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EDPA Finds Alleged Transmission of Consumer Information to Letter Vendor States Claim Under FDCPA’s § 1692c(b)

letter vendor claimThe U.S. District Court for the Eastern District of Pennsylvania on Feb. 7 handed down a decision finding that the mere use of a letter vendor is sufficient to allege a violation of 15 U.S.C. § 1692c(b) of the Fair Debt Collection Practices Act by transmitting information to the letter vendor.

A copy of the decision in Khimmat v. Weltman, Weinberg and Reis Co., LPA can be found here: Link to Opinion.

The Court determined that the transmission of information to a letter vendor is a “communication,” and that the communication is “in connection with the collection of any debt” within the meaning of § 1692c(b).

In denying the defendant’s motion for judgment on the pleadings, the Court rejected an argument that the letter vendor was exempt from § 1692c(b)’s coverage because it served as the defendant’s “agent.”

First, the Court noted that Congress did not exempt any agents other than those specifically listed in § 1692c(b). Next, the Court explained that even if agents were exempt, there was no evidence showing that the defendant directed or had control over the vendor’s printing or mailing activities, an essential element of an agency relationship.

The Court also rejected an argument grounded in the First Amendment, finding that the government had a substantial interest in limiting disclosure of a consumer’s status as a debtor and that it proportionally advanced that interest through § 1692c(b).

Similarly, the Court was not persuaded by the apparent approval of the use of letter vendors by the CFPB and the FTC. Instead, the Court explained that the CFPB and the FTC “have not addressed the use of letter vendors in any legally significant way.”

The Court did, however, note that the parties can address the issue of standing if it turns out that the letter vendor merely processed, and did not read, consumer information; but at the pleadings stage the Court inferred from the complaint that the vendor read the plaintiff’s information.

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Brent Yarborough practices in Maurice Wutscher's Birmingham office in its Appellate, Commercial Litigation, Consumer Credit Litigation and Regulatory Compliance groups. He has substantial experience representing financial institutions, debt buyers and law firms. He has defended cases involving the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Truth In Lending Act, and various state law claims asserted against lenders and their assignees. He has also provided compliance advice on matters related to the FDCPA, UDAAP, and state debt collection and privacy laws. He is a frequent speaker to national audiences and publishes on topics related to consumer financial services regulation and litigation. For many years Brent served on the Executive Board of the Birmingham Bar Association’s Bankruptcy and Commercial Law Section. He also served on the Legislative Task Force of the Creditor Attorney Association of Alabama and is a past president of the Birmingham-Southern College National Alumni Association. He formerly served as Secretary of NARCA – The National Creditors Bar Association, after serving on its Board of Directors for eight years. In addition, he chaired NARCA’s Government and Regulatory Affairs Committee. Yarborough earned his B.A., cum laude, from Birmingham-Southern College and his J.D. from Cornell University, where he was Secretary/Treasurer of the Cornell Law School Moot Court Board. For more information, see https://mauricewutscher.com/attorneys/brent-yarborough/

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