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 seeminglysimple questions have dividedthe circuit courts,and they may soon be resolvedby the United States SupremeCourt when it decides a case that arose out of a nonjudicial foreclosure proceeding in Colorado. See Obduskeyv. 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 statutesin the country. It prohibitsdebt collectors from engaging in a broad rangeof 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 exactlywhat “debt collection” means?
You would think this would be easy, but like most things relatingto the FDCPA, it is not. For starters, as courts have observed, althoughthe statute includes a number of definitions, Congressdid 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 undesiredeffects); § 1692a (defining certainterms, but not defining“debt collection”); see also Glazerv. 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 circuitnor any otherhas established a brightline rule for determining whethera communication from a debt collector was made in connection with the collection of any debt.”).To date, the Supreme Court has never definedthe 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 courtshave reached differentconclusions on whethera “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 TenthCircuit have held that a collectoris notengaged in “debt collection” under the FDCPAunless the challenged communication makes a demandfor paymentof money. See, e.g.,Ho v. ReconTrust Co., NA, 840 F.3d 618, 621-623 (9th Cir. 2016)(mailing notice of defaultand 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 noticesat issue in our case didn’t request payment from Ho.”); Obduskey v. Wells Fargo, 879 F.3d 1216, 1221 (10th Cir.) (following Ho; “Becauseenforcing a securityinterest is not an attempt to collect money from the debtor, and the consumerhas no “obligation . . . to pay money,” non-judicial foreclosure is not coveredunder FDCPA) (citations omitted), pet. for cert. granted, 138 S. Ct. 2710 (2018).
The approachused by the Ninth Circuitand Tenth Circuitseems 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 demandfor paymentof 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] requiresthat a debt collector’s misrepresentation [or other violative actions] be made as part of an express demandfor paymentor even as part of an action designed to induce the debtor to pay.”) (emphasis in original, citation omitted); Gburek, 614 F.3d at 386 (letteroffering to discuss“foreclosure alternatives” was attemptto collect a debt: “Though it did not explicitly ask for payment, it was an offer to discuss Gburek’srepayment options,which qualifies as a communication in connection with an attempt to collect a debt.”); Glazer, 704 F.3d at 461 (FDCPA appliedto judicial foreclosure complaint, despite absenceof any allegation that it made a demand for paymentof money on debtor:“Thus, if the purposeof an activity taken in relationto 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 absenceof any allegation that attorneymade demand for paymentof money).
Ok, with the courts goingin opposite directions, how do we get an answer to this question? It is possiblethat the SupremeCourt may bring some clarityin the upcomingterm when it hears the Obduskey case. The Court is expected to address in Obduskey whether the FDCPA appliesto a collector’s communications made in connection with non-judicial foreclosure proceedings. While doing so, it is possiblethe Court will take the opportunity to opine more generallyon whether communications that do not include a request for paymentfrom the debtorare subject to the FDCPA.In the meantime, collectors will have to do their best to adjust their communications based on the law of the circuitswhere they are located. Stay tuned everyone.