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Volume XII, Number 335

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The Third Time Is the Charm: The Eleventh Circuit Allows Creditor's Use of Commercial Mail Vendor

On 8 September 2022, sitting en banc, the Eleventh Circuit held that a debt collector’s communication of a customer’s information to the debt collector’s private, third-party commercial mail vendor was not actionable under the Fair Debt Collection Practices Act (FDCPA). In issuing the most recent iteration of Hunstein v. Preferred Collection and Management Services, Inc.,the Eleventh Circuit reversed the panel decision.The Eleventh Circuit examined, in particular, whether a bare procedural violation of the FDCPA on its own sufficed to establish a concrete injury for Article III standing purposes.The Eleventh Circuit answered “no.”This is good news for loan services and collection agencies who seek to use third-party mail vendors to formulate, print, and mail collection letters, though institutions should still review, and update as needed, their mailing procedures to minimize and prevent potential disclosures. 

In Hunstein, the plaintiff incurred a debt stemming from his minor son’s medical treatment.The hospital transferred the debt to the defendant, a collection agency.The defendant, in turn, hired a commercial mail vendor to prepare and mail out a collection letter on the defendant’s behalf, using the defendant’s prewritten form letter.After receiving the letter, the plaintiff filed suit alleging that the defendant’s disclosure of his information to the defendant’s mail vendor violated the FDCPA’s prohibition on communicating “in connection with the collection of any debt, with any person other than the consumer.”The district court dismissed the action.On appeal, an Eleventh Circuit panel reversed.10 Shortly afterwards, the Supreme Court issued its decision TransUnion LLC v. Ramirez,11 examining the basis for establishing Article III standing under another federal statute.12 In light of TransUnion, the Eleventh Circuit panel vacated its opinion and issued another one, still finding that the defendant’s communication to its mail vendor stated a FDCPA claim.13 The Eleventh Circuit then voted to revisit the matter en banc.14 

In reversing the panel decision, the Eleventh Circuit concluded that the plaintiff lacked Article III standing to proceed on the basis alleged.15 In reaching this conclusion, the court found that the plaintiff had failed to plead that he had suffered a tangible, “real harm.”16 The court held that the subject communication did not constitute an allegation of a concrete harm.17 In particular, the Eleventh Circuit held that the alleged intangible-reputational injury failed to give rise to an Article III injury because the defendant’s communication to the mail vendor was not “public.”18 Stressing a distinction between public and private communications, the Eleventh Circuit reasoned “publicity” requires more than “any communication” but rather requires dissemination of the communication to “the public at large.”19 Further, the “effect of a disclosure is what matters—not the number of people to whom it is made.”20 In other words, “[t]ransmitting information” to a “single intermediary” who contacts a debtor through a private letter “without sharing it more broadly” is “simply not enough” to give rise to Article III standing under the FDCPA.21 In rendering its decision, the Eleventh Circuit held that the plaintiff was “simply no worse off because [defendant] delegated the task of data into a form letter to a mail vendor” and reiterated TransUnion’s holding: “no concrete harm, no standing.”22 

Key Takeaway

Hunstein III is notable for all debt-collection businesses that delegate customer-related mailing tasks to vendors. The Eleventh Circuit ruling provides support to debt collectors for the use of third-party mail vendors to formulate, print, and mail collection letters. Nonetheless, a business should continue to be mindful of its operations in light of this and under governing FDCPA law. 


FOOTNOTES

Hunstein v. Preferred Collection & Mgmt. Servs., Inc., No. 19-14434, 2022 WL 4102824 (11th Cir. Sept. 8, 2022) [hereinafter Hunstein III].

See Hunstein v. Preferred Collection & Mgmt. Servs., Inc., 994 F.3d 1341 (11th Cir. Apr. 21, 2021) [hereinafter Hunstein I]; Hunstein v. Preferred Collection & Mgmt. Servs., Inc., 17 F.4th 1016 (11th Cir. Oct. 28, 2021) [hereinafter Hunstein II].

Hunstein III, 2022 WL 4102824, at *9.

Id.

Id. at *1.

Id.

Id.

Id. at *2 (quoting 15 U.S.C. § 1692c(b)). Two additional claims were brought by the plaintiff, but were not subject to appeal. 

Hunstein v. Preferred Collection & Mgmt. Servs., Inc., No. 19-CV-983-T-60SPF, 2019WL5578878, at *3 (M.D. Fla. Oct. 29, 2019).

10 Hunstein I, 994 F.3d at 1352.

11 TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 210 L. Ed. 2d 568 (2021) (examining basis for establishing Article III standing for alleged violation of the Fair Credit Reporting Act).

12 Id. at 2200, 2203–07.

13 Hunstein II, 17 F.4th at 1038.

14 Hunstein v. Preferred Collection & Mgmt. Servs., Inc., 17 F.4th 1103, 1104 (11th Cir. Nov. 17 2021). 

15 Hunstein III, 2022 WL 4102824, at *10.

16 Id. at *1.

17 Id. at *9.

18 Id. at *1, *6-10.

19 Id. at *7 (emphasis in original).

20 Id.  (emphasis in original).

21 Id. at *8.

22 Id. at *10 (quoting TransUnion, 141 S. Ct. at 2214).

Copyright 2022 K & L GatesNational Law Review, Volume XII, Number 271
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About this Author

Andrew Glass, KL Gates Law Firm, Financial Litigation Attorney
Partner

Mr. Glass is a partner resident in K&L Gates’ Boston office, and a member of the firm's Consumer Financial Services Litigation and Class Action Litigation Defense groups, with extensive experience in complex commercial litigation. Mr. Glass's practice focuses on the defense of federal and state class action litigation brought against consumer financial services, mortgage lending, and consumer credit institutions. These class actions concern challenges under federal statutes, including the Fair Housing Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Real...

617-261-3107
Gregory Blace, KL Gates Law Firm, Class Action Litigation Attorney
Partner

Mr. Blase is a partner in the Boston office of K&L Gates where he is a member of the firm's Class Action Litigation Defense group. Mr. Blase has experience in complex commercial litigation, and has represented mortgage lenders, servicers and other financial institutions in class action and individual suits under the Telephone Consumer Protection Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Fair Housing Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, and various state unfair and deceptive practices...

617-951-9059
David Fialkow, KL Gates Law Firm, Financial Services and Litigation Attorney
Partner

David Fialkow is a partner in the firm’s Boston office. He focuses his practice in commercial litigation, consumer finance litigation, class actions, and appellate advocacy.

Mr. Fialkow represents consumer financial services providers in litigation, class actions, arbitrations, and administrative proceedings involving state and federal laws governing lending, mortgage origination, loan servicing, auto loans, debt collection, credit reporting, unfair and deceptive practices, and other consumer financial laws. He also regularly handles state and...

617-261-3126
Sean Higgins, KL Gates Law Firm, Financial Litigation Attorney
Partner

Sean Higgins is a partner in the firm’s Boston office focusing his practice on consumer financial services litigation where he regularly represents financial institutions, mortgage lenders, and mortgage loan servicers. In addition, Mr. Higgins handles complex commercial litigation, class actions, and appeals in both state and federal court. He also has experience with bankruptcy matters representing creditors in bankruptcy court and with bankruptcy appeals before the U.S. District Court and U.S. Court of Appeals.

617-261-3128
Staff Lawyer

Keith McCarthy is a staff lawyer at the firm’s Boston office and is a member of the Financial Institutions and Services Litigation practice group. He focuses his practice on bankruptcy, real estate litigation, as well as business and consumer financial services litigation.

617.951.9128
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