Court Issues Favorable Ruling for Collection Industry

The District Court for the Eastern District of Pennsylvania produced a victory for the collection industry, holding collection calls to residential lines of nondebtors are exempt under the Telephone Consumer Protection Act (TCPA). The court also held consumers have the burden of proving their underlying debt is for personal use when asserting a claim under the Fair Debt Collection Practices Act (FDCPA).

In Anderson v. AFNI, Inc., an individual alleged a debt collector violated the TCPA and the FDCPA by placing 76 telephone calls to her home telephone number using an automatic dialing system when the individual did not consent to the telephone calls being made. It was undisputed the individual was a victim of identity theft and had notified consumer reporting agencies as well as the debt collector of this fact. The skiptracing services used by the debt collector continued to produce the individual’s number, and calls were placed to the individual’s residence even though she was not the intended recipient. The court held the individual had standing to bring a claim under the TCPA because 47 U.S.C. Section 227(b)(3) grants standing to “any person or entity.” The court asserted granting standing to unintended recipients does not contradict the Act.

The individual claimed the debt collector violated 47 U.S.C. Section 227(b)(1)(B) of the TCPA by initiating telephone calls to the individual’s residential telephone line using an artificial or prerecorded voice without the prior express consent of the individual. The TCPA prohibits debt collectors from using a prerecorded message to call a consumer’s residential line unless the call is made for an emergency purpose, a commercial purpose, by a tax-exempt nonprofit organization or there is an established business relationship.

The debt collector asserted “all” debt collection circumstances involve an established business relationship; therefore, the exemption, under 47 C.F.R. Section 64.1200(a)(2)(iii), applied and the collector was not liable.

The court held collection calls to nondebtors were exempt under the TCPA, reasoning the established business relationship exemption under 47 C.F.R. Section 64.1200(a)(2)(iii) applies to all calls made to non-debtors purely for the purpose of debt collection.

The individual also alleged the debt collector violated several provisions of the FDCPA. The debt collector contended the debt was not “consumer debt;” therefore, it was not subject to the FDCPA. The individual asserted the debt was a “consumer debt” because it was (1) being collected from an individual person; (2) the address associated with the account was a residential address; and (3) the debt collector treated the debt as if it was a “consumer debt.”

The court held the individual had the burden of showing the underlying debt was for personal use. Discovery needed to be conducted to determine the purpose of the original consumer’s debt in order to assert a claim under the FDCPA.

Accordingly, summary judgment was granted in favor of the collection agency.