Insights

In 2006, the U.S. District Court for the Southern District of New York threw the debt collection world for a loop with its decision in Foti v. NCO Financial Systems, Inc., 424 F. Supp. 2d. 643 (S.D.N.Y. 2006). In case the name does not ring a bell, that is the case where the court decided that a voice mail left by a debt collector subject to the Fair Debt Collection Practices Act was a “communication” subject to the FDCPA that had to include the identity of the caller and a Mini-Miranda warning (“This is an attempt to collect a debt…”). Unfortunately, four years later it is still not clear what a debt collector subject to the FDCPA should say in a voice message left for a debtor, or whether the debt collector is better off not leaving a message at all.

By way of background, the FDCPA requires a “communication” to include a meaningful identification of the caller (if the “communication” is a telephone call) and the Mini-Miranda warning. 15 U.S.C.A. §§ 1692d(6) and 1692e(11). The FDCPA also prohibits a debt collector from communicating with any third party about another consumer’s debt without the consumer’s express prior consent, except that a debt collector may seek location information from third parties without disclosing the fact of the debt. 15 U.S.C.A. § 1692c(b).

Before Foti, most in the debt collection industry left basic voice messages asking the debtor to return the call, which pertained to “an important business matter.” Occasionally the message would clarify that it was not a sales call. The intent of the message was to let the debtor know the debt collector was looking for her, but the reason for not leaving a detailed message was to keep it from being a “communication” that conveyed information about the debt, and to avoid potential disclosure to a third party who might overhear the message that the person being called owed a debt. Before Foti, a California federal court had decided this issue against the debt collector, with reasoning adopted by the Foti court, but that case did not generate as much attention as Foti. Hosseinzadeh v. M.R.S. Assocs., Inc., 387 F. Supp. 2d 1104 (C.D. Cal. 2005). The court in Foti unapologetically noted the “Hobson’s Choice” that debt collectors are faced with (leave a message and violate the third-party disclosure prohibition or leave a message that violates the requirement to include a Mini-Miranda warning), pointing out that nothing in the FDCPA required debt collectors to leave voice messages for debtors, when so many other means of communication are available.

Many courts follow the Foti (and Hosseinzadeh) reasoning, holding that voice messages, however simple, that are designed to get the debtor to call back and discuss a debt are “communications” that should include the Mini-Miranda warning and a meaningful identification of the caller. As recently as March 5, 2010, the courts are convinced that voice messages that do not include an identification of the caller as a debt collector (the Mini Miranda) violate the FDPCA. See Gryzbowski v. I.C. System, Inc., 2010 U.S. Dist. LEXIS 20649 (M.D. Pa. March 5, 2010). At least one federal district court in the last few years since Foti has gone against the grain and agreed with debt collectors that a simple voice message seeking a return call is not a “communication” because it does not convey any information about the debt. See Biggs v. Credit Collections, Inc., 2007 U.S. Dist LEXIS 84793 (W.D. Ok. 2007). That court was criticized in a subsequent case, though, for taking too narrow a reading of the definition of “communication” because that reading failed to recognize the legislative intent of the FDCPA, “which calls for a broad construction of [the FDCPA’s] terms in favor of the consumer.” Ramirez v. Apex Fin. Mgmt., LLC, 567 F. Supp. 2d 1035, 1041-42 (N.D. Ill. 2008). We have not found reported cases since Ramirez that adopted the Biggs reasoning.

The federal circuit courts have yet to weigh in on this question. To the author, the better legal argument still seems to be that the message is not a “communication,” which the FDCPA defines to mean “the conveying of information regarding a debt directly or indirectly…” It seems clear that a voice message that does not “convey information regarding a debt” is not a “communication” under the FDCPA. Nevertheless, a “debt collector” subject to the FDCPA has to weigh the risk of third party interception of a voice message intended for someone else against the risk that someone who receives a simpler message feels deceived that they did not get a Mini-Miranda warning and a meaningful identification of the caller. That legal risk has always existed under the FDCPA, but the prevailing thinking before the Foti case was that the simpler voice message was not a “communication” under the FDCPA. Now debt collectors have clear legal risk regardless of the voice message they leave, and they have to decide which approach creates the greater risk that it will actually result in a consumer claim.

To date, there do not appear to be any reported decisions where a plaintiff successfully pled an FDCPA violation because a third party (friend, maid, plumber) overheard a voice message left by a debt collector on an answering machine. It could be that no such case has made it to the dispositive motion stage of litigation, or that the third-party disclosure does not happen enough for the issue to gain momentum and lead to successful claims. It could also be that more consumers have voice mail through their telephone service, which does not play out loud and may be accessed with a password, than answering machines that play messages through a speaker and may potentially be overheard. Whatever the case, because the courts are leaning toward finding any voice message to be a “communication,” notwithstanding the legal arguments based on the statutory language, it seems that the better approach—if a “debt collector” will leave voice messages—is to include the Mini-Miranda warning in those voice messages. The “debt collector” who does leave messages with the Mini-Miranda warning knows it is risking third-party disclosure, but right now that does not seem to be the issue of greatest litigation risk exposure. Depending on the facts of a specific case, the debt collector might be able more easily to defend the third-party disclosure violation than the Mini-Miranda violation.

Chuck Dodge is a partner in the Maryland office of Hudson Cook, LLP. Basis Points readers can reach Chuck at (410) 865-5427 or by email at cdodge@hudco.com.