On Thursday, August 8, 2019 the Seventh Circuit Court of Appeals (7th Cir.) published its long-awaited opinion in the matter of Lavallee v. Med-1 Solutions, LLC, 17-3244 (7th Cir. Aug. 8, 2019). For everyone in the ARM industry that is considering using email to deliver requisite 1692g disclosures, the decision is mandatory reading.
I wrote an article about this case in October of 2017 when I was still at insideARM. At that time, I wrote: “On September 29, 2017, in a very interesting and timely Fair Debt Collection Practices Act (FDCPA) case, a district court in Indiana shot down a debt collector’s argument that it “sent” its validation notice to a consumer via email. The case is Lavallee v. Med-1 Solutions, LLC (Case No. 1-15-cv-1922, U.S.D.C., Southern District of Indiana).”
Everyone in the ARM industry is talking about more “digital engagement” with consumers. Interactive web portals, emails, texts, chat are the obvious options, with email being the most interesting and potentially most beneficial. However, use of email, particularly for 1692g disclosures, is fraught with issues.
What the Lavallee case has taught us is this: sending an email that contains a hyperlink to the requisite disclosures is NOT a communication of the requisite disclosures under the Fair Debt Collection Practices Act (FDCPA). The crux of the court’s opinion revolves around the definition of “communication”, particularly what constitutes a “communication” under the FDCPA. The court found that the emails were not “communications” since the substance of the email itself contained no disclosures or debt information. Nor did the hyperlink save the emails because it required the consumer to take multiple extra steps to obtain the information. (In fact, the court found that the consumer would have been required to take six (6) separate actions to read the notice.) The court noted:
“To access the validation notice, Lavallee would have had to (1) click on the “View SecurePackage” hyperlink in the email; (2) check a box to sign for the “SecurePackage”; (3) click a link to open the “SecurePackage”; (4) click on the “Attachments” tab; (5) click on the attached .pdf file; and (6) view the .pdf with Adobe Acrobat or save it to her hard drive and then open it.”
The CFPB’s NPRM is currently the hot topic in the ARM space. The NPRM is opening the door to more electronic communications, including emails. However, it is not clear at this time how “open” that door is going to be. Use of emails for initial communications is an interesting concept - but many questions remain to be answered. Notably: How and when can the industry use emails for communication? What will be required to use emails? Should “prior consent” be required and how will we track consent and revocation? Finally, what in the world does the ESIGN Act have to do with this?
The NPRM's comment period has been extended. Debt collectors and industry groups now have until September 18, 2019 to submit comments on this specific issue.
It will be very interesting to see how email communications will be used in the future. Among the open issues to be resolved is what options will pass muster when sending required disclosures to consumers via email if using Lavellee-like hyperlinks are not considered an appropriate communication?
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About the author
Tim Bauer, Chief Executive Officer
An ARM executive with a wide range of experience in M&A, operations, compliance, sales and marketing, and portfolio acquisitions, Tim joined DCMS in October of 2017. Relying on his diverse background, Tim’s primary role is to work with the Board of Directors to set strategy and direction for the company.
Before joining DCM Services (DCMS), Tim was President of the iA Institute and its affiliate, insideARM. The iA Institute is a media company that specializes in providing context, insight, and practical information to the complex debt industry. Prior to his time at the iA Institute, Tim was involved with several of the largest collection agencies with call centers in the United States and nearshore/offshore locations. His background includes various senior management positions with Integrity Solution Services, Inc., Outsourcing Solutions, Inc. (OSI) and Risk Management Alternatives, Inc. (RMA).