How a Court Ruling on Email and the FDCPA Could Impact the CFPB’s Proposed Debt Collection Regulations

ACA International Corporate Counsel Kari Barber explains the pros and cons of FDCPA ruling in Lavallee v. Med-1 Solutions, LLC in interview with American Banker.

10/9/2019 9:30 AM

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How a Court Ruling on Email and the FDCPA Could Impact the CFPB’s Proposed Debt Collection Regulations

A Seventh Circuit Court of Appeals decision on emails, disclosure notices and compliance with the Fair Debt Collection Practices Act may impact the Consumer Financial Protection Bureau’s proposed rules for the 1977 law.

Following the Aug. 8 decision in Lavallee v. Med-1 Solutions LLC, ACA’s Corporate Counsel Kari Barber told American Banker reporter Kate Berry the court decision provides some clarity on how email communications may be used in compliance with the FDCPA.

“The Lavallee decision is not all bad news,” Barber said in the article. (A subscription may be required to view the article.) “It provided some clarification about how courts will interpret the FDCPA when the facts involve modern technology. Under these facts, the court concluded that the use of modern technology in this manner did not comply with the FDCPA. What the court didn’t do is rule out the use of text messages or email completely.”

In Lavallee v. Med-1 Solutions LLC, the Seventh Circuit Court of Appeals ruled that an email sent to a consumer containing a hyperlink to debt disclosures did not qualify as “communication” as the term is defined by the FDCPA, ACA previously reported.

ACA supported member company Med-1 Solutions LLC in the case 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.

Berry also reports in the American Banker article that there could be “gaps between the decision and what the CFPB proposal would allow” while some sources said the ruling signifies the law won’t be applied to the modern era of technologies.

In its current state, the proposed rule, with more than 12,000 comments submitted by the Sept. 18 deadline, includes:

  • Certain disclosures, such as an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt, including by disputing the debt.
  • Methods by which debt collectors may lawfully use newer communication technologies, such as voicemails, emails and text messages.
  • Methods by which collectors may provide required disclosures electronically, for example, by email or text message.
  • Call frequency limits of no more than seven attempts by telephone per week; prohibiting call attempts within 7 days of a telephone conversation.
  • Out-of-statute debt collection, by prohibiting suits and threats of suit on time-barred debts and requiring communication with the consumer before credit reporting.

The proposed rule addresses several key issues ACA has long sought clarity on, including safe harbor procedures for the use of voicemail messages and the ability to use modern forms of communication, such as text messaging and email. The proposed rule also provides more clarity on the requirements for a validation notice and includes a model form.

Consumers increasingly prefer modern electronic communications—such as email and text messages—over antiquated snail mail, which ACA addresses in its comments to the CFPB, including the Lavallee v. Med-1 Solutions LLC decision (see page 136.)

“The Bureau recognizes that ‘debt collectors and consumers may benefit from greater flexibility as to electronic disclosures.’ Yet, many in the accounts receivable management industry do not send electronic notices to consumers because they fear violating the FDCPA. This fear was recently borne out in Lavallee v. Med-1 Solutions, LLC, where the Seventh Circuit concluded that a debt collector’s secure email did not contain the § 1692g(a) disclosures because the debtor had to follow the hyperlinks in order to access the information,” the comments state.

The CFPB needs to set realistic regulations of these communications for businesses to follow. The bureau’s proposed electronic flowchart for electronic disclosures is overly complex and could be particularly burdensome to small businesses. It could also make it infeasible for many collectors to use electronic methods of communication, ACA previously reported.

While the CFPB reviews comments and finalizes the proposed rule, the precedent in the Lavallee 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.

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.

Read more on the ruling in Lavallee v. Med-1 Solutions, LLC.


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

How a Court Ruling on Email and the FDCPA Could Impact the CFPB’s Proposed Debt Collection Regulations

A Seventh Circuit Court of Appeals decision on emails, disclosure notices and compliance with the Fair Debt Collection Practices Act may impact the Consumer Financial Protection Bureau’s proposed rules for the 1977 law.

Following the Aug. 8 decision in Lavallee v. Med-1 Solutions LLC, ACA’s Corporate Counsel Kari Barber told American Banker reporter Kate Berry the court decision provides some clarity on how email communications may be used in compliance with the FDCPA.

“The Lavallee decision is not all bad news,” Barber said in the article. (A subscription may be required to view the article.) “It provided some clarification about how courts will interpret the FDCPA when the facts involve modern technology. Under these facts, the court concluded that the use of modern technology in this manner did not comply with the FDCPA. What the court didn’t do is rule out the use of text messages or email completely.”

In Lavallee v. Med-1 Solutions LLC, the Seventh Circuit Court of Appeals ruled that an email sent to a consumer containing a hyperlink to debt disclosures did not qualify as “communication” as the term is defined by the FDCPA, ACA previously reported.

ACA supported member company Med-1 Solutions LLC in the case 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.

Berry also reports in the American Banker article that there could be “gaps between the decision and what the CFPB proposal would allow” while some sources said the ruling signifies the law won’t be applied to the modern era of technologies.

In its current state, the proposed rule, with more than 12,000 comments submitted by the Sept. 18 deadline, includes:

  • Certain disclosures, such as an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt, including by disputing the debt.
  • Methods by which debt collectors may lawfully use newer communication technologies, such as voicemails, emails and text messages.
  • Methods by which collectors may provide required disclosures electronically, for example, by email or text message.
  • Call frequency limits of no more than seven attempts by telephone per week; prohibiting call attempts within 7 days of a telephone conversation.
  • Out-of-statute debt collection, by prohibiting suits and threats of suit on time-barred debts and requiring communication with the consumer before credit reporting.

The proposed rule addresses several key issues ACA has long sought clarity on, including safe harbor procedures for the use of voicemail messages and the ability to use modern forms of communication, such as text messaging and email. The proposed rule also provides more clarity on the requirements for a validation notice and includes a model form.

Consumers increasingly prefer modern electronic communications—such as email and text messages—over antiquated snail mail, which ACA addresses in its comments to the CFPB, including the Lavallee v. Med-1 Solutions LLC decision (see page 136.)

“The Bureau recognizes that ‘debt collectors and consumers may benefit from greater flexibility as to electronic disclosures.’ Yet, many in the accounts receivable management industry do not send electronic notices to consumers because they fear violating the FDCPA. This fear was recently borne out in Lavallee v. Med-1 Solutions, LLC, where the Seventh Circuit concluded that a debt collector’s secure email did not contain the § 1692g(a) disclosures because the debtor had to follow the hyperlinks in order to access the information,” the comments state.

The CFPB needs to set realistic regulations of these communications for businesses to follow. The bureau’s proposed electronic flowchart for electronic disclosures is overly complex and could be particularly burdensome to small businesses. It could also make it infeasible for many collectors to use electronic methods of communication, ACA previously reported.

While the CFPB reviews comments and finalizes the proposed rule, the precedent in the Lavallee 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.

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.

Read more on the ruling in Lavallee v. Med-1 Solutions, LLC.


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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