On April 21, 2021, the Court of Appeals for the 11th Circuit handed down a decision holding that a debt collector violates the federal Fair Debt Collection Practices Act (FDCPA) when it engages a letter vendor to send letters to debtors on its behalf. More specifically, the conduct violates § 1692c(b) “Communication with third parties.” The decision in Hunstein v. Preferred Collection and Management Services, Inc. is available here.

Many may recall Crawford v. LVNV, a case concerning the filing of proofs of claim, that also was decided by the 11th Circuit Court of Appeals and, like Hunstein, rendered a decision that substantially disrupted the debt collection industry. Crawford was not supported by bankruptcy law or the FDCPA and ultimately the decision was overruled. In Hunstein persuasive arguments demonstrating that the claim is contrary to the text and structure of the FDCPA and regulatory interpretations were not before the court.

What to Expect
It is certain that the 11th Circuit decision will result in an unprecedented increase in litigation against debt collectors. RMAI members should expect class-action and individual claims everywhere, with the highest concentration in the 11th Circuit, as well as pre-suit demands.

Debt collectors who used letter vendors within the past year are already exposed to complaints. For many, it is not practical to cease the use of letter vendors. By no means do we expect Hunstein to be the final word on the use of letter vendors.

We do not offer legal advice, and you should seek legal advice from an attorney.

What RMAI is Doing
RMAI is working to identify similar Hunstein-type cases to fight and promoting well-reasoned responses to Hunstein; reaching out to ACA International, the National Creditors Bar Association, thought leaders and impacted parties to develop a coordinated strategy; supporting RMAI members and the industry as amicus curiae; and presenting a webinar on Monday to brief members.

As the 11th Circuit decision noted, its holding does little to enhance consumer protection. In fact, letter vendors can increase the accuracy and integrity of the lettering process, foster increased communication between debt collectors and consumers while at the same time providing substantial protections for customer data. Perhaps the court understood all this but was constrained by the argument before it.

We do not believe there is a quick fix, legislative or otherwise. Just as was the case with Crawford litigation, this issue must find its way through the courts and, ultimately, we expect it will fall. The Crawford litigation demonstrated that coordinated responses can be effective in undoing disruptive decisions like this and, perhaps, accelerate the process of achieving the needed result.

What You Can Do
RMAI asks that members who are served with Hunstein-type complaints contact RMAI General Counsel David Reid at dreid@rmaintl.org and provide a copy of the complaint. Please reference “Hunstein Litigation” in the subject line.