Another Circuit Court Ruling Complicates Answering Machine Use in Debt Collection

[Jen23514]

http://www.insidearm.com/go/arm-news/anoth...debt-collection

 

An appellate court last week ruled against a debt collection agency in a case involving messages left on an answering machine. The decision laid bare the tightrope collectors must walk when leaving messages that comply with the Fair Debt Collection Practices Act (FDCPA) and its rules requiring identification but prohibiting third party disclosure.

 

The 11th U.S. Circuit Court of Appeals in Georgia said that a debt collection agency was not within their rights to intentionally violate one section of the FDCPA for fear of violating another.

Niagara Credit Solutions Inc. claimed that it ran afoul of the section of law requiring debt collectors to identify themselves so that it could comply with a rule prohibiting debt collectors from disclosing the debt to third parties. Niagara left messages on Brenda Edwards’ answering machine that asked the her to return an “important call,†but did not tell the debtor the calls were in relation to the collection of a debt.

 

Edwards had an outstanding debt of less than $1,000 owed to the Consumer Shopping Network, according to court records. She sued Niagara in 2007 for FDCPA violations after receiving the messages.

 

Niagara used a bona fide error defense in claiming that the problem was with the law itself. The firm said that if it had identified itself in the messages, a person other than the debtor could have heard the message, which may have constituted a third party disclosure. But the appellate panel rejected the defense.

"Niagara purposefully left out of the messages any information disclosing that they were from Niagara Credit Solutions, Inc. or a debt collector or that the call had been made for the purpose of collecting a debt," Judge Edward E. Carnes wrote in the decision. "The Fair Debt Collections Practices Act specifically requires that a debt collector disclose in all communications with a debtor that the message is from a debt collector."

 

(Jen note: I find this interesting mostly because it is a damned if you do, damned if you don't situation for the CA. The only solution to avoid this, is not to leave messages.)

 

The decision was not a surprise to debt collection legal experts. But some aspects of the ruling did raise concerns.

 

Barbara Sinsley, of law firm Barron, Newburger & Sinsley, PLLC, noted that Carnes used some questionable language in his write up.

 

“The court used dangerous language by equating debt collection practices with murder and mayhem in the Vietnam War,†Sinsley told insideARM.

 

The opinion, written by Carnes, opens, “In an oft-repeated statement from the Vietnam War, an unidentified American military officer reputedly said that ‘we had to destroy the village to save it.’ That oxymoronic explanation may be apocryphal, but 1 the debt collection agency in this case offers up much the same logic to explain why it violated the [FDCPA]: it was necessary to violate the Act in order to comply with the Act.â€

 

Sinsley, who is also co-chair of the In-house Counsel Division of the National Association of Retail Collection Attorneys (NARCA), said that the court also strays into dicta by writing “the [FDCPA] does not guarantee a debt collector the right to leave answering machine messages.â€

 

Sinsley notes that the language has repercussions, especially in light of the much-followed Foti case. Collectors must be able to communicate with debtors, and recent court rulings are making that tougher.

 

“If all communications with debtors with the exception of lawsuits are shut down, is that really what the courts want?†she said.

 

John H. Bedard, Jr., a nationally recognized expert in FDCPA and FCRA compliance and defense litigation with Bedard Law Group, P.C. in Duluth, Ga., agreed with Sinsley.

 

“Congress never intended to prevent communicating with consumers by telephone,†said Bedard.

 

Bedard said that he understands the legal rationale behind this particular ruling. But he said that it is very important to note that the court did not decide if it would be third party disclosure if another person overheard an answering machine message in which a debt collector identified themselves.

 

Indeed, Judge Carnes wrote in response to Niagara’s concerns about disclosure, “We do not need to decide whether that concern is well-grounded in the law.†Later, he also wrote “We have not decided that issue†in reference to the paradox of third party disclosure versus “mini-Miranda†warning compliance contained in the FDCPA.

 

Bedard is concerned that rulings similar to this one will cripple an accounts receivable management company’s ability to leave messages on answering machines (“Legal Ruling Further Muddies Waters on Third-Party Disclosure vs. Mini-Miranda,†Dec. 12, 2008). Further, he does not believe the consumer is being reasonably harmed by the messages.

 

“When consumers use answering machines, they are inviting the unknown public to leave them messages,†he said. “It does not hurt consumers for collectors to leave respectful messages. I don’t think that’s something Congress ever contemplated.â€

 

The case, decided October 14, can only be appealed to the U.S. Supreme Court. Attempts to contact attorneys for Niagara were unsuccessful.

 

 

To read more on this case and its implications:

 

Arguing that you broke the law in order to comply with it is not, apparently, the way to win an argument before the 11th U.S. Circuit Court of Appeals.

 

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Read HERE to read the ruling.

 

Since this is a fairly recent ruling (Oct 19th), more to come.....

[clambert1273]

LOL

 

But Officer - I had to run this stop sign to stop at that sign...

 

hmm I don't think it works anywhere LOL

[x-large debt]

I want to call the Niagara people and leave them this message:

 

hello this is an important message.

 

You lost your case you loser!

 

[JunkBuyersWorstNightmare]

I want to call the Niagara people and leave them this message:

 

hello this is an important message.

 

You lost your case you loser!

 

 

[NeverQuietHere]

Yep, my lawyer emailed me this case last week.

 

ETA: I was trying to get my thread to start a big thread on the cases so far that have to do with phone calls, voicemails as violations. It would be nice for people to have a "cheat sheet" of sorts.

Edited October 21, 2009 by cfj503

[bucketoblood]

I have a medical bill that they have called me about once a day in September ( I was laid off, my employer retroactively cancelled my insurance back to last time insurance was paid, they say they sent me bill but I didnt receive one so I appealed decision they denied my appeal) so the collection dept calls and leeaves this robo message was " ..this call is for ____,_____ this is not a sales or a marketing call please respond to this important matter at ..." no notice of who is calling so i think why should i return that call?

It could be a donation request thats not sales or marketing, or a political poll is not really marketing either. So now about 7 days ago they added to start of message who it is from.

This is before the case ws decided. Now the message says "This is a call from xxxxx health services for _____._____ this is not a marketing or a sales call please call us at..." would that message now violate FDCPA now? Actually both of those messages according to the article may violate it right?

Should I send them a Validation letter now that I know who is calling?

Would it be worth it to bargain the amt in return for not suing them?

 

Its been long time since I worried about this stuff about 2 yrs ago.

Would a FDCPA suit like the one the lady made in the story be a statutory type damages deal meaning $1000 per violation right?

Because that would help me pay the almost $4k AND stick it to my greedy employers. You see I worked at hospital and they own the clinic and hospital I was treated at. So if I ended up paying them with their own money would be sweet justice.

[pryan67]

damages under FDCPA are capped at 1k per ACTION...not per violation

 

 

 

 

I'm confused about Sinsley and Bedard's statements though...

 

where did the judge state that the CAs can't communicate by telephone? If the consumer answers the phone, then they can communicate...

 

really quite simple...

 

of course, the CA will then claim "well, they avoid answering the phone"....to which I say "too bad, so sad...if they're not answering the phone because you're a dirtbag...what makes you think they'll return your call?"

[NeverQuietHere]

ttt

[vetswife]

I'll reitterate my thoughts on communication from a debt collector...i really think their first contact should be by certified/registered mail and they shouldn't be allowed to report until this letter is received

 

can you dodge the mail? sure, but how many people get phone calls and messages for people that don't live at your house

OR had the sneak attack of a collection suddenly showing up on your reports that you knew nothing about, was a time barred debt or wasn't even yours to begin with

 

I have a unique name so totally off the wall stuff doesn't usually happen to me unless its ID theft (I actually have pretty squeaky clean credit) but my Dhs name is dead common and I had to deal with like three things that were absolutely not his...they were just as bad to deal with as the stuff that WAS his

[nekom]

Not that I have any sympathy for debt collectors but it does seem like a bit of a catch-22 for them. If you don't identify yourself, it's a violation of the law. If you do identify yourself, it's a potential violation of the law.

[NeverQuietHere]

vets, ITA with you. Dh has a common name as well and I've had different SSN on his reports and judgments that weren't his in public records reports. They should have to send a letter certified for first communication.

[vetswife]

Not that I have any sympathy for debt collectors but it does seem like a bit of a catch-22 for them. If you don't identify yourself, it's a violation of the law. If you do identify yourself, it's a potential violation of the law.

 

 

I agree with this to a point, only because I know how some people abuse things and this will get abused

 

 

my basic philosphy is, if they follow the law and have valid info..and don't go nuts with absurd fees, they get paid

if they can't comply, they don't get paid

 

and I will cut off my nose to spite my face

[breeze]

The court, in this case, pretty much told the CA "do not leave messages on answering machines."

 

 

ETA: I think it would be great to index all the threads on this topic, so they can be readily accessed. If you see one or start one, let me know, and I'll put up a "directory" - I've been helping someone who is trying to handle crazy phone calls from rogue collectors, so I'm trying to find out all I can too.

[beli]

vets, ITA with you. Dh has a common name as well and I've had different SSN on his reports and judgments that weren't his in public records reports. They should have to send a letter certified for first communication.

I don't think certified is a way to go.. it would cost them way too much money. When I worked in the insurance industry and I'm sure this pretty standard across most major businesses that generate a lot of letters. We had a program that would automate the letter process. It would also "burn" the letter into the case file. So anyone looking up the case could see that a letter went out on such and such date. There was no doctoring this system. They couldn't go back and say they sent a letter on such and such date because the date would correspond to whatever the date the letter was sent.

[NeverQuietHere]

breeze, I did start a thread (and have been searching for it) where I started listing all of the cases for phone violations. Do you want me to pm you what I find or just post here?

 

beli, whatever they are doing now isn't working and all I was doing was agreeing with a SUGGESTION. A certified letter or registered mail sent to a debtor COULD possibly clear things up from the start when dealing with people of the same name or similar names. Then again, for people who don't have to fight to prove that they are John Smith and not John R. Smith or whatever, it's a totally different story.

Edited April 13, 2010 by NeverQuietHere

[jack1212]

I think there were some cases in the TCPA thread if im not mistaken.

[Bobbydebt]

The catch in CAs leaving voice mails is that a debt collector CANNOT, in order to comply with one section of the FDCPA, violate another section of the FDCPA.

 

Most collectors are too stupid to realize that, and the individual collectors do not understand how important their choice of words are/become.

[beli]

breeze, I did start a thread (and have been searching for it) where I started listing all of the cases for phone violations. Do you want me to pm you what I find or just post here?

 

beli, whatever they are doing now isn't working and all I was doing was agreeing with a SUGGESTION. A certified letter or registered mail sent to a debtor COULD possibly clear things up from the start when dealing with people of the same name or similar names. Then again, for people who don't have to fight to prove that they are John Smith and not John R. Smith or whatever, it's a totally different story.

Ohh, I agree, something needs to be done. I think some of the larger Ca's just don't give a damn. They say "Well we sent it to the last known address" or it's not our fault the creditor didn't give us complete information, or our skip tracing service sucks. CA's are going to come with every excuse under the sun. It's a loosing battle I think.

 

When we sent out letters, we had the applicants current address because it was on the application. When someone sends the Ca a letter stating that they are not such and such, and can provide proper identification stating that they are not who they are looking for, the blame falls back on the Ca.

 

So in your scenario of a person w/ a common last name how is a certified letter going to clear anything up? If the Ca has the wrong person, they have the wrong person certified letter or not. They won't know until the wrong person calls them or sends the Ca a letter stating they have the wrong person.

[NeverQuietHere]

beli, I am about done. A certified letter to someone with a common last name or to someone without a common last name, hell, they need PROOF that they've sent letters out. I myself have experienced KNOWING a CA did NOT send a letter out because the CA TOLD ME SO and they TOLD ME THEY DIDN"T HAVE MY ADDRESS. But because I didn't have it on tape and when my lawyer went to go sue them, boom! There's a freakin' letter. A collection agency is different than an insurance agency I'm sure in a lot of ways when it comes to collecting or notes or whatever.

 

Let me rephrase: A CERTIFIED LETTER SENT TO A DEBTOR or ALLEGED DEBTOR COULD HELP their case and your own case. (General use of YOUR) A person will pay more attention to a certified rather a plain ol' letter or no letter at all, which is the case in MOST cases.

 

ETA: oh and just so it's clear, that no dunning letter was NOT the only thing we had on the CA so it's not like we went after them for ONE little violation like that.

Edited April 13, 2010 by NeverQuietHere

[beli]

beli, I am about done. A certified letter to someone with a common last name or to someone without a common last name, hell, they need PROOF that they've sent letters out. I myself have experienced KNOWING a CA did NOT send a letter out because the CA TOLD ME SO and they TOLD ME THEY DIDN"T HAVE MY ADDRESS. But because I didn't have it on tape and when my lawyer went to go sue them, boom! There's a freakin' letter. A collection agency is different than an insurance agency I'm sure in a lot of ways when it comes to collecting or notes or whatever.

 

Let me rephrase: A CERTIFIED LETTER SENT TO A DEBTOR or ALLEGED DEBTOR COULD HELP their case and your own case. (General use of YOUR) A person will pay more attention to a certified rather a plain ol' letter or no letter at all, which is the case in MOST cases.

 

ETA: oh and just so it's clear, that no dunning letter was NOT the only thing we had on the CA so it's not like we went after them for ONE little violation like that.

While I get your point, the Ca isn't going to spend money on sending letters certified. Just not feasible for them. Second of all, look how many people come on here and ignore a dunning letter that was sent. Or ignore Ca's in general because they don't "want to deal" with it. Those types of people will still ignore the certified letter.

 

Designing a system like the one I said above (burning a letter into someone's file, one where it can't be doctored like our system) would be more feasible and cost effective for the CA, then the proof would be on the debtor to say the Ca didn't send the dunning letter.(In the Ca's eyes anyway) There is no law that requires the Ca to send any letters certified, and unless they update the FDCPA to say that, I don't see the Ca's updating their procedures to be consumer friendly much less send letters certified. Just like any business the Ca's are in business to make money. Sending letters certified will cut at their bottom line, and I don't see Ca's using it on a regular basis for the 1000's upon 1000's of letters that they send out.

 

Another note, the CA can still say they sent the letter certified, but the debtor didn't get the letter why? Because the Ca had the wrong address/and or name on the letter, and would have to prove to the judge that the CA had the wrong address, or wrong person.

[bostonte]

, then the proof would be on the debtor to say the Ca didn't send the dunning letter.

 

How do you prove someone didn't send you a letter?

[beli]

, then the proof would be on the debtor to say the Ca didn't send the dunning letter.

 

How do you prove someone didn't send you a letter?

When you have a system like ours, where it burns the letter in, it automatically also sends the letter to our "mail" center where it gets sent out from there. If the letter didn't go out, for whatever reason we noted the case that the letter generated on XXX didn't go out. Otherwise it's assumed that the letter went out since it's in the file already. Our notes also say Letter created on XXX date (which is automatically burned into the case as well with our names on it next to the notes)

Edited April 13, 2010 by beli

[NeverQuietHere]

you can't. The messed up part is that there is a general mailbox rule. Then you have the whole thing of a CA pulling your credit reports and STILL not sending the letter to the correct address. While it may be more expensive for a CA to do so, who cares? If they don't want to get slapped with complaints and lawsuits, frivilous or not, then spend the $3-$5 extra dollars and send a letter. God knows that they only pay PENNIES on the dollar for a collection accts so in the end, what is $3-$5 more for proof that they sent a letter and when it was sent? The bottom line is, the CA do whatever they want whenever they want. Of course they won't come up with a better system or anything because they get money out of people who don't know their rights. So now that we've taken this thread completely off topic...

 

ETA: oh wait, if you are an insurance company and have the same system beli's employer does, then I guess you *could* prove that, but I'm sure there's ways of getting around that system. We all know how accurate CA's notes, documents, etc are anyway.

 

, then the proof would be on the debtor to say the Ca didn't send the dunning letter.

 

How do you prove someone didn't send you a letter?

Edited April 13, 2010 by NeverQuietHere

[beli]

you can't. The messed up part is that there is a general mailbox rule. Then you have the whole thing of a CA pulling your credit reports and STILL not sending the letter to the correct address. While it may be more expensive for a CA to do so, who cares? If they don't want to get slapped with complaints and lawsuits, frivilous or not, then spend the $3-$5 extra dollars and send a letter. God knows that they only pay PENNIES on the dollar for a collection accts so in the end, what is $3-$5 more for proof that they sent a letter and when it was sent? The bottom line is, the CA do whatever they want whenever they want. Of course they won't come up with a better system or anything because they get money out of people who don't know their rights. So now that we've taken this thread completely off topic...

 

ETA: oh wait, if you are an insurance company and have the same system beli's employer does, then I guess you *could* prove that, but I'm sure there's ways of getting around that system. We all know how accurate CA's notes, documents, etc are anyway.

 

, then the proof would be on the debtor to say the Ca didn't send the dunning letter.

 

How do you prove someone didn't send you a letter?

Not from our system you can't get around it. Only way that I know of (and they were in the process of getting rid of this system when I got laid off since everything was automated now) was to do a manual letter from our letter generator. But like I said, they were in the process of getting rid of that system when I got laid off, or severely limiting it's use. Everything is completely automated by the person using the system/and or touching that case. It has your name next to the notes, it has the letter that you created & burned into the file etc, pretty fool proof if ya ask me. In fact it was so full proof we argued that it was taking away some of our thinking as what we needed to do with the case.

Edited April 13, 2010 by beli

[vetswife]

vets, ITA with you. Dh has a common name as well and I've had different SSN on his reports and judgments that weren't his in public records reports. They should have to send a letter certified for first communication.

I don't think certified is a way to go.. it would cost them way too much money. When I worked in the insurance industry and I'm sure this pretty standard across most major businesses that generate a lot of letters. We had a program that would automate the letter process. It would also "burn" the letter into the case file. So anyone looking up the case could see that a letter went out on such and such date. There was no doctoring this system. They couldn't go back and say they sent a letter on such and such date because the date would correspond to whatever the date the letter was sent.

 

 

 

ahh, but Ive had more than one instance of being sent a letter that was dated such and such, and the postal stamp was a full 3 weeks later than the dated material

 

also, Ive had more than one instance of the letter being sent to a very old address when the current address was readily available

 

the insurance industry gets my own sort of grumblings, but not usually the level of shenanigans the collections industry tends to favor