Insights

The United States Court of Appeals for the Tenth Circuit recently issued an interesting 2-1 decision in the case of Marx v. General Revenue Corp. The two-judge majority in this Marx decision held that a fax from General Revenue Corp. to an individual’s employer, seeking verification of employment, and containing no indication that the individual owed any money to General Revenue Corp. (and no indication that General Revenue Corp. was seeking to collect a debt from the individual), was not a debt collection “communication” for purposes of the federal Fair Debt Collection Practices Act (FDCPA). The fax only disclosed General Revenue Corp.’s name, logo, address and phone number, and an “ID” number (not an “account” number) used by General Revenue Corp. for its own internal purposes to help identify the individual’s account. Two of the three Court of Appeals judges deciding this case agreed that the name of the company (General Revenue Corp.) and the inclusion of an “ID” number on the fax did not, by themselves, imply that the individual owed a debt to General Revenue Corp. The name of the company did not by itself disclose the debt collection nature of the company’s business. The “ID” number by itself did not imply that the plaintiff owed a debt. The two-judge majority referred to the “ID” number as “a jumble of numbers, designed for internal identification purposes, the functional equivalent of a bar code.” The judges also observed that “[a] party may seek to verify employment status (without hinting at a debt) for any number of reasons, including as part of processing a mortgage, conducting a background check before hiring, or determining eligibility for an extension of credit.”

The two-judge majority in this Marx decision did, however, state that if the employer knew or suspected that General Revenue Corp. was a debt collection agency, the faxed employment verification form could be considered a debt collection “communication” in such a case. However, the plaintiff introduced no evidence indicating that her employer (or any co-worker who may have seen the fax) believed that the fax concerned a debt of hers. Therefore, since the faxed employment verification form (which was intended to be used by General Revenue Corp. to help determine the individual employee’s eligibility for a possible statutory wage garnishment) was not a “communication” for FDCPA purposes, it did not have to meet the FDCPA’s requirements for debt collector communications to third parties.

The dissenting judge in the Marx case cited several federal district cases that interpret debt collection “communications” more broadly, to include communications from debt collectors that do not indicate that the communication pertains to the collection of a debt. However, the two-judge majority distinguished this one single faxed employment verification form from other federal district court decisions that have held that telephone calls or telephone messages left by debt collectors were debt collection “communications” even though the calls or messages themselves contained no express references to any debt. In situations where a debt collector calls 21 times in 7 days (for example), the recipient of the calls (or anyone else hearing the debt collector’s telephone messages) might reasonably infer that the reason for the calls is a past-due debt.

A few lower courts have on occasion ruled that certain non-repetitive messages are not debt collection “communications.” For example, a federal district court in Indiana ruled that a mortgage servicing transfer notice that included information about the dollar amount (and not the due date) for the next monthly payment due on the mortgage loan was not a debt collection “communication” under the FDCPA, because the notice did not refer to any past-due payments, and did not mention the fact that the loan was in default or delinquent.

The two-judge majority in the Marx case might potentially regard one single innocuous telephone call or telephone message, that does not in any manner imply that the call pertains to the collection of a debt, as falling outside the scope of FDCPA “communications” requirements, provided that the person(s) who either received the call or heard the telephone message did not believe that the call related to a past-due debt. Although this Marx decision opens the door for this possible argument, whether a certain message or communication does or does not indirectly imply the existence of a past-due debt remains a very fact-specific matter, and will depend on such things as how often messages were left, whether the party leaving the messages also sent related written communications, and whether the party that received (or overhead) the message or communication believed the message or communication pertained to a past-due debt.

Elizabeth C. Yen is a partner in the Connecticut office of Hudson Cook, LLP. Elizabeth can be reached at 203-776-1911 or by email at eyen@hudco.com.