Much Ado About Nothing: Hunstein's Three Trips To The Eleventh Circuit Did Not Clarify Whether The FDCPA Is A Financial Privacy Statute

• Published date: 18 October 2022
• Subject Matter: Finance and Banking, Consumer Protection, Privacy, Debt Capital Markets, Financial Services, Consumer Law, Privacy Protection
• Law Firm: Adams and Reese
• Author: Ms Amy L. Hanna Keeney and Joshua A. Lesser

By now, those in the financial services, vendor management, and consumer protection spaces have heard of Hunstein v. Preferred Collection & Mgmt. Services, Inc. and that case's rare three trips to a federal appellate court in effort to answer this question: does the federal Fair Debt Collection Practices Act (the "FDCPA") apply to prohibit the very routine communications between a debt collector and its vendors? Unfortunately, none of the opinions ultimately provide an answer to this apparent question of first impression, though they imply one.

What message does the Hunstein opinions send to companies that regularly transmit personal and potentially sensitive information to third-party vendors?

Brief Procedural History

In Hunstein 1,¹ a three-judge panel of the Eleventh Circuit first unanimously held that a debt collector's transmission of a debtor's private data to a dunning vendor was actionable under the FDCPA.²

In Hunstein 2,³ the same panel then sua sponte vacated and superseded Hunstein 1 (to address the intervening Supreme Court opinion of TransUnion LLC v. Ramirez⁴), but ultimately reached the same conclusion, 2-1, but over a vociferous dissent.

The Eleventh Circuit then granted rehearing en banc, and on September 8, 2021, issued its Hunstein 3⁵ opinion vacating Hunstein 2 and remanding to the district court with instructions to dismiss the case without prejudice, finding that the plaintiff failed to properly allege his claim. In doing so, the Hunstein 3 court considered but ultimately did not make a ruling on the pivotal question'whether the FDCPA prohibits a debt collector from sending a consumer's private data to a dunning vendor.

Background

Section 1692c(b) of the FDCPA provides, in pertinent part, that "without the prior consent of the consumer given directly to the debt collector, . . . a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer . . . ." Here, the plaintiff's son received medical care, and the plaintiff allegedly did not pay the bill, which was then placed for collections with the defendant. The defendant then sent certain information, including the plaintiff's status as a debtor, the exact balance of the debt and the entity to which it was owed, that the debt concerned his son's medical treatment, and the plaintiff's son's name, to its dunning vendor, Compumail, to issue dunning letter(s) to the plaintiff.

The issue in all three Hunstein opinions was not whether this communication of information was prohibited by ' 1692c(b), but whether plaintiff had alleged a "concrete harm" such that he had standing to bring the claim (i.e., whether the courts had a case or controversy sufficient to confer jurisdiction).

Concrete harm is normally alleged by showing an injury in fact'some tangible harm to a person's body or property. In cases of a bare statutory violation unaccompanied by an injury in fact, however, the plaintiff must show an "intangible harm."⁶ Intangible harm is a relatively illusory concept, but one way courts assess it is by "compar[ing] [the intangible harm] to a harm redressed in a traditional common-law tort."⁷

In his complaint, Hunstein alleged that Preferred Collection's communication with Compumail in connection with debt collections was comparable to the common-law tort of Public Disclosure of Private Facts ("Public Disclosure"), which requires showing, amongst other things, the "publicity" of private information.

The Majority Opinion

The Hunstein 3 Majority...