11th Circuit Holds Outsourcing to Mail Vendors Not Actionable Under FDCPA

In a recent en banc decision, the U.S. Court of Appeals for the Eleventh Circuit held that a debt collector’s disclosure of a consumer’s debt to a third party mail vendor was not  actionable under the Fair Debt Collection Practices Act (FDCPA) because the consumer did not show he suffered the type of injury that bears a “close relationship” to one traditionally recognized at common law—in this case, “public disclosure of private facts.”

The case arose when a debt collector provided details regarding a consumer to a third party mail vendor, who then generated a debt collection letter with that information and sent it to the consumer.  The consumer claimed that the disclosure of his information to the mail vendor amounted to an unlawful third party disclosure under the FDCPA.  The district court granted the debt collector’s motion to dismiss, finding no violation because the communication to the mail vendor was not “in connection with the collection of any debt” as specified in the FDCPA. 

On appeal, an Eleventh Circuit panel initially reversed the district court’s decision and took up the threshold issue of Article III standing, finding that, in light of Congress’s intent in drafting the FDCPA, a violation of the third party disclosure provision would constitute a concrete injury and convey standing.  However, after the Supreme Court’s decision in TransUnion v. Ramirez held that a mere statutory violation is not sufficient to show the concrete injury required to establish standing, the same Eleventh Circuit panel vacated but reaffirmed its initial opinion. The panel explained that because “some measure of disclosure in fact occurred,” the consumer’s alleged injury bore a close enough resemblance to the common law tort of public disclosure to establish standing.

The Eleventh Circuit reheard the case en banc and overturned the panel’s decision, finding that the consumer’s claim of harm was insufficient to establish standing because the information wasn’t made public; it was merely disclosed to a private party vendor who did not disclose it further.  Thus, an essential element of the common law tort of public disclosure was not established, and the consumer did not show he suffered a concrete harm as a result of the debt collector’s disclosure.  The Eleventh Circuit remanded the case to the district court with instructions to dismiss.