Yesterday, the 11th Circuit Court of Appeals issued an opinion in Hunstein v. Preferred Collection and Management Services, Inc., -- F.3d --, 2021 WL 1556069 (Apr. 21, 2021), which almost immediately set off alarms in the debt collection industry. In that case, the plaintiff alleged that a debt collector had violated the Fair Debt Collection Practices Act (“FDCPA”) by electronically transmitting information concerning a consumer’s debt to its mail vendor for the sole purpose of sending a “dunning” letter. The parties acknowledged that the practice of using mail vendors has been common in the collection industry for decades, and plaintiff did not allege a tangible harm arising from this alleged statutory violation. After concluding the plaintiff had standing to sue for a bare statutory violation, the court held the transmission of such data constituted an unlawful communication in connection with the collection of a debt.
In an unusual commentary at the conclusion of the opinion, the court seemed to recognize the potential consequences—and impracticality—of its decision. The court stated:
It’s not lost on us that our interpretation . . . runs the risk of upsetting the status quo in the debt-collection industry…. Our reading . . . 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 Compumails 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.
Indeed, this decision upsets the status quo and potentially increases—significantly—costs to those who use vendors to communicate with debtors. The reaction from the debt collection industry has already been swift and highly critical. The defendant will likely seek review en banc from the entire 11th Circuit, where industry groups are likely to submit amicus briefs. Stay tuned.