In a decision issued on April 21, 2021, a unanimous panel of the U.S. Court of Appeals for the Eleventh Circuit has ruled that a debt collector’s transmittal of the plaintiff’s personal information to the vendor it used to generate and send collection letters “constituted a communication ‘in connection with the collection of any debt’ within the meaning of [FDCPA Section 1692c(b)]”. This section of the FDCPA prohibits a debt collector from communicating with anyone other than the debtor and certain specified third-parties “in connection with the collection of any debt” without the debtor’s consent, court permission, or to effectuate a post judgment judicial remedy.
In Hunstein v. Preferred Collection and Management Services, Inc., the debt collector electronically transmitted information about the plaintiff, including his status as a debtor, the amount of the debt, and the entity to whom the debt was owed, to a vendor that used the information to generate and send a collection letter to the plaintiff. Hunstein filed a complaint, alleging violations of both the FDCPA, see 15 U.S.C. §§ 1692c(b) and 1692f, and the Florida Consumer Collection Practices Act, see Fla. Stat. § 559.72(5).
The district court dismissed the complaint for failing to state a claim, concluding that the plaintiff had not sufficiently alleged that the debt collector’s transmittal of information to the vendor violated Section 1692c(b) of the FDCPA because the transmittal did not qualify as a “communication in connection with the collection of any debt.” (The district court did not accept supplemental jurisdiction of the state law claim.)
The Court first addressed whether there was standing to sue and found that because (1) § 1692c(b) bears a close relationship to a harm that American courts have long recognized as cognizable and (2) Congress’s judgment indicates that violations of § 1692c(b) constitute a concrete injury, the Court concluded that Hunstein had standing to sue.
The Court explained that § 1692e contains none of the specific exceptions that § 1692c(b) does; accordingly, there was no risk in Reese or Caceres that, by reading a “demand for payment” gloss into § 1692e, we would render other portions of that statute redundant or meaningless. And as an operational matter, § 1692e—which prohibits “false, deceptive, or misleading representation or means in connection with the collection of any debt”—covers the sorts of claims that are brought by recipients of debt collectors’ communications—i.e., debtors.
The Eleventh Circuit rejected what it termed the debt collector’s “industry practice” argument that there is widespread use of mail vendors by debt collectors and a scarcity of FDCPA cases against them. It commented that none of the cases cited by the debt collector involved Section 1692c(b) claims, the courts in those cases had no obligation to sua sponte determine whether there was a Section 1692c(b) violation, and the fact that this case “is (or may be) the first case in which a debtor has sued a debt collector for disclosing his personal information to a mail vendor hardly proves such disclosures are lawful.”
Having found that the plaintiff had stated a claim for a violation of Section 1692c(b), the Eleventh Circuit reversed the district court and remanded the case. Anticipating the reaction its decision may create, the Court concluded its opinion:
It’s not lost on us that our interpretation of § 1692c(b) runs the risk of upsetting the status quo in the debt-collection industry. We presume that, in the ordinary course of business, debt collectors share information about consumers not only with dunning vendors like [the defendant’s vendor], but also with other third-party entities. Our reading of § 1692c(b) may well require debt collectors (at least in the short term) to in-source many of the services that they had previously outsourced, potentially at great cost. We recognize, as well, that those costs may not purchase much in the way of “real” consumer privacy, as we doubt that the [letter vendors] of the world routinely read, care about, or abuse the information that debt collectors transmit to them. Even so, our obligation is to interpret the law as written, whether or not we think the resulting consequences are particularly sensible or desirable. Needless to say, if Congress thinks that we’ve misread § 1692c(b)—or even that we’ve properly read it but that it should be amended—it can say so.
In review of this opinion, it is an initial reaction that there may be far reaching consequences. What vendors are used by debt collectors to expedite the process – what are the risks of disclosure, and whether the process can be altered to remove the sharing of information. No doubt, this case will result in more litigation. For any questions regarding this case, please contact Deborah Gallo, Director Of Operations, at firstname.lastname@example.org.