Courts Find No Violation in Visibility of Account Digits

Two federal judges in New York have reached the same conclusion in unrelated cases that having consumers' account numbers visible on the outside of envelopes containing letters from debt collection agencies does not, by itself, violate the federal Fair Debt Collection Practices Act.

Both Southern District Judge Colleen McMahon and Western District Judge John Curtin wrote that they would not follow a 2014 decision by the U.S. Court of Appeals for the Third Circuit that has caused dismay among some in the debt collection industry by saying the appearance of an account number with the addressee's name on a collection envelope did violate the debt collection act.

McMahon and Curtin agreed that the federal law sought to prohibit wording on envelopes that identifies addressees as debtors, thereby causing them possible embarrassment or worse, and that the coding visible on envelopes in the cases before them was indecipherable to members of the public.

In Perez v. Global Credit and Collection, 14-cv-9413, McMahon said the eight-digit account number that consumer Yajaira Perez objected to was "meaningless to anyone other than someone at Global Credit."

"Even the fact that it is an account number says nothing about whether the plain white envelope contained a debt collection communication, as opposed to a renewal notice, a special offer to consumer, or any of the other myriad junk mail communications that arrive in plain white envelopes with glassine windows on a daily basis in the mailboxes of America," McMahon wrote in her ruling from Manhattan.

Curtin ruled from Buffalo in Gelinas v. Retrieval-Masters Creditors Bureau, 15-cv-116, that "nothing about the series of letters and numbers above the addressee's name intimates that the contents of the envelope relate to the collection of a delinquent debt, and the visibility of these numbers and letters is neither threatening nor embarrassing."

Curtin said the markings on the envelope received by consumer Lucienna Gelinas were "benign," and that the exception that courts have recognized under the debt collection act for benign, unidentifiable markings on creditors' communications should apply.

The consumers in both cases contended that the letters they received from collection agencies violated §1692f(8) of the debt collection act, which states that it is a violation of the statute for a debt collector to use "any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer ... except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business."

Both judges noted that, over time, courts have come to recognize an exception under the debt collection act on communications from creditors for "benign" words or notations that cannot be construed as being threatening to consumers or designed to cause them embarrassment because they owe money.

Both consumers cited the ruling by the Philadelphia-based Third Circuit last year in Douglass v. Convergent Outsourcing, 865 F.3d 299 (2014), as making the letters they received from creditors in violation of the debt collection act because their account numbers were visible on the envelopes.

In Douglass, the Third Circuit held that a consumer's account number with a collection agency was "not meaningless" and when coupled with the name of the addressee could potentially identify the consumer as a debtor.

McMahon wrote that the Third Circuit's analysis in Douglass was "unsupported by any analysis."

Similarly, Curtin wrote from Buffalo in Gelinas that he was not bound to follow the Douglass decision and would not do so.

Both federal judges noted that the Second Circuit has never ruled directly on the question raised in both the Perez and Gelinas matters. Each said the closest case on point in the circuit was the ruling by a Connecticut district judge in Johnson v. NCB Collection Servs., 799 F.Supp. 1305 (1992), and each cited it as supporting the findings they made in favor of the collection agencies in the cases before them.

In Johnson, a district judge held that numbers printed on the outside of a collection agency's pre-addressed return envelope that was included in a mailing to a debtor did not make that consumer identifiable as a debtor and did not violate the debt collection act.

Bradley Levien, partner with Mintzer, Sarowitz, Zeris, Ladva& Meyers in Manhattan, and David Peltan of East Aurora represented Global Credit and Collection.

Edward Geller of the Bronx represented Perez.

Daniel Moar, partner with Goldberg Segalla in Buffalo, represented the Retrieval-Masters Creditors Bureau in the Western District case.

Moar said in an interview Friday that Douglass had caused alarm in the debt-collection industry because the use of account numbers, some fully visible and some visible in part, was "incredibly common" in communications from collection agencies to debtors.

"You had debt collection agencies which would send out literally hundreds of thousands of letters," Moar said. "It created a new opportunity for plaintiffs to try to file suit. After you had this ruling [ Douglass], you had hundreds of suits filed, often class-action suits."

He added that the ruling in Gelinas is "going to cause a huge sigh of relief" in the debt-collection industry in the Second Circuit. "It is going to allow the courts to do some docket cleaning."

Gelinas' attorney, Cyrus Chubineh of Getzville, said Friday he and his client were unhappy with the Curtin ruling but said Gelinas was unlikely to pursue an appeal.

McMahon's ruling was dated July 27; Curtin's July 22. Both judges dismissed the claims before them.

The collection agency-defendants in both cases argued that Douglass was an outlier that was in direct contradiction to rulings about the identifiability of consumer account numbers under the FDCPA in Goswani v. American Collectors Enterprise, 377 F.3d 488 (5th Cir. 2004), and Strand v. Diversfied Collection Service, 380 F.3d 316 (8th Cir. 2004).

By Joel Stashenko