American Financial Services Association

Trades United in Request for 11th Circuit to Review Hunstein

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Trades United in Request for 11th Circuit to Review Hunstein

This week, AFSA and six other trade associations joined together in a brief asking that the 11th Circuit Court of Appeals review a decision made by a panel of the court’s judges. The case, Hunstein v. Preferred Collection and Management Servs., Inc., has serious implications for the financial services industry.

En banc review is required because the Court’s decision prohibits not only third-party debt collectors, but the entire financial services industry—including banks, credit unions, and finance and mortgage companies—from using third-party service providers that are vital to servicing of loans, the trades wrote, “These service providers make financial services more affordable and efficient for consumers and are particularly important now in reaching customers impacted by COVID-19. The decision also threatens to limit the ability to share information necessary for buying, selling, and securitizing loans, which is critical to the financial services market. None of this was intended by the drafters of a statute meant to curb abusive debt collection practices.”

Earlier this year, the panel of judges held that a debt collector who shared debt-related personal information with a third-party vendor for collection letter printing and mailing violated the Fair Debt Collection Practices Act (FDCPA). The 11th Circuit panel acknowledged that its ruling has the potential to substantially expand the scope of the FDCPA because the debt collection industry generally relies on mail and other vendors. However, the court discounted that concern. The opinion held that while Hunstein may be the first case in which a debtor brings suit against a debt collector for disclosure of personal information to a mail vendor, that hardly proves that such disclosures are lawful. This decision is significant because debt collectors transmit consumer personal information in their third-party vendor relationships frequently. Copycat lawsuits are springing up all over the county.

While the majority of requests for a rehearing are denied, we are hoping that the large amount of national interest in the case will lead the court to grant the motion.

In addition to litigation, AFSA has discussed the implications of this case with members of Congress and the Consumer Financial Protection Bureau (CFPB).

June 3rd, 2021 by