Is It “Debt Collection” If You Never Asked For Money?

Can a communication from a collector violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq. (the “FDCPA”) if it never asks the debtor to pay any money? What exactly does the term “debt collection” mean in the context of the FDCPA? These seemingly simple questions have divided the circuit courts, and they may soon be resolved by the United States Supreme Court when it decides a case that arose out of a nonjudicial foreclosure proceeding in Colorado. See Obduskey v. Wells Fargo, 138 S. Ct. 2710 (2018).

The FDCPA has been with us for over forty years, and it is likely one of the most heavily-litigated statutes in the country. It prohibits debt collectors from engaging in a broad range of unfair and misleading debt collection practices. See 15 U.S.C. §§ 1692b-1692i. How is it, then, that after all this time and all this litigation, we still do not know exactly what “debt collection” means?

You would think this would be easy, but like most things relating to the FDCPA, it is not. For starters, as courts have observed, although the statute includes a number of definitions, Congress did not define the term “debt collection” anywhere in the Act. See 15 U.S.C. § 1692(a) (referring to “abundant evidence of” improper “debt collection practices” and observing that certain “debt collection practices” can cause undesired effects); § 1692a (defining certain terms, but not defining “debt collection”); see also Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 460 (6th Cir. 2013) (“Unfortunately, the FDCPA does not define ‘debt collection,’ and its definition of ‘debt collector’ sheds little light, for it speaks in terms of debt collection.”) (citations omitted); Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 384 (7th Cir. 2010) (“Neither this circuit nor any other has established a brightline rule for determining whether a communication from a debt collector was made in connection with the collection of any debt.”). To date, the Supreme Court has never defined the term “debt collection,” nor has that Court ever addressed whether a “debt collection” communication must include an explicit demand for payment of money from the debtor.

The circuit courts have reached different conclusions on whether a “debt collection” communication must make a demand on the debtor for payment of money in order to be subject to the FDCPA. Decisions from the Ninth Circuit and the Tenth Circuit have held that a collector is not engaged in “debt collection” under the FDCPA unless the challenged communication makes a demand for payment of money. See, e.g., Ho v. ReconTrust Co., NA, 840 F.3d 618, 621-623 (9th Cir. 2016) (mailing notice of default and notice of sale to debtor, which threatened foreclosure, was not attempt to collect money from debtor, and thus was not “debt collection” under FDCPA; “The notices at issue in our case didn’t request payment from Ho.”); Obduskey v. Wells Fargo, 879 F.3d 1216, 1221 (10th Cir.) (following Ho; “Because enforcing a security interest is not an attempt to collect money from the debtor, and the consumer has no “obligation . . . to pay money,” non-judicial foreclosure is not covered under FDCPA) (citations  omitted), pet. for cert. granted, 138 S. Ct. 2710 (2018).

The approach used by the Ninth Circuit and Tenth Circuit seems simple enough: “debt collection” equals asking the debtor to pay money. Other circuit courts, however, have held that a collector’s communication may amount to “debt collection” under the FDCPA, even if the collector has not made a demand for payment of money on the debtor. See, e.g., McCray v. Federal Home Loan Mortg. Corp., 839 F.3d 354, 360 (4th Cir. 2016) (“nothing in [the] language [of the FDCPA] requires that a debt collector’s misrepresentation [or other violative actions] be made as part of an express demand for payment or even as part of an action designed to induce the debtor to pay.”) (emphasis in original, citation omitted); Gburek, 614 F.3d at 386 (letter offering to discuss “foreclosure alternatives” was attempt to collect a debt: “Though it did not explicitly ask for payment, it was an offer to discuss Gburek’s repayment options, which qualifies as a communication in connection with an attempt to collect a debt.”); Glazer, 704 F.3d at 461 (FDCPA applied to judicial foreclosure complaint, despite absence of any allegation that it made a demand for payment of money on debtor: “Thus, if  the purpose of an activity taken in relation to a debt is to ‘obtain payment’ of the debt, the activity is properly considered debt collection.”); Kaltenbach v. Richards, 464 F.3d 524, 526-28 (5th Cir. 2006) (attorney who filed foreclosure action may be “debt collector” under FDCPA, despite absence of any allegation that attorney made demand for payment of money).

Ok, with the courts going in opposite directions, how do we get an answer to this question? It is possible that the Supreme Court may bring some clarity in the upcoming term when it hears the Obduskey case. The Court is expected to address in Obduskey whether the FDCPA applies to a collector’s communications made in connection with non-judicial foreclosure proceedings. While doing so, it is possible the Court will take the opportunity to opine more generally on whether communications that do not include a request for payment from the debtor are subject to the FDCPA. In the meantime, collectors will have to do their best to adjust their communications based on the law of the circuits where they are located. Stay tuned everyone.