11th Circuit Finds Data Transmission to Vendor Constitutes a Communication to a Third Party Under FDCPA

The U.S. Court of Appeals for the Eleventh Circuit recently issued an opinion holding that, when a debt collector sent a consumer’s information to a vendor responsible for creating a dunning letter, that action constituted a communication “in connection with the collection of any debt” under the federal Fair Debt Collection Practices Act (FDCPA) provision generally prohibiting communicating consumers’ personal information to third parties.  Such an action thereby created a “concrete injury” giving the consumer necessary “standing” under Article III of the U.S. Constitution to sue the debt collector for damages. 

In the underlying case, a debt collector sent information about a consumer’s debt, arising from his son’s medical treatment, to the debt collector’s vendor who used the information to create a dunning letter to send to the consumer.  The information the debt collector sent to the mail vendor included the consumer’s name, the balance of the debt, the entity to whom he owed the debt, the fact that the debt concerned the consumer’s son’s medical treatment and the son’s name.  The consumer filed suit against the debt collector alleging violations of the FDCPA, as well as the Florida Consumer Collection Practices Act. 

The U.S. District Court, as pertinent to this appeal, dismissed the action for failing to state a claim that the transmittal to the vendor constituted a communication “in connection with the collection of any debt” under provision 15 U.S.C. § 1692c(b) of the FDCPA.  § 1692c(b) of the FDCPA prohibits, with certain exceptions, debt collectors from communicating, “in connection with the collection of any debt,” with any person other than the consumer. 

The Eleventh Circuit first examined whether the plaintiff had Article III standing to sue, looking at whether a violation of § 1692c(b) of the FDCPA gives rise to a concrete injury.  The court reviewed the historical precedent of invasion-of-privacy torts as well as Congress’ findings and declaration of purpose for the FDCPA, concluding that violations of § 1692c(b) of the FDCPA constitute a concrete injury and, thus, that the plaintiff in this case had standing to sue.

Next, the court examined whether the debt collector’s communication with the vendor was “in connection with the collection of any debt” such that it violated § 1692c(b) of the FDCPA.  The court looked to the plain meaning of the phrase “in connection with,” and also applied rules of statutory interpretation to the phrase, ultimately finding that, although past judicial interpretations of the phrase required the communication to include a demand for payment, there was no such requirement in § 1692c(b).  The court distinguished prior opinions, noting that those interpretations looked at the phrase “in connection with the collection of any debt” as it is used under other sections of the FDCPA, not the prohibition on communications with third parties under § 1692c(b).  The court found that under the plain meaning of the phrase, the debt collector’s communication of certain information about the consumer to the vendor was “in connection with the collection of any debt” under § 1692c(b) of the FDCPA, triggering the law’s prohibitions. 

The court acknowledged that this review of § 1692c(b) and its holding may be the first of its kind, and addressed the practical implications of this holding, stating:

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….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….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.

In so finding, the Eleventh Circuit reversed the initial decision from the U.S. District Court for the Middle District of Florida and remanded the case for further proceedings.