New York District Court Adds Frustration for Collection Agencies Avoiding Improper Communications with Third Parties under the FDCPA

On January 18, 2016, we wrote about a recent Oregon District Court’s decision to set limits on when a message is a communication “with” a third party under the Fair Debt Collection Practices Act (“FDCPA”). The District Court in Peak v. Professional Credit Services determined there was no FDCPA violation when a debtor’s live-in boyfriend, who had permission to use the debtor’s cell phone, listened to a voicemail message from the debt collection agency which was actually intended for the debtor.

Although this decision is favorable for collection agencies, not all courts are willing to set limits on third party communications. In a recent matter in the United States District Court for the Eastern District of New York, Halberstam v. Global Credit and Collection Corp., 15-cv-5696, the court was presented with the issue of whether a debt collector, whose telephone call to a debtor is answered by a third party, may leave his name and number for the debtor to return the call -- without disclosing that he is a debt collector -- or whether the debt collector should refrain from leaving callback information and attempt the call at a later time. Judge Brian M. Cogan ruled that the message was an FDCPA violation.

In Halberstam, the collection agency called the debtor regarding his debt and reached a third party informing the collection agency representative that “Herschel [the debtor] is not yet in.” When asked if the representative wanted to leave a message for the debtor, he responded “Name is Eric Panganiban. Callback number is 1-866-277-1877 … direct extension is 6929. Regarding a personal business matter.”

Judge Cogan wrote, in part:

“There are several provisions of the Fair Debt Collection Practices Act that might bear on the question of whether this message was allowed. First, § 1692e(11) deems it a ‘false or misleading representation’ if a debt collector fails to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector . . .

Second, the FDCPA also addresses communications between the debt collector and a third party. Section 1692c(b), subtitled ‘Communication with third parties,’ provides, in part:

Except as provided in section 1692b of this title …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.”

Defendant’s argument was the typical “lose-lose situation” argument in which if the call to the third party is a “communication,” then the collection agency has to give the § 1692(e) disclosures. However, if it gave those disclosures to the third party, or even mentioned that it was a debt collector, then it would clearly be violating § 1692c(b).

The court concluded that “the only way to avoid violating the statute when the recipient of the call was asked if he could take a message was for the caller to make a different decision by politely demurring, and perhaps trying again at some point in the future.”

Perhaps the best option for collection agencies is to never leave a message under any situation.  However, this can lead to many other potential violations such as harassment by causing too many additional calls.

For more information on this topic, contact Stephanie A. Strickler at 312-334-3465 or at