Debtors are using the federal Telephone Consumer Protection Act (“TCPA”), the federal Fair Debt Collection Practices Act (“FDCPA”) and other statutes to challenge prerecorded or mechanical collection calls.

A. TCPA: Watson v. NCO Group, Inc.

The United States District Court for the Eastern District of Pennsylvania has held that a caller could be held liable under the federal TCPA for erroneously making prerecorded or mechanical collection calls to a person who owed no debt. Watson v. NCO Group, Inc. , No. CIVA 2:06CV1502, 2006 WL 3059933 (E.D. Pa. Nov. 28, 2006).

In Watson, the plaintiff alleged that he received more than 200 prerecorded or mechanical telephone calls in a five month period from a debt service to which he owed no debt. According to the plaintiff, he spent more than 53 hours speaking with approximately 29 agents in an attempt to correct the problem. When his attempts failed, the plaintiff sued the caller and others on the theory that they violated, among other things, the TCPA’s prohibition against initiating telephone calls to residential telephone lines using an artificial or prerecorded voice to deliver a message without the prior consent of the called party. See 47 U.S.C. § 27(b)(1)(B).

The defendants filed a motion to dismiss, arguing that the debt collection calls under consideration were exempt from the TCPA. The district court, however, disagreed. According to the district court, the calls did not fall under the TCPA’s established business relationship exemption because an erroneously called non-debtor does not have such an established business relationship with a caller. The court also found that the calls did not fall under the TCPA’s exemption for commercial calls that do not adversely affect privacy rights and do not transmit an unsolicited advertisement because, according to the court, a non-debtor’s rights are in fact violated when the person is subject to repeated annoying and abusive debt collection calls that the person is powerless to stop.For these reasons, the district court denied the defendants’ motion to dismiss the plaintiff’s TCPA claim.

B. FDCPA: Foti v. NCO Fin. Sys., Inc.

The United States District Court for the Southern District of New York has held that a pre-recorded message left on a consumer’s telephone answering machine by a debt collector was a “communication” under the federal FDCPA. Foti v. NCO Fin. Sys., Inc., No. 04-CV-707 (KMK), 2006 WL 779774 (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 court, in ruling on the defendant’s motion to dismiss, found that the defendant’s message met the broad definition of “communication” (i.e. , the conveying of information regarding a debt directly or indirectly to any person through any medium). The 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.

Regarding 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). However, the court denied the defendant’s motion to dismiss the plaintiff’s claim with respect to the Section 1692e(11) (regarding the so-called mini-Miranda ), finding that a least sophisticated consumer would not have known that the pre-recorded message was from a debt collector.

C. Other Cases

Other decided cases illustrate the significant risks that debt collectors face under the TCPA and other federal and state debt collection statutes when attempting to leave collection messages for debtors. See, e.g., Knoll v. Intellirisk Corp., No. 06-1211 (PAM/JSM), 2006 WL 2974190 (D. Minn. Oct. 16, 2006) (indicating that a debt collector violates the federal FDCPA’s prohibition against placement of telephone calls without meaningful disclosure of the caller’s identity by leaving an answering machine message under an alias and failing to disclose that the call is related to debt collection); Leyse v. Corporate Collection Servs., Inc., No. 03 Civ. 8491 (DAB), 2006 WL 2708451 (S.D.N.Y. Sept. 18, 2006) (holding that a debt collector violated the federal FDCPA by leaving prerecorded messages that did not provide a meaningful disclosure of the caller’s identity or the FDCPA’s so called “mini-Miranda ” notices); Belin v. Litton Loan Servicing, LP., No. 8:06-cv-760-T-24 EAJ, 2006 WL 1992410 (M.D. Fla. Jul. 14, 2006) (holding that messages left on answering machines were “communications” triggering the federal FDCPA so-called “mini-Miranda ” notice).

Based upon recent filings, it appears that creditors and collectors can expect to see more cases brought on these and other claims. See, e.g., Zuchowski v. Truelogic Fin. Corp., No. C0607720 (N.D. Cal. filed Dec. 18, 2006); Hylkema v. OSI Collection Servs., Inc., No. CV06-1354JLR (W.D. Wash. filed Sept. 20, 2006); Donfray v. OSI Collection Servs., Inc., No. C06-05163PTV (N.D. Cal. filed Aug. 23, 2006) (settled without decisions from the respective courts).

  • Charles Gall and Mike Tomkies