Multiple Calls to Same Party to Obtain Location Information Ruled OK in Some Instances

The Fourth Circuit Court of Appeals held that a debt collector did not violate the federal Fair Debt Collection Practices Act (“FDCPA”) when it made multiple calls to a third party in an effort to locate a debtor.

In Worsham v. Accounts Receivable Management, filed yesterday, a debt collector, who was unable to locate a debtor, instead placed 10 telephone calls to the debtor’s brother-in-law, Worsham, in May 2010.  Worsham answered two of the calls and heard an automated message prompting him to press “1” if he was the debtor or “2” if he was not. On one occasion  Worsham pressed “2” and then hung up his phone. On the second occasion, he hung up before pressing “2”. Worsham never spoke with a live person in either of the two calls.

Worsham sued the debt collector alleging it violated section 1692b of the FDCPA. Section 1692b(3) permits a debt collector to obtain “location information” from a third party, but also provides that a debt collector shall:

not communicate with any such person more than once . . . unless the debt collector reasonably believes that the earlier response was incomplete and that such person now has . . . complete location information.

This section, the Court wrote, allows the debt collector to make further communications with a third party if it “reasonably believes” his prior response was incomplete and that the third party now has “complete location information.” Because the section requires  a reasonable belief before pursing further communications, the debt collector’s decision to place further calls is evaluated under an objective standard — what a hypothetical, reasonable person would believe under the same facts and circumstances.

The court concluded that the debt collector’s actions here were objectively reasonable. When Worsham first answered the phone and pressed “2” he indicated he was not the debtor. However, because he hung up before providing any information, a reasonable person could conclude his response was “incomplete.” The debt collector also had information indicating that Worsham was a “possible contact for [the debtor],” which would lead the objective reasonable person to conclude that Worsham “would have knowledge of [the debtor’s] location at the time of a later call . . .”

Considering all these facts, the Fourth Circuit held favorably for the debt collector:

Accordingly, § 1692b(3) allowed [the debt collector] to continue calling Worsham until it reasonably believed that it had received a complete response, so [its] additional phone calls did not violate the statute.

The process of obtaining location information is an important tool to debt collectors. The court recognized that “third parties may understandably find debt-collection calls bothersome or inconvenient,” but multiple calls placed to obtain “location information” are permitted by the FDCPA in certain instances, such as those outlined here.

While the decision is well reasoned, it is binding only within the Fourth Circuit. A copy of the decision is available here.

 

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He serves on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law .