Collection agency envelope that used federal agency's return address violated Fair Debt Collection Practices Act

Law Reporter, Mar 2003

CONSUMER PROTECTION

Peter v. GC Servs. L.P, 310 F.3d 344 (5th Cir. 2002).

The Fifth Circuit Court of Appeals held that an envelope used by a collection agency violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. sec 1692, because it could lead the recipient to believe it was sent by a government agency.

Here, a debtor received a notice from a private collection agency concerning student loan debt. The envelope carried the return address of "U.S. Department of Education." The debtor sued the agency and its general partners, alleging that it had used deceptive practices in trying to collect the debt. The trial court granted defendants summary judgment.

Reversing in part, the appellate court observed that the FDCPA bars any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or telegram, except that a debt collector may use its business name if such name does not indicate that it is in the debt collection business. The defendants' use of the Department of Education's name and address on the envelope, as well as a marker that the envelope is not to be used for private communication, violated the plain language of the statute.

The court rejected defendants' argument that other courts have ruled that "benign language" does not violate the FDCPA. Those cases involved phrases such as "personal & confidential" and "forwarding and address correction requested," the court explained. Here, defendants' impersonation of the Department of Education is certainly not benign, the court said. The U.S. Senate report that accompanied the passage of the FDCPA explained that the purpose of the act was to protect consumers from a host of unfair, harassing, and deceptive debt collection practices, without imposing unnecessary restrictions on ethical debt collectors. One of the deceptive practices Congress was concerned about was "impersonating public officials," because of the large number of pre-FDCPA cases where debt collectors were sanctioned for impersonating government agencies. As defendants' impersonation of a federal department implicates this core concern of the FDCPA, any implicit exception for benign language cannot be stretched to cover that thoroughly disapproved practice, the court said.

Accordingly, the court remanded.

Plaintiff's Counsel

*Daniel A. Edelman,

Adela Cassandra Lucchesi,

Cathleen M. Combs, and

James O. Latturner, all of Chicago, Ill.