by William N. Foshag, Esq.

Gray & Associates, LLP

USFN Member (WI)

In April 2021, the 11th Circuit held that a debt collector violated the FDCPA by sending a consumer’s information to a third-party vendor generating debt collection letters in Hunstein v. Preferred Collection and Management Services, Inc. No. 19-14434, 2021 WL 1556069, at *2 (11th Cir. Apr. 21, 2021).  Hunstein gave expansive interpretation to 15 U.S.C. § 1692c(b)’s phrase, “‘in connection with the collection of any debt,” and rejected the argument that this phrase necessarily involves a demand for payment. The court acknowledged this rigid interpretation may have widespread industry implications and suggested it would be up to Congress to amend § 1692c(b), as needed.

The court reaffirmed its decision in October 2021[i] related to Hunstein’s standing to sue, then vacated that opinion in November 2021 and agreed to reconsider the matter en banc (2021 WL 5353154 (11th Cir. Nov. 17, 2021)). Oral arguments were recently held in February 2022, again related to standing and the U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021).[ii]

In the meantime, Hunstein has created ongoing confusion in the collection industry and in courts across the country, including Wisconsin. In a proposed class action suit with a nearly identical fact pattern to Hunstein, a Wisconsin consumer alleged a debt collector violated 1692c(b) for sharing information with a third party that mails collection letters in Nabozny v. Optio Sols., 21-cv-297-jdp (W.D. Wis. Feb. 8, 2022).[iii]  The Wisconsin District Court was not persuaded by Hunstein however, citing the case’s more recent procedural history, and was similarly not persuaded by decisions around the country that have followed the reasoning of Hunstein. 

Instead, the court followed decisions holding “disclosure to a third-party provider of clerical services differs from disclosure to the public in kind, not merely in degree.” Nabozny, at 6, citing Shields v. Prof'l Bureau of Collections of Md., Inc., No. 2:20-cv-02205-HLT-GEB, 2021 WL 4806383, at *8 (D. Kan. Oct. 14, 2021); Sputz v. Alltran Fin., LP, No. 21-CV-4663 (CS), 2021 WL 5772033, at *10 (S.D.N.Y. Dec. 5, 2021). 

The court also found persuasive that the CFPB has not prevented debt collectors from using vendors to send collection letters, despite the recent issuance of similar rules related to communications (85 Fed. Reg. 76, 735). Concluding,  “disclosure to such vendors is not the sort of harm the FDCPA was meant to prevent,” the Court found Nabozny did not suffer any concrete injury, lacked standing to sue, and dismissed the case. Nabozny, at 8. 

@Copyright 2022

USFN Report - Spring 2022