New York District Court Finds Pre-recorded Messages are a "Communication" Under the FDCPA

Published: Monday, April 17, 2006

In Foti v. NCO Fin. Sys., Inc., No. 04-CV-707(KMK), 2006 WL 779774 (S.D. N.Y. Mar. 25, 2006), the court held that a pre-recorded message left on the consumer's answering system was a communication in connection with the collection of a debt. Since the pre-recorded message was left with the consumer after the initial validation notice was sent, the court determined the message was a subsequent communication.

To comply with Section 807(11), in all communications subsequent to the initial communication with a consumer, a debt collector must disclose the communication is from a debt collector. Numerous courts have held that such a disclosure is satisfied if the debt collector states, "This is a communication from a debt collector," or if the name of the debt collection agency (as stated in the written or oral communication) makes clear the communication is from a debt collector.

The pre-recorded message left by the defendant stated the following: "Good day, we are calling from [Defendant] Financial Systems regarding a personal business matter that requires your immediate attention. Please call back 1-866-701-1275. Once again, please call back, toll-free, 1-866-701-1275. This is not a solicitation."

The court found that other than the agency name, the message contained no other suggestion that the correspondence was from a debt collector. Instead, a consumer would need to recall that it previously received mail from a debt collection agency in order to recognize the call was from a debt collector. The court found that placing such a burden on the consumer was unreasonable. Thus, the court determined the pre-recorded message failed to comply with the requirements of Section 807(11).

Such a holding presents a noticeable dilemma for debt collectors. By complying with the Section 807(11) requirement to disclose the communication is from a debt collector, there is a possibility that a claim based upon an unauthorized third-party disclosure may result.

In an attempt to ward off a negative decision by the Southern District of New York in the Foti vs. NCO litigation and in light of similar decisions out of California, ACA filed a request for an Advisory Opinion with the Federal Trade Commission (FTC) in the fall of 2005. A copy of ACA's Request for an Advisory Opinion may be found by clicking here. The FTC has yet to release an Advisory Opinion on the issue. ACA is continuing to meet with the FTC to discuss the industry's dire need for clarification in the form of an Advisory Opinion.

In light of Foti and other recent decisions, ACA strongly recommends consulting with independent legal counsel as you decide how you will adjust your operations and compliance programs to comply with Foti and similar decisions.

Please watch for more information from ACA about this decision and a possible letter writing campaign to the FTC.

This article is provided as a service of ACA International's Legal and Government Affairs Department.