Consumer finance companies and credit vendors spend a lot of time and energy avoiding becoming a third-party debt collector. The Fair Debt Collection Practices Act (FDCPA) places serious limitations on third party collectors. And, certainly, debt collection remains one of the main elements of the consumer credit industry. But we have long advocated that creditors collect their own debts and in doing so seek to avoid becoming third party debt collectors in order to avoid FDCPA restrictions.
Well, it looks like there is now another reason to avoid being submitted to FDCPA.
In a recent lawsuit, a third-party debt collector was found liable for violating the FDCPA because he passed on a consumer’s personal information to an external vendor that the debt collector was using to print and mail. collection letters. Although such information sharing is a common and common practice, the Eleventh Circuit Court of Appeals adopted the claimant’s argument that the outsourcing of this information amounted to communicating with someone other than the consumer whose debt is in collection. This constitutes a violation of the FDCPA.
Talk about unintended consequences!
As in most industries, debt collectors rely on unaffiliated vendors to help them perform their basic services. Most consumer credit protection laws recognize the need for supplier services and, in one form or another, recognize that these relationships are an exception to or beyond the scope of the restrictions of the law. However, according to the Eleventh Circuit, the FDCPA is not one of these statutes.
It remains to be seen how important this court decision will become. Recall that in the early days of the FDCPA, recovery lawyers discovered, to their regret, that they were considered debt collectors under the FDCPA. After all, in the literal language of the law, they were.
After the initial shock of this series of cases wore off, the industry, including debt collection lawyers, moved on. But this did not happen without some defendants paying a high price.
We will see how the debt collection industry thwarts this most recent attack.
This content was published prior to the Dentons Sirote merger. Learn more about Dentons Sirote.