Debt Collectors and Answering Machines

by Jeff Sovern

My co-blogger, Deepak Gupta has previously blogged about the FTC's request for comments on debt collection in preparation for a workshop it plans to hold in October.  Today is the deadline for submitting comments,  though the Commission is willing to receive original research, surveys, and academic papers until September 7.  I submitted a comment earlier today (the number assigned my submission suggests only fifteen had been received to that point, though perhaps many last-minute statements have since been or will be filed).  The FTC will make the comments available on its website and in fact seven statements received in April and May have already been posted there.  The following excerpt from my comment deals with debt collectors who, when attempting to telephone a consumer, instead reach an answering machine: 

The FDCPA was enacted in 1977, when telephone answering machines were not yet common, and so the drafters of the statute understandably did not anticipate all the consequences of that technology.  In the intervening decades, answering machines and voice mail have, of course, become omnipresent.  Answering machines present a dilemma for debt collectors.  Debt collectors who repeatedly reach an answering machine and respond by hanging up without leaving a message risk violating § 806, 15 U.S.C. § 1692d, barring harassment, and particularly subsection (5) of that provision (“Causing a telephone to ring . . . repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.”) and subsection (6) (prohibiting “the placement of telephone calls without meaningful disclosure of the caller’s identity”).

Another option for a debt collector reaching an answer machine might be to leave a message.  But a collector leaving a message risks violating three sections of the FDCPA.  First, a collector leaving a message doesn’t know who will overhear it.  Consequently, the collector might fall afoul of § 805(b), 15 U.S.C. § 1692c(b), by communicating with third parties in connection with the collection of a debt.   Second, a collector leaving a message may have to comply with the validation provision of § 809, 15 U.S.C. § 1692g, and the so-called Miranda warning of § 1692e(11).  Collectors must comply with those provisions in the initial communication; whether a message would qualify as a “communication” depends on whether information has been conveyed “regarding a debt” under § 803(2), 15 U.S.C. §

The FTC Staff Commentary takes the position that if the collector does not refer to the debt or the caller’s status as affiliated with a debt collector, the call does not convey information regarding a debt.  § 803(2)-2.[1]  It thus represents an attempt to amputate one horn of the debt collector’s dilemma by permitting the collector to leave a limited message requesting a return call.  The problem is that recent case law seems to reject the FTC position.  Thus, in Foti v. NCO Financial Systems, Inc., 424 F. Supp.2d 643 (S.D.N.Y. 2006), the debt collector left a pre-recorded phone message at the debtor’s home, saying “Good day, we are calling from NCO Financial Systems regarding a personal business matter that requires your immediate attention. Please call back 1-866-701-1275 once again please call back, toll-free, 1-866-701-1275, this is not a solicitation.”  The message did not mention a debt, but only a “personal business matter.”  The court nevertheless found this to be a communication within the meaning of the FDCPA, stating “The FDCPA should be interpreted to cover communications that convey, directly or indirectly, any information relating to a debt, and not just when the debt collector discloses specific information about the particular debt being collected.”   

Similarly, in Hosseinzadeh v. M.R.S. Associates, Inc., 387 F. Supp.2d 1104 (C.D. Cal. 2006), the debt collector left several messages of which the following is typical: “Hello, this is Thomas Hunt calling. Please have an adult contact me regarding some rather important information. This is not a sales call, however, regulations prevent me from leaving more details. You will want to contact me at 1-877-647-5945 as soon as possible. This is a toll free number. Once again this is Thomas Hunt calling and my number is 1-877-647-5945. Thank you.”  The court found the messages to be communications even though, again, they did not explicitly mention the debt.  The court also concluded that the messages violated the requirement of § 806(6), 15 U.S.C. § 16926(6), that debt collectors provide meaningful disclosure of their identity.

Debt collectors who follow the FTC Staff Commentary, then, risk liability under Foti and Hosseinzadeh.  The FTC should encourage Congress to amend the FDCPA to clarify whether debt collectors can leave messages on telephone answering systems and if so, what can be said without incurring liability. Failing that, the FTC should revisit its Commentary to see if it needs updating.

[1] The Commentary refers to messages left with third parties but there does not appear to be a principled basis for distinguishing messages left on answering machines.

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Comments

[my name]

no wonder your country is in dire strates financially lol,lol,lol,lol, my my my your goverments lets companies dictate your national debt lol lol. my shut that crap off don't let collectors run the nation let your 3 major banks run the lending and so on the rest are crooks lol my my

[K Clark]

Information in reference to my situation are kind of blurred. Can a collector leave a message with the mini Miranda in it on ones voicemail?

[heureuse]

I am owner of a small debt collection firm - small business owner trying to make a living. My clients are all hard working local businesses who simply want to be paid for the work they do.
We spend many hours training, reviewing case law, and working to comply with a law that is like a moving target. It is virtually impossible to get any clear direction from any authority and there is a really a feeling of "damned if you do...damned if you don't"
Most of my day is spent explaining medical insurance benefits, setting up affordable payment plans and trying to find workable solutions. We have had people write us thank you notes, call our clients to tell them how professional we have been and call us at the end of a payment plan to "say goodbye". Then, there are the people who curse and swear at us or ignore the calls entirely, never dispute the debt even though we advise them of their right to do so, and want to sue us when the debt appears on their credit report.
Owing money is hard, and it is scary. I know, because I have been there myself.
Most of the time just picking up the phone will make the situation infinitely better. If you do not wish to receive phone calls, you have the right to write and request no future contact by phone.

It is disheartening to see so many people looking for some small technical "gotcha" violation to avoid having to pay a debt. The law was intended to stop the bad guys, not to be used to avoid paying a valid debt. To the woman who has gotten 5-6 phone calls for someone else, do you not realize that phone numbers nowadays are reassigned quickly and a simple phone call to the agency should get the number removed? How is an agency supposed to know that they are contacting the wrong person if you do not tell them?

Guys, the lawyers are getting rich on these cases, and small business owners are unable to keep providing you services. You may think that "screwing over" the debt collector (a threat made to me recently) helps commerce, but when your dentist, doctor, oil company, or other vendor has to raise prices to make up for all the bad debt they've written off, who loses then?

The writer who spoke with a

[Tim]

The company I am employed by was hit with a lawsuit recently for a rogue collector not leaving the foti message. this message was left several times the debtor was instructed by an attorney to keep recording the messages. each one ended up in a fine to be paid out by the company and employee. People think debt collectors are vultures. Don't you think if the matter was addressed either by the attorney or the debtor the foti messages would then begin? Granted the messages should start from the beggining but now its costing the company mulitple thousands of dollars and possible closure of the office due the amount of the fine. Was it necessary? Now good, professional collectors will possibly be without a job because of a rogue collector.

[bluefire]

Shirley -

It is VERY illegal to disclose all that information. Especially your social. I would sue.

Sorry about all the comments. I'm a bill collector and I would like to clear up any confusion. I ,unlike many others, dont break the law.

[bluefire]

Stan -

It is NOT legal for a bill collector to leave that msg on a business # unless it is a business card or you own the business. Now it illegal to give the balance in a msg on any phone. Hope that helps.

[bluefire]

Kay johnson -

I'm a bill collector. They have to put on your credit that you settled and did not pay in full because that is what you're doing. They dont have a choice. Why would they say you paid off you bill completely if you didn't. It's common sense. just pay your bill.

[Judy Matthews]

The real shame is that whatever the legal landscape now, neither one of these messages is offensive or designed to do anything other than try to get the debotr to call. There is nothing about these messages that is attempting to abuse, harass or annoy. The real problem is that collectors and collection attorneys, like myself, have to constantly answer technicality lawsuits and threats of lawsuits from for profit consumer advocate attorneys that have made a cottage industry out of this law at the expense of the people they are supposed to represent. Yes, there are some collectors who make bolder violations of the law. Most are attempting to abide by it. Some choose to stay in the gray area because the law has been intereted so strictly against collectors that doing business is almost becoming impossible; that is the shame in the matter because we are talking about creditors who have valid legal debts.
A piece of advice to those of you tired of getting phone calls for other people or even for yourself.....pick up the phone make the call. Most of the time you will get a human being who will help out of their own interest to get the account resolved. If you get someone who is nasty and violates the law, consider yourself blessed because there are hundreds of consumer advocate attorneys available to take your case no matter how valid or invalid and threaten suit to get a settlement....account closed and money sometimes.
What is most frustrating about the law is that the easiest way to resolve everything is to get people on the phone together at least once and anything that stops that is not helping the process.
Just like every debtor is not a "deadbeat" not every collector is a vulture after your home. Training is truly undervalued in the collection industry and a lot of times minor violations occur like above is not company policy but aberrant individual behavior from not following rules, poor training in the law, or poor retention of the law. Most entry level collectors are no more than high school educated and it is getting increasingly difficult to expect all the legal technicalities to be complied with by employees without some level of expertise. No company can manage and create enough policies to comply the voluminous amount of law on the oral communications alone...which is contstantly changing. That is not an excuse but yet companies for the most part comply; however, there will always be technical violations because there is no way the way the law is now that people will not do the things above without change.
We need change, not change that requires more legal analysis, but change that meets the needs of both sides so that practical solutions can be made. Sorry, that may create less obfuscation and decrease the lawuits for any consumer advocate attorneys making a living off filing or threatening FDCPA nuisance suits.

[ashley]

I have received about 5-6 messages left on my answering machine from a debt collection agency. He says that "he is going to move into legal on this file and he needs a phone call back as soon as possible." Just wondering if he is allowed to do that?

[Mary]

Another winner I have been getting from a collection agency for someone else's debt. They start off with, "you have been named as a reference.......I usually hang up at this point - this has happened several times in the last few months. I stated firmly to them the last time not to call my phone number any more or I would report them to the Attorney General. So far, no more of these phone calls.

[Mary]

Recently received a phone call from a collection agency (maybe NCO?). They left a message for someone else - not me - not family. It said we want to speak to Mr.........., if you are not Mr. ........, stop listening to this message immediately. I can only guess that this is illegal.

[Shirley]

I had a debt collector leave a message on my cell voicemail a few days ago. He stated first thing, "I'm not sure if this is your number anymore, but this is regarding (my name) with Social Security #, and recited my SS #, he further went on to state he was contacting my employer and references and left all their names too. Since the law dosen't seem clear, or at least I haven't found yet, is it legal for collectors to leave such private information like a social security number on a cell phone voicemail? Any insight is appreciated.

[Stan]

Today I received a message on a business answering machine from a collection agency about a debt that was paid off in January 2008. I am the former owner of this business and am working for this business part time. In this message the collector stated from whom the debt was owed, the amount of the debt, their name and phone #. To return a call as soon as possible before an asset and liability investigation which is to take place today at 4:00PM. Of course when my boss played the message with my co-workers around, I wanted to crawl under the counter. My question is: Is this legal??? Can the agencies discuss your personal business affairs on an answering machine not knowing who is around to hear this information???

[Online Debt Collection Review]

Certainly there needs to be clarity for all instances of contact. I'd be interested to know how this turned out.

[John]

The original intent of FDCPA was to prevent abusive and unfair practices by debt collectors. Period! In their various rulings over the last 31 years the FTC and the courts have gone way beyond the original intent of the law. Both entities have attempted to make debt collectors and the agencies which employ them into targets for everyone who wishes to obfuscate the issue of their non-payment of a legitimate debt. The courts should be in the business of either validating or invalidating a debt. In most cases a person owing a debt would never have to deal with a professional debt collector if they would just work out the issue with their primary creditor.

It is my opinion that FDCPA and the huge bureaucracy it has spawned should be scrapped!