9th Circuit

Arrow Financial Services Loses 9th Circuit Appeal Because the Truth Can Be Misleading

The 9th Circuit US Court of Appeals recently found that “a literally true statement can still be misleading” and therefore a violation of the Fair Debt Collection Practices Act. Arrow Financial Services (a Sallie Mae Company) sent a consumer a letter stating that if Arrow were reporting the debt to a credit reporting agency, it might submit negative information to that credit agency. However, Arrow could not have submitted the underlying debt to any credit reporting agency.

Gonzales, the consumer in this case, sued because Arrow implied a threat of negative credit reporting when it did not have the right to report the debt in the first place. The 9th Circuit agreed.

This decision (PDF) suggests that debt collectors cannot simply use a form that says if and leave it up to consumers to determine whether they are subject to the negative side of the if. In the 9th Circuit, at least, debt collectors may not threaten—even conditionally—unless they actually do have the right to do what they are threatening to do.

(Thanks for the tip, Randall!)

Wells Fargo’s Freezing of Bank Accounts After Bankruptcy Found Illegal


Apparently, Wells Fargo has a national policy of freezing its customers’ accounts as soon as they file bankruptcy. This policy apparently has something to do with what Wells Fargo thinks are its obligations to the Bankruptcy Estate. Of course, many debtors will have exempt funds in their accounts, but Wells Fargo stubbornly refuses to give the money back without the blessing of the U.S. Trustee.

The 9th Circuit’s Bankruptcy Appellate Panel just did away with Wells Fargo’s particular brand of debtor harassment, holding that the policy violates the bankruptcy stay. The question of whether Wells Fargo’s violation is willful and entitles the debtor to sanctions will go back to the district court.

Despite the 9th Circuit’s decision, Wells Fargo has apparently decided not to comply, since it plans to appeal.

Wells Fargo’s Procedure of Freezing Accounts After A Bankruptcy Filing Invalidated | Bankruptcy Law Network (thanks, Jay!)
Mwangi v. Wells Fargo Bank, N.A. | U.S. Bankruptcy Appellate Panel of the 9th Circuit

Follow Up to the “Secret Law” Appeal at the 9th Circuit

As you may recall, the U.S. Attorney General claimed that a “secret law” required air travelers to show identification before they will be allowed to fly. The U.S. Attorney General claimed the law could not be described, and would only show it to the court, not to opposing counsel.

This is the United States. We don’t have secret laws.

Or do we?

The 9th Circuit apparently “stated that secret laws that constrain the exercise of constitutional rights are constitutional, as long as they are not “penal statutes.”

Although the plaintiff/appellant lost, it also clarified that airline passengers cannot be required to show identification. Instead, passengers can opt to be searched as if they were one of the randomly-selected individuals that are searched every day.

It does not appear that the Transportation Security Agency is aware of this rule, however. Signs still show you must show identification in order to travel. The Identity Project is spearheading a “Freedom Flier” project, encouraging individuals to take advantage of their right to travel anonymously so that the right is not lost through disuse.