A summary of this week’s top cases. Editor’s note: This content is available for members only.
7/2/2020 9:00
Each week, ACA International’s Compliance Analysts Laura Dadd and Andrew Pavlik compile relevant case summaries for ACA members. Here is a recap of the cases this week. Members may also submit cases for consideration to our compliance team at [email protected].
SCOTUS finds CFPB Director’s Removal Protection Unconstitutional, but Severable from Dodd-Frank
The Selia Law firm received a civil investigative demand from the Consumer Financial Protection Bureau. The law firm refused to comply, stating that the CFPB’s leadership structure with a single director removable only for cause violated the separation of powers. The CFPB did not address Seila Law’s claim and asked them to comply with the demand.
The law firm continued to refuse to comply and the CFPB filed a petition to enforce the demand with the district court. Selia Law responded to the petition raising the argument that the CFPB’s structure was not constitutional. The district court disagreed with the law firm and ordered it to comply with the CFPB’s demand.
Court Finds Collection Letter Confusing to Least Sophisticated Consumer
The consumer defaulted on a credit card debt which was subsequently sent to the debt collector after it had been charged off. The debt collector sent a letter to the consumer which contained an itemized statement of the debt. It stated in part:
The total amount due as of charge-off: $5,266.06
The total amount of interest accrued since charge-off: $0.00
The total amount of non-interest charges or fees accrued since charge-off: $263.50
The total amount of payment made on the debt since charge-off: $263.50
Current balance: $5,266.06
The consumer claimed that the itemized statement was confusing and did not clearly communicate the amount owed on the debt. The consumer stated that, “[t]he total amount of non-interest charges or fees accrued since charge-off: $263.50” creates confusion as to the true amount of debt because there is “no explanation as from what source the ‘non-interest charges or fees’ are derived[.]” The debt collector argued that the letter was not confusing and did not imply that future non-interest charges or fees would be added to the account and moved to have the case dismissed.
Ninth Circuit Rules on FDCPA’s Applicability to Security Interest Enforcement
A consumer took out a loan to satisfy a divorce judgment and to repurchase his home from his ex-wife. He also granted the bank a deed of trust on his home as security for the note. In September 2010, the consumer ceased his loan payments and soon after filed a federal lawsuit seeking damages and rescission of the loan under the Truth in Lending Act. Meanwhile, the Federal National Mortgage Association (Fannie Mae), acquired the note and the deed of trust from the bank. Fannie Mae subsequently initiated a proceeding to foreclose the deed of trust on the consumer’s home, and the state court dismissed the foreclosure action without prejudice, reasoning that the pending Truth in Lending Act action was duplicative. The Oregon Court of Appeals vacated the decision, but at the time of the instant case, Fannie Mae had not yet renewed its attempt to foreclose on the deed of trust.
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