The United States Court of Appeals for the Third Circuit recently held that the federal Fair Debt Collection Practices Act applies to communications with a consumer’s attorney. Allen ex rel. Martin v. LaSalle Bank, N.A., No. 09-1466, 2011 WL 94420 (3rd Cir. Jan. 12, 2011).

    In Allen, a law firm brought a foreclosure action against a consumer. Upon request, the law firm sent the consumer’s attorney a letter setting forth the amount required to pay off the principal amount of the loan and other amounts due, including attorneys’ fees and costs due the law firm. On the same day, the law firm sent a second letter to the attorney itemizing the attorneys’ fees and costs in the previous letter.

    The consumer filed a class action against the law firm, the current holder of the loan and the loan servicer. The consumer claimed that the law firm and holder violated the FDCPA’s prohibition against unfair and unconscionable collection practices by sending letters attempting to collect amounts prohibited by state law. The law firm moved to dismiss the complaint, arguing that a communication from a debt collector to a consumer’s attorney is not governed by the FDCPA.

    The district court held that the law firm’s letters were governed by the FDCPA, but should be analyzed from the perspective of a competent attorney. The district court found that a competent attorney would have readily recognized any overcharges reflected in the letters, and the consumer’s attorney protected the consumer from the alleged overcharges. Accordingly, the district court dismissed the consumer’s FDCPA claims.

    On appeal, the Court agreed that the law firm’s letters were subject to the FDCPA, which the Court concluded is broad in scope and does not explicitly exempt communications to an attorney from the prohibition against unfair or unconscionable collection practices. The Court, however, refused to analyze the letters from the perspective of a competent attorney. Instead, the Court indicated that attempting to collect an unauthorized debt is a per se unfair or unconscionable debt collection practice. Consequently, the Court held that the law firm may have violated the FDCPA if the amounts demanded in the letters sent to the consumer’s attorney were not expressly authorized by the agreement with the consumer or permitted by law.

    Other courts have held that communications with a consumer’s attorney are subject to the FDCPA. See, e.g., Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769 (7th Cir. 2007). Still others have reached the opposite conclusion. See, e.g., Guerrero v. RJM Acquisitions LLC, 499 F.3d 926 (9th Cir. 2007) (holding that communications directed solely to a consumer’s attorney are not actionable under the FDCPA). Given the split of authority, debt collectors should be cautious when communicating directly with a consumer’s attorney.

    • Margaret Stolar and Chuck Gall