Alan S. Kaplinsky is a senior partner in the Business and Finance Department at Ballard Spahr LLP and Chair of the Consumer Financial Services Group. He is also a member of the Higher Education, Mortgage Banking, and Bank Regulation and Supervision Groups.
Last week, the head of the New York Department of Financial Services (DFS) became the first state regulator to use his authority under Dodd-Frank Section 1042 to bring a civil action for a violation of its prohibition of unfair, deceptive, or abusive acts or practices (UDAAP). Just last month, the Illinois Attorney General became the first state attorney general to file a state court lawsuit under this section of the law.
A California federal district court hearing the CFPB’s enforcement action against Morgan Drexen has rejected Morgan Drexen’s challenge to the CFPB’s constitutionality. Although similar challenges have been made in other cases, this appears to be the first decision to rule on the merits of such a challenge.
A collection letter violated the Fair Debt Collection Practices Act (FDCPA) because it stated that the debtor could only dispute the debt in writing, the U.S. Court of Appeals for the Second Circuit ruled recently.
The Seventh Circuit agreed to hear the issue after the district judge certified it for interlocutory review in the plaintiffs’ class action case (which followed the judge’s certification of a class with the plaintiffs as its representatives). The Seventh Circuit’s decision is the first by a federal appellate court on the issue, with the court noting in its opinion that the absence of appellate court authority was a major factor in its decision to hear the appeal.
The clear takeaway from the Consumer Financial Protection Bureau’s first annual report to Congress on enforcement of the Fair Debt Collection Practices Act is that debt collection will be a major focus of both the CFPB and the Federal Trade Commission in 2012.