Ask any collection agency executive about their top three compliance issues, and “voicemail messages” will most likely be among them. The reason? The Fair Debt Collection Practices Act (FDCPA) can present agencies with a real Catch 22.
Under the Act’s Section 805(b), debt collectors are prohibited from disclosing the existence of a debt to a third party without the debtor’s consent. At the same time, Sections 806(6) and 807(11) of the FDCPA require debt collectors to meaningfully disclose their identity when communicating with a consumer, along with the purpose of the call, and how any information obtained will be used by the collector to collect the debt. So leaving a voicemail that complies with 806(6) and 807(11) leaves you at risk of violating 805(b), and vice versa.
What’s a collector to do?
Many seek to avoid disclosing any information about the debt or even the fact they are a debt collector when leaving voicemail. Those debt collectors tend to leave innocuous messages that do not meet the requirements of Sections 806(6) and 807(11) of the FDCPA (e.g. “Hi, this is an important call from Bill Bob for Mary M. Please call me back at XXX-XXX-XXXX”). But of course, that’s not the most optimal route, since that brand of messaging may expose the agency to class action liability.
Other debt collectors who are more concerned about satisfying the requirements of Sections 806(6) and 807(11) when leaving voice mail messages usually identify themselves, state the mini- Miranda, explain how the information obtained may be used and ask the consumer, by name, to return their call. But unfortunately this approach has spawned hundreds if not thousands of lawsuits under the FDCPA claiming the debt collector made an unauthorized disclosure of the debt to a third party when leaving the message.
Many have simply decided to not leave voicemail messages at all. But of course, that eliminates an important channel of communication that can significantly aid in recovery.
So it seems like you’re damned if you do, damned if you don’t. Leave a voicemail identifying yourself and the consumer, and you’re in violation of 805 (b). Leave a voicemail that does not include your identity and the mini Miranda, and they’ve got you under 806(6) and 807(11).
Fortunately there is a third option: Leaving voicemail messages that satisfy both the identity and disclosure requirements of Sections 806(6) and 807(11), but which omit the consumer’s name from the message entirely. If a third-party debt collector leaves a message in which they appropriately and meaningfully identify themselves as a debt collector, but refrain from identifying the consumer by name, the collector may actually satisfy Sections 805, 806, and 807’s compliance requirements, and avoid liability under the FDCPA altogether.
This was the approach taken by the agent in Zortman v. J.C. Christensen & Assocs., Inc. [870 F. Supp. 2d 694 (D. Minn. 2012)]. It was also the approach seemingly condoned by the FTC in its consent decree with NCO Group [United States of America v. NCO Group, Inc. et al., 3-13 CV2611 (N.D. Tex. July 16, 2013)].
The Zortman voicemail message reads as follows:
“We have an important message from [company’s name]. This is a call from a debt collector. Please call [company’s telephone number].”
According to the Zortman court, that voice message was not a “communication” under the FDCPA, and thus the debt collector did not violate Section 805 (b). It is also important to note that in the matter between the FTC and NCO Group, the FTC effectively ratified the Zortman court’s decision by directing NCO to use the Zortman message until such time it knew the phone number was in fact associated with the consumer allegedly obligated to pay the debt.
Keep in mind the Zortman case has not been widely litigated and no voicemail message is a silver bullet. Courts vary in their interpretation of the law and unique facts and circumstances can lead to inconsistent decisions. But if you are wondering what many if not most of your colleagues are doing today with regard to voicemail messaging, consider Zortman and then call your legal counsel. Together you can determine the most practical solution for your agency, your consumers, and your risk tolerance threshold. Using particular voicemail messaging statistics can even help you gauge your effort’s effectiveness, and whether it’s worthy of continuation – We will cover that topic next week.
Disclaimer: Ontario Systems is a technology company and provides this blog entry solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.
Rozanne Andersen, J.D., serves as Ontario Systems’ Vice President of Business Development and Chief Compliance Officer. She is responsible for leading Ontario Systems’ corporate efforts and response to the Consumer financial Protection Bureau’s launch of compliance examinations in the ARM industry. Rozanne also works with the sales and business development teams in developing new revenue. Rozanne is a recognized thought leader in the area of compliance. Her advocacy work on behalf of the credit and collection industry has resulted in landmark legislation and regulation at both the state level and the federal level with regard to the FDCPA, FCRA and HIPAA.