In a decision filed on July 22, 2015, the US District Court for the Middle District of Pennsylvania in the case of Lisa Kostik v. ARS National Services, Inc., a new chapter is being written in the saga of what information can be displayed on the outside of an envelope a collector mails to a consumer.

There has been a fair amount of legal activity in recent years surrounding information on debt collection envelopes, including whether a company can even display its name if it reveals in any way that the sender is a debt collector.

In this March 2015 post on insideARM Tomio Narita, partner in the law firm Simmonds & Narita, summarized multiple cases and noted that some courts have recognized that a strict application of section 1692f(8) may lead to absurd results, and some courts have held that “benign language” on an envelope does not violate the FDCPA.

He also noted that not every court has adopted the “benign language” exception to section 1692f(8), however, and it is not always easy to predict what language will fit within the exception. One example is the 2014 case Douglass v. Convergent Outsourcing, in which the Plaintiff claimed that an account number that was viewable through the address window was harmful because it could reveal her financial predicament. However the firm claimed that the data was a tracking number for internal use and was innocuous.

The district court initially ruled in the Defendant’s favor, but it was overturned on appeal in the Third Circuit. A petition for rehearing was subsequently denied.

Now we have a case in which a Plaintiff, Lisa Kostik, claims that her account number embedded in a barcode that the Defendant, ARS National Services, Inc. (ARS), used for mail processing amounts to an FDCPA violation because of the risk of identity theft created by the proliferation of QR readers commonly available on smart phones.

Kostik filed her complaint complaint against ARS on December 1, 2014; on March 31, 2015 ARS filed a motion for judgment on the pleadings. At issue was whether ARS’s disclosure of the Plaintiff’s account number embedded in a barcode constitutes a violation of section 1692f(8) of the FDCPA.

ARS argued that the FDCPA was not intended to prohibit the disclosure of benign symbols on any envelope sent by a debt collector as means of communicating with a consumer by use of the mails. While the company concedes that section 1692f(8) prohibits any language or symbol from appearing on a debt collection envelope, it claimed that “the section ‘was intended merely to prevent debt collectors from embarrassing debtors by announcing the delinquency on the outside of a debt collection letter envelope.”

ARS also argued that imposing liability due to the possibility of illegal action by a third-party is “inappropriate,” contending that when a barcode such as the one at issue is visible on an envelope sent through the US Postal Service, the consumer’s privacy is protected by 18 U.S.C. § 1702, which prohibits individuals from taking another’s mail with the specific intent to obstruct correspondence or pry into the business or secret of another.

The Plaintiff asserted that the Court need not decide whether a benign symbol exception should be adopted because the barcode at issue is not benign. They cited the Third Circuit’s decision in Douglass v. Convergent Outsourcing, asserting that the barcode in question is no different than the innocuous internal account number, therefore the decision should be the same.

Indeed, the U.S. District Judge Nealon agreed with the Plaintiff and denied ARS’s motion for judgment on the pleadings.

insideARM Perspective

The letter/envelope challenge for ARM agencies continues.  Based upon the recent line of cases, it is clear that “Less is More.” When adding anything to a letter or envelope the risk is too great.  Hoping that something will be determined to be “benign language” is not a good strategy.

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