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Fair Debt Collection: 7.4.11.1 Generally

Enforcement of a mortgage is the collection of a debt.1164 As described at § 4.7.5, supra, the FDCPA applies to a wide range of mortgage collection and foreclosure activities carried out by law firms, mortgage servicers, and other players in the mortgage lending industry.

Home Foreclosures: 14.3.5 Recovery of Attorney Fees

Most condominium statutes provide that the prevailing party may recover attorney fees in actions to enforce the bylaws and/or declaration, to enforce provisions of the condominium act, or to collect assessments and fines.221 However, as with other issues in this area, because the law differs from state to state, a given state’s law should be consulted to determine under what particular circumstances a unit owner will be liable for attorney fees.

Fair Debt Collection: B.3.10 CFPB, Bulletin 2022-01: Medical Debt Collection and Consumer Reporting Requirements in Connection with the No Surprises Act

This guidance reminds debt collectors that the FDCPA’s prohibition on misrepresentations “includes misrepresenting that a consumer must pay a debt stemming from a charge that exceeds the amount permitted by the No Surprises Act.” It also reminded furnishers, including debt collectors, that “the accuracy and dispute obligations imposed by the FCRA and Regulation V apply with respect to debts stemming from charges that exceed the amount permitted by the No Surprises Act.”

Fair Debt Collection: 7.4.13a.2 FDCPA Claims Where Medical Debt Violates the Federal No Surprises Act

Effective generally for medical insurance plan years beginning on or after January 1, 2022, the federal No Surprises Act1299 protects consumers with private health insurance from surprise medical bills when they receive emergency services, non-emergency services from nonparticipating providers at participating health care facilities, and air ambulance services from nonparticipating providers of air ambulance services.

Fair Debt Collection: 7.4.13a.3 Nursing Home Debt

Under the Nursing Home Reform Act, a nursing facility that participates in Medicaid, or a skilled nursing facility that participates in Medicare, may not request or require as a condition of a resident’s admission or continued stay that the facility receive a guarantee of payment from a third party, such as a relative or representative.1302 Contractual provisions that violate that prohibition are illegal and unenforceable.

Truth in Lending: 2.8.11 Income Share Agreements

With an income share agreement (ISA), a consumer obtains funding in return for a promise to pay a percentage of future income for a period of time to the entity that advanced the funds. ISAs are typically marketed to students as a way of payment for educational services, though they have been used for other types of expenses as well. Providers often market ISAs as an alternative to traditional student loans. Some ISA providers claim, in both their marketing and on the face of their contracts, that these transactions are not loans and do not involve extensions of “credit.”

Truth in Lending: 2.2.2.1 The Term “Debt” Is a Critical Element of the Definition of “Credit”

As noted above, TILA defines “credit” as “the right granted by a creditor to a debtor to defer payment of a debt or to incur debt and defer its payment.”53 Unless some form of “debt” is involved, TILA does not apply to the transaction.

However, neither the Act nor Regulation Z defines the term “debt.” Potential sources of law for supplying that definition and the few court decisions interpreting term “debt” in the TILA context are discussed in this subsection.

Consumer Arbitration Agreements: 10.7.2 Advantages and Disadvantages of Mass Arbitration

Enforceable arbitration agreements typically deprive workers and consumers of the right to redress their injuries through individual and class court actions and even through class arbitration, leaving only individual arbitration as an available procedure to obtain relief. But when damages are not large and thousands of workers or consumers are injured, individual arbitration is often not economically viable for a private firm attorney.

Consumer Arbitration Agreements: 10.7.3.1 Case Selection

Considering the resources and cost involved in mass arbitration, proper case selection is essential. Given the likely need to litigate at least some individual cases, the strength of the case on the merits will be quickly put to the test. Customary case selection questions must also be considered, such as whether the firm or co-counsel have the required resources, time, and expertise, and whether the defendant has the resources to pay an award.

Consumer Arbitration Agreements: 10.7.3.3 Marketing

Mass arbitration is viable when a firm’s cost to acquire large numbers of clients is reasonable. Lawyer advertising is generally constitutionally protected speech and entirely permitted in most jurisdictions. Know a jurisdiction’s rules—for example, New York and Florida impose some unusual restraints on lawyer advertising.

Consumer Arbitration Agreements: 10.7.3.4 Client Relationships

When the client has multiple contacts with the law firm before arbitration is initiated, it builds a relationship between the firm and the client, ensuring that clients understand that they hired a lawyer and why they did so, that are willing to engage in the relationship and the process, and that know what to expect. Cultivate real, if virtual, relationships with clients. Let them see the attorney’s face on video. “Chat” to them using email and text message mail merge, automated follow-ups, and the like.

Consumer Arbitration Agreements: 10.7.3.6 Arbitration Forum Selection

The applicable arbitration agreement may specify one or more arbitration forums, and typically the mass arbitration must be filed in the specified forum. When arbitration agreements do not specify a forum or allow for either AAA or JAMS as the forum, the attorney will have to decide between bringing the action before AAA or JAMS. One consideration is the relative quality of JAMS versus AAA arbitrators in a locality.

Consumer Arbitration Agreements: 10.7.3.7 Settlement

Settling on behalf of a group of similarly situated clients presents practical challenges and attorneys must be prepared to grapple with certain ethical issues. It is impractical (if not impossible) to negotiate thousands of individual settlements on a case-by-case basis. Consequently, most mass arbitrations involve aggregate settlements. This is also consistent with the approach preferred by the business, which is the total cost of its liability, not individual components.

Consumer Arbitration Agreements: 10.7.4.1 Overview and What to Watch Out For

This subsection considers consumer or worker court challenges when a business’s arbitration provision requires unfair mass arbitration procedures. Those unfair procedures may be found in the arbitration provision itself, or the arbitration provision may specify an arbitration provider whose mass arbitration rules are unfairly one-sided.

Consumer Arbitration Agreements: 10.7.4.2 Challenging the Formation of Agreements Specifying Unfair Procedures

When a consumer or worker was already subject to a preexisting arbitration provision, any amendment to that provision must be validly formed. Formation questions are for the court and not the arbitrator to decide even if there is a delegation clause.139 Thus, consumers and workers can seek a court order that an amended arbitration provision was not validly consummated, negating any amendment that might impose limitations on mass arbitrations.

Consumer Arbitration Agreements: 10.7.4.3 Who Decides Unconscionability Challenges

If an arbitration provision containing a mass arbitration provision is validly formed, consumers and workers may nevertheless wish to challenge the enforceability of the mass arbitration procedures on unconscionability grounds. Such a challenge is for the court to decide unless the arbitration provision includes a clear and unmistakable delegation clause that requires that the arbitrator determine enforceability issues. In practice, many arbitration provisions contain such a delegation clause.