11th Circuit Adopts FDCPA Decision That Could Dramatically Affect Mortgage Services Operations | Perkins Coie


in the Hunstein v Preferred Collection and Management Services, Inc., 994 F.3d 1341 (Cir. 11, 2021), the Eleventh Circuit ruled that the transmission of a consumer’s personal information to a print provider through a debt collection agency violates the law on fair debt collection practices collection under 15 USC Section 1692c (b).

Hunstein will likely require major operational changes for many credit service providers. At the very least, credit servicers who qualify as “debt collectors” under the FDCPA should reconsider how third-party providers can be used for basic operations like printing and higher-level functions like damage mitigation. Although it is theoretically possible to continue using such providers without disclosing the consumer’s personal information, the efficiency of using such providers will be reduced. The short term solution to avoiding exposure under Hunstein This will likely result in the self-provision of such services – a major change in industry practice.

In the meantime, a class action lawsuit has already been launched against credit servicers based on Hunstein, and servicers should be ready to defend such cases.

The plaintiff in Hunstein Preferred Collection allegedly provided his personal information – including his name, the balance of his debts, the debts from his son’s medical treatment and his son’s name – to a print seller in order to prepare and send a dunning letter. The district court dismissed the case, finding that Preferred Collection’s communications with its print provider did not trigger FDCPA liability as it was not “related to debt collection.”

Using an “atextual reading” of “in connection with the collection of debts” in Section 1692c (b) of the FDCPA, the Eleventh Circuit found that “in connection with” is “invariably a vague, loose connection”. The court found that “connection” is broadly referred to as “relationship or association” and “in connection with” is broadly referred to as “relating to” [or] concerning ”and also noted that Section 1692c (b) was different from other sections of the FDCPA.

The court found that section 1692c (b) did not include the exceptions noted in other areas of the FDCPA and concluded that its substantive reading of the statute would not render other aspects of the provision meaningless. The court concluded that, in the context of Section 1692c (b), the phrase “in connection with the collection of debts” has an “identifiable ordinary meaning that eliminates the need to resort to extratextual” factors “. The court rejected Preferred Collection’s confidence in the multifactor test.

The Hunstein Decision is consistent with Facebook v. Duguid141 S. Ct. 1163 (2021), where Justice Sotomayor relied on a similarly strict interpretation of the text in order to interpret the definition of an “autodialer” according to the Telephone Consumer Protection Act (“TCPA”).

A petition to repeat in Hunstein was submitted on May 25, 2021. We will continue to follow Hunstein and offer further analyzes of any developments.

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