In Hunstein v. Prefeerred Collection and Management Services, Inc., the Court of Appeals for the 11th Circuit addressed the question whether a debt collector’s use of a mail-service to send its dunning letters, and sharing the debtor’s information required to do so, violates the FDCPA.
The short story: A debt collector electronically transmitted data concerning a consumer’s debt—including his name, his outstanding balance, the fact that his debt resulted from his son’s medical treatment, and his son’s name—to a third-party vendor. The third-party vendor then used the data to create, print, and mail a “dunning” letter to the consumer. The consumer filed suit alleging that, in sending his personal information to the vendor, the debt collector had violated 15 U.S.C. § 1692c(b), which, with certain exceptions, prohibits debt collectors from communicating consumers’ personal information to third parties “in connection with the collection of any debt.” The district court rejected the consumer’s reading of § 1692c(b) and dismissed his suit. On appeal, we must consider, as a threshold matter, whether a violation of § 1692c(b) gives rise to a concrete injury in fact under Article III, and, on the merits, whether the debt collector’s communication with its dunning vendor was “in connection with the collection of any debt.” We hold (1) that a violation of § 1692c(b) gives rise to a concrete injury in fact under Article III and (2) that the debt collector’s transmittal of the consumer’s personal information to its dunning vendor constituted a communication “in connection with the collection of any debt” within the meaning of § 1692c(b).
The Court of Appeals claimed that it understood that it was changing the landscape of debt collection, but, doubtful that it really understood the scope of the holding.
Lastly, Preferred makes what we’ll call an “industry practice” argument. It contrasts what it says is the widespread use of mail vendors like Compumail and the relative dearth of FDCPA suits against them. More particularly, Preferred identifies cases involving mail vendors and emphasizes that none of them hold that a debt collector’s mail vendor violated the FDCPA. True enough, but none of the cases that Preferred cites involved § 1692c(b) claims, and the courts in those cases certainly had no obligation to sua sponte determine whether the collectors’ communications to their vendors violated § 1692c(b). That this is (or may be) the first case in which a debtor has sued a debt collector for disclosing his personal information to a mail vendor hardly proves that such disclosures are lawful. One final (and related) point: It’s not lost on us that our interpretation of § 1692c(b) runs the risk of upsetting the status quo in the debt-collection industry. We presume that, in the ordinary course of business, debt collectors share information about consumers not only with dunning vendors like Compumail, but also with other third-party entities. Our reading of § 1692c(b) may well require debt collectors (at least in the short term) to in-source many of the services that they had previously outsourced, potentially at great cost. We recognize, as well, that those costs may not purchase much in the way of “real” consumer privacy, as we doubt that the Compumails of the world routinely read, care about, or abuse the information that debt collectors transmit to them. Even so, our obligation is to interpret the law as written, whether or not we think the resulting consequences are particularly sensible or desirable. Needless to say, if Congress thinks that we’ve misread § 1692c(b)—or even that we’ve properly read it but that it should be amended—it can say so.