What We Know

The Telephone Message Conundrum Continues for Debt Collectors in New York

March 22, 2016 | by Caren D. Enloe

Ten years after the Southern District of New York entered into its infamous decision in Foti v. NCO Financial Systems, Inc., 424 F. Supp. 2d 643 (S.D.N.Y. 2006) and just two weeks after it begrudgingly ruled in Nicaisse v. Stephens and Michaels Assocs, Inc., 2015 U.S. Dist. LEXIS 172073 (E.D.N.Y. Dec. 28, 2015), the Eastern District of New York has joined the debate of how to properly leave telephone messages.

The Eastern District’s answer is simple: don’t do it.  In Halberstam v. Global Credit and Collection Corp., 2016 U.S. Dist. LEXIS 3567 (S.D.N.Y. Jan. 11, 2016), the debt collector’s call was answered by a third party who asked if he could take a message.  The debt collector responded as follows:

Name is Eric Panganiban.  Callback number is 1-866-277-1877…direct extension is 6929.  Regarding a personal business matter.

The issue as couched by the court was whether under the Fair Debt Collection Practices Act, a debt collector, whose telephone call to a debtor is answered by a third party, may leave his name and number for the debtor to return the call, without disclosing that he is a debt collector, or whether the debt collector must refrain from leaving callback information and attempt the call at a later time. The court held that the debt collector must refrain from leaving any callback information. In so holding, the court determined that soliciting a call back is a “communication in connection with the collection of a debt.”  “In our case…the only purpose of…[the] call was quite obviously to collect the debt, and anyone, regardless of their level of sophistication, who knew that the call came from a collection firm would understand that purpose.” Halberstam at *9-10.

The opinion is troublesome and illustrates how problematic telephone messaging is for debt collectors. In this case, the information provided in the message was less than the information provided by the telephone device’s caller id. The collector did not identify the company name; however, the collection agency’s name most likely was disclosed by the caller identification on the telephone device itself. To date, the majority of courts have not been persuaded by the Hobson’s choice illustrated in these cases- specifically, that debt collectors disclosing their identity as a debt collector to comply with §1692e(11)’s requirements run afoul of §1692c(b)’s prohibition on communications to third parties. The safe but impractical solution is to never leave a message.

Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws.  Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker....LEARN MORE

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