JACKSONVILLE, Fla. -- Debt collection agency Stellar Recovery, Inc. secured a significant Fair Debt Collections Practices Act (“FDCPA”) victory last week, again establishing favorable precedent for the industry. The latest win establishes that agencies may indeed obtain limited information from consumers who are represented by counsel, so long as that information is not being used for the purpose of collecting a debt. The opinion also serves to substantially clarify acceptable consumer/agency dialog after the agency is on notice that counsel represents a consumer.
The case of Klein v. Stellar Recovery, Inc. No. 4:16-cv-01480-JMB (E.D. Mo. Oct. 12, 2017) centers on a single phone call. During the call, which Plaintiff placed to Stellar to inquire about details concerning a debt on her credit report, Plaintiff informed Stellar that counsel represented her. After receiving this information Stellar then requested Plaintiff’s updated contact information and subsequently ended the call. No further attempts were made to contact Plaintiff after this interaction.
Plaintiff alleged that Stellar’s request for updated contact information violated § 1692c(a)(2) of the FDCPA, which provides in relevant part that “a debt collector may not communicate with a consumer in connection with the collection of any debt . . . if the debt collector knows the consumer is represented by an attorney with respect to such debt . . .” Plaintiff based her allegation of a violation on the assertion that “once notified that [a debtor] has legal representation, defendants may only ask for the attorney’s contact information before ending the call.”
Citing to Hanks v. Valarity, LLC, No. 4:14-CV-01433-JAR, 2015 WL 1886960, at * 3 (E.D. Mo. Apr. 24, 2015). However, Hanks and several other cases relied on by Plaintiff involved allegations--which the court accepted as true--that the disputed communications were made in connection with the collection of a debt. In contrast, Stellar alleged here that the communication at issue in this case was NOT an attempt to collect a debt but instead was solely for the purpose of ensuring that the proper information was included in Plaintiff’s consumer file with the credit bureaus and to advise the underlying creditor of the updated information for its customer.
On October 12, 2017, Magistrate Judge John M. Bodenhausen of the United States District Court, Eastern District of Missouri, issued an opinion granting summary judgment in favor of Stellar, concluding that Stellar’s request for Plaintiff’s updated contact information in this context was not a communication “in connection with the collection of any debt,” and thus not violative of the FDCPA. In coming to this conclusion, the Court considered the relationship between the parties, the purpose and context of the communication, the language used in the communication and whether there was an explicit demand for payment. The Court noted that Plaintiff initiated the call to Stellar, that Stellar did not request payment from Plaintiff or suggest a payment plan, or ask whether plaintiff intended to pay the debt, all of which indicated that the request for Plaintiff’s updated contact information was not a “communication in connection with the collection of a debt” as required to establish liability under 15 U.S.C. § 1692c(a)(2). The Court also noted that the fact that Stellar issued the “mini-Miranda” warning at the beginning of the call did not alter the conclusion.
This win further solidifies Stellar’s confidence in its counsel Assurance Law Group’s innovative litigation model, which allows Stellar to aggressively defend appropriate cases and establish favorable precedent for the collection industry at a much lower cost than traditional models. Though it was not discussed in the opinion or argued by counsel, the call certainly raises the possibility of deliberate targeting considering that the Plaintiff was already represented by counsel prior to calling to engage the agent. The facts of this case provide an important training opportunity for agents, who are often advised of legal representation at various stages of a call with a consumer.
About Stellar Recovery, Inc.
Stellar Recovery, Inc. is in Jacksonville, Florida. Please visit our website at www.stellarrecoveryinc.com.