Another Circuit Court Ruling Complicates Answering Machine Use in 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."

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.”

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.”