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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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The United States District Court for the Southern District of New York recently held that a pre-recorded message left on a consumer’s telephone answering machine by a debt collector was a “communication” under the federal Fair Debt Collection practices Act. Foti v. NCO Fin. Sys., Inc., No. 04-CV-707 (KMK), 2006 WL 779774, *9 (S.D.N.Y. Mar. 25, 2006). The message at issue stated: “Good day, we are calling from [name of debt collector] regarding a personal business matter that requires your immediate attention. Please call back [telephone number], once again please call back, toll-free, [telephone number], this is not a solicitation.” The plaintiffs, in a class action complaint, alleged, among other things, that the message resulted in violations of several provisions of the FDCPA, including Sections 1692g (regarding the 30-day validation of debt notice), 1692e(10) (prohibiting false and deceptive practices) and 1692e(11) (regarding the so-called mini-Miranda ). The court granted the defendant’s motions to dismiss on some counts but not others.

The court rejected the defendant’s argument that the message was not a “communication” as defined by the FDCPA (i.e., the conveying of information regarding a debt directly or indirectly to any person through any medium) simply because it did not convey any information regarding the debt, but only requested a return call. The court noted that the defendant cited no cases in its papers in support of its argument. The court noted that at least one other court had rejected a similar argument regarding a voicemail message, based on the fact that the definition of communication applies to information conveyed directly or indirectly.” See Hosseinzadeh v. M.R.S. Assocs., Inc., 387 F.Supp.2d 1104 (C.D.Cal. 2005). The Foti court found that while the message did not set forth specific information about a particular debt, it clearly (i) provided some information and (ii) related to the collection of a debt insofar as it was intended as the first step in a process designed to communicate with the debtor about the debt. 2006 WL 779774, *6.

Regarding the plaintiff’s specific allegations with respect to the plaintiff’s specific allegations with respect to the pre-recorded message, the court granted the defendant’s motion to dismiss the plaintiff’s claims that the pre-recorded message (i) overshadowed the 30-day validation period and (ii) violated Section 1692e(10) of the FDCPA (regarding false and deceptive practices). The court found that there was no suggestion in the message that the 30-day validation period should be ignored or that the debtor had to make an immediate payment. Additionally there was no suggestion that the debtor’s failure to cooperate immediately would hurt the chances for resolution of the debt. The court concluded that the phrase “immediate attention” was not enough to support either the overshadowing or the false and deceptive practices claim. Id . at *12-14.

However, the court denied the defendant’s motion to dismiss the plaintiff’s claim with respect to Section 1692e(11) (regarding the so-called “mini-Miranda” requirements), finding that the mere identification of the collection agency by name (when that name did not reveal the nature of the agency’s business) in a subsequent communication was not enough to allow a “least sophisticated consumer” to determine that the pre-recorded message was in fact from a debt collector. Id. at *17-18. The court also was unreceptive to the argument that compliance with Section 1692e(11) could be incompatible with the requirements of Section 1692c(b), which prohibits debt collectors from communicating with third parties who might hear the contents of an answering machine message. The court noted that “just because a debt collector is permitted . . . to attempt to collect [a] debt does not entitle the collector to use any means, even if those means are the most economical or efficient.” Id. at *9 (citing Clomon v. Jackson , 988 F. 2d 1314, 1321 (2nd Cir.1993)).

Debt collectors should review the contents of their messages in light of these decisions.

Mike Tomkies and Margaret Stolar


The United States Court of Appeals for the Fourth Circuit recently held that trustees, including attorneys, acting in connection with a foreclosure can be “debt collectors” under the federal Fair Debt Collection Practices Act. Wilson v. Draper & Goldberg, P.L.L.C ., No. 05-1392, 2006 WL 861429, *2 (4th Cir. April 5, 2006).The plaintiff alleged violations of the FDCPA in connection with communications from defendants, a law firm and one of its lawyers, who were acting as substitute trustees foreclosing on a deed of trust. The district court granted summary judgment to the defendants ruling that such trustees were not “debt collectors” under the FDCPA and that actions taken by them in foreclosing pursuant to a deed of trust were not subject to challenge under the FDCPA. The Fourth Circuit reversed on appeal.

The court rejected the defendants’ argument that they were not acting in connection with a “debt” as defined by the FDCPA. The court found that the mortgage payment owed, as well as fees, penalties and interest due, all were “debts” under the FDCPA and, that, contrary to the defendants’ argument, such amounts remained “debts,” even after foreclosure proceedings began. The court noted that if the defendants’ argument was accepted, it would created an “enormous loophole” in the FDCPA by removing from its coverage any debt that happened to be secured by an interest in real property and for which foreclosure proceedings were used for collection.

The court also rejected the defendants’ argument that, even if they were collecting a “debt,” they were not “debt collectors” based on the Section 1692a(6)(F)(i)’s exception for persons collecting “incidental to a bona fide fiduciary obligation.” The court concluded that for the exception to apply, the trustee’s actions to foreclose must be “incidental” to its fiduciary obligation. Because the defendants’ actions were not incidental, but rather “central” to its fiduciary obligation, the exemption did not apply. The fact that the defendants were attorneys, the court concluded, did not change this result.

Finally, the court rejected the defendants’ argument that they could be liable only for violations of Section 1692a(6), which was not one of the allegations. The court noted that this argument was based on the fact that the definition of “debt collector” states that “[f]or the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce . . . in any business the principal purpose of which is the enforcement of security interests.” See 15 U.S.C. § 1692a(6). The court found that the purpose of this provision was not to create an exception to the definition of “debt collector” for those who only enforce security interests, but rather to include them for purposes of Section 1692f(6). Those who enforce security interests, but who also fall under the general definition of debt collector, it found, are not excluded.

The court noted that its decision was not intended to make the FDCPA applicable to every law firm engaging in foreclosure proceedings, but that lawyers who “regularly engage” in consumer debt collection activity should conform to the FDCPA even if their actions are done in the context of a foreclosure

Mike Tomkies and Margaret Stolar


On April 5, 2006, the Federal Communications Commission released a public notice seeking comment on a petition filed by ACA International regarding the applicability of the Telephone Consumer Protection Act (“TCPA”) rules to calls made via autodialers. FCC Public Notice, CG Docket No. 02-278 (April 5, 2006). ACA specifically asked the FCC to confirm that 47 C.F.R.§ 64.1200(a)(1)(iii) does not apply to creditors and collectors making collection calls. Section 64.1200(a)(1)(iii) generally prohibits the initiation of telephone calls using an automatic telephone dialing system or an artificial prerecorded voice to any telephone number assigned to a cellular telephone service.

In its petition, ACA claims that autodialed calls are the most efficient way to contact customers and are used by creditors not for telemarketing purposes, but to recover payments for obligations owed to creditors. Thus, the calls do not involve advertising or soliciting the sale of products or services, but instead, are placed to complete a transaction in which a customer has received a product or service. ACA also claims that customers may use wireless phones as their primary or preferred method of contact and wireless telephone numbers are typically provided as a part of a credit application for purposes of receiving calls. ACA argues that Congress did not intend the TCPA’s autodialer restriction to cover calls by or on behalf of creditors when attempting to recover payments. ACA maintains that without clarification that a creditor’s calls are not subject to the above restriction, the credit and collection industry will suffer severe economic harm based on the inability to make such calls.

The FCC has indicated that interested parties may file comments on the ACA’s petition on or before the 15th day after publication of the FCC’s public notice in the federal register. Reply comments may be filed on or before the 25th day after publication of the public notice in the federal register.

Mike Tomkies and Chuck Gall