Ethics Update: The Evolving Role of Voicemail in Debt Collection
by Aaron Nelson on November 25, 2014
Providers of financial services work with a complex and evolving web of laws, regulations and requirements designed to protect the consumer. The collections and accounts receivable management (ARM) sectors in particular are subject to a large amount of oversight in order to prevent fraud and abuse. Laws such as the FDCPA and TCPA have made great strides in the battle against predatory lending and collections tactics, and they continue to be refined and reformed through case law and further legislation. For the ethical debt collector, staying on top of the often confusing and ever-changing regulations can be a challenged but necessary endeavor.
Voicemail, Third Party Debt Disclosure and the FDCPA
Contacting debtors, customers and other third-parties is one of the most integral and most regulated aspects of being a debt collector. While regulations are effective in preventing harassment, intrusion and abuse of debtors, they run the risk of preventing ethical debt collectors from performing their work effectively due to contradictions in the law. For example, the FDCPA contains provisions restricting the release of debt information to uninterested third parties such as friends or relatives. While the debtor’s privacy is of the utmost importance to the law, consumers and the businesses that serve them, these rules can also impede the debt collection process for honest practitioners.
A November 13th decision by a New York federal district judge is the latest in a series of conflicting case law concerning the use of voicemail in debt collections. In Zweigenhaft v. Receiveables Performance Management (RPM), a debt collector left a voicemail at the home phone number of a debtor. In the voicemail, RPM identified itself as a debt collection company and stated that they had a message for the alleged debtor. The debtor’s son later returned the call, and a representative of RPM noted that he was not the target of the voicemail and agreed to remove the number from their system. The alleged debtor then filed suit.
In the complaint, the plaintiff argued that the voicemail and subsequent conversation with his son was an unlawful disclosure of his debt information to a third party, in violation of the FDCPA’s privacy provisions. In response, RPM contended that their message didn’t communicate the fact that the plaintiff owed a debt but simply identified themselves as a collector.
The case hinged on whether that information alone constituted an improper disclosure, an issue which has produced conflicting case law and two conflicting interpretations of the FDCPA provision. One line of precedent holds that any communication from a collections agency overheard by a third party constitutes a breach of privacy, regardless of the content or circumstances of the message. The other camp focuses of the nature and definition of a communication and the context in which it was made. Depending on the jurisdiction and the specifics of the court, two identical third party disclosure lawsuits could end with very different results.
“An Undue Restriction on the Ethical Debt Collector”
In his Zweigenhaft option, Judge Raymond Dearie carefully balanced these two opposing theories and ultimately dismissed the suit against RPA. He concluded that classifying the collector’s actions as an FDCPA violation would be contrary to the overall purpose of the bill, which is to protect consumers from abusive collection practices “without imposing unnecessary restrictions on ethical debt collectors.”
Dearie noted that the FDCPA requires debt collectors to identify themselves when calling a consumer, even though such disclosure itself implies that a debt is owed. These incompatible provisions within the statute’s language are one of several issues within the FDCPA, and many advocates argue that reform is increasingly necessary. The court’s opinion critiqued the FDCPA for failing to keep up with technological progress, arguing that the statute places an “undue restriction on an ethical debt collector in light of our society’s common use of communication technology.”
In the court’s ruling, Dearie defended the use of voicemail by debt collectors as an ethical practice that serves the interest of both the consumer and the collector. “The alternative,” he wrote, “is numerous, harassing hang-up phone calls” that can be harmful to the debtor and an inefficient, ineffective burden on the collector. A debt collector should not be barred from using common technology to contact their debtor, provided they act with care and caution to protect their privacy of their customers. To do otherwise, Dearie concludes, “defies common sense and the purpose of the FDCPA.”
Stay Ethical by Staying Informed
While Zweigenhaft is by no means the last word on the propriety of voicemails or other communications that could potentially disclose debt information to third parties, it illustrates how the regulatory landscape is ever-changing and often at odds with itself. As a collector, it’s important to stay educated and up-to-date on the latest developments in the law governing your field. In a shifting, often confusing landscape, D&S Global Solutions can help keep you informed and compliant, providing customizable solutions to suit the needs of both your business and your customers.