Counsel Beware: The Eleventh Circuit Expands the Liability of Creditor's Lawyers under the FDCPA

In a decision published on March 25, 2016, the Eleventh Circuit has joined three other Circuits in broadening the duties of a creditor’s counsel under the Fair Debt Collection Practices Act (“FDCPA”) when communicating with a debtor.  Lawyers who represent creditors in consumer collection matters have long been designated as “debt collectors” under the FDCPA since the statute was amended in 1986.  Under the FDCPA, lawyers who routinely pursue consumer collection matters are required to give the following notice to consumers upon making an “initial communication with a consumer.” See, 15 U.S.C. § 1692g:

  • A statement that if the consumer notifies the debt collector in writing within [a] thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector. (emphasis added).

The giving of what is sometimes called the “Thirty Day Notice” has long been the practice of consumer collection lawyers.  The new ruling by the Eleventh Circuit expands that requirement.

The case before the Court was Bishop v. Ross, Earle & Bonan, P.A. (Case Number 15-12585).  The facts were simple.  The Ross law firm sent a consumer collection demand letter. Since Bishop was represented by counsel, the demand letter was sent to her attorney rather than to the debtor/consumer directly.   Although the Thirty Day Notice was included in that initial correspondence, the words “in writing” were omitted.  Based upon the deficient notice, Bishop filed a class action under the FDCPA in the United States District Court for the Southern District of Florida.  The lower court dismissed the case with prejudice and Bishop appealed.  In a case of first impression, the Eleventh Circuit reversed.

There were three issues presented on appeal, the first of which is critically important to consumer collection lawyers.  The Ross law firm argued that since the initial communication was directed to Bishop’s lawyer, rather than the consumer directly, there could be no violation of the FDCPA.  In joining the Third, Fourth and Seventh Circuits, the Eleventh Circuit held that,

  • Section 1692g regulates the contents of a ‘notice of debt,’ as well as certain procedures for handling disputed debts. 15 U.S.C. § 1692g(a)-(b). Its protections are triggered when a debt collector makes an ‘initial communication with a consumer.’ Id. § 1692g(a). To confirm that § 1692g applies to attorney communications, we need look no further than this triggering phrase. The FDCPA defines the term ‘consumer’ as ‘any natural person obligated or allegedly obligated to pay any debt.’ Id. § 1692a(3). It defines ‘communication’ as ‘the conveying of information regarding a debt directly or indirectly to any person through any medium.’ Id. § 1692a(2) (emphasis added). It follows that § 1692g, which applies to the ‘initial communication with a consumer,’ can be triggered either by a direct communication or by an indirect communication.
  • We join the Third, Fourth, and Seventh Circuits in holding that a debt-collection notice sent to a consumer's attorney is just such an ‘indirect’ communication. See Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d Cir.  2011); Evory, 505 F.3d at 773; Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 232–33 (4th Cir.  2007).

This holding sets on its head the notion that a lawyer to lawyer communication may occur in a less formal setting.  Going forward, lawyers involved in consumer collection matters must take care to ensure that their internal policies and procedures are fully compliant with the FDCPA even when there is not direct contact with a consumer.

The second question presented to the Court was whether, by omitting the “in writing” requirement of the Thirty Day Notice, the Ross law firm lessened the consumer’s burden of requesting a validation of the debt, and by so doing waived the requirement. Notwithstanding that this approach actually enhanced the consumer’s ability to dispute a debt, the Court rejected this argument, holding that § 1692g speaks in absolute terms that a “debt collector ‘shall’ notify the consumer of her right to dispute the debt in writing.” The Court went on to point out that “[s]ection 1692k imposes civil liability on ‘any debt collector who fails to comply with any provision’ of the FDCPA.”  In declining to “judicially fashion a ‘waiver remedy,’”  the Court held that the plain language of the statute imposes civil liability for any violation of  §1692g.

The final question before the Court was whether the omission of the “in writing” requirement was “false, deceptive, or misleading” within the meaning of §1692g.  The Ross law firm argued that the sending of the defective demand letter to Bishop’s attorney was subject to the “competent lawyer” standard.  In other words,  the consumer’s lawyer should have reasonably known that the FDCPA required any dispute or request for a validation of a debt to be in writing.  Notwithstanding that the demand letter was sent to an attorney, the Court rejected the “competent lawyer” standard in favor of the “least sophisticated consumer” standard.  The Court held that since the omission of the words “in writing” created a false statement, there was “no basis in the FDCPA to treat false statements made to lawyers differently from false statements made to consumers themselves.”

In summary, the Bishop decision creates a dangerous canyon for lawyers to cross when dealing with other lawyers in consumer debt collection cases.  A creditor’s lawyer cannot assume a collegial relationship with opposing debtor’s counsel, nor deal with that lawyer on an informal basis.  Compliance with every facet of the FDCPA is mandated in each of a lawyer’s communications with counsel representing a consumer.  To do otherwise creates strict liability under the act.