FDCPA Ruling in Favor of Collector Defines One Aspect of "Communication"

A federal appeals court Wednesday published an opinion in favor of a debt collection agency that not only attempted to define a narrow aspect of a “communication” under the FDCPA, but awarded costs to the ARM defendants.

The United States Court of Appeals for the Tenth Circuit affirmed a lower court ruling in favor of the defendants in the case Olivea Marx v. General Revenue Corporation (GRC). In doing so, the court found no violation of the Fair Debt Collection Practices Act (FDCPA) and awarded costs to GRC in the amount of $4,543.

The initial case was filed October 2008 after the plaintiff defaulted on a student loan assigned to GRC. Marx claimed that a fax sent to her workplace for the purpose of employment verification violated the FDCPA’s prohibition on third party disclosure. GRC sent the fax in response to her employer’s request for verification in writing.

A lower court found that the employment verification did not violate the FDCPA because it did not constitute third party disclosure. In fact, “GRC designed the form precisely to avoid such an implication,” wrote the court. Since under the FCPA, a “communication” is defined as the “conveying of information regarding a debt directly or indirectly to any person through any medium,” both courts found that the fax did not constitute a “communication.”

The ruling could have broad implications for ARM companies. The case defined – or specifically, declined to define – a particular fax as a communication. So there is an opportunity for collection agencies to use the fax as a template. But the case is limited in that a fax was being used here, not a voice message. So the impact as it relates to Foti entanglements is yet to be determined.

The case, does however, provide a clear path for winning costs from a plaintiff in a defendant victory.

The question before the appellate court was whether a defendant could recover costs should they prevail and there is no finding that the case was brought in bad faith.  There was never an allegation that Marx brought the case in bad faith, so GRC would not have been eligible to recover attorney’s fees. But in exploring the FDCPA for costs, both courts determined that the language of the FDCPA does not tie the awarding of attorney’s fees to the awarding of costs. Thus, GRC was awarded $4,543 in costs and that decision was affirmed in Wednesday’s ruling.

The full opinion can be read on the court’s website.