On Thursday, the Seventh Circuit Court of Appeals (7th Cir.) published its long-awaited opinion in the matter of Lavallee v. Med-1 Solutions, LLC, 17-3244 (7th Cir. Aug. 8, 2019). Critically, the 7th Cir. found that an email containing no disclosures or information about a debt, but rather a hyperlink where such information can be securely accessed, is not a communication under the Fair Debt Collection Practices Act (FDCPA). An interesting question arises: what does this decision mean for text messaging and call frequency limits as outlined in the Consumer Financial Protection Bureau's (CFPB) Notice of Proposed Rulemaking (NRPM) for debt collection?
To quickly summarize, Med-1 Solutions sent emails to the consumer that did not contain disclosures or information about the debt in the subject line or body of the message (likely to prevent third-party disclosure) but instead provided a link to a secure portal that included all of the required disclosures and account information. The consumer never opened the emails and instead first learned about them after the creditor called her about another debt. Med-1 Solutions did not re-send the 1692g disclosures, figuring that the original emails satisfied 1692g as initial communications. The consumer disagreed, believing that the initial communication was the phone call. She filed an FDCPA claim alleging that Med-1 failed to provide her with her validation rights under 1692g during or within five days of the phone call. The district court found in favor of the consumer.
The 7th Circuit affirmed. The opinion revolves around the definition of communication, which requires the conveying of information about the debt. The court found that the emails were not communications since the substance of the email itself contained no disclosures or debt information. The hyperlink did not save the emails because it required the consumer to take extra steps to obtain the information.
Clash Between Lavallee and the CFPB's NPRM
The NPRM is hot on everyone's mind, and the 7th Cir.'s Lavallee decision poses an interesting question about text messaging and call frequency limits.
In the NPRM's preamble, which provides an in-depth discussion of the proposed rules, the CFPB references a debt collector's legitimate need to communicate with consumers. The preamble implies that the rules offset the burden that call frequency limits place on this legitimate need by opening up electronic avenues of communication, such as email and text messaging.
The CFPB took a big step in bringing debt collectors into the modern world of communications. Thus far, the only "safe" methods of communication were those contemplated at the time the FDCPA went into effect: phone calls, letters, faxes, and telegrams. [Editor's Note: "Safe" is tongue-in-cheek, as we are all well aware of the litigation dilemma faced by the industry using even these well-established communication methods.] By outlining steps for the use of electronic communications, the CFPB opened the door for debt collectors to meet consumers using the consumers' preferred contact medium.
A significant concern regarding contact frequency limits in the NPRM is the increased amount of time it will take for debt collectors to make a right party contact—a fancy way of saying reaching the correct consumer. This poses a risk to consumers—if debt collectors are unable to reach consumers timely, it increases the likelihood that creditors will choose to pursue legal action against consumers. The ability to email and text message consumers to make that first contact might help alleviate this issue.
However, does Lavallee present a hiccup? Due to the character limits of text messages, it is unlikely that all required disclosures—especially the validation notice—will fit within the body of the text. The NPRM contemplates hyperlinks, but according to the 7th Cir., they are not enough for required disclosures. Will this impact sending validation notices via text message? Is one of the supporting legs of the CFPB's call frequency limits kicked out from underneath itself, at least as far as the 7th Circuit is concerned? And, the biggest question of all, how will the Chevron Deference doctrine, which outlines when courts should apply administrative agency interpretations to statutes, be applied to all of this?
These are all complicated questions that will be answered in due time. The good news is that the NPRM's comment period is still open, leaving time for debt collectors and industry groups to comment on this specific issue. Comments are due by September 18, 2019.
Want to keep up with other similar FDCPA cases as they come out? You can do so through iA's Case Law Tracker, which allows you to conduct incisive and quick legal research in less time than it takes to pour your morning cup of coffee.