The U.S. Court of Appeals for the Seventh Circuit has rejected a defense to claims under the federal Fair Debt Collections Practices Act or FDCPA. In a case decided last month, the Court declined to adopt the common law “benign-language exception” to violations of 15 U.S.C. § 1692(f)(8), that allows only a business name and address on the envelope of a debt collection letter. Preston v. Midland Credit Management, Case No. 18-3119 (7th Cir. Jan. 21, 2020). The holding departs from the law of the Fifth Circuit in Goswami v. American Collections Enterprise, Inc., 377 F.3d 488 (5th Cir. 2004) and the Eighth Circuit case Strand v. Diversified Collection Service, Inc., 380 F.3d 316 (8th Cir. 2004), that adopted the exception based on Masuda v. Thomas Richards & Co., 759 F. Supp. 1456 (C.D. Cal. 1991), that first recognized the exception.
The FDCPA regulates the conduct of debt collectors that attempt to recover unpaid consumer debt. The regulations are extensive and heavily regulated, resulting in volumes of federal district court and courts of appeal decisions that interpret or apply the FDCPA. From these cases, one defense available to debt collectors that has emerged is the “benign-language exception.” It applies in cases (at least in cases in the Fifth and Eighth Circuits) involving debt collectors placing words or symbols, such as “Immediate Reply Requested” and “Personal and Confidential” on an envelope with a debt collection letter inside. Those courts held that the statute allows a company name, and courts have allowed a company’s initials as well, so by “natural extension” then, a neutral logo or innocuous phrase printed on a debt collection envelope is benign and does not violate the statute as long as it does not reveal the contents. After all, those courts reasoned, the FDCPA was meant to stop intimidating, not harmless, collection tactics.
The Seventh Circuit, that hears appeals from federal district courts in Wisconsin, Illinois and Indiana, disagreed with the approach taken by the Fifth and Eighth Circuits. The court held the plain reading of the statute was conclusive; it precludes, “[u]sing any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails . . . except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.” 15 U.S.C. § 1692(f)(8). From that statutory language, the court held it was clear that any language or symbol on a debt collection envelope, except the debt collector’s name (as long as it does not reveal the letter is from a debt collector) and address, violates subsection (8). Because the statute allows “use of the mails” for sending debt collection letters however, the statute does not prohibit markings required by the U.S. Postal Service, such as stamping or affixing language or symbols to ensure the successful delivery of the communication.