Another Court Weighs in on the Envelope Window

Since the Third Circuit’s decision in Douglass v. Convergent Outsourcing, FDCPA cases concerning information visible through the debt collector’s envelope have been on the rise.  The Northern District of Illinois has now weighed in, cautioning parties about statutory interpretations which yield absurd results.  In Schmid v. Transworld Systems, et al., C.A. No. 15 C 02212 (N.D. Ill. Sept. 4, 2015), the plaintiff alleged that a string of digits and letters which were visible through the envelope’s transparent window included the consumer’s account number within the string.  The plaintiff alleged that the display of this text violated 15 U.S.C. §1692f(8) which prohibits, among other things, the use of any “language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram.”   

In reviewing the consumer’s claim, the court first noted that section 1692f(8) must be reviewed within the context of the statute, noting that “the statute’s literal terms cannot be read without taking the entirety of the statute into account.” Schmid, Slip Op. at 8.  The court first looked at the prefatory language of section 1692f which prohibits unfair or unconscionable means to collect or attempt to collect a debt.  The court noted that the conduct therefore must be a means to collect a debt.  The court then noted that subsection 8 requires that the language or symbols communicate something to the consumer.  The court concluded that the alphanumeric string communicated nothing (even though the account number was imbedded within) and cautioned that a literal statutory interpretation must be avoided when it would lead to absurd results.  To apply a literal interpretation to subsection 8, the court continued, would preclude any information aside from the debt collector’s address from being on the envelope, including a stamp or the consumer’s address.

While this opinion offers some good news for the debt collection industry, a couple of notes to temper the good news:

• The Seventh Circuit (which includes the Northern District of Illinois) has rejected the least sophisticated consumer standard and applies a less strict “unsophisticated consumer” standard.  Under the stricter standard, a different result may have occurred; and
   
• The Court did not go so far as to suggest it would reach the same result if faced with the same facts as presented by Douglass.  In fact, the court was careful to note that “[t]he display of text on an envelope that makes it readily apparent to anyone who might see it that the enclosed contents deal with the recipient’s debt obligations…would breach…[the recipient’s] privacy and thus represent the kind of “unfair and unconscionable means” covered by § 1692f.”