Appeals Court Affirms District Court Decision on Email and the FDCPA

Lavallee v. Med-1 Solutions LLC case is further evidence the law needs updated guidance on modern communications as the CFPB’s consideration of the proposed rule for the industry moves forward.

8/12/2019 8:00 AM

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Appeals Court Affirms District Court Decision on Email and the FDCPA

The Seventh Circuit Court of Appeals ruled on Aug. 8 that emails sent to a consumer containing debt disclosures do not qualify as “communication” as the term is defined by the Fair Debt Collection Practices Act.

ACA International supported member company Med-1 Solutions LLC in the case, Lavallee v. Med-1 Solutions, LLC, with an amicus brief seeking to establish that secure email is a legitimate means of providing the written notifications required by § 1692g of the FDCPA, or at least to obtain guidance for the accounts receivable management industry as to how secure email may be engineered to comply with the law.

In Lavallee, a consumer accused a collection agency of failing to comply with the FDCPA’s requirement that a debt collector “send the consumer a written notice containing” statutorily required information about the debt, even though the agency transmitted the requisite validation notice to the consumer by secure email attachment.

The consumer learned about the debts after being contacted by the creditor about a different debt. When the consumer called the collection agency to inquire about the debts, the collector representative neither provided the required disclosures nor sent a written notice within the next five days. The consumer claimed she did not receive the emails and, therefore, the agency failed to provide her with a timely validation notice containing the mandatory disclosures required under the FDCPA. The agency’s records confirmed that the consumer did not open the email attachment. The agency argued that it had met its obligation by sending the email attachment, regardless of whether it was opened.

Granting the consumer’s motion for summary judgment, the District Court for the Southern District of Indiana said the agency did not meet its obligations because it easily could have determined that the consumer never accessed the attachments. The court also found that documents transmitted as email attachments cannot be deemed as reliable as U.S. mail.

In this month’s ruling, the Seventh Circuit Court of Appeals affirmed the district court’s decision that the emails did not qualify as proper disclosures of the consumer’s debts under the FDCPA.

The ruling states, “Med-1 concedes its failure to send Lavallee a written notice within five days of her phone call. This appeal rests on Med-1’s contention that its emails were initial communications that contained the required disclosures. But the emails do not qualify under the Act’s definition of ‘communication’ because they did not ‘convey[] … information regarding a debt.’ 15 U.S.C. § 1692a(2). Nor did the emails ‘contain’ the statutorily mandated disclosures. § 1692g(a). At most the emails provided a means to access the disclosures via a multistep online process. Because Med-1 violated § 1692g(a), the judge was right to enter judgment for Lavallee.”

Relying on the Seventh Circuit’s decision in Horkey v. J.V.D.B. & Associates, Inc., Med-1 argued that its emails qualified as communications because they were intended to aid its collection efforts; however, the court countered that the emails do not fall under communication defined in the FDCPA because the consumer needed to click through multiple screens to access a secure link and attachments to see the disclosures.

Med-1 Solutions' Response

In response to the decision, Med-1 Solutions LLC provided ACA International with the following statement:

“While we accept the 7th Circuit Court’s decision, we continue to disagree with the Court’s assessment that the e-mails did not themselves contain the 1692g disclosures.  MED-1 in an effort to protect the debtor’s information sent the 1692g disclosures in the e-mails via a secured HTTPS hyperlink instead of a traditional unsecured e-mail HTTP protocol. 

“As to the Court’s holding that MED-1’s e-mails were insufficient because they didn’t imply the existence of a debt, we believe this rule is unrealistic and outdated regarding how individuals access their e-mail.  Debtors do not want the subject or body of their e-mail to state the communication is from a debt collector. Debtors often check their e-mail in public including having the e-mail subject read aloud over their car infotainment system, potentially exposing the existence of their debt to third parties.

“The Court’s decision only serves to further discourage the collection industry from communicating with the modern debtor through secure and modern electronic communication platforms.  We are hopeful that the CFPB will consider the outcome in this case when adopting its final rules and provide the industry with a means to provide the 1692g disclosures electronically through a secure protocol that addresses the reality of using e-mail and text messaging in today’s world.”

Amicus Brief

Meanwhile, in its amicus brief, ACA asked the Seventh Circuit to reverse the district court’s decision and “establish that email can be ‘written notice’ within 15 U.S.C. § 1692g(a)’s meaning, and that the statute applies to email in the same way that it applies to postal email.”  ACA argued that without such a ruling or without clear answers on how a debt collector can comply with the requirement that it “send the consumer a written notice” using email, debt collectors will be “less likely to use email for their initial communication with a consumer, which will drive up the cost of collection – a cost that will ultimately be borne by the consuming public.” 

The Consumer Financial Protection Bureau also filed an amicus brief for the appeals court to affirm the district court ruling, except it focused on the argument that the collection agency could not use email to comply with the FDCPA’s written validation notice requirement if it did not satisfy the requirements of the E-SIGN Act, including making certain disclosures to a consumer about the use of electronic records and obtaining the consumer’s prior consent to such use.

The appeals court did not address the E-Sign Act as it applies to this case.

“Because we’ve resolved this appeal in Lavallee’s favor on other grounds, we have no need to address the impact of the E-Sign Act,” the Aug. 8 ruling states.

ACA’s Position

Now that the Seventh Circuit addressed the arguments at issue in Lavallee, the precedent in the case is another push for the accounts receivable management industry to continue to seek clarity on the use of alternative forms of communication, including email messages and text messages during the comment period for the CFPB’s proposed updates to the FDCPA. ACA is working diligently to compile feedback from our members to file a comprehensive comment letter on the industry’s behalf in response to the CFPB’s rule proposal to modernize the severely outdated FDCPA in a grassroots advocacy campaign. Read more here to take action.

In the meantime, debt collectors (especially those in the Seventh Circuit’s jurisdiction) should err on the side of caution by sending the consumer’s initial validation notice via traditional first-class U.S. mail.

Related Content from ACA International:

Seventh Circuit Emailed Validation Notice Case Forces Tip-Off between ACA International and the BCFP

From Collector: Top 10 Cases of 2018


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Appeals Court Affirms District Court Decision on Email and the FDCPA

The Seventh Circuit Court of Appeals ruled on Aug. 8 that emails sent to a consumer containing debt disclosures do not qualify as “communication” as the term is defined by the Fair Debt Collection Practices Act.

ACA International supported member company Med-1 Solutions LLC in the case, Lavallee v. Med-1 Solutions, LLC, with an amicus brief seeking to establish that secure email is a legitimate means of providing the written notifications required by § 1692g of the FDCPA, or at least to obtain guidance for the accounts receivable management industry as to how secure email may be engineered to comply with the law.

In Lavallee, a consumer accused a collection agency of failing to comply with the FDCPA’s requirement that a debt collector “send the consumer a written notice containing” statutorily required information about the debt, even though the agency transmitted the requisite validation notice to the consumer by secure email attachment.

The consumer learned about the debts after being contacted by the creditor about a different debt. When the consumer called the collection agency to inquire about the debts, the collector representative neither provided the required disclosures nor sent a written notice within the next five days. The consumer claimed she did not receive the emails and, therefore, the agency failed to provide her with a timely validation notice containing the mandatory disclosures required under the FDCPA. The agency’s records confirmed that the consumer did not open the email attachment. The agency argued that it had met its obligation by sending the email attachment, regardless of whether it was opened.

Granting the consumer’s motion for summary judgment, the District Court for the Southern District of Indiana said the agency did not meet its obligations because it easily could have determined that the consumer never accessed the attachments. The court also found that documents transmitted as email attachments cannot be deemed as reliable as U.S. mail.

In this month’s ruling, the Seventh Circuit Court of Appeals affirmed the district court’s decision that the emails did not qualify as proper disclosures of the consumer’s debts under the FDCPA.

The ruling states, “Med-1 concedes its failure to send Lavallee a written notice within five days of her phone call. This appeal rests on Med-1’s contention that its emails were initial communications that contained the required disclosures. But the emails do not qualify under the Act’s definition of ‘communication’ because they did not ‘convey[] … information regarding a debt.’ 15 U.S.C. § 1692a(2). Nor did the emails ‘contain’ the statutorily mandated disclosures. § 1692g(a). At most the emails provided a means to access the disclosures via a multistep online process. Because Med-1 violated § 1692g(a), the judge was right to enter judgment for Lavallee.”

Relying on the Seventh Circuit’s decision in Horkey v. J.V.D.B. & Associates, Inc., Med-1 argued that its emails qualified as communications because they were intended to aid its collection efforts; however, the court countered that the emails do not fall under communication defined in the FDCPA because the consumer needed to click through multiple screens to access a secure link and attachments to see the disclosures.

Med-1 Solutions' Response

In response to the decision, Med-1 Solutions LLC provided ACA International with the following statement:

“While we accept the 7th Circuit Court’s decision, we continue to disagree with the Court’s assessment that the e-mails did not themselves contain the 1692g disclosures.  MED-1 in an effort to protect the debtor’s information sent the 1692g disclosures in the e-mails via a secured HTTPS hyperlink instead of a traditional unsecured e-mail HTTP protocol. 

“As to the Court’s holding that MED-1’s e-mails were insufficient because they didn’t imply the existence of a debt, we believe this rule is unrealistic and outdated regarding how individuals access their e-mail.  Debtors do not want the subject or body of their e-mail to state the communication is from a debt collector. Debtors often check their e-mail in public including having the e-mail subject read aloud over their car infotainment system, potentially exposing the existence of their debt to third parties.

“The Court’s decision only serves to further discourage the collection industry from communicating with the modern debtor through secure and modern electronic communication platforms.  We are hopeful that the CFPB will consider the outcome in this case when adopting its final rules and provide the industry with a means to provide the 1692g disclosures electronically through a secure protocol that addresses the reality of using e-mail and text messaging in today’s world.”

Amicus Brief

Meanwhile, in its amicus brief, ACA asked the Seventh Circuit to reverse the district court’s decision and “establish that email can be ‘written notice’ within 15 U.S.C. § 1692g(a)’s meaning, and that the statute applies to email in the same way that it applies to postal email.”  ACA argued that without such a ruling or without clear answers on how a debt collector can comply with the requirement that it “send the consumer a written notice” using email, debt collectors will be “less likely to use email for their initial communication with a consumer, which will drive up the cost of collection – a cost that will ultimately be borne by the consuming public.” 

The Consumer Financial Protection Bureau also filed an amicus brief for the appeals court to affirm the district court ruling, except it focused on the argument that the collection agency could not use email to comply with the FDCPA’s written validation notice requirement if it did not satisfy the requirements of the E-SIGN Act, including making certain disclosures to a consumer about the use of electronic records and obtaining the consumer’s prior consent to such use.

The appeals court did not address the E-Sign Act as it applies to this case.

“Because we’ve resolved this appeal in Lavallee’s favor on other grounds, we have no need to address the impact of the E-Sign Act,” the Aug. 8 ruling states.

ACA’s Position

Now that the Seventh Circuit addressed the arguments at issue in Lavallee, the precedent in the case is another push for the accounts receivable management industry to continue to seek clarity on the use of alternative forms of communication, including email messages and text messages during the comment period for the CFPB’s proposed updates to the FDCPA. ACA is working diligently to compile feedback from our members to file a comprehensive comment letter on the industry’s behalf in response to the CFPB’s rule proposal to modernize the severely outdated FDCPA in a grassroots advocacy campaign. Read more here to take action.

In the meantime, debt collectors (especially those in the Seventh Circuit’s jurisdiction) should err on the side of caution by sending the consumer’s initial validation notice via traditional first-class U.S. mail.

Related Content from ACA International:

Seventh Circuit Emailed Validation Notice Case Forces Tip-Off between ACA International and the BCFP

From Collector: Top 10 Cases of 2018


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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