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If you've ever wondered how seriously Congress and the courts take debt collection regulation, this case, involving a combination of a misaligned clear plastic window on an envelope and poorly formatted letter, that merely let a QR Code (barcode) and a bare account number show, is quite telling.
Convergent Outsourcing is a debt collector. The company sent a letter to Courtney Douglass which, due to the misaligned window, also displayed her account number and the barcode (which could be scanned to show how much she owed). But nowhere on the envelope did it say what the letter, or the account number, pertained to.
Still, the Third Circuit held that the company could face a Fair Debt Collection Practices Act (FDCPA) lawsuit over the "invasion of privacy."
15 U.S.C. § 1692f prohibits certain "Unfair practices" by debt collectors. Section 1692f(8) specifically prohibits:
Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
Benign Language Exception?
Despite the apparently clear language of the statute, the district court read an exception into the statute for benign language, buying Convergence's argument that a strict reading of the statute would lead to absurd results. (Convergence offered the example of affixing postage, which would, indeed, display language or a symbol on the envelope in violation of the statute.)
The benign language exception is based on the purposes of the statute -- to prevent abusive conduct by debt collectors -- and exempts language that does not mention the purpose of debt collection and is not intended to humiliate or threaten the recipient.
The Third Circuit didn't totally buy in to the district court's holding, though it didn't rule out a benign language exception altogether. After discussing two other circuits' treatment of the issue (both of which held that such an exception does exist), the panel punted, finding in favor of Douglass for an entirely different reason: privacy.
"Though several courts, including the Courts of Appeals for the Fifth and Eighth Circuits, have interpreted § 1692f(8) to permit an exception for certain benign or innocuous markings, they did so in the context of envelope markings that did not have the potential to cause invasions of privacy," Judge Anthony Joseph Scirica noted.
Invasion of Privacy
Again, the court didn't rule out a benign language exception. Instead, the panel held that regardless of whether there was such an exception, the disclosure of an account number wasn't benign.
"Here, Convergent's disclosure implicates a core concern animating the FDCPA -- the invasion of privacy," Judge Scirica wrote. "The disclosure of Douglass's account number raises these privacy concerns. The account number is a core piece of information pertaining to Douglass's status as a debtor and Convergent's debt collection effort. Disclosed to the public, it could be used to expose her financial predicament. Because Convergent's disclosure implicates core privacy concerns, it cannot be deemed benign.
"Convergent insists that Douglass's account number is a meaningless string of numbers and letters, and its disclosure has not harmed and could not possibly harm Douglass," Scirica continued. "But the account number is not meaningless -- it is a piece of information capable of identifying Douglass as a debtor. And its disclosure has the potential to cause harm to a consumer that the FDCPA was enacted to address."
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