Sending Collection Letter 'In Care of' Debtor's Employer Violates FDCPA, Ninth Circuit Holds

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A debt collector violates the Fair Debt Collection Practices Act by sending a collection letter to the debtor's employer's address even if the letter is addressed to the debtor "in care of" the employer, the U.S. Court of Appeals for the Ninth Circuit has ruled.

In its August 1, 2012, majority decision in Evon v. Law Offices of Sidney Mickell, the Ninth Circuit held that, absent the debtor's consent, sending a collection letter addressed to a debtor "in care of" the debtor's employer is a per se violation of the prohibition on third-party communications in Section 1692c(b) of the FDCPA.

FDCPA Section 1692c(b) generally prohibits a debt collector, without the debtor's consent, from communicating in connection with the collection of a debt with any person other than the debtor, the debtor's attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the creditor's attorney, or the debt collector's attorney.

The Evon complaint was filed as a putative class action. The named plaintiff's employer had opened the letter addressed to her, which was mailed in an envelope showing the defendant "law office" as the return address.In the Ninth Circuit's view, the debt collector "knew or could reasonably anticipate" that a letter sent to a debtor's employer "might be opened and read by someone other than the debtor as it made its way to him/her." It also observed that, because of the return address, someone handling the plaintiff's mail would know that she "was receiving legal mail, a fact many people would prefer be kept private," and that "disclosing a consumer's personal affairs to his or her employer is a form of collection abuse."

The court found support for its ruling in the Federal Trade Commission's FDCPA Staff Commentary. The Commentary provided that a debt collector cannot "send a written message that is readily accessible to third parties" and can use an "in care of" letter only "if the consumer lives at, or accepts mail at, the other party's address." The Dodd-Frank Act gave FDCPA enforcement and rulemaking authority to the Consumer Financial Protection Bureau.)

In a harshly worded dissent, the dissenting judge took issue with the majority's view that "a debt collection letter addressed to the debtor at his place of employment is a communication made to an indefinite number of persons in the employer's business." Observing that there was "nothing in [his] experience" to suggest that it was "the rule or common practice in the United States" for letters to a person in care of the person's employer to be opened, the dissenting judge stated that "the majority invents a custom to confirm its conclusion."

The district court had denied the plaintiff's class certification motion, finding that commonality, typicality, and adequacy were lacking. The Ninth Circuit disagreed with the district court's conclusion that individual questions of consent precluded commonality, finding that the debt collector had produced no evidence showing certain class members had consented to receiving letters at work. In the Ninth Circuit's view, commonality existed because all class members "suffered the same injury" in that they received a collection letter at work without giving consent.

The Ninth Circuit also disagreed with the district court's view that, because the debt collector had sent the letter to the plaintiff's workplace by accident after being instructed not to contact her at work, the plaintiff's claim was subject to a unique bona fide error defense. According to the Ninth Circuit, the debt collector was ineligible for the bona fide error defense as a matter of law because he intentionally sent collection letters to workplaces without having any procedures in place to determine whether a debtor had consented to receiving mail at work. Finally, the Ninth Circuit found that the plaintiff would be an adequate representative despite having waived her actual damages claim by accepting the debt collector's offer of judgment on her individual claim.

Ballard Spahr lawyers regularly consult with their clients engaged in consumer debt collection on compliance with the FDCPA and state debt collection laws. As we summarized in a prior legal alert, the CFPB has issued a proposal to supervise certain debt collectors and debt buyers as “larger participants.” The CFPB will soon be examining debt collectors and debt buyers who qualify as “larger participants" We are currently conducting compliance reviews for debt collectors and debt buyers in anticipation of their first CFPB examinations.

Ballard Spahr’s Consumer Financial Services Group produces the CFPB Monitor, a blog that focuses exclusively on important CFPB developments. To subscribe, use the link provided on the right. The group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

Published In: Administrative Agency Updates, Civil Procedure Updates, General Business Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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