Saturday, January 9, 2016

FYI: MD Pa Holds QR/Bar Code Visible on Collection Ltr Envelope States FDCPA Claim

The U.S. District Court for the Middle District of Pennsylvania recently denied a debt collector's motion for judgment on the pleadings as to allegations that use of a "QR code" or barcode visible through a glassine window on an envelope containing a collection letter constituted a violation of the federal Fair Debt Collection Practices Act (FDCPA).


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


A debt collector mailed a collection letter in an envelope addressed to the debtor.  The return mailing address was not physically printed on the envelope. Rather, the return address was visible through a glassine window and read, in part, as follows: "Department # 5996 P.O. Box 1259 Oaks, PA 19456."  A barcode was printed directly below the return address and visible through the glassine window.


The barcode, when electronically scanned, would allegedly reveal the debtor's account number.  The alleged violation at issue was the debt collector's alleged disclosure of the consumer's account number, which was embedded in a barcode visible on the face of the debt collection envelope.  The consumer alleged that, by disclosing the barcode to the general public, the debt collector supposedly increased the risk that the consumer would be a victim of identity theft.


The debt collector argued that the FDCPA was not intended to prohibit the disclosure of benign symbols on any envelope sent by a debt collector as means of communicating with a consumer by use of the mails.  


As you may recall, the FDCPA "prohibits a debt collector from using `unfair or unconscionable means' to collect a debt." Douglass, 765 F.3d at 302 (quoting 15 U.S.C. § 1692f). Section 1692f "sets out a nonexclusive list of conduct that qualifies as unfair or unconscionable." Id. The consumer alleged that the debt collector violated subparagraph 8 of section 1692f, which prohibits a debt collector from:


[u]sing 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).


Although the debt collector conceded that section 1692f(8) of the FDCPA prohibits any language or symbol from appearing on a debt collection envelope, the debt collector argued that the section was intended merely to prevent debt collectors from embarrassing debtors by announcing the delinquency on the outside of a debt collection letter envelope.  As we have noted in our prior updates (example), when interpreting section 1692f(8), have held that "benign" language or symbols do not violate FDCPA's prohibitions.


The debt collector also argued that "[t]he only way to view the information stored in the barcode at issue requires illegal action by a third party, making the imposition of liability under the FDCPA inappropriate."  The debt collector noted that when a barcode is visible on an envelope sent through the U.S. Postal Service, the consumer's privacy is protected by 18 U.S.C. § 1702, which prohibits individuals from taking another's mail with the specific intent to obstruct correspondence or pry into the business or secret of another. The debt collector also referenced 18 U.S.C. § 1703, which allows "[o]nly U.S. Postal workers . . . to handle the mail, and even then, federal law prohibits those employees from tampering with the mail."


In response, the consumer argued that the court need not decide whether a benign symbol exception should be adopted because the barcode at issue was not benign. In support of this argument, the consumer relied upon the Third Circuit's decision in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014). 


In Douglass, the defendant debt collector argued "that to prevent absurd results" the Third Circuit "must adopt a `benign language' exception to the FDCPA that would allow for markings on an envelope so long as they do not suggest the letter's purpose of debt collection or humiliate or threaten the debtor." Douglass, 765 F.3d at 303.


The Third Circuit found that the defendant's disclosure of the plaintiff's account number implicated "a core concern animating the FDCPA—the invasion of privacy." Id.  The Third Circuit stated that the plaintiff's account number was "a core piece of information pertaining to [plaintiff's] status as a debtor and [defendant's] debt collection effort." Id.


Moreover, the Third Circuit held that "disclosure [of the account number] has the potential to cause harm to a consumer that the FDCPA was enacted to address." Id.  As a result of the foregoing, the Third Circuit concluded that the plaintiff's account number was "impermissible language or symbols under § 1692f(8)" because "[c]onstruing § 1692f(8) in accord with the FDCPA's purposes in § 1692(a), we find the statute not only proscribes potentially harassing and embarrassing language, but also protects consumers' identifying information." Id. at 306. 


The Third Circuit also went on to state that the disclosure of the plaintiff's account number was not benign because by divulging such information to the public meant it "could be used to expose [the plaintiff's] financial predicament." Id. at 303.  However, the Third Circuit expressly declined to decide whether "section 1692f(8) contains a benign language exception because even if such an exception existed, [the plaintiff's] account number is not benign." Id.  


Of note, however, the Third Circuit's ruling in Douglass was not a QR code or bar 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 trial court here also referenced that, in Styer v. Prof'l Med. Mgmt., 2015 U.S. Dist. LEXIS 92349 (M.D. Pa. July 15, 2015) (Nealon, J.), the U.S. District Court for the Middle District of Pennsylvania applied Douglass to circumstances similar to those alleged by the plaintiff consumer in this case.


In Styer, the parties submitted cross motions for summary judgment on the plaintiff's sole claim raised, specifically whether the defendant's disclosure of a QR code that, when electronically scanned, revealed the plaintiff's name, address, and account number constituted a violation of section 1692f(8) of the FDCPA.  The court in Styer determined that the disclosure of that QR code on a debt collection envelope was prohibited under section 1692f(8) of the FDCPA and thus, judgment was entered in favor of the plaintiff.


Here, the Court applied Douglass and Styer, and denied the debt collector's motion for judgment on the pleadings, holding that the plaintiff consumer pled sufficient facts to state a claim for relief under the FDCPA that is plausible on its face.





Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874


Admitted to practice law in Illinois




California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC



NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates and webinar presentations are available on the internet, in searchable format, at:


Financial Services Law Updates




The Consumer Financial Services Blog








California Finance Law Developments




Insurance Recovery Services