Third Circuit Doubles Down on §1692f Violations

By Anna Claire Turpin and Caren Enloe

The Third Circuit recently doubled-down on its decision in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3^rd Cir. 2014).  In Douglass, the Third Circuit held that displaying an internal collection agency reference number through a glassine envelope window violated §1692f(8). In DiNaples v. MRS BPO, LLC, 934 F.3d  275 (3d Cir. Aug. 12, 2019), the defendant debt collector sent a collection letter to the consumer in an envelope which, on its face, displayed a QR code. When scanned, the QR code revealed the debt collector’s internal account number. The consumer filed suit asserting the envelope violated 15 U.S.C. §1692f(8) which prohibits debt collectors from “using any language or symbol, other than the debt collector’s address, on any envelope when communicating with the consumer by use of the mails. . .”  The district court granted the plaintiff’s summary judgment motion on liability based on the reasoning in Douglass.

On appeal, the Third Circuit first addressed the issue of standing and determined the consumer had suffered a concrete injury and therefore had Article III standing to bring the FDCPA claim. In doing so, the Court held that the information in the QR Code was private information. Therefore, the disclosure of this information, which the Court determined was core information relating to a debt, was a concrete intangible injury susceptible to a privacy intrusion. 

The Court then addressed the merits of the FDCPA claim and the debt collector’s argument that the QR code was benign information that did not violate section 1692f(8). While the Court declined to decide whether a benign language exception exists for purposes of  section 1692f(8), the Court rejected the debt collector’s argument that a QR code is a “benign disclosure” because it requires someone to actually scan the code to retrieve the information. Instead, the court held that there is no material difference between displaying information on the face of an envelope as in Douglass and displaying the information in a QR Code. The court reasoned that both methods display the same information and were displayed to the public regardless of the steps needed to actually identify the information. Following its reasoning in Douglass, the court found that “the harm is the same, especially given the ubiquity of smartphones.” DiNaples, 934 F.3d at  282. 

Moreover, the Court having found a violation of the FDCPA, rejected defendant’s argument that the printing of the QR code on the envelopes was a bona fide error.  In asserting a bona fide error, the defendant argued that it "erred by using industry standards for processing return mail and appreciating that no person has ever used a QR Code to determine a letter concerned debt collection." DiNaples, 934 F.3d at 282-283.  The Court dismissed this argument, noting that the issue was a mistake of law and therefore defendant could not avail itself to the bona fide error exception.

Anna Claire Turpin is an attorney practicing in Smith Debnam’s Consumer Financial Services Litigation and Compliance Group.