Tuesday, December 22, 2015

FYI: WD Mo Holds Account Number on Envelope Did Not Violate FDCPA

The U.S. District Court for the Western District of Missouri recently held that an internal account number displayed on the envelope of a debt collector's demand letter did not violate the federal Fair Debt Collection Practices Act ("FDCPA") because it did not reveal that plaintiff consumer was a debtor.

A copy of the opinion is available at:  Link to Opinion  

In March 2014, a debt collector sent a demand letter regarding a consumer debt owed by the plaintiff consumer (Plaintiff).  The letter's envelope had a window in which Plaintiff's name, address and account number were visible.  The debt collector maintained the account number was not a number provided by Plaintiff, but was instead assigned by the debt collector and known only internally within the debt collector's business.

Plaintiff filed suit in March 2015, alleging the demand letter violated the FDCPA because it included her personally identifiable information (i.e., the account number) on the exterior of the envelope and visible to third parties.  The debt collector filed a motion for judgment on the pleadings, which the Court granted.

As you may recall, it is a violation of the FDCPA to use "any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business."  15 U.S.C. § 1692f(8). 

Here, Plaintiff's account number was visible on the exterior of the envelope used by the debt collector.  However, as the Court noted, the U.S. Court of Appeals for the Eighth Circuit has held that adhering to the plain language of this provision of the FDCPA would "create bizarre results"  -- for example, the plain language of the statute would prevent the debtor's address, postage, or other postal marks such as "overnight mail" from being placed on the outside of an envelope.  Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 318 (8th Cir. 2004). 

Ultimately, the Eighth Circuit in Strand concluded that the FDCPA "does not proscribe benign language and symbols" from being visible on the outside of an envelope.  Id. at 319. 

The Plaintiff urged the Court to adopt the U.S. Court of Appeals for the Third Circuit's differing ruling in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014). According to the Court, in Douglass, the Third Circuit held that an internal account number and QR code printed on the outside of an envelope violated the FDCPA.  765 F.3d at 302.

Of note, however, the Third Circuit's ruling in Douglass was not a QR code case.  In fact, the Douglass opinion expressly states in fn 4:  "Douglass no longer presses her argument that [the defendant in that case] violated the FDCPA by including the QR Code on the envelope.  Appellant Br. 5 n. 2.  We therefore do not decide that issue."

The Western District of Missouri went on to say that the Third Circuit in Douglass determined that the inclusion of the number and QR Code on the exterior of the envelope was not benign because "it [wa]s a piece of information capable of identifying [the plaintiff] as a debtor. And its disclosure has the potential to cause harm to a consumer that the FDCPA was enacted to address." Id. at 306.  The Court noted that the Third Circuit distinguished the Eighth Circuit's ruling in Strand because Strand "did not confront an envelope that displayed core information relating to the debt collection and susceptible to privacy intrusions." Id. at 305

The Court here, being within the Eighth Circuit, in turn distinguished the Third Circuit's ruling in Douglass, noting that the envelope at issue in Douglass contained an account number and a visible QR code, which, when scanned by a smart phone or similar device, revealed various personal information about the plaintiff, including the monetary amount corresponding to the Douglass plaintiff's alleged debt, but that in this case the Plaintiff did not allege that someone viewing the envelope at issue here could use the string of numbers in the visible account number to obtain information about the amount of his debt or other private information.

Plaintiff argued the display of the account number was not benign because it violated his privacy rights by exposing his account number to third parties.  The Court disagreed, reasoning that the legislative purpose of the FCPA was to prohibit a debt collector from using symbols and language on envelopes that would reveal that the contents pertained to debt collection.  Although the Court noted that a debtor's privacy is a legitimate concern, the Court believed the purpose of the FDCPA was not to prevent disclosure of internal account numbers, but to prevent identification of the recipient as a debtor.

Accordingly, the Court held that benign information which does not reveal that the recipient is a debtor may be included on the exterior of an envelope.  Because the account number contained on the envelope to the Plaintiff did not reveal she was a debtor, the Court held it did not violate the FDCPA.

Ralph T. Wutscher
Maurice Wutscher LLP
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Email: rwutscher@MauriceWutscher.com

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