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Meaningful Review Required When Attorneys File Debt-Collection Lawsuits

Sharon Edmondson, Washington Legislative Team Member | September 15, 2015

Two federal consumer watchdog organizations asked a federal appeals court for a ruling that could increase liability for debt collection attorneys on a question given sparse attention by the courts.

At issue is an appeal from a decision saying that the FDCPA requires debt collection lawsuits to be the subject of “meaningful” review by attorneys. The June 2014 ruling was appealed to the US Court of Appeals for the Third Circuit, where the CFPB and FTC filed a brief in opposition on August 13.

The FTC-CFPB filing highlights increased scrutiny of the secondary credit market and the market is already in flux after the US Court of Appeals for the Second Circuit refused to rehear a May decision that bankers say will make it harder to sell consumer loans. Although the two cases are unrelated, there is overlap in some of the particulars. The appeal in the Third Circuit involves a debt purchased by Midland Funding LLC. Midland Funding is also the defendant and the appellant in the Second Circuit case that was denied rehearing in August.

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