DS News

78 On April 21, 2021, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in Hunstein v. Preferred Collection and Management Services, Inc., creating new risk and uncertainty around the most common, everyday business practices used by many debt collectors, including loan servicers. 994 F.3d 1341 (11th Cir. 2021). While a petition for rehearing en banc was filed on May 25, 2021, and 13 industry-related amicus curiae briefs in support of the rehearing were also timely filed, the opinion remains published at this time. Debt collectors often contract with third- party vendors for services such as a creating and mailing collection letters, receiving incoming phone calls, even simple accounts receivable bookkeeping. ese practices now face increased scrutiny and potential litigation as described in further detail below. In Hunstein, the debt collector provided its mail services vendor, Compumail, with information about Hunstein, including, among other things: (1) his status as a debtor, (2) the exact balance of his debt, (3) the entity to which he owed the debt, (4) that the debt concerned his son's medical treatment, and (5) his son's name. Compumail used that information to generate and send a dunning letter to Hunstein. On Appeal, the 11th Circuit ruled that Hunstein could pursue claims that by providing this information to its third-party vendor the debt collector violated § 1692c(b) of the Fair Debt Collection Practices Act (FDCPA), entitled "Communication With ird Parties." is section provides: Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector. us, the mere act of providing its third-party vendor with the information necessary to create and deliver the collection correspondence can constitute a violation of the FDCPA. Often, it seems courts do not appreciate the impact of their rulings on routine, widely understood and accepted business practices on which entire segments of industry DICTATES FOR DEBT COLLECTION A recent Eleventh Circuit decision places debt collection business models at risk. Quick Take By: Brett L. Foster and Michelle A. Mierzwa

• Cover