Only Consumers Can Enforce FDCPA’s Third-Party Disclosure Provisions, Eight Circuit Holds

A bankruptcy attorney received a dunning letter from a debt collector, identifying him as the attorney for the consumer named in the letter. Unable to recognize the consumer’s name, the attorney searched his records and determined that he had never represented the consumer.

The attorney filed a Fair Debt Collection Practices Act (FDCPA) suit against the debt collector in Missouri state court, alleging that the debt collector had violated Section 1692c(b) by disclosing the existence of a debt to an unauthorized third party. The attorney alleged that searching his records cost him valuable time and resources that he could have spent working on matters for actual clients.

The case was removed to federal district court where the debt collector moved for judgment on the pleadings, arguing that the attorney lack standing to sue under Section 1692.

While the district court found that the debt collector’s letter violated Section 1692c(b), it nevertheless agreed with the debt collector that the attorney lacked standing to sue under that provision of the FDCPA.

On appeal, the U.S. Court of Appeals for the Eight Circuit analyzed the attorney’s standing using the zone-of-interests test, which presumes that a statutory cause of action extends only to plaintiffs whose interests fall within the zone of interests protected by the law invoked. The full text of Section 1692c(b) reads as follows:

"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."

The court stated: “We thus read the plain language of § 1692c(b) as making clear that the provision’s purpose is to protect consumer, not third parties.”‘ The court noted that it was joining other circuits, including the Sixth, Seventh, and Eleventh circuits, that previously considered the issue and concluded that non-consumers cannot bring claims under Section 1692c(b).

The case is Magdy v. I.C. System, Inc. A copy of the opinion is available here.