Rehearing needed by full appeals court on FDCPA decision

June 2, 2021

CUNA and other financial industry associations supported a petition for a rehearing en banc of a lawsuit that deals with communications under the Fair Debt Collection Practices Act (FDCPA) in an amicus brief filed Tuesday. CUNA and the organizations seek a re-hearing before the entire 11th Circuit Court of Appeals. 

A three-judge panel in the 11th Circuit Court issued an opinion in Hunstein v. Preferred Collection and Management Services, Inc. that would expand the potential actions that could violate the FDCPA.

“The panel’s broad reading of Section 1692c(b) renders the statute in violation of the First Amendment. In fact, under the panel’s interpretation, Section 1692c(b) may be the most burdensome restriction on commercial speech in the federal code,” the brief reads. “Yet this heavy restriction cannot be justified by the promise of advancing a substantial interest in a tailored manner.”

CUNA and the other organizations note that the rehearing before the entire circuit is required, “because the Court’s decision prohibits not only third-party debt collectors, but the entire financial services industry—including banks, credit unions, and mortgage companies—from using third-party service providers that are vital to servicing of loans.”

The brief adds that the previous decision threatens to limit the ability to share information necessary for buying, selling, and securitizing loans, which is critical to the financial services market.