Civil Litigation

Trends in FDCPA Litigation: To Call or Not to Call? Leaving messages can lead to FDCPA liability

“Like so many other industries, the practice of law evolves rapidly and enterprising plaintiffs’ attorneys are like lions stalking wounded prey. The collection industry has been in the cross-hairs of public opinion for some time and we have taken some shots. It is rare for a single case from a United States District Court to have such a profound impact on an industry, but that is exactly what has happened with Foti v. NCO Financial Systems, Inc.[1] This case alone has spawned a cottage industry for consumer attorneys.

Here is the rub: the court in Foti concluded that a pre-recorded message left on a consumer’s answering machine constituted a “communication” within the meaning of the FDCPA. The actual text of the message was as follows:

Good day, we are calling from NCO Financial Systems regarding a personal business matter that requires your immediate attention. Please call back 1-866-701-1275 once again please call back, toll-free, 1-866-701-1275, this is not a solicitation.

According to the court, the collector’s failure to leave the mini-Miranda constituted a violation of Section 806(6) (placement of telephone calls without meaningful disclosure of the caller’s identity). Prior to the Foti decision, it was standard practice to leave voice messages simply asking for a return call and not leaving any information regarding the underlying debt or disclosing that the caller was a debt collector. This practice avoided the risk of third-party disclosures. Those days are gone.

Now the industry appears to be in a catch-22 when it comes to leaving voicemail messages. On the one hand, if you leave a message and don’t leave the mini-Miranda you have almost certainly violated Section 806(6)[2]. Yet, by leaving a message you risk third-party disclosure in violation of Section 805(b). Leaving messages can be an effective collection tool and collectors continue to use that practice; consequently, there has been a significant increase in FDCPA lawsuits alleging violations of Sections 805(b) and 806(6) since the Foti decision came out in 2006.

To date, no Federal court in Virginia has addressed the issues arising in Foti. Many other courts have adopted the reasoning in Foti and have held that voice mail messages are “communications” as defined in the FDCPA; and it is likely that Virginia courts would follow such precedent.

What can the collector do to avoid liability? There is no bright line test or safe harbor here. The safest course of action to avoid Foti violations would be to not leave voice messages at all. Recognizing that leaving voice messages can be an effective collection tool, ACA drafted a recommended message which can be found in Fastfax #1146. However, even using ACA’s recommended message does not immunize the collector from liability under the FDCPA.

As the industry remains in the cross-hairs of public opinion and of the regulators, and with the coming Consumer Financial Protection Bureau, it is safe to say that the industry will see more changes in the near future and it will likely come in the form of more regulation, not less. With more regulation comes more litigation.

The materials available at this website or blog are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed are those of the individual author and may not reflect the opinions of the firm or any individual attorney.
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