[authors: Alan S. Kaplinsky, John L. Culhane, Jr., Mark J. Furletti, Jeremy T. Rosenblum, Christopher J. Willis]
The U.S. Court of Appeals for the Fourth Circuit recently affirmed, in an unpublished opinion, a district court's entry of summary judgment in favor of a debt collector that was sued by the debtor’s brother-in-law over the collector’s repeated prerecorded calls to him. The plaintiff claimed that the calls, which the collector made in an effort to locate the debtor, violated the Fair Debt Collection Practices Act (FDCPA).
The FDCPA provides that when communicating with a third party to obtain location information, a debt collector may not do so more than once without a request by that party, unless the debt collector "reasonably believes" that the initial response was erroneous or incomplete, and that the third party has correct or complete location information. In Worsham v. Account Receivable Management, Inc., the Fourth Circuit found, even assuming the debt collector's calls constituted “communications” (an issue the Fourth Circuit did not decide), there was no violation of the FDCPA.
The Fourth Circuit held there was no material issue of fact concerning the reasonableness of the debt collector's belief that the plaintiff (1) had given an incomplete response by pressing a number to indicate he was not the debtor and then hanging up the phone before speaking with the collector's live representative, and (2) would know the debtor's location based on his phone number appearing as a possible contact. Accordingly, the Fourth Circuit found that the debt collector was entitled to summary judgment on the plaintiff's claim that the collector had violated the FDCPA by calling him more than once to obtain location information.
The plaintiff had also alleged that the debt collector's calls violated the FDCPA's prohibitions on third-party communications and placing calls without meaningful disclosure of the caller's identity. The Fourth Circuit found that summary judgment was properly granted on these claims because both FDCPA prohibitions include an exception for calls seeking location information permitted by the FDCPA.
The plaintiff did not appeal the district court's summary judgment ruling on his claim that the calls violated the Telephone Consumer Protection Act. The Federal Trade Commission has ruled that the TCPA's prohibition on prerecorded calls to residential phone lines excludes debt collection calls and, based on the FCC's ruling, the district court had granted the debt collector's motion for summary judgment on the TCPA claim. But the plaintiff did appeal the ruling on his claim that the calls violated the Maryland Telephone Consumer Protection Act. The Fourth Circuit found that summary judgment was properly granted on this claim because the Maryland statute did not create a cause of action based on the TCPA violation alleged by the plaintiff.
Lawyers in Ballard Spahr's Consumer Financial Services Group regularly consult with their clients engaged in consumer debt collection on compliance with the FDCPA and state debt collection laws. The group also has vast experience in defending all manner of TCPA lawsuits, and has counseled a number of clients on establishing auto-dialing and monitoring protocols.
Last month, the Consumer Financial Protection Bureau issued its final rule defining larger participants of a market for consumer debt collection. The rule is effective January 2, 2013, and the CFPB is expected to begin examinations of qualifying entities then or soon thereafter. Our Consumer Financial Services Group has created a team of lawyers who have already conducted compliance reviews for debt collectors and debt buyers in anticipation of their first CFPB examinations.
For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, Practice Leader Jeremy T. Rosenblum at 215.864.8505 or rosenblum@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com, or Mark J. Furletti at 215.864.8138 or furlettim@ballardspahr.com.
