When it comes to the Hunstein case, the industry made two steps forward with the Eleventh Circuit Court of Appeals in finally getting the Court to agree to rehear the case, only to have a judge in the Eastern District of Pennsylvania make everyone take one giant step backward yesterday after denying a defendant’s motion for judgment on the pleadings and ruling that a collection law firm communicated information about a debt when it sent information to a vendor to print and mail a collection letter.
A copy of the ruling in the case of Khimmat v. Weltman, Weinberg & Reis can be accessed by clicking here.
The plaintiff received a collection letter from the defendant seeking to collect on an unpaid credit card debt. The plaintiff filed suit, alleging the defendant violated Section 1692c(b) of the Fair Debt Collection Practices Act by using a third-party vendor to print and mail the letter, because the defendant had to transmit information about the plaintiff and her debt to the vendor in order for the letter to be printed and mailed. This is the same argument that was made in Hunstein v. Preferred Medical & Collection Services and hundreds of other cases that were filed after the Eleventh Circuit issued a ruling last April saying that using a vendor to print and mail letters constituted a communication as it was defined under the FDCPA. The industry has fought tirelessly to get that ruling overturned, and the Eleventh Circuit agreed to vacate the ruling and hear arguments in the case again, which will happen again this month.
None of that mattered to Judge Joshua D. Wolson, who said in his ruling that there is “no doubt” that the defendant conveyed information about the plaintiff to a third party.
Section 1692c(b) says that a “debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.” Judge Wolson summarized the dispute between the plaintiff and the defendant as hinging on three components of that provision — what it means to communication, what “in connection with the collection of any debt” means, and what “with any person.”
The defendant argued that guidance — as well as the lack of any enforcement action — from both the Federal Trade Commission and the Consumer Financial Protection Bureau make it clear that the practice of using a letter vendor is common throughout the accounts receivable management industry and that neither regulator has any issue with it. Judge Wolson didn’t see it that way.
“Consequently, because the agencies tasked with regulating and enforcing the FDCPA have not addressed the use of letter vendors by debt collectors in any legally significant way, and because the statutory language is not subject to a different reading, the Court will afford no deference to the indeterminate actions of the CFPB and FTC,” he wrote.
