Circuit Court Ruling to Impact Collection Letters

The Third Circuit Court of Appeals last week issued a ruling regarding meaningful attorney involvement in debt collection cases.

Attorneys and law firms often participate in the collection process in ways other than filing suit to collect a debt. However, when an attorney or a law firm sends a collection letter on attorney or law firm letterhead, or otherwise threatens or implies legal action in a collection letter, the letter may violate § 807 of the Fair Debt Collection Practices Act (FDCPA) if the attorney or firm is not meaningfully involved in the decision to send the letter.

The term “meaningfully involved” in this context is generally understood as requiring an attorney to conduct some review of the particulars of an account prior to sending a letter which appears to be from the attorney.

This issue was revisited in a recent opinion handed down by the United States Court of Appeals for the Third Circuit. In Lesher v. Law Offices of Mitchell N. Kay, P.C., No. 10-3194, (3d Cir. June 21, 2011), the Third Circuit affirmed a district court decision that found a law firm’s collection notices violated § 807 of the FDCPA. The court reasoned the letter violated the Act because the letters were printed on the law firm’s letterhead and gave the impression an attorney was personally involved with the collection of a debt, when in fact, an attorney was not.

The letters in question included a disclaimer on the back of each letter that stated in part, “[a]t this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.” This disclaimer is similar to a disclaimer that was approved by the United States Court of Appeals for the Second Circuit in Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360 (2d Cir. 2006). However, in Greco, the disclaimer was placed on the front of the letter within the main text, not on the back of the letter. Additionally, the Third Circuit noted in the instance case that the text of the letter in Lesher contradicted the disclaimer printed on the back of the letter.

The Third Circuit’s opinion in Lesher adds to a growing body of case law finding such a disclaimer may not be effective to avoid liability under § 807, especially in instances where the disclaimer is contradicted by the main text of the letter or the disclaimer is placed on the letter in such a way as to render it ineffective (i.e., placing the disclaimer on the back of the letter).

ACA International supported the defendant in Lesher by filing an amicus brief with the court. ACA would like to thank Richard J. Perr, Esq. with Fineman, Krekstein & Harris PC for his assistance in preparing ACA’s amicus brief. For more information on this decision, review the full text of decision on the Third Circuit’s website.

For more information on the issue of attorney involvement, ACA members can review ACA Fastfax #2055.