05 · Notice and vendor oversight

Firmus, Actual Knowledge, and Continuing Use of NCS

If a creditor learns of repeated unlawful practices by its independent collector and continues using that collector, a separate Texas issue may arise. The proof cannot skip over who received the information, what it established, or when.

The statutory test

Texas Finance Code §392.306 prohibits a creditor from using an independent debt collector when the creditor has actual knowledge that the collector repeatedly or continuously engages in practices prohibited by Texas Chapter 392.

  1. Who is the legally relevant creditor: the property owner, a landlord entity, Firmus itself, or another party?
  2. Was NCS an independent debt collector used by that creditor?
  3. Are there repeated or continuous acts that actually violate Texas Chapter 392, rather than accusations, settlement filings or unrelated federal provisions?
  4. Did the creditor have actual knowledge of those practices, and what proof establishes that knowledge?
  5. Did the creditor continue using NCS after acquiring that knowledge?

The distinction between discoverability and knowledge

Reichert was public in 2008 and shows an NCS FDCPA violation. But public availability alone does not establish that Firmus read it, and a federal FDCPA violation is not automatically a Texas Chapter 392 violation. A CFPB investigative demand is even further from a merits finding. If a litigant merely cites cases in a complaint or attaches them to an exhibit, the filing by itself does not conclusively establish that the intended corporate decision-maker read them.

Actual knowledge might be proved by acknowledged correspondence, internal legal/vendor communications, discovery responses, deposition testimony, compliance reports, forwarding to the responsible decision-maker, or a chronology linking evidence actually received to later vendor conduct. The legal standard is not constructive knowledge or what the company should have found online.

Later notice can change a later decision

If Firmus or the actual creditor receives a carefully documented notice and subsequently continues using NCS, that later decision could be examined in light of the information actually received. Notice in November 2026 cannot retroactively establish knowledge at a 2025 vendor-selection date. Even actual delivery of prior litigation records alone may not establish knowledge of the repeated Texas-prohibited practices demanded by §392.306.

A possible change in law

Because §392.306 requires proof of actual knowledge but has no general client-notification mechanism after a finding against a collector, Commons now publishes a proposed statutory notification process and a draft §392.3061. The proposal would require verified notices to clients and remediation for affected consumers after precisely defined final findings. These proposed obligations do not exist in §392.306 today.

Proposed evidence package (not sent)

  1. Cover note listing recipient entity, role and purpose, and describing only verified source facts.
  2. Exact published Reichert decision, identifying the holding, jurisdiction, and 2008 date.
  3. Separate description of the CFPB proceedings, labeled “investigation and enforcement of civil investigative demand,” not “finding of violation.”
  4. Any additional adjudicated Chapter 392 conduct, if verified, with full docket/court references.
  5. Questions about NCS compliance controls, prior due diligence, contracts, complaints routed to Firmus, and who could act on the information.
  6. Signed/dated notice edition; proof of delivery; any response and later evidence of continued use. Hash and ledger anchor, if any, are separate from proof of delivery.

Sample neutral notice paragraph

We are providing identified public judicial and regulatory records concerning National Credit Systems, together with questions about its procedures for reviewing disputed rental charges. Please identify the person or department responsible for evaluating the collector's compliance history, what steps were taken to assess these records, and whether the creditor continues to use NCS. We do not suggest that the enclosed records alone prove a violation of Texas Finance Code §392.306.

This is a drafting component, not a letter actually mailed or served. A case-specific notification would require the correct recipient entity, the applicable supporting records, and legally reviewed statements. Review each public source first.