In Foti v. NCO Financial Systems, Inc., 424 F. Supp. 2d 643 (S.D.N.Y. 2006) (“Foti”), the District Court for the Southern District of New York held that if a debt collector leaves a message on a debtor’s answering machine that merely invites a return phone call, the message amounts to a “communication” within the meaning of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (the “FDCPA” or the “Act”). The court also held that the voicemail message must state it is from a “debt collector” in order to comply with section 1692e(11) of the Act. See Foti, 424 F. Supp. 2d at 669.
The FDCPA was designed to protect a debtor’s privacy, however, so the Act generally prohibits collectors from communicating information about a debt to third parties. See, e.g., 15 U.S.C. § 1692c(b). Given that parties other than the debtor (such as a roommate, parent or guest) may retrieve or hear a collector’s voice mail message, any message which states that it is from a “debt collector” necessarily puts the collector at risk of violating the prohibition on third party disclosure set forth in section 1692c(b) of the Act.
The Foti court was wrong. A debt collector’s use of a truthful, non-threatening voicemail message that requests a return phone call constitutes a valid form of commercial speech, and is therefore entitled to protection under the First Amendment. By holding that such a message is a “communication” under the FDCPA, the Foti court interpreted the Act in a manner that unreasonably restricts valid commercial speech. Given the Supreme Court’s express prohibition on interpreting any statute in a manner that raises serious constitutional problems (see Debartolo v. Florida Gulf Coast Build. & Constr. Trades Council, 485 U.S. 568, 575 (1988)), the holding of Foti must be rejected.
II. A Collector’s Voicemail Messages Is Valid Commercial Speech
In Foti, the collector left a message on the debtor’s answering machine that stated:
Good day, we are calling from NCO Financial Systems regarding a personal business matter that requires your immediate attention. Please call back 1-866-701-1275 once again please call back, toll-free, 1-866-701-1275, this is not a solicitation.
See Foti, 424 F. Supp. 2d at 648.
The message was valid commercial speech. The Supreme Court has defined commercial speech as any “expression related solely to the economic interests of the speaker and its audience.” See Central Hudson v. Public Serv. Comm. Of New York, 447 U.S. 557, 562 (1980). Debt collectors generally act on behalf of creditors who have an existing economic relationship with the debtor, or on behalf of entities who purchase delinquent accounts after they have gone into default. When a collector leaves a message for a debtor requesting a return call, that message is a form of expression that relates to the parties’ economic interests.
It is true that commercial speech is entitled to less protection than other forms of expression. No regulation that restricts commercial speech can survive, however, unless it directly advances a substantial governmental interest and is not more extensive than necessary to serve that interest.
The holding that the message in Foti was a “communication” under the FDCPA places an unreasonable restraint a collector’s lawful commercial speech.
III. The Foti Decision Improperly Construes The FDCPA In A Manner That Prohibits Or Unreasonably Restricts Valid Commercial Speech
Statutes should not be construed in a manner that will raise serious constitutional problems. A “cardinal principle” of statutory construction is that “where an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress.” See Debartolo v. Florida Gulf Coast Build. & Constr. Trades Council, 485 U.S. 568, 575 (1988) (citing N.L.R.B. v. Catholic Bishop of Chicago, 440 U.S. 490, 499-501, 504 (1979). This rule, which is sometimes referred to as the “canon of constitutional avoidance,” has been described as “a tool for choosing between competing plausible interpretations of a statutory text, resting on the reasonable presumption that Congress did not intend the alternative which raises serious constitutional doubts.” See Clark v. Martinez, 543 U.S. 371, 381 (2005).
Thus, in Debartolo, when a proposed interpretation of a provision of the National Labor Relations Act would have prohibiting peaceful handbilling, thereby raising serious First Amendment issues, the Court concluded that “we must independently inquire whether there is another interpretation, not raising these serious constitutional concerns, that may fairly be ascribed to” the statute. See Debartolo, 485 U.S. at 577. After concluding the statute was “open to a construction that obviates deciding” the constitutional issues, and finding no “clear indication” in the legislative history that Congress intended to prohibit the peaceful handbilling at issue, the Court affirmed the lower court’s reversal of the NLRB’s ruling. Id. at 578, 583-88.
The Foti court erred by interpreting the definition of a “communication” under the FDCPA in a manner that raises serious constitution problems. Foti held that 1) a voicemail message that does not mention a debt but simply invites a return call from a debtor is a “communication” within the meaning of section 1692a(2) of the FDCPA, and 2) that such a message must state that it is from a “debt collector” under section 1692e(11) of the Act. See Foti, 424 F. Supp. 2d at 665-66, 669. But the voicemail message in Foti was not a “communication” because it did not convey “information regarding a debt directly or indirectly to any person.” See 15 U.S.C. § 1692a(2) (defining “communication”) (emphasis supplied). Since no information “regarding a debt” was conveyed by the message, there was no “communication.” Further, a voicemail message cannot recite that it is from a “debt collector” without risking a violation of the Act’s prohibition on third party disclosure. See 15 U. S. C. § 1692c(2). By interpreting the Act in this manner, the Foti court imposed an unreasonable restraint on the use of voicemail messages.
The Foti court should not have construed the FDCPA in a way that effectively bans truthful, non-threatening voicemail messages, unless the court found a “clear expression of an affirmative intention of Congress” to do so. See Catholic Bishop, 440 U.S. at 504. Nothing in the plain language of the FDCPA or its legislative history suggests that Congress intended this result.
The FDCPA was passed by Congress in 1977 in an effort to protect consumers from threats, harassment, abuse and other deceptive practices that might be utilized by unscrupulous debt collectors. See 15 U.S.C. § 1692. The legislative history that the objective of the Act was to eliminate debt collection practices such as:
threats of violence; obscene language; the publishing of 'shame lists;' harassing or anonymous telephone calls; impersonating a government official or attorney; misrepresenting the consumer's legal rights; simulating court process; obtaining information under false pretenses; collecting more than is legally owing; and misusing postdated checks.
See Sen. Rep. No. 382, 95th Cong. 2d Sess. 4, reprinted in 1977 U.S.C.C.A.N. 1695, 1698 (internal quotation marks omitted).
Congress also took great pains to design a regulatory scheme that would do more to protect the consumer’s privacy during the collection process. See 15 U.S.C. § 1692(a) (“Abusive debt collection practices contribute to . . . invasions of individual privacy.”). With very limited exceptions, collectors are prohibited from disclosing the existence of a debt to any third parties. Id. § 1692c(b). Although collectors may contact third parties to obtain certain location information, collectors must carefully avoid disclosing the existence of the debt during that process. Id. § 1692b. Collectors may not publish lists of consumers with unpaid debts. Id. § 1692d(3). To avoid third party disclosure, collectors may not communicate about a debt by post card, nor may they use language on an envelope which indicates a collection letter is enclosed. Id. §§ 1692f(7), 1692f(8).
Thus, the focus of the Act is the prevention of harassment and abuse and the protection of consumer privacy. Nothing in the Act or its legislative history evinces a Congressional intent to regulate voicemail messages that merely seek a return call from a debtor. Rather, as the Ninth Circuit recently observed,
The purpose of the FDCPA is to protect vulnerable and unsophisticated debtors from abuse, harassment and deceptive collection practices. . . . Congress was concerned with disruptive, threatening, and dishonest tactics. The Senate Report accompanying the Act cites practices such as ‘threats of violence, telephone calls at unreasonable hours [and] misrepresentation of consumer’s legal rights.’ (Citation). In other words, Congress seems to have contemplated the type of actions that would intimidate unsophisticated individuals and which, in the words of the Seventh Circuit, ‘would likely disrupt a debtor’s life.’ (Citation).
Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 938-39 (9th Cir. 2007) (emphasis added). Congress specifically stated that one purpose of the Act was to “insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged . . . .” See 15 U.S.C. § 1692.
The most reasonable interpretation of the FDCPA – and the one which avoids the serious constitutional problems raised by Foti – is that the voicemail message at issue in Foti did not convey any “information regarding a debt directly or indirectly to any person” (see 15 U.S.C. § 1692a(2)), and therefore was not a “communication” within the meaning of the FDCPA.
The Foti court suggested that if the collector’s voicemail message was not considered a “communication” under the FDCPA, this might “create a significant loophole” that could undermine the protections afforded by the Act. See Foti, 424 F. Supp. 2d at 657. But no such “loophole” exists. The message itself does not harm the debtor, and the debtor can elect not to return the call. If the debtor returns the call and an actual “communication” occurs, the collector would be obliged to comply with all provisions of the Act, including disclosing that it is a “debt collector” consistent with section 1692e(11).
The “loophole” theory also ignores the other sections of the Act which protect the debtor. The collector cannot cause a phone to ring repeatedly or continuously with the intent to harass or annoy any person. See 15 U.S.C. § 1692d(5). The collector cannot utilize any false, deceptive, or misleading representation or means to collect a debt, nor can it employ any unfair or unconscionable means to collect. See 15 U.S.C. §§ 1692e, 1692f. A debtor retains the power to stop all communications from a collector by informing the collector in writing that the debtor refuses to pay the debt, or that the debtor wishes the collector to cease further communications. See 15 U.S.C. § 1692c(c).
Debt collectors engage in protected commercial speech when they leave truthful, non-threatening voicemail messages that simply invite a return phone call from the debtor. Such messages do not constitute “communications” under the FDCPA because they do not convey information “regarding a debt” to anyone. By ruling that such messages constitute “communications” and therefore must recite that they are from “debt collectors,” the Foti court put all collectors who leave messages at risk of violating the Act’s third party disclosure requirements, thereby placing an unreasonable restriction on valid commercial speech. The Foti court violated the Supreme Court’s holding in Debartolo by construing the FDCPA in a manner that raises serious constitutional problems under the First Amendment.
1. The Act defines a “communication” as follows: “The term ‘communication’ means the conveying of information regarding a debt directly or indirectly to any person through any medium.” See 15 U.S.C. § 1692a(2).
2. Since the Foti decision issued, numerous other court have reached similar conclusions. See, e.g., Baker v. Allstate Fin. Srvs., Inc., 554 F. Supp. 2d 945 (D. Minn. 2008);Anchondo v. Anderson, Crenshaw & Assocs., 583 F.Supp.2d 1278, 1281-82 (D.N.M. 2008);Edwards v. Niagara Credit Solutions, Inc., 586 F.Supp.2d 1346, 1351-53 (N.D. Ga. 2008), aff’d on other grounds, 584 F. 3d 1350 (2009); Ramirez v. Apex Fin. Mgmt., LLC, 567 F.Supp.2d 1035, 1041(N.D. Ill. 2008).
3. There are certain limited exceptions to the prohibition on third party disclosure, which are not relevant here. See, e.g., 15 U.S.C. §§ 1692b, 1692c(b).
4. For example, in Berg v. Merchs. Ass’n Collection Div., 586 F. Supp. 2d 1336 (S.D. Fla. 2008), the defendant left a message on the plaintiff’s voice mail machine which stated that it was “an attempt to collect a debt.” Id. at 1339. The debtor sued under section 1692c(b) of the FDCPA, alleging the message was overheard by his father, step-mother, step-mother’s ex-spouse, girlfriend and neighbor. Id. Even though the collector had attempted to prevent disclosure, by warning any third parties to stop listening, the court refused to grant the collector’s motion to dismiss. Id. at 1441-44.
5. Although the voicemail message left by the collector in Foti was a form of expression that related to the economic interest of the parties and was therefore entitled to First Amendment protection, as discussed herein, that message did not communicate any information directly or indirectly “regarding a debt” to anyone, and the Foti court therefore erred when it held the message was a “communication” within the meaning of section 1692a(2) of the Act.
6. The existence of this business relationship with the debtor is also a significant factor in distinguishing Foti from the facts presented by Mainstream Marketing Services, Inc. v. FTC, 358 F. 3d 1228 (10th Cir. 2004). Mainstream Marketing upheld a ban on most telemarketing calls made to consumers who had registered their phone numbers on the national “do-not-call” registry, noting that “individuals are not required to welcome unwanted speech into their own homes . . .” Id. at 1237-38, 1246. But the restrictions on “unsolicited calls from commercial telemarketers” at issue in Mainstream Marketing did not apply to companies with an “established business relationship” with the consumer. Id. at 1234 and n.7.
7. While the Supreme Court has noted that the Constitution “protects commercial speech from unwarranted governmental regulation,” the Court has also noted that the Constitution “accords a lesser protection to commercial speech than to other constitutionally guaranteed expression.” Central Hudson, 447 U. S. at 563.
8. The Court in Central Hudson articulated the test as follows: “At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.” Central Hudson, 447 U.S. at 566.
9. See also Solid Waste Agency of Northern Cook County v. Un. St. Army Corps of Engrs, 531 U.S. 159, 172-74 (2001) (rejecting interpretation of Clean Water Act that would raise “serious constitutional issues” relating to the reach of the Commerce Clause); Jones v. United States, 590 U.S. 848, 857-58 (rejecting interpretation of federal arson statute that raised serious constitutional issues regarding the scope of the Commerce Clause: “where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter. (citation)”).
10.Similarly, if a collector elected to leave a voicemail message that did convey information concerning the debt directly or indirectly, that message would constitute a “communication” and would need to comply with the statute.
11.The forgoing is provided for informational purposes only and should not be construed as legal advice given by the author or by Simmonds & Narita LLP. Transmission of this information is not intended to create an attorney-client relationship, nor should it be viewed as a substitute for obtaining legal advice from a licensed attorney. Parties should not rely upon the foregoing without first engaging their own legal counsel to obtain advice.