The U.S. Court of Appeals for the Ninth Circuit recently held that there is no federal Fair Debt Collection Practices Act (FDCPA) violation if a subsequent communication is sufficient to disclose to the least sophisticated debtor that the communication was from a debt collector, even without expressly stating “this communication is from a debt collector.”

In reaching the conclusion, the Court gave weight to the extensive communication between the debtor and debt collector, prior to the debt collector’s employee leaving a voicemail in which the employee stated he was from the debt collector.

A link to the opinion is available at:  Link to Opinion.

In order to qualify for a business credit card, a debtor filled out the application using his spouse’s former business.  The debtor used the credit card for personal items and subsequently defaulted on the debt.  The creditor referred the debt to a debt collector.

The debt collector first contacted the debtor on the telephone.  The debt collector required its employees to identify both the nature of the call and to identify the company as a debt collector.  The debtor did not allege that the debt collector employee failed to communicate this information during its initial contact with the debtor.

In two telephone calls, the debtor and his wife each referred the debt collector employee to a debt settlement firm.  Over the next few weeks, the debt collector employee communicated exclusively with the debt settlement firm.  The debt collector made multiple attempts to reach the debtor’s representative during this time.

The case was later assigned to a different debt collector employee.  This newly-assigned employee had all remaining relevant contacts with the debtor.

After failed attempts to reach the debt settlement firm, the debt collector employee emailed the debtor to thank him for a telephone inquiry to settle the debt.  The debtor wrote back and offered to settle the credit card debt for a percentage of the total due.  The debt collector employee wrote that he would provide the information to the creditor.

The next day, the debt collector employee and the debtor again exchanged emails concerning more details as to settlement.

A few days later, the debtor emailed the debt collector employee about the status of the settlement offer.  The debt collector employee wrote back and explained that there was no update.

A week later, the debt collector employee called the debtor and left the following message: “Hello this is a call for [the debtor] from [the employee] at the [law firm].  Please call sir, it is important, my number is [law firm number].  Thank you.”  In the voicemail message, the employee did not state that the company was a debt collector.

After the voicemail, the debtor and the debt collector employee exchanged 11 additional emails in the span of eight days.  The debt collector employee informed the debtor that his offer had been declined and that the debt collector would move forward with legal action.  The parties still had not reached an agreement almost three months after the initial contact.

The debtor filed suit alleging that the voicemail did not disclose the caller was a debt collector, in supposed violation of the FDCPA.  The lower court held a bench trial and ruled in favor of the debtor.   The debt collector appealed the ruling.

On appeal, the Ninth Circuit noted that 15 U.S.C. § 1692(e)(11) requires a debt collector to disclose in the initial communication that the debt collector is attempting to collect a debt and any information obtained will be used for that purpose.  The provision also requires that the debt collector must “disclose in subsequent communications that the communication is from a debt collector,” with the exception of formal pleadings made in a legal action.

The Court also clarified that any error in a debt collector’s communications must be material in order to be actionable under § 1692e of the FDCPA.  The Court recited that mere technical errors that deceive no one do not give rise to liability under the FDCPA.

As you may recall, the “least sophisticated debtor” standard for FDCPA claims assumes a basic level of understanding, but does not include bizarre or idiosyncratic interpretations.  Accordingly, the Court examined whether the voicemail at issue would be sufficient to disclose to the least sophisticated debtor that the call was on behalf of a debt collector.

The Court noted that prior to the relevant voicemail, the debtor and the debt collector employee had been involved in potential settlement discussions for about a two-week period.  The debtor had made a telephone inquiry to the debt collector employee about settlement.  The debt collector employee and the debtor exchanged eight emails in this time period.

Moreover, the Court gave weight to the fact that, at the time the debt collector employee left the voicemail, the debtor had a pending settlement offer for a percentage of the total due.  The debtor even asked the debt collector employee for a status report as to the settlement offer.   Most importantly for the Court, in the voicemail the debt collector employee identified himself by his first name and stated that he was from the debt collector.

The Ninth Circuit determined that the lengthy communication history and the fact that the debt collector employee identified himself by his first name and stated that he was from the debt collector was sufficient to disclose to the least sophisticated debtor that the communication at issue was from a “debt collector” under 15 U.S.C.§ 1692(e)(11).

The Court noted that any other interpretation of the voicemail at issue would be bizarre or idiosyncratic.  In this context, the Court found that the voicemail was not “false, deceptive, or misleading” under 15 U.S.C.§ 1692(e).

The Court held that § 1692(e)(11) does not require subsequent communications from a debt collector to use any specific language so long as it is sufficient to disclose that the communication is from a debt collector.

Accordingly, the Ninth Circuit reversed the trial court’s ruling.