A state Appeals Court in New Jersey has affirmed the dismissal of a Fair Debt Collection Practices Act class action accusing a debt buyer and its servicer of unlawfully sharing a consumer’s personal information with a third-party letter vendor.
The background: The plaintiff incurred a debt that she did not pay, and the debt was transferred to one of the defendants, a debt buyer, and placed with the other defendant, its master servicing agent.
- After the plaintiff disputed the debt, the defendants sent her a notice required by a New York banking regulation informing her of her right to request substantiation of the debt. The notice stated it was for informational purposes only and was not an attempt to collect a debt.
- The plaintiff filed a class action, alleging the notice was generated and mailed by a third-party letter vendor to whom the defendants transmitted her private financial information without her consent, in violation of Section 1692c(b) of the FDCPA, which bars debt collectors from communicating with third parties in connection with the collection of a debt. She also brought claims under the New Jersey Consumer Fraud Act, along with negligence and invasion of privacy claims.
- A trial court judge dismissed the complaint, writing that the letter vendor “is no different than the telephone/telegram operator engaged as a ‘medium’ for an otherwise permitted communication,” and noting the plaintiff never alleged anyone at the vendor actually saw her information.
- The plaintiff filed an amended complaint, adding allegations that letter vendors profit by analyzing the consumer data debt collectors send them, but a second judge ruled the new allegations did not cure the original deficiencies and dismissed the case with prejudice.
The ruling: The Appeals Court affirmed, concluding that transmitting a consumer’s information to a letter vendor is not the type of conduct Congress intended to regulate when it enacted the FDCPA.
- The transmission was made to fulfill a regulatory obligation to inform the plaintiff of her substantiation rights, and the plaintiff alleged nothing to suggest it was anything other than a routine business practice.
- The plaintiff did not allege that any employee of the vendor saw her information, that the information was publicly released, or that she suffered any concrete harm.
- The Appeals Court described the plaintiff’s reading of the statute as a “wooden interpretation” that would treat what is essentially an internal communication as an abusive collection practice.
- The Appeals Court was not persuaded by the federal appellate decisions the plaintiff relied on, noting that rulings from the federal courts of appeals are not binding on New Jersey state courts.
