Another Circuit Court Ruling Complicates Answering Machine Use in Debt Collection
A U.S. circuit court in Georgia ruled last week that a collection agency could not intentionally violate one section of the FDCPA to avoid violating another. The case is the latest in a string of decisions addressing third party disclosure vs. mini-Miranda warning on answering machines.
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.
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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.”
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Comments
Comment from Krazy Pete on October 20, 2009 at 12:20PM EST
Big Up yose'f Barb Sinsley!
Comment from MJ on October 20, 2009 at 12:29PM EST
No reasonable agency wants to break the law, but in this case we are all breaking it by design! If the FTC doesn't want us to leave messages on machines, why don't they just say so? Why allow us to be so exposed on this issue? Contradictory laws, especially ones that regualte something as ticky-tack as leaving messages on machines, are insane. Unless we do something as an industry, we'll all be peppered with lawsuits (or, if we no longer leave messages, insufficient ROI).
Comment from Jeffrey Deutsch on October 20, 2009 at 12:41PM EST
What exactly are debt collectors going to do now?
I collected full-time for two and a half years, and from Day One we knew never to leave detailed information in a recorded message because we never knew who could hear it.
How are we supposed to leave messages now, if saying who we are and what it's about would violate the debtor's privacy, and not doing so would *gasp* force the debtor to call back to find out what the call is about?
Is any call not answered by (someone ID'ing self as) the debtor him/herself or by his/her attorney or someone else s/he's already told us we can talk with about this, or the spouse (outside of Iowa, anyway), a total waste of time?
And does the court really not care about the legal binds they're putting legitimate people into? Don't they interpret laws so as to leave at least one permissible course of action? (Or do they expect collectors to just hang up on answering machines/voicemail, family members, roommates and the like?)
I'd like to see how the Supreme Court handles this one.
Cheers,
Jeff Deutsch
Comment from joker on October 20, 2009 at 1:09PM EST
Now if we could just get some Harrassment lawsuits from not leaving messages. That would really clear things up.
Comment from TX Debt Atty on October 20, 2009 at 1:12PM EST
IMO, this case presents nothing new or unexpected.
The job of the judiciary is to interpret the law, not to write it.
If you want the law changed, you must do so through the legislature.
If you cannot convince the legislature to change the law, then you must adapt, or you will perish.
Comment from Anonymous on October 20, 2009 at 1:32PM EST
Joker - you may be joking but those suits have already happened.
Comment from caliz on October 20, 2009 at 2:17PM EST
as the economy continues in a dive,so do the court rulings favoring the debtors. it seems this ruling was a damn if u do,damn if you don't for the collector and/or agency.
Comment from BigRed on October 20, 2009 at 2:44PM EST
I agree with TX debt attny. Unfortunately there are too many illegal collection agencies out there giving reputable agencies a bad name. Collections is an evolving beast. Some of the collection laws are good, but some are totally extreme making it to where one day all you will be able to do is ask the consumer if they want to pay. The bottom line if it wasnt for the collectors that break the law we wouldnt have nearly the laws we have now.
Comment from Anonymous on October 20, 2009 at 5:28PM EST
Complying with the law is easy. You cannot leave messages on an answering machine without informed consent and complying with the law.
The truth of the matter is that agencies and some law firms simply do not want to comply. The result follows.
Comment from PublicServiceMsg on October 20, 2009 at 11:48PM EST
I agree with BigRed. I have worked the industry over 20 years and the laws have continued to get tighter on the collectors and agencies due to the illegal tactics being applied. The country has lost sight of the fact the debt exists and should be repaid because of the inflated interest and fees on credit cards. No one cares that the consumer used the account for ten's of thousands of dollars and is not paying, they care that we said "it's important".
Comment from paybill on October 21, 2009 at 10:41AM EST
So TxDebt attny, how exactly do you "adapt" to the law when the law or its interpretation is unclear? It isn't about illegal vs. legal activities when no one knows what is legal or illegal. We leave ACA's Foti approved message but have already had to settle a case on that. Damned if you do and damned if you don't. It isn't about bad or good agencies when no one knows what the hell to do. Which I am sure is perfect for you debtor attorneys.
Comment from Anonymous on October 21, 2009 at 10:59AM EST
In reference to the TX attorney's comments, and some will call this cynical, the judiciary's decisions are biased towards creating income streams for the practitioners of law. For example, most folks that read a law will such as the TCPA and will agree about what the law says. But you have the attorneys arguing positions and judges interpreting law in an entirely different manner. In this country, the civil justice system is not about justice, it's about protecting the golden goose of legalized extortion. The legal profession is shameful.
Comment from Receivables Management Mohawk, NY on October 21, 2009 at 11:38AM EST
I've read this and other articles regarding the same case. Not one has offered an explanation of the damages suffered by Ms. Edwards, the debtor who sued the agency.
Is she losing sleep? Suffering from PTSD because of the 'urgent' messages? Has she lost wages. This case was frivolous at best...a waste of the court's time and taxpayer money.
Comment from Gene on October 21, 2009 at 1:03PM EST
"Some of the collection laws are good, but some are totally extreme making it to where one day all you will be able to do is ask the consumer if they want to pay."
That's where were headed and you won't hear any apologies from the people pushing the industry in that direction.
"Complying with the law is easy. You cannot leave messages on an answering machine without informed consent and complying with the law."
You need informed consent to leave a message on an answering machine? What is your source for that requirement? Is that law or did Dan Edelman write this?
Comment from Andrew on October 21, 2009 at 9:06PM EST
Foti was a court decision not a law that was written by congress. We live in fear because of a court decision, not congress.
Scavenger consumer lawyers need to be taken down immediatley. Their ransom letters and milking the tax payer teet has gone on for far too long.
I put all of you on notice. How you pigs can sleep at night is beyond me.
Comment from MJ on October 22, 2009 at 10:06AM EST
After thinking this through, I think the only logical solution for an agency is investing (or continuing to invest)in a robust legal department. NOT to defend lawsuits, but to INITIATE them. By design, the result of these contradictory laws is to reduce the number of messages left. Less messages mean less call-ins, which result in less accounts collected. The only solution that effectively counters that, then, is to sue more consumers. Apparently that's what legislators and regulators want us to do. It's unfortunate, but maybe when a politician's constituency starts getting their wages garn'd and their checking accounts siezed they will revisit things like allowing us to leave messages.
Comment from Robert Cohen on October 22, 2009 at 9:45PM EST
MJ, their is only one problem with your theory (as much as i like it) the courts(judges) are legislating from the bench. I see it every day, the collection attorneys are coming to court and the judges are defending the cases for the consumers from there bench. I know of judges that in an effort to keep creditors from getting judgements on debtors they require the creditors to produce statments back to a zero balance (other words every statement the debtor ever had on their credit card or loan). Their are judges that give collection attorneys 2 weeks to produce new documents when they know the documents cannot be provided that quickly. When the collections attorneys ask for more time, the judges have flat out said that they know the attorneys can not get the documents in time hence giving the ability for the judge to dismiss with prejudice. Those are just two situations that i have been privy too. i could name another dozen easily. it is happening across the US, Judges are legislating from the bench not enforcing the laws. Think about "Choice of Law" decisions. yes, your state has a statuate of limitations for debtors to be pursued by creditors. But, now in numerous states the judges (with the help from consumer attorney's)are saying "No, the actual statuate of limitations is the state that the original creditor is incorporated in. This is happening in FL, CA, OH and several others.
Comment from Anonymous on October 26, 2009 at 12:26AM EST
consumers are the winners, and collectors are the losers when all they are trying to is their jobs.This is sooo sad.
Comment from BigRed on October 27, 2009 at 12:52PM EST
This is for Anonymous. Not all collectors are following the FDCPA. Yes the consumers are the winners, but in the long run all of us will pay the price-including the consumer.
Comment from Anonymous on October 28, 2009 at 9:21PM EST
Has any one heard of the 'FOTI' script allowing messages on answer machines with the Mini Miranda. It is FDCPA approved.