors is examined in detail in NCLC’s Federal Deception and Abuse Law Chapter 6 and Chapter 7 and in NCLC’s Fair Debt Collection § 14.3.2.  Of recent import are new TCPA limits on debt collection calls. 

Unless the calls relate to a pending emergency, all calls with a prerecorded or artificial voice made to a cell phone—including debt collection calls—are only legal if the called party provided prior express consent for those calls. On February 8, 2024, the FCC adopted a Declaratory Ruling affirming that an AI-generated voice on a robocall is “an artificial or pre-recorded voice” under the TCPA and its regulations at 47 C.F.R. § 64.1200.

However, providing one’s telephone number on an application for credit is considered consent for collection calls relating to that debt. See NCLC’s Federal Deception and Abuse Law § 6.4.5.3.  Nevertheless, a new FCC Report and Order, effective April 11, 2025, clarifies that consumers can easily revoke that consent.  The order codifies that consumers can revoke consent through any reasonable means, providing examples that clearly meet that standard, such as by saying or texting the words “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel,” or ​“unsubscribe.”

Until recently there were no limits on prerecorded or artificial voice to landlines. However, effective July 20, 2023, an FCC rule only permits 3 calls with a prerecorded or artificial voice per 30-day period to landlines if there is no consent, but all calls must stop when the consumer requests that they stop. The calls made without consent must include an automated opt-out mechanism.  See In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 35 F.C.C. Rcd. 15188, at ¶ 42 (F.C.C. Dec. 30, 2020) (effective July 20, 2023).  See also Lucas v. Fed. Commc’ns Comm’n, 2022 WL 2314524 (D.C. Cir. June 28, 2022) (upholding the requirement). 

TCPA remedies, which may be even stronger than FDCPA remedies, are available for any calls exceeding the numerical limit unless the called party has consented. For more detail on this requirement, see NCLC’s Federal Deception and Abuse Law §§ 6.4.3, 6.5.3, 6.7.9.

2024 CFPB Advisory Opinion Clarifies Requirements for Medical Debt Collectors

On October, 4, 2024, the CFPB issued an important advisory opinion clarifying that certain medical debt collection practices violate FDCPA §§ 1692e, 1692e(2)(A), and 1692f(1).  See 89 Fed. Reg. 80,715 (Oct. 4, 2024).  The advisory initially was to be effective as of December 3, 2024, but the CFPB extended the date until January 2, 2025.  89 Fed. Reg. 94,599 (Nov. 29, 2024).  The CFPB notes that “the advisory opinion is an interpretive rule in part and a general statement of policy in part.” 89 Fed. Reg. 80,715, at 80,723.

The advisory opinion finds FDCPA violations when debt collectors seek an amount not owed because it was already paid or seek the full balance where a partial payment has been made or the medical provider otherwise decreased the balance owed. The CFPB noted that “Because payments toward a debt might be made at any time, debt collectors are responsible for ensuring that the correct collection amount is sought during each attempt at collection.” 89 Fed. Reg. 80,715, at 80,718.

The collector is also prohibited from collecting amounts that the consumer is not responsible for under applicable law, such as medical treatment paid via state workers’ compensation laws.  See NCLC’s Fair Debt Collection § 7.2.2.3.  

The federal Nursing Home Reform Act also limits collection for nursing home debt. See NCLC’s Fair Debt Collection § 7.4.13a.4.  See also CFPB & CMS, Joint Statement: Protecting Qualified Medicare Beneficiaries from Improper Bills (Oct. 31, 2024) (noting that some “low-income older adults and people with disabilities . . . qualify to have the State Medicaid agencies cover their Medicare premiums and Medicare Part A and B cost-sharing”). A December 16, 2024, NCLC article discusses how a recent federal guidance confirms that family and friends are not liable for nursing home debts owed by the resident. 

Similarly, debt collectors violate the FDCPA by collecting amounts above what can be charged under the federal No Surprises Act and other state laws limiting surprise medical bills. See NCLC’s Fair Debt Collection § 7.4.13a.2.

The advisory opinion also finds that debt collectors violate the FDCPA where they seek to collect for services not received. This includes medical bills that were “upcoded” to indicate that the patient received a higher level of care than was received.

Misrepresenting to consumers the nature of their legal obligations also violates the FDCPA and can occur in the collection of medical debt where there is no fixed contractual price term and the debt collector “gives the misleading impression that the amount demanded is final and that precise amount is legally owed.” See 89 Fed. Reg. 80,715, at 80,721.

Another example of an FDCPA violation, found in the advisory opinion, is collecting unsubstantiated medical bills. The CFPB explains that “A debt collector violates the prohibition against false representations if the collector has no reasonable basis on which to represent that the specific amount demanded is due and legally collectible.” 89 Fed. Reg. 80,715, at 80,721.

An issue that comes up in FDCPA cases involving medical debt collection is whether a collector is excluded from FDCPA coverage because the medical provider sent the account to the collector prior to the account being in default. The collector will argue that when an account is in default is determined by when the medical provider claims the account is in default.  See NCLC’s Fair Debt Collection § 4.8.9.2; NCLC’s Collection Actions § 9.2.2.2. The advisory opinion clarifies that the contract and the law, not the medical provider, determine the date of default. 

In the context of medical debt collection, for purposes of [§ 1692a](6)(F)(iii)’s exemption, whether a debt is “in default” is determined by the terms of any agreement between the consumer and the medical provider under applicable law governing the agreement. 89 Fed. Reg. 80,715, 80,722.

Challenges to CFPB’s Medical Debt Collection Advisory Opinion Highlight Its Importance for Consumers

Despite its common sense clarifications of existing FDCPA provisions, two challenges have already been filed against the CFPB’s medical debt collection advisory opinion. Few federal advisory opinions face such opposition.

The debt collection industry has challenged the advisory opinion in federal court in ACA International, L.L.C. v. Consumer Financial Protection Bureau, 1:24-cv-03118 (D.D.C. filed Nov 1, 2024), seeking, pursuant to the APA, declaratory and injunctive relief to set aside the advisory opinion.  The complaint claims that the advisory opinion is legislative without meeting preconditions for a legislative ruling and that the advisory exceeds the CFPB’s authority. On December 16, 2024, the court denied the industry’s request for a TRO and a preliminary injunction.  The advisory is thus in effect as of January 2, 2025. 

A Congressional Review Act (CRA) challenge to the advisory opinion was introduced on November 13, 2024, as H.J. Res. 220 and was referred to the House Committee on Financial Service. If a simple majority of both houses of Congress vote to disapprove the advisory opinion and the President does not veto the action, then the advisory opinion is disapproved and the CFPB cannot issue a similar advisory opinion without Congressional authorization. A similar CRA could also be filed once the new Congress takes office in January. 

New Claims Against Debt Collectors Concerning Reporting of Medical Debt

Significant changes regarding consumer reporting agency (CRA) reporting of delinquent medical debt have important implications for FDCPA claims against debt collectors. The amount of medical debt listed in credit reports is staggering. The CFPB has found:

Patients and their families are contacted by debt collectors about medical bills more than any other type of debt, and it commonly results in negative information appearing on credit records. In fact, in 2021, 43 million people had allegedly unpaid medical bills on their credit reports.

Recent developments put debt collectors on shaky grounds when they make claims about the impact of delinquent medical debt on consumers’ credit reports, as increasingly medical debt is no longer included in credit reports. It is deceptive to claim that failure to pay a medical debt will harm a person’s credit rating when this is not the case. 

The three nationwide CRAs, Equifax, Experian, and TransUnion, removed medical debts from consumer credit reports that were eventually paid and also removed all medical debts less than a year old. Effective April 11, 2023, the three CRAs also removed all unpaid medical collections under $500. The CFPB estimated that roughly half of those with medical debt on their reports have had it removed by these actions by the three nationwide CRAs.

On January 7, 2025, the CFPB announced that it had finalized a rule amending its Regulation V on the Fair Credit Reporting Act to effectively prohibit the use of medical debt in credit reporting. The Rule, entitled “Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information,” removes a regulatory exception that had permitted creditors to obtain and use information on medical debts. The final rule also provides that a consumer reporting agency generally may not furnish to a creditor a consumer report containing information on medical debt that the creditor is prohibited from using. The rule is set to be effective 60 days from its publication in the Federal Register.  The CFPB web page indicates Federal Register publication will be on January 14, with an effective date of March 17, 2025.  A lawsuit challenging the final rules has already been filed.

Whatever the fate of the CFPB rule, the last two years have seen additional, significant changes at the state level.  After Colorado and New York prohibited medical credit reporting in 2023, seven other states adopted similar reforms in 2024.  Not only does this legislation limit the reporting of medical debt, but some of the state statutes prohibit debt collectors from furnishing medical debt information to the CRAs. 

California’s Cal. S.B. 1061, effective January 1, 2025, prohibits CRAs from making a consumer credit report containing medical debt information. The bill prohibits debt collectors from furnishing information regarding a medical debt to a CRA, and if a person knowingly does so, the medical debt is void and unenforceable.  The bill also prohibits consumer credit report users from considering any medical debt listed on the report as a negative factor when making a credit decision. See Cal. Civ. Code § 1785.27 (West). 

Connecticut, effective July 1, 2024, provides that no health care provider or collector can furnish information on a medical debt to a CRA. Any portion of the debt so reported is void. See Conn. Pub. Act 24-6 (2024).

Illinois law, effective January 1, 2025, makes it is UDAP violation for a CRA to maintain in the consumer’s file or furnish any consumer report with adverse medical debt information. 815 Ill. Comp. Stat. § 505/2EEEE.

Minnesota, as of October 2, 2024, bans the reporting of medical debt information.  See Minn. Stat. § 332C.03. 

New Jersey prohibits the furnishing of medical debt, and prohibits CRAs from reporting medical debt under $500, with an apparent effective date of July 26, 2024.  See N.J. Stat. Ann. § 56:11-58 (West).

Rhode Island, effective January 1, 2025, prohibits a health care provider or emergency ambulance service from furnishing information regarding medical debt to a CRA and a CRA shall not report any medical debt.  R.I. Gen. Laws Ann. § 6-60.

Virginia prohibits medical providers and debt collectors from furnishing medical debt, effective July 1, 2024.  See Va. Code Ann. §§ 59.1–444.4.