Eleventh Circuit Rules in the FDCPA Case
On September 8, 2022, sitting en banc, the Eleventh Circuit ruled that a debt collector’s disclosure of a customer’s information to the debt collector’s private, third-party commercial mail provider was not actionable. under the Fair Debt Collection Practices Act (FDCPA). Upon release of the most recent version of Hunstein v. Preferred Collection and Management Services, Inc..,1 the Eleventh Circuit reversed the panel’s decision.2 The Eleventh Circuit considered, in particular, whether a mere procedural violation of the FDCPA was sufficient on its own to establish actual harm for purposes of Article III.3 The Eleventh Circuit answered “no.”4 This is good news for loan services and collection agencies looking to use third-party mail providers to formulate, print, and send collection letters, though institutions should still review and update their mailing procedures to minimize and prevent potential disclosures.
In hunsteinthe plaintiff incurred a debt resulting from the medical treatment of his minor son.5 The hospital transferred the debt to the defendant, a collection agency.6 Defendant, in turn, hired a commercial mail provider to prepare and send a collection letter on behalf of Defendant, using Defendant’s pre-written form letter.seven After receiving the letter, Plaintiff filed a lawsuit alleging that Defendant’s disclosure of his information to Defendant’s mail provider violated the FDCPA’s ban on communicating “in connection with the collection of any debt, with any person other than the consumer”.8 The district court dismissed the action.9 On appeal, an Eleventh Circuit panel reversed.ten Shortly after, the Supreme Court issued its decision TransUnion LLC vs. Ramirez,11 examining the basis for establishing Article III status under another federal statute.12 The light at Trans Unionthe Eleventh Circuit panel reversed its opinion and issued another, still concluding that the defendant’s communication to its mail provider indicated an FDCPA claim.13 The Eleventh Circuit then voted to reconsider the matter en banc.14
In reversing the panel’s decision, the Eleventh Circuit concluded that the plaintiff did not have standing under Article III.15 In coming to this conclusion, the court held that the plaintiff had not pleaded that he had suffered tangible “actual harm”.16 The court held that the communication in question did not constitute an allegation of concrete harm.17 In particular, the Eleventh Circuit held that the alleged immaterial damage to reputation did not give rise to injury under Article III because the defendant’s communication to the mail seller was not “public”.18 Emphasizing a distinction between public and private communications, the reasoned “advertising” of the Eleventh Circuit requires more than “any communication” but rather requires dissemination of the communication to the “general public”.19 Further on, theeffect of a disclosure is what counts, not the number of people to whom it is made.20 In other words, “[t]transmitting information” to a “single intermediary” who contacts a debtor through a private letter “without sharing it more widely” is “simply not sufficient” to give rise to Article III under the FDCPA.21 In rendering its decision, the Eleventh Circuit found that the plaintiff was “simply not worse off because [defendant] delegated the task of data in a form letter to a mail provider” and reiterated Trans Union tenant: “no concrete harm, no position.”22
Take away key
Huntstein III is remarkable for all debt collection companies that delegate customer-related direct mail tasks to vendors. The Eleventh Circuit’s ruling provides support to debt collectors for using third-party mail providers to formulate, print, and send debt collection letters. Nonetheless, a company should continue to be mindful of its operations in light of this and under applicable FDCPA law.
1 Huntstein v. Preferred Collection & Mgmt. Servs., Inc., No. 19-14434, 2022 WL 4102824 (11th Cir. September 8, 2022) [hereinafter Hunstein III].
2 See Huntstein v. Preferred Collection & Mgmt. Servs., Inc., 994 F.3d 1341 (11th Cir. April 21, 2021) [hereinafter Hunstein I]; Huntstein v. Preferred Collection & Mgmt. Servs., Inc., 17 F.4th 1016 (11th Cir. Oct. 28, 2021) [hereinafter Hunstein II].
3 Huntstein III2022 WL 4102824, at *9.
5 Identifier. to 1.
8 ID. at *2 (citing 15 USC § 1692c(b)). Two additional claims were made by the claimant, but were not appealed.
9 Huntstein v. Preferred Collection & Mgmt. Servs., Inc., No. 19-CV-983-T-60SPF, 2019WL5578878, at *3 (MD Fla. Oct. 29, 2019).
ten Huntstein I, 994 F.3d at 1352.
11 TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 210 L. Ed. 2d 568 (2021) (basis of review for establishing Article III for alleged violation of the Fair Credit Reporting Act).
12 Identifier. at 2200, 2203–07.
13 Hunstein II17 F.4th at 1038.
14 Huntstein v. Preferred Collection & Mgmt. Servs., Inc., 17 F.4th 1103, 1104 (11th Cir. Nov. 17, 2021).
15 Huntstein III2022 WL 4102824, at *10.
16 ID. to 1.
17 ID. at 9 o’clock.
18 Identifier. to *1, *6-10.
19 ID. to *7 (emphasis in original).
20 Identifier. (emphasis in original).
21 Identifier. at 8.
22 Identifier. to *10 (quoting Trans Union, 141 S.Ct. to 2214).