If you can’t use your business’s legal name, do you need to register a trade name for the purpose of leaving a limited content message? Editor’s note: This article is available for members only.
When the Consumer Financial Protection Bureau’s first set of amendments to Regulation F takes effect on Nov. 30, 2021, a debt collector will be able to leave a limited content voicemail message and have the benefit of the safe-harbor from inadvertent third-party disclosures that the limited content message provides.
Note: The CFPB has permitted limited content messages to be transmitted only in the form of voicemail; there’s no such thing as a limited content email message or limited content text message.
To leave a limited content message on a consumer’s voicemail, the debt collector will be required to leave its business name as part of the limited content message—but that business name cannot reveal that the company is in the debt-collection industry. The CFPB has not specified what words might indicate that a company is in the debt collection industry, but it’s safe to assume that if your company name includes words like “collection,” “receivable,” “acceptance,” or “recovery," you won’t be able to leave a limited content message unless you find an alternative company name to use for that purpose.
One way to work with this requirement is to use an acronym or some other variation of your company’s name. Any name a company uses to identify itself to the public other than the company’s legal name would be considered a “trade name” (also called a “fictitious name” or “doing business as” name, i.e., d/b/a or DBA name).
The question of whether a debt collector’s trade name must be registered with the jurisdictions where the debt collector operates is another hurdle for debt collectors seeking to use a limited content message. While it remains to be seen how courts will come down on this question considering the amendments to Regulation F and the confluence with state licensing laws, we can preliminarily look to the Fair Debt Collection Practices Act, the Federal Trade Commission’s commentary on the FDCPA, existing FDCPA case law and existing state law for guidance.
The FDCPA’s “True Name” Requirement
The inquiry can begin with the plain language of the FDCPA, which states in Section 807, codified at 15 U.S.C. Section 1692e(14), that it is false or misleading for a debt collector to use “any business, company, or organization name other than the true name of the debt collector's business, company, or organization.” (Emphasis added.)
Let’s call this provision the FDCPA’s “true name” requirement.
The FTC’s 1988 Staff Commentary
Roughly a decade after the FDCPA became law, the FTC provided its take on the FDCPA’s true name requirement in its Interpretation Staff Commentary on the Fair Debt Collection Practices Act, 53 FR 50097-02. In that document, the FTC stated “[a] debt collector may use a name that does not misrepresent his identity or deceive the consumer. Thus, a collector may use its full business name, the name under which it usually transacts business, or a commonly used acronym. When the collector uses multiple names in its various affairs, it does not violate this subsection if it consistently uses the same name when dealing with a particular consumer.”
Based on this FTC guidance, it would seem that a debt collector can satisfy the true-name requirement simply by not lying. As long as a debt collector regularly uses a particular name, that name will satisfy the true-name requirement. The core inquiry here appears to be whether the name misleads the consumer as to the debt collector’s identify. Note that the standard here is “false, deceptive, or misleading,” not “confusing,” as so many plaintiffs’ attorneys would like to interpret the statute.
The FTC’s staff commentary does not specifically address whether a trade name must be registered with the state or states in which the debt collector operates. Nor does it address whether the trade name—registered or not—needs to appear on a debt collector’s license in the states where it uses that name (if those states require debt collectors to be licensed).
But collection agencies with business names that reveal the nature of their business have for years used trade names on media that may be seen or heard by third parties, e.g., on envelopes, caller ID displays and in voicemails.
With that in mind, the CFPB stated in its section-by-section analysis to the amendments to Regulation F that for purposes of leaving a limited content message, “the Bureau expects that many debt collectors will be able to disclose a business name (e.g., a doing business as (d/b/a) name) without revealing that they are in the debt collection business.”
Remember, the final rule does not address whether a trade name needs to be registered in order to comply with the requirements for limited content messages or other laws.
Fortunately, although federal statutes and regulations do not address whether a debt collector’s trade name needs to be registered for the debt collector to use that name in communications with consumers, the existing body of federal case law provides some guidance.
Sheriff v. Gillie –True Name Requirement Means Debt Collectors Cannot Lie About Affiliation
In Sheriff v. Gillie, the consumers alleged that two attorneys hired by the Ohio attorney general to collect debts owed to the state of Ohio had used the Ohio attorney general’s letterhead in violation of the true name requirement. By contract, the attorneys were required to use the Ohio attorney general’s letterhead when attempting to collect, and the signature block of the letters included the attorneys’ names and addresses and the designation “special” or “outside” counsel to the state attorney general. In addition, the letters identified the senders as debt collectors seeking payment for debts owed to the state.
The district court entered summary judgment for the attorneys, finding that they were protected by the FDCPA’s state officer exemption. On appeal, the 6th Circuit held that the attorneys were independent contractors, not state officers, and remanded the case for a jury determination about whether the attorney’s use of the Ohio attorney general’s letterhead would mislead the least sophisticated consumer into believing that the attorney general’s office was collecting the debt. Before the district court reviewed the case again, however, the Supreme Court granted certiorari and took up the case.
In its review, the Supreme Court focused on the true name requirement. The court held that regardless of whether the two attorneys qualified for the state officer exemption, their use of the attorney general’s letterhead did not violate the FDCPA’s true name requirement. The late Justice Ruth Bader Ginsburg, writing for a unanimous court, agreed with Judge Jeffrey Sutton’s dissenting opinion in the 6th Circuit: “Although the FDCPA does not say what a true name is, its import is straight forward: A debt collector may not lie about his institutional affiliation."
While Sheriff did not directly address the use of a debt collector’s use of a trade name, the decision’s application is clear for those wishing to do so: Where, as in Sheriff, a debt collector’s communications with a consumer make no attempt to conceal the debt collector’s function and do not attempt to conceal the debt collector’s identity or “lie” about its “institutional affiliation,” its use of a trade name will satisfy the true name requirement.
Levins v. Healthcare Revenue Recovery Group
In contrast to Sheriff, however, the U.S. Court of Appeals for the 3rd Circuit found in Levins v. Healthcare Revenue Recovery Group, LLC that a debt collector that had a registered trade name and, in communication with consumers, used an abbreviation of that name but apparently never did business under the abbreviated name could plausibly have violated the true name requirement.
In Levins, the consumers received several voicemails from the debt collector, Healthcare Revenue Recovery Group (HRRG), stating: “ARS calling. Please return our call at 1-800-694-3048. ARS is a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose. Again, our number is 1-800-694-3048. Visit us at www.arspayment.com.” The name “ARS” was an abbreviation of HRRG’s registered trade name, ARS Account Resolution Services.
The consumers alleged that HRRG violated the true name requirement by using the abbreviated name “ARS” in the voicemail. The district granted HRRG’s motion to dismiss, and the consumers appealed.
On appeal, the 3rd Circuit found that the complaint stated a plausible claim under FDCPA Section 1692e(14). In doing so, the court relied on and adopted the FTC’s interpretation of the true name requirement as stated in the 1988 Interpretation Staff Commentary discussed above. In applying that standard, the 3rd Circuit found that “[n]othing in the information properly before [the court] indicates that ‘ARS’ is HRRG’s full business name, the name under which it usually transacts business, or its commonly used acronym.”
The 3rd Circuit remanded the case to the district court. HRRG moved for summary judgment, asserting that it used the unregistered abbreviation of its registered trade name ARS in its course of communications with the consumers. The district court denied HRRG’s motion for summary judgment, finding that “the record show[ed] that HRRG sent plaintiffs three letters and left them five voicemails which identified the entity attempting to collect plaintiffs’ debt as ‘HRRG’ and made no mention of the ARS division. This use of ‘HRRG’ when communicating with plaintiffs is plainly inconsistent with HRRG’s subsequent use of the name ‘ARS.’”
Notably, at no point in any of the Levins decisions did either the district court or the circuit court note the general standard for the true name requirement set forth in Sheriff. Rather, the courts adhered to the interpretation offered by the FTC in 1988 and simply found that on the facts placed on the record, HRRG had not consistently used the abbreviation “ARS” in its communications with these (or any) consumers.
Other Case Law
Velez v. Healthcare Revenue Recovery Grp., LLC – Complaint did not plausibly allege a violation of the true name requirement where debt collector had used a trade name—which it had not registered in North Carolina and which was not “licensed as a collection agency in North Carolina”—in letters to consumers located in North Carolina. The trade name had, however, been registered in the debt collector’s home state (principal place of business) and therefore satisfied the true name requirement even for the purposes of its communications with North Carolina consumers.
Hsu v. Enhanced Recovery Co., LLC – “[A] debt collector is not liable under Section 1692e(14) when it uses a trade name or fictitious name that is registered with the state that appears in the debt collector’s address in its correspondence to the debtor.” (For the same reasons, the court dismissed the consumer’s true name claims under the Texas Debt Collection Act.) In addition, the court found that even if the debt collector’s use of its Florida-registered trade name in the course of correspondence to Texas consumers violated the Texas assumed-name act, which requires “a foreign filing entity” to file a certificate if it “regularly conducts business . . . in [Texas] under an assumed name,” that violation of the Texas assumed name law would not be a per se violation of the FDCPA.
Dickenson v. Townside T.V. & Appliance, Inc. – In a case mostly about a creditor’s liability under the FDCPA for attempting to collect a debt in a name other than its own, the court applied the 1988 FTC staff commentary to the true name analysis. The court found that where the creditor had consistently used an unregistered trade name in doing business with the public and had billed customers, including the plaintiffs, using that trade name, the creditor had not attempted to mislead the consumers into believing that a third party was involved in the collection of its debts.
Espinal v. Enhanced Recovery Co., LLC – Applying the interpretation in the 1988 FTC staff commentary as adopted by the 3rd Circuit, the court found that “a debtor’s ability to know what an acronym stands for” is not part of the true name requirement and that a debt collector who registered an abbreviated name as an alternate name in collections and customer care in the state where the FDCPA alleged violation had occurred; registered that abbreviated name as a trade name both in the state where it maintained its principal place of business and in its state of incorporation; and had regularly used the abbreviated name in connection with its debt collection services for two decades had established, for purposes of summary judgment, that it had a commonly used acronym.
Cobb v. Enhanced Recovery Co., LLC – Stating that case law makes clear that “if an entity is licensed to do business under a trade name, that name is the entity’s ‘true name’ for the purpose of the FDCPA” and aggregating cases: Kizer v. Am. Credit & Collection, 1990 WL 317475 at *6 (D. Conn. Dec. 17, 1990); Bieder v. Retrieval Masters Creditors Bureau Inc., 146 F.Supp.3d 465, 470 (E.D.N.Y. 2015) (name under which debt collector was licensed in New York City was its true name for the purposes of the FDCPA); Cruz v. Credit Control Services, 2017 WL 5195225 at *7 (E.D.N.Y. 2017) (holding that name used by debt collector operating in Freeport, New York, was its “true name” for FDCPA purposes where debt collector was licensed under that name in New York City and Massachusetts); Boyko v. American Int'l Group, Inc., 2009 WL 5194431 at *7 (D.N.J. 2009) (“the Court is persuaded that a collector’s ‘true name’ includes the collector’s legal name . . . as well as the name under which it is licensed to do business”).
Mahan v. Retrieval-Masters Credit Bureau Inc. – The true name requirement “at its core clearly prohibits the use of a name that is neither the collector’s actual corporate name nor its trade name, licensed or otherwise” and, accordingly, “cases in which a violation of Section 1692e(14) have been found typically involve a debt collector misrepresenting its identity, such as by purporting to be the creditor when it is not, purporting to be a government agency when it is not, or purporting to be distinct from the creditor when it is not.” (Citing Lester E. Cox Medical Center, Springfield, Mo. v. Huntsman, 408 F.3d 989, 992–93 (8th Cir.2005) (debt collector violated Section 1692e(14) where plaintiff received medical treatment at Lester E. Cox Medical Center, which then referred account to “Ozark Professional Collections,” a fictitious registrant of Cox, for collection, which was deceptive because debtor would not know that debt remained with creditor and had not been turned over to a third-party collection agency); Carrizosa v. Stassinos, 2010 WL 4393900, *2 (N.D.Cal. Oct. 29, 2010) (finding violation of Section 1692e(14) where the debt collector “sometimes sent letters using the creditor's name … rather than its own name”); Gradisher v. Check Enforcement Unit Inc., 210 F.Supp.2d 907, 914 (W.D. Mich.2002) (defendant violated Section 1692e(14) by sending debt collection notices creating false impression that they were generated by Muskegon County Sheriff's Department rather than a private debt collector); Domico v. Etan Industries Inc., 1998 WL 765058, *4 (N.D. Ill. Oct. 26, 1998) (denying motion to dismiss where complaint alleged that defendant rented or borrowed another company's name and letterhead as cover for its debt collection activities).
Applicable State Law
While the FDCPA generally operates as the primary law that regulates debt collection, debt collectors must also be abide by applicable state laws. For example, some states do not allow debt collectors to conduct collection activities using any other name but their legal name.
In addition, some states require a debt collector to obtain a license for any name they use that is different from the one that appears on their license. Others require that a debt collector use only the exact agency name that appears on the agency’s state license (except for skiptracing purposes and on the exterior of envelopes). For states like these, agencies would need to conduct a state-specific analysis of licensing requirements and other relevant state law to determine whether they would be able to leave a limited content message using a trade name (registered or unregistered) that does not appear on their debt collection license for the state or states in which they seek to leave the limited content messages. Agencies must keep in mind that, even if the FDCPA allows the use of acronyms, certain states prohibit their usage. This prohibition limits an agency’s ability to leave limited content messages if their name reveals they are a debt collector.
Debt collectors must also keep in mind that not following state licensing requirements can lead to unfair, deceptive or abusive acts or practices (UDAAP) enforcement by the CFPB. Recently, the CFPB entered a consent order with RAB Performance Recoveries LLC. In the order, the CFPB alleged that the debt buyer was not licensed to collect debts in Connecticut, New Jersey and Rhode Island, but had sent settlement offers to consumers and obtained judgments against consumers. According to the Bureau, these actions violated Sections 1692e(5),(10) of the FDCPA and included false and misleading actions that qualified as UDAAP. The debt buyer entered into a consent order with the CFPB, “without admitting or denying any of the findings of fact, conclusions of law, or wrongdoing, except that [it] admits the facts necessary to establish the Bureau’s jurisdiction over [the debt buyer] and the subject matter of this action.”
Debt collectors and debt buyers should both consider this consent order as a reminder of the importance of licensure and how sometimes violations of state laws can become violations of federal laws as well. For more information about state requirements that relate to trade names, members can review ACA’s SearchPoint document #2018, Use of Aliases. For information related to licensing for debt collectors and debt buyers, members can access ACA SearchPoint documents #4553, Licensing for Debt Purchasers, and #3005, Interstate Chart.
Bringing It All Together
Putting all this together, it seems clear that the FDCPA does not necessarily require debt collectors to register a trade name in order to comply with their obligations. It’s clear that courts approve of trade names when they’re registered where used and that some courts have approved of the use of trade names registered in the debt collector’s home state—even if they’re not registered in the state where the debt collection communication takes place and where state law otherwise requires foreign entities to file a certificate of assumed name or similar docket. Even if a debt collector does not register their trade name, as long as it’s used in the normal course of business with the public (including with individual consumers) and does not misrepresent the debt collector’s corporate identity, role in the debt collection process, or institutional affiliation, it should pass muster under the FDCPA and its true name requirement.
With that in mind, however, if a specific state’s law bans debt collectors from using any name except their legal, registered or licensed company name (including trade names), debt collectors will probably want to avoid using an unregistered or unlicensed trade name to prevent unintended state regulatory consequences and potential liability under applicable state consumer protection laws.