Appeals Court Upholds Ruling for Debt Collector in FDCPA-TCPA Case

The U.S. Court of Appeals for the Fourth Circuit Wednesday affirmed a lower court’s summary judgment in favor of a debt collection agency on a non-debtor’s claim that the company repeatedly contacted him to collect the debt of another in violation of the Fair Debt Collection Practices Act (FDCPA) and Telephone Consumer Protection Act (TCPA).

In essence, the court’s opinion says that collection agencies may place automated calls to third parties when seeking information on debtors until they receive a complete response without violating the FDCPA.

The case, Michael C. Worsham v. Account Receivables Management, Inc., was filed pro se after Worsham received some 10 debt collection calls placed to his residence that played a prerecorded message seeking to speak to someone. His suit asserted four claims under the FDCPA, three claims under the TCPA, two claims under the Maryland TCPA, and common law invasion of privacy.

U.S. District Court for the District of Maryland granted summary judgment in favor of ARM Inc., in November of last year. Worsham appealed the case thereafter.

Writing for insideARM.com last year, John Lynch, an attorney with ARM Inc.’s defense firm Troutman Sanders, claimed, “this is the first known decision from a federal court within the Fourth Circuit to hold that debt collection calls – including those to a non-debtor – are exempt from the TCPA’s prohibition on prerecorded messages to landlines.”

Furthermore, the court held that unanswered calls are not “communications” under the FDCPA.

According to the appellate opinion filed Wedneday, ARM, Inc. was trying to locate a debtor, Martha Bucheli,1 who is Worsham’s sister-in-law. During the company’s efforts to locate Bucheli, it discovered Worsham’s phone number as a possible contact for Bucheli. ARM, Inc. called Worsham’s phone number approximately 10 times in late May 2010. Worsham answered only two of these phone calls, and both times he heard a prerecorded message telling him to press “1” if he were Martha and “2” if he were not Martha. On one of these occasions, Worsham pressed “2” and upon hearing more prompts and options, he hung up the phone. On the other occasion, Worsham hung up the phone without pressing “2” to indicate he was not Bucheli. At no point did Worsham speak to a live representative from ARM.

The Court held that debt collection calls, including those to a non-debtor, are exempt from the TCPA’s prohibition on prerecorded messages because such calls “do not adversely affect the privacy rights” that the TCPA “is intended to protect.” The Court emphasized that the purpose of the TCPA is to prevent abusive telemarketing practices and found that none of the alleged calls “included the transmission of an unsolicited advertisement.” Also, the Court held that the same exemption applies to Plaintiff’s Maryland TCPA claims.

The Court also held that “unanswered telephone calls can hardly be considered ‘communications’ under the FDCPA.” Further, the Court found that the two calls Plaintiff allegedly answered did not violate the FDCPA because ARM was attempting to locate the consumer and reasonably believed that Plaintiff’s prior response in pressing option “2” for “I am not the debtor,” but hanging up before speaking to a live agent, was erroneous and/or incomplete.