The Consumer Finance Podcast

Navigating Hot Topics in Consumer Finance: Litigation Trends, Regulatory Changes, and Medical Debt Collection

Episode Summary

Chris Willis, David Anthony, and Rami Haddad dive into a variety of pressing issues in the consumer finance sector and cover current litigation trends, the impact of the Supreme Court's overruling of Chevron in the Loper Bright case, and the CFPB's new nonbank registry rule.

Episode Notes

In this episode of The Consumer Finance Podcast, Chris Willis is joined by Troutman Pepper Partner David Anthony and Rami Haddad, deputy general counsel for Compliance, Litigation, and Privacy at PRA Group. The discussion dives into a variety of pressing issues in the consumer finance sector and covers current litigation trends, the impact of the Supreme Court's overruling of Chevron in the Loper Bright case, and the CFPB's new nonbank registry rule. The episode also explores the heightened focus on medical debt collection by the CFPB and its potential implications for the industry. Tune in for expert insights and a comprehensive overview of these critical topics.

Episode Transcription

The Consumer Finance Podcast: Navigating Hot Topics in Consumer Finance: Litigation Trends, Regulatory Changes, and Medical Debt Collection
Host: Chris Willis
Guests: David Anthony and Rami Haddad
Date Aired: October 24, 2024

Chris Willis:

Welcome to The Consumer Finance Podcast. I'm Chris Willis, the Co-Leader of Troutman Pepper's Consumer Financial Services Regulatory Practice. Today, we're going to be talking about a grab bag of hot topics in consumer finance with a special guest providing in-house perspective on those trends.

But before we jump into that topic, let me remind you to visit and subscribe to our blogs, TroutmanPepperFinancialServices.com, and ConsumerFinancialServicesLawMonitor.com. Don't forget about our other great podcasts. We have the FCRA Focus, all about credit reporting. The Crypto Exchange about all things crypto. Unauthorized Access, which is our privacy and data security podcast. Payments Pros, which is our podcast all about the payments industry. Finally, our newest podcast, Moving the Metal, which is all about auto-finance. All those podcasts are available on all popular podcast platforms.

Speaking of those platforms, if you like this podcast, let us know. Leave us a review on your podcast platform of choice and let us know how we're doing. If you enjoy reading our blogs and listening to our podcasts, our mobile app is a great one-stop shop to do that. Just look for it in your app store under Trotman Pepper. It's available for both iOS and Android. Download it and give it a try.

Chris Willis:

Now, as I said, we're going to be talking about grab a bag of hot litigation and regulatory topics in consumer finance today, and I'm joined by two guests today, which is a real treat for me. First, I have my partner and longtime friend, David Anthony, a member of our Consumer Financial Services Group here at Troutman, and our special guest, Rami Haddad, who's been on our podcast before, and I'm glad to welcome him back.

Rami is the Deputy General Counsel for Compliance, Litigation, and Privacy for PRA Group. So, David, Rami, thanks for being on the podcast again.

David Anthony:

Glad to be here.

Rami Haddad:

Thank you for having me again.

Chris Willis:

Let's start the discussion by talking about some interesting litigation trends that are going on in the consumer financial services industry, because there's really a lot going on there right now. Rami, do you want to get us started on this topic? I mean, what do you think is going on from your sort of viewpoint of the industry in the litigation sphere?

Rami Haddad:

Statistically, and public records indicate as such, and it cuts across the industry of financial services. I think over the past year, we've seen usual consumer financial protection laws such as the TCPA, FTCPA, and FCRA. Those filings trending up month over month, generally speaking, with some historically high months over the past year.

I would say we've seen other, there are other buckets of laws that have been used on litigation this year, and we've seen some VPPA, the Video Privacy Protection Act, SIPA, BIPA, in Illinois, those tend to privacy and has been a hot button issue in litigation over the past year as well. With contributing to increased litigation costs, settlements across the board, being inclined to say, well, macroeconomic trends and leading to higher settlements potentially, but the statutory damages are still capped. Actual damages don't trend with macroeconomics.

So really, you're left with sort of what's contributing a lot to potentially higher settlements and costs of litigation. We see that as tending to be more on the attorney's fee side of things, because as we know, a lot of these laws have attorney fee provisions, right? So, higher inflation labor market for associates and partners and so on, I think tends to add to the settlement costs and litigation costs of these actions that are trending higher over the past year.

David Anthony:

I would just amplify a couple of things, which is, cases seem to generally speaking be increasing. Sometimes it might be one category over another versus one, but they're not going anywhere. Similar to that, I think there's a macro trend, or the micro trend in my view. I think back to 10, 20 years ago, you had 3,000 bases 20 years ago, or the nature of those 2,000 bases is dramatically different today than it was 20 years ago. You might have had a lot more formal legal aid-type folks who are bringing claims, whereas now the sophistication of the plaintiff's part has changed dramatically. So, it's apples to oranges to say that the number alone has relatively stayed stagnant, or is modestly increasing. When I think you also look at caliber nature of the cases that are being brought by new. That has had an impact.

I think this is a general proposition. The cost litigation and the settlements have gone up because the plaintiffs have gotten more aggressive in that sense. Cost of litigation is expensive and it creates attention for clients in terms of defending those cases and just the sheer cost to defend it. I had conversation with a client where they said, “What is the clients? Are they trying to bankrupt us with this coin?” I said, “No, they're trying to get $1 less than that.” And the plaintiffs’ counsel are certainly pushing and being more aggressive in that sense.

There are some other things that I think we're going to talk about, but at a very high level, those are two things I'm seeing. Then the first thing I would say is they're continues to be creativity by our plaintiffs’ counsel to either see a dry well in one area and come up with a new theory, or change different claims, something else, or to attempt to manufacture a new claim.

Let's take a failed FCRA claim and create an FTCBA claim, or a failed FTCBA claim and create a QCBA claim. Or a failed QCBA claim and create a UDAP claim. So, the field is kind of shifting consistently. There are some steady all-reliables as Rami knows well. There are some steady players who have their problem finding 5, 10, 20, 30 claims and they bring a dump of those claims and then they run their cycle and it seems like every year groupings of that and that's continuing.

Rami Haddad:

I would agree with that. I think we've seen also probably an increase in self-represented consumers' pro se. On average, I think 10% to 15% as I last check were pro se filings in the consumer financial area, rather the majority end up actually being comprised of prisoner petitions, right? So, the overall majority is on the criminal side, but 10% to 15% tend to be more on the consumer financial services side. What we've seen, however, in that space with self-represented individuals is potentially a higher level of sophistication in terms of pleadings, legal research, motions before the court, things of that nature. I think emergent technology has certainly fueled that, and here and I specifically mentioned, artificial intelligence, for example, things of that nature that are now publicly available.

I think we've also seen some players in the industry who have come on to the scene where they offer potentially fee-based legal help. We've seen a lot more of that, and I think that's also contributed to more of the self-represented cases that we're seeing. I think also, we've seen an increase in sort of what we call the more frequent consumer plaintiffs attorneys and plaintiffs themselves who are repeat filers of claims. On average, I think last I read statistically about 40% were repeat filings by the same number of individuals. And we've also seen a lot of sort of what we call manufactured sort of claims by consumer law firms and credit repair organizations that tend to work closely with them. Some of these are standardized letters that are sent containing vague language, buried, and amidst a long text.

I think a recent case out of Pennsylvania in which actually Portfolio Recovery Associates LLC was involved in highlights that fact. There was a firm there in this case where PRA was a defendant. That firm was publicly chastised and sanctioned for writing letters on behalf of their clients using standardized handwritten letters that included a lot of irrelevant text along with vague sentences buried in the middle of the letter reciting an even less conspicuous and very many mention that the consumer does not owe the money in which subsequently alleged to be a dispute that was at a federal district court of Pennsylvania.

David Anthony:

Yes. I’d like Rami’s comments and just a couple of other observations on top of a certain increase in technology. Never seems to be a rash of folks on YouTube and social media who will tell you how to file consumer claims and having seen some of them, some of them are accurate and some of them are not accurate, but nonetheless. The combination of all this is resulting in more pro se claims.

I had one client who's had an almost 50% increase with pro se claims. Again, there's nothing wrong with having self-representing individuals, but if you understand, particularly if you've got a seasoned consumer plaintiffs’ attorney, you can have a frank conversation because you know them, you can talk about the merits, and sort of get to the claims. Sometimes there is misunderstanding on either side, but you can touch the heart of it. As everyone knows, when you have a pro se litigant, the rules are slightly different. Some courts have special rules and courts tend to give some latitudes, or sometimes that just creates more, more everything to get all that resolved.

The last point on the pro se litigants is there are some repeat players. There are some more sophisticated folks that are happening, but it does, when you're having an increase and you're having an increase of pro se bases, that creates different challenges for clients, just to deal with it from the volume perspective.

Chris Willis:

Well, let's shift away for a second from litigation and talk about some more regulatory-type issues. Rami, I'm particularly interested to get your viewpoint on the next thing, which is earlier this year, the Supreme Court overruled Chevron and the Loper Bright case, potentially sort of ushering in an era of less federal court deference to agency interpretations of statutes. In consumer finance, we have a lot of agencies, and they do a lot of interpreting of statutes.

So, I'm very interested to hear what you're thinking from an in-house perspective about the potential impact of the overruling of Chevron and Loper Bright and how that may sort of impact the industry as a whole going forward.

Rami Haddad:

Yes. Certainly, coming out of this recent Supreme Court term, that was arguably one of the more seminal cases that was released this year. Obviously, 40-year-old precedent under Chevron overturned, and just for context, under Chevron, the Congress had not directly addressed the question at the center of a dispute. The court would have been required to uphold the agency's interpretation. Of course, now that has gone by the wayside, and now we have that deference pretty much in the hands of the courts and the judges, right?

So, it's sort of a major transfer of power, I think, from regulatory agencies to judges. What is the impact? What could we see? I think it certainly jeopardizes a regulatory agency's ability or to maybe promulgate regulations just for the fear of potentially being challenged or struck down by courts subsequently. I think you will see regulations challenged even more regularly now than they were in the past 12 months and we've seen many that have been challenged. I think you'll see them challenged directly, potentially, or under the APA, for example, or collaterally in a private lawsuit.

I think you'll see also potentially impact to the regulatory policy life cycle. So, how are bills drafted? What delegation language? How regulated entities and the comment on the rules that are noticed proposed rulemaking and how they comment on those rules before the agencies. There's certainly a big shadow of doubt on the validity of some of the existing agency interpretations, even though the ruling did not undo those prior interpretations.

I think generally speaking, you're just going to see rulemaking be under heightened scrutiny and under a microscope. In fact, I think since June, we've already seen challenges being made as a result of Loper from things related to airline fees, to gun sales, to other matters.

David Anthony:

Yes. From my perspective, I agree with Rami. Loper was a very, very significant decision, but I think will have an impact in many consumer management services statutes. If you think like, let's take the FTCPA or the FCRA, for example, or the TCPA. These are statutes that were written some time ago. I used the word interpretation with air quotes, because in my view, part of the problem that the Supreme Court identified in Loper was that interpretation, what's effectively rulemaking or legislation.

So, yes, I do think there are distinctions between what it is that the federal agency is saying, but with this particular CFPB, for instance, they take an aggressive view of interpretation. I heard a commentator shortly after that decision came out, make the comment, having previously been a federal regulator, that it used to be that a federal regulator would say, “This is what we want to do. Let's see if we can find any sort of hook in a statute to do what we want to do.” And this sort of works that and make them have to start with the language which then of the statute, which then restricts them in terms of let's just use the word creativity in the aggressiveness of what they can do or get away with.

I do think that there's got to be very, very close scrutiny. You can certainly see this in any new rule-making that there are going to be challenges. I know of the FCRA rulemaking. I saw several comments specifically about the authority that the CFPB was attempting to discuss or regulate was beyond what their purview was by the face of the statute. So, as Rami said, you certainly can see there being litigation challenges to this, which will affect the timing of rules as well as the scope of the rules.

The other thing too that I would add to that is that I think will be a real change in things is part of the reason that these agencies or the federal government, the executive branch, has made executive orders or agency interpretations or rules, has been because there has been a log jam in Congress. Congress has been happy to sort of operate under the Chevron rule, make a general rule, and then leave the details to the agency and something so agency is conservative, and some says the agency is more aggressive.

So, you can see this actually change in the nature of the legislation itself as well. Do we want a FTCPA, for instance, that's 200 pages long? I'm not saying we do or we don't, but the way that Congress has been legislating is going to have to change to address this.

The last point I'll make is I think back to where there was a lot of conversation how people thought that the role was going to end when some more conservatives took over or began a more influential as to constitutional reputation with originalism and plain language text interpretation, or when the twombly and Iqbal came out about pleading, or when we, the article three cases that came out, Supreme Court came out. When the reality of all that was, it caused a shift. So, as much as sense that some folks have that this was simply a tool for the defense side, it's a tool for lawyers.

In my view, it has changed as well how plaintiffs plead basis. I've seen plaintiffs’ counsel argue originalism in plain text that you never would have seen 10 years ago. There is different litigation strategies to take advantage of the article for your standing rules and to perhaps keep it quiet as the defendant in the state court as opposed to in federal court. So, I don't suspect that the plaintiffs’ bar and the agencies are going to sit idly by and I certainly expect that there's going to be one, some two-way streets to this, but as well as that, I think just going to be a lot of solstice made in the next five to ten years while this gets sort of out in litigation.

Rami Haddad:

Yes. I would agree with that. One last comment on that before we move on is Congress's legislative efforts, the intent there, the ambiguity of the language, just to say that, is not always unintentional. Now, there's going to be a level of surgical precision almost required by congressional legislative intent in public policymaking. That's certainly a shift in how public policy and bills are proposed.

Now, speaking on the authority, that probably segues into another topic we're going to talk about shortly, but you can see how for example in the TCPA that fueled decades of litigation. I mean, it was a matter of syntax, right? And just that alone how prevalent litigation was under TCPA, and it was really a matter of how words were arranged in the sentence and where the comma was. So, that's the style of precision and the level of unambiguity that where it's going to be required going forward.

David Anthony:

I'll add one point that I'll get Chris credit for this time. I mean, you have heard him say this in the other podcasts as well, as in conversation to we’ve had. A lot of folks on the defense side and industry side who thought that Chevron as it has developed was sometimes a really bad thing. Now, but the flip side of all that was the many instances, Chevron and this sort of rulemaking idea did provide predictability for companies. So, I do think that some of that is going to up in the air, in terms of companies suits around their compliance strategies based upon some of this regulatory advice. Are they going to not honor that anymore? Or are they going to be a competitive advantage? A disadvantage, if we honor the old Chevron advice while all this stuff get sorted out.

I hear that you acquire the sense of, okay, so what do we do about all that? Most of my clients like certainty, and having uncertainty, certainly is concerning for businesses in terms of how they operate on a daily basis.

Chris Willis:

This has been a fascinating discussion about Chevron, and the impact of it being overruled. But there are a couple of hot issues that I wanted to have us discuss, involving a couple of CFPB initiatives. The first one that I've been getting tons of client inquiries about is the CFPB's non-bank registry rule, that essentially was finalized earlier this year and requires non-banks to register any enforcement orders that they have with the CFPB, or with the state regulator if the subject matter of the order is a consumer financial product or service, and one of the laws that the CFPB specified in the rulemaking.

Rami, what's your perspective on how you think the existence of that registry is going to impact the industry?

Rami Haddad:

That's a great question. I think for the most part, most non-banks that are going to end up being covered under this are certainly grappling with the same concept of what is this? Why is it needed? And what will come of it? What ramifications will come of it? Certainly, I think the CFPB and under director Chopra specifically, there's been a big reduce sort of repeat offenders or corporate recidivism, such that, “I think that director Chopra said the penalties for illegal activity as the cost of doing business that is not acceptable.”

The consent orders are to the CFPB's point not polite suggestions. The intent I think is to make them publicly available and more easily tracked as they are not necessarily now, specifically because current registries, such as the NMLS specifically, which is the most widespread, a lot of entities that are non-banks may or may not be licensed and have to be registered to NMLS. Any orders against such entities may not be tracked. That's one of the reasons that I think the CFPB has cited, in addition to the corporate repeat offender, corporate recidivism rationale, and the fact that I think financial companies, they cited that have not faced consistent oversight and so it makes it more difficult for regulators, not just the CFPB, but also cross-agency to identify and address risks across the industry.

So, those are some of the reasons the CFPB has cited to that. It is yet to be seen how this will impact non-bank entities that are covered and must register any covered orders as that's defined by the rule. I think at best, there's reputational damage to be considered, right? That may be associated with being labeled as a repeat offender, if that's what this rule is intended to do. I think certainly other companies looking to do business with non-banks and doing their due diligence may also use this to look into the company and any orders related to them, and may also add fuel to that fire and that the company is not doing what it should be doing.

Those are some of the things that are top of mind. It's very hard to tell how this will play out. I know that House Republicans have challenged the rule, specifically under what David was just mentioning a minute ago, was under the CFPA authority that CFPB does not have the authority to do this specifically. I'm not sure if that challenge will materialize, but again, that's as best as we can tell right now, is that it will also require, of course, just as anything, higher costs of compliance. There are multiple steps you need to do under this rule. There are also some, I would say, somewhat onerous attestation requirements on an annual basis, and so on.

David Anthony:

Yes, and I would agree with Rami’s comments. Currently, there's no central repository for all the startups, so at least when you're defending someone, sometimes there's not a concern that's sure going to be public or easily found publicly. So, that might play a role in the litigation of settlement strategy. But I also think that personally, if this plays out like I think it's going to play out, if it's adopted, I do think that it's something that's potentially a negative that's not a major negative to folks in the industry. So, you could see they are changing the approach in litigation. It's one thing to agree to do something or even have a consent order, which many instances was easier when fighting on litigation, but more particularly where there is a frontal assault right now being made perhaps on the scope of the CFPB's authority on these certain things. You could certainly see companies saying, “Well, the advantage of a resolution does not work being tarred and feathered forever, and being part of this registry, so we're going to go litigate this issue or litigate the authority issue.”

I also think that I think about class action lawsuits. One of the things from the private litigation perspective that you always worry about, particularly if you settle a federal court base on a class-wide basis, is that you have notice that you have to get up to state attorneys general and looking back over 10 to 15 years, there was a trend of having more federal or state regulatory investigations that follow from a public class settlement than without that. I had more clients now who five years ago wouldn't have really worried about that, but now that plays a role in terms of when is the case over because most regulators will say that the class action privately does not extinguish our authority or our rights or our remedies.

So, if you add this to that, that's another feather, at least certain cost hesitation between a public versus private settlement on the litigation side. I also have to believe that there's already some cynicism about self-reporting that you're going to self-report and you're going to end up with a consent decree of some type. If you had an aggressive regulator who said, “We want to document each and every instance of that.” I could certainly see that being another factor that they would have to decide.

The other thing too is much like some of the efforts of the CFPB consumer complaint portal. It is always a concern that this will contribute to some type of argument or finding there somehow the defendant’s behavior, the client’s behavior, is willfulness. You can imagine certainly seeing a plaintiff’s counsel arguing if there's a string of three or four or five items in a registry or a company, you would expect to see that in a jury argument. Those things are less about the technical element of registry than what I see might be some of the ramifications of the registry.

Rami Haddad:

I agree with that. One last comment on that, and you really hit on a really good point, David, is that does the fact that the registry exists, does the fact that you were required to register on the registry? Will a non-bank be less inclined to enter into future consent orders or decrees? That then sort of parlays into our earlier conversation, challenges to regulatory agency authority. So, would a non-bank now be more inclined to sort of challenge the regulatory interpretation under which they're being challenged for purposes of the consent decree? It all kind of parlays in together. So, it will be fascinating. Yet to be seen what will come of it.

Chris Willis:

Yes. I agree though with both of your comments that the primary impact of this rule is to basically, increase the impact of a consent order by triggering more of what I'll call the pile-on effect. Either from other regulators or from private litigants. In fact, I think that is the purpose of the registry rule. So, it means that today, when people enter into consent orders, it's not that common to see other regulators pile-on afterwards or private litigation pile-on. It happens sometimes, but not all the time, and I feel like the registry is going to cause it, both of those things to happen much more frequently.

David Anthony:

Yes. I'm not going to suggest this as the base, but you certainly could see how a federal or state agency or head who happened to have a more aggressive political agenda on a particular industry could effectively try to chokepoint a member of the industry or an entire sector by overwhelming them with consent decrees in order to taint the entire industry.

Chris Willis:

Yes. Well, there's one more hot topic that I'd like to cover with you two gentlemen, and that is with regard to debt collection. The CFPB in particular has been incredibly strident recently in public statements and actions related to medical debt collection. There have been two enforcement cases. One was at the tail end of last year, one was earlier this year. You've seen numerous reports and press releases about the perceived evils of medical debt collection, and those just keep coming. There was even a White House event where the director of the CFPB went to the White House to talk about what the Bureau is doing with respect to medical debt collection.

So, Rami, you're a veteran of this industry. I'd really love to hear your impression of what's going on with this very high degree of focus on medical debt collection?

Rami Haddad:

Lots going on. Obviously, it's hotly publicized. There's a lot going on with it. You're going to see news coming out. We just saw that yesterday, like you said, related to the proposed rule to prohibit medical debt from being credit-reported with the credit reporting agencies.

A couple of things here. I think there's a public policy aspect to this as well, in the sense that medical debt has increased. You can see that it now contributes to a larger piece of the pie of the consumer financial debt nationwide. There seems to be obviously issues with the financial health system. So, the CFPB is taking a position that a lot of people suffer from medical debt. It's comprising a lot of the national debt for most consumers. But also, one of the rationales for that is that it's rife with inconsistencies when it is being reported or collected upon, right? That there's a lot of inaccuracies and that it's really a poor predictor of whether someone's likely to pay their other bills and loans in the future.

I think the issue with the proposed solution is sort of the old adage, is the cure going to be worse than the disease? In the sense of, well, what would happen? We've seen this kind of play out before. This is not somewhat analogous to the proposal to eliminate a certain portion of student loan debt that we saw in the past. Are we really getting to the bottom of the issue though, right? Are we really fixing a broken health system? Are we really addressing the cost of prescriptions and medical devices and goods for individuals? That really, that's the real issue as opposed to saying, “Well, we're just not going to report medical debt.” Yes, that will give a reprieve to millions of Americans?

Sure. I don't believe that that really fixes the issue that's systemic in our society, which it's related to this issue. I think what you'll see is the same argument we've seen in the past, which is, okay, now that you've done that, what will happens? Medical debt, unlike other consumer debt, it doesn't subscribe to the economic laws of supply and demand. People are not going out and choosing to buy medical debt. They're not choosing to buy such like they would a television or another consumer good. So, medical debt is just something that happens to you, right?

The demand is what it is. It will always be organic. The problem is then we'll become the supply. Our lenders, our healthcare providers, are they're going to be inclined to basically lend the same, extend the same amount of credit? Are they going to ask for money upfront for services now? Is it going to lead to individuals potentially looking to other sources for lending, basically, unscrupulous potential actors or other mediums that real higher interest rates, higher payments and really does a disservice to the consumer at the end because no matter what, if they need a medical attention, they need medical service, and they're going to need to get it, and the cost is the same, how are they going to pay for that? I think that's where the argument is potentially the cure maybe end up being worse than the disease.

David Anthony:

Yes, I would echo. Certainly, there's a public policy element to this, and that's the American healthcare system and how all that operates. It's not exactly the easiest to understand, but certainly, folks on the more progressive side who want a single-tax payer system or single-payers model that certainly there can be an argument that this is another step for folks trying to make that happen.

But the other day as well, I also think there's some dismal politics about this. It's popular. It's good from a voting perspective to eliminate debt, whether it's medical debt or student debt people have. I think Rami is spot on in the sense that it's not answering the question here. But again, there are folks who have debt who choose not to credit report because credit reporting system that's voluntary. Our credit reporting system is complicated, that doesn't mean that the debt was drawn away. So, one of the things that struck me is that the notion that somehow the medical community or the lending community is going to remain static with whatever it is, I think is a bit folly, to the extent that there have been other things that are done that have the met effect of increasing credit scores and whether that's sort of the mortgage loan occupation programs, or it be the inclusion of utility bills or other things.

It's not like the underwriters aren't aware of that the made adjustments, if what they think is a minimal credit score. It would be sufficient for someone to qualify for whatever the loan happens to be, because at the end of the day the underwriting criteria look at things like amount of debt and there's kinds of things. So, I certainly think that if this ends up going through, there will be ripple effects along the lines of what Rami said.

I also think this too, a cynical view of all of this is that the CFPB recognizes that the FCRA rulemaking in total is never going to be approved. So, let's pick one or two things that we really want to harp on and see if we can create enough political support behind it to either make that happen or to have Congress do something. And clearly medical debt is one there seems to be at the forefront. I don't think there's any great surprise as well that the timing of this relative to the election is on purpose.

So, it is to be decided, but Chris, you’re spot on. It does seem to be obnoxiously present in a sense of just the volume of the stuff that's coming out singularly on a daily basis about this. There's a lot of other stuff in the FCRA rulemaking that is causing a lot of interest, but this one is dominating in terms of the volume that seems to be potential, it seems to be getting to now.

Rami Haddad:

To add to that, David, I think there's one other aspect of this that's important is that so the CFPB’s intent is to close what they argue is a loophole in Reg. V related to this issue. However, they have publicly come out and we have seen statements from them directing states to feel free to enact their own laws related to medical debt. And they have, in fact, stating that FCRA is not preempted, state laws are not preempted by FCRA in this instance. We've seen Colorado, New York, and Minnesota pass specific legislation targeting medical debt and credit reporting of such debt and other requirements that are related to that.

Now, the issue that happens is you may end up, even though you close the loophole at a federal level, you may end up with a 50-state patchwork of different laws targeting medical debt in different ways in those respective states, including how medical debt is defined, right? So, that'll be interesting to see.

David Anthony:

That's a great point, Rami. And there's the same worry about Loper. A lot of things that the CFPB, for instance, or the FTC or federal agency would not be authorized to do a state might do. We've seen a lot of that. There have been a lot of states that have done this on the FCRA side in terms of credit reporting. There are flights that have gone around the country, got FCRA grants, and those kinds of things. Also, I would say, and Chris might comment better on this, but their observational perspective, there seems to also be an increase in statements from the CFPB about the authority of states or encouraging states or partnering with states that I think is certainly a plan B strategy for more aggressive regulators to get these policies enacted if they can't get them through the federal level.

Chris Willis:

Yes. There's no question about that. I feel like the CFPB's encouragements to states, particularly in the legislative front, what you and Rami were talking about, about saying, “Oh, go legislate whatever you want. It's not going to be preempted.” It's just a response to the fact that there doesn't seem to be an end in sight to legislative difficulties at the federal level. The stars don't look like they're going to align. They're not aligned now and don't look like they're going to align for one party to control the House, the Senate, and the White House, such that legislation can be more easily enacted.

So, the CFPB is saying, “Well, if we can't get it at the federal level,” just as you said, David, “let's have a bunch of states do it.” That started to show some success, actually, as a strategy. You've seen a lot of legislation on the issue of medical debt reporting. You've seen a lot of debt collection legislation at the state level, and you've seen lots of privacy laws enacted at the state level. And now Colorado is the first to have an AI law, and other states may follow that example as well.

So, I think the inability for either party to advance legislation like this at the federal level, in Congress, it leads to the fragmentation of many state laws that we as an industry now have to deal with.

David Anthony:

If you connect the thread between the entire conversation we've had, which is the increase in trend of litigation, the increase of both for the, or against the increasing use of automation AI to a litigation perspective, combined with the open issues for Loper, combined with this federal state conundrum and rulemaking, all that kind of stuff that portends a lot of turbulence over the next 5 to 10 years, no matter how it shakes out.

Chris Willis:

Okay. Well, we're going to buckle up and prepare for that turbulence. But for now, let me thank both of you for being on the podcast today. This has been a great discussion. I know that you too will be back on the podcast again to talk about issues like this in the future. But thank you today for being on. Of course, thanks to our audience for listening in as well.

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