A recent decision by a federal judge in Minnesota may offer a solution to the Hobson’s choice currently facing debt collectors whenever a call to a debtor is picked up by an answering machine or voicemail.

In Zortman v. J.C. Christensen & Associates, Inc., issued on May 2, 2012, the court held that a voicemail message containing the caller’s name and identifying the caller as a debt collector with “an important message” was not a “communication” under the Fair Debt Collection Practices Act.

The message, left on the plaintiff’s cellular phone, included the debt collector’s phone number but did not identify a consumer or a debt. It was heard by the plaintiff’s children to whom she had lent her phone. The plaintiff alleged the message violated the FDCPA’s prohibition on third‑party communications.

The FDCPA defines a “communication” as the “conveying of information regarding a debt directly or indirectly to any person through any medium.” According to the district court, because the voicemail message was not directed to the plaintiff by name and did not identify a debt, the message would not convey to someone listening to it that the plaintiff was being called in connection with a debt. The court said it was unwilling to find “indirect communications” based on “inferences or assumptions by an unintended listener” that the plaintiff was the intended recipient or that the call, because it was from a debt collector, was necessarily to collect a debt.

The court also found the message’s statement that the caller had an “important message” did not “convert [the debt collector’s] simple self-identification and telephone number into an indirect conveyance of information about a debt.” In the court’s view, the collector’s use of the word “important” conveyed no substantive information about the call’s purpose.

According to the court, it would be unreasonable to read the FDCPA to impose liability for communicating with a third party based on a voicemail message “that essentially reveals no more than a hang-up call.” More specifically, the court found that the information conveyed by the debt collector’s message was virtually the same information that would be revealed by either a cellular phone’s “missed call” log, caller ID, or an Internet search for the caller’s phone number.

The court concluded that prohibiting messages of that kind would effectively prevent debt collectors from using the telephone as a collection method, something the FDCPA expressly allows. It also concluded that such a prohibition would not “directly advance the interests Congress set out to protect in the FDCPA”.

In its opinion, the court discussed the Hobson’s choice currently facing debt collectors, whenever a call to a debtor is picked up by an answering machine or voicemail, as a result of the 2006 federal court decision from the Southern District of New York. The ruling in Foti v. NCO Financial Systems, Inc. effectively required a debt collector to either hang up or leave an awkward, elaborately scripted message. Debt collectors and debt buyers should consult counsel about possible changes to their message scripts in light of Zortman.

Ballard Spahr lawyers regularly consult with their clients engaged in consumer debt collection on compliance with the FDCPA and state debt collection laws. As summarized in a prior legal alert, the Consumer Financial Protection Bureau has issued a proposal to supervise certain debt collectors and debt buyers as “larger participants.” The CFPB will soon be examining debt collectors and debt buyers who qualify as “larger participants” or who act as service providers to entities supervised by the CFPB, such as payday and private student loan lenders. We are currently conducting compliance reviews for debt collectors and debt buyers in anticipation of their first CFPB examinations.

Ballard Spahr’s Consumer Financial Services Group produces the CFPB Monitor, a blog that focuses exclusively on important CFPB developments. To subscribe, use the link provided to the right. The group is nationally recognized for its guidance in structuring and documenting prepaid cards and other consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

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; Barbara S. Mishkin at 215.864.8528 or mishkinb@ballardspahr.com; or Mark J. Furletti at 215.864.8138 or furlettim@ballardspahr.com.


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