11th Circuit Agrees with AFSA on Hunstein
By a vote of 8 to 4, judges in the 11th Circuit Court of Appeals held that the plaintiff in Hunstein v. Preferred Collection and Management Servs., Inc., failed to allege a concrete harm that would provide Article III standing to pursue claims in federal court, and accordingly ordered the district court’s judgment be vacated and the case dismissed. Chief Judge Bill Pryor in a concurrence indicated that the case was an “exercise in simplicity” following the U.S. Supreme Court’s TransUnion decision from last summer.
As background, earlier this year AFSA and six other trades filed a brief asking that the 11th Circuit Court review a prior decision made by a panel of the court’s judges in Hunstein.
“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.”
The original 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), and also acknowledged that its ruling had 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. The ruling was considered significant because debt collectors transmit consumer personal information in their third-party vendor relationships frequently.
AFSA will share full analysis of the ruling after it completes its review of the decision.
September 8th, 2022 by Dan Bucherer