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Third Circuit: Debt Collector's "True Name" FDCPA Violation Did Not Violate Other FDCPA Provisions

The U.S. Court of Appeals for the Third Circuit has ruled that although the plaintiffs had plausibly alleged facts stating a claim that a debt collector had violated the Fair Debt Collection Practices Act (FDCPA) by not using its "true name" in prerecorded phone messages, the plaintiffs failed to state claims for violations of the FDCPA provisions that prohibit collectors from placing phone calls without "meaningful disclosure of the caller's identity" or using false or deceptive means to collect a debt or obtain information concerning a consumer. The decision illustrates the value of careful analysis of FDCPA claims in defeating attempts by plaintiffs' attorneys to "piggy back" such claims.

In Levins v. Healthcare Revenue Recovery Group LLC, the plaintiffs, New Jersey residents, purportedly incurred a debt that was transferred to Healthcare Revenue Recovery Group (HRRG) for collection. HRRG had registered the name "ARS Account Resolution Services" in New Jersey. Pre-recorded messages left by HRRG on the plaintiffs' phone allegedly contained statements that, "ARS is calling," "ARS is a debt collector," that the call was an attempt to collect a debt, and "any information obtained" would be used for collection purposes, as well as a phone number and website address for ARS.

The plaintiffs alleged that there were numerous businesses that use the name "ARS," and that the name, by reputation, was associated with another debt collector of which the plaintiffs were aware due to an earlier bankruptcy. They also alleged that a Google search of "ARS" along with "debt" or "collector" produced links to many debt collectors other than HRRG, and that a computer user visiting the ARS website mentioned in the phone messages would still not be able to identify ARS. Instead, the user would encounter a browser privacy warning that blocked access to the website and, if the user ignored the warning and accessed the site, the website would begin tracking and storing information about the user.

The plaintiffs alleged that HRRG violated FDCPA Sections 1692e(14), 1692d(6), and 1692e(10) because, respectively, it did not use its true name in the messages, the messages did not meaningfully disclose the caller’s identity, and HRRG used deceptive collection practices by forcing consumers to call HRRG or navigate its website. The district court dismissed all of the plaintiffs' claims for failure to state a claim.

The Third Circuit reversed the district court's dismissal of the plaintiffs' Section 1692e(14) claim. It concluded that the plaintiffs had stated a "plausible claim" that HRRG had not used its true name because, "as alleged in the complaint, 'ARS' is neither HRRG's full business name, the name under which it usually transacts business, nor a commonly used acronym of its registered name" and no information before the court indicated otherwise. The court stated that while the plaintiffs did not deny that "ARS" was a name HRRG could use, they claimed that "the acronym is commonly associated with other debt collection companies…and that it could refer to hundreds of other businesses registered to do business in New Jersey under names that include 'ARS.'" The court noted that HRRG would have an opportunity later "to expand the record."

The Third Circuit affirmed the district court's dismissal of the plaintiffs' Section 1692d(6) "meaningful disclosure" claim, observing that their contention that because other debt collectors were associated with the name "ARS" it was not clear from the messages that "ARS" uniquely referred to HRRG had "less force" in the context of Section 1692d(6) than in the context of Section 1692e(14)'s "true name" requirement. The court concluded that a violation of the "true name" requirement was not necessarily a violation of Section 1692d(6). As support, the court cited case law that, in its view, has interpreted "meaningful disclosure of the caller's identity" to include information that discloses the call is from a debt collector. It found that the messages left for the plaintiffs would not have misled the least-sophisticated consumer about the messages' purpose. The court also observed that, "[I]f we were to say that use of anything less than a debt collector's true name was a violation of Section 1692d(6), we would make Section 1692d(6) superfluous in light of Section 1692e(14)."

Finally, the Third Circuit affirmed the district court's dismissal of the plaintiffs' claim that the messages violated the general FDCPA prohibition on a debt collector’s use of false or deceptive means to collect a debt or obtain information concerning a consumer. Observing that "the plain language" of each message revealed that the caller was a debt collector, the call was part of an attempt to collect a debt, and that any information obtained would be used in that attempt, the court concluded that "even the least-sophisticated debtor is fairly on notice that calling the phone number provided in the message or visiting the website might result in the debt collector obtaining information that it could use in trying to collect the debt."

Copyright © by Ballard Spahr LLP

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Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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Culhane, Ballard, Partner
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John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing, advertising and marketing, application processing, privacy, disclosure, pricing, substantive terms, servicing, collection, portfolio sales, and securitization. His regulatory practice includes preparing clients for banking agency and CFPB compliance examinations and assisting in the defense of attorney general investigations and banking agency and CFPB enforcement actions. His clients have ranged from a multibillion-dollar bank holding company, to one of the nation's largest residential mortgage lenders, to a leading provider of financial institution forms and documentation. Mr. Culhane is a member of the firm's Fair Lending Task Force.

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Stefanie Jackman, Ballard Spahr law firm, Partner, financial services institutions lawyer
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Stefanie H. Jackman devotes her practice to assisting financial services institutions facing government investigations and enforcement actions, as well as defending them in individual and class action lawsuits. Ms. Jackman regularly handles matters arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA. Ms. Jackman represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party...

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