The U.S. Court of Appeals for the Ninth Circuit ruled that debt collectors – including third parties who may be collecting mortgage debt – cannot send notices addressed to debtors at their place of employment even if it's addressed "in care" of the debtor.
The case is Evon v. Law Offices of Sidney Mickell.
The original suit involves a debt collector who sent Catherine Evon a collection letter at her place of work. Evon sued saying mailing the letter to her work violated the Fair Debt Collection Practices Act's prohibition on communicating debt issues with third parties.
"It applies to all third parties who are collecting debt that is owed to someone else," said Alan Kaplinsky, partner at Ballard Spahr and one of the authors of an alert covering legal issues tied to financial services.
Kaplinsky said the ruling doesn't apply to creditors or mortgage lenders and servicers. However, when there is a third-party hired to collect on a mortgage debt or a debt of any kind, the provision is applicable.
In the mortgage space, it's typically the servicer who does the work and then gets a law firm to foreclose, Kaplinsky said. But he added, "Law firms are covered by the FDCPA act. After a foreclosure occurs, if there is a deficiency, a third-party or some other debt collector might be hired to try to collect on that deficiency."
In that case, a mortgage-debt collector who is a third party may have to be aware of the act's applicability.
"Because Congress enacted the FDCPA to protect debtors from abusive debt collection practices and because we have consistently interpreted the statute liberally to achieve the objective, Mickell's act of sending care of letters constitutes a per se violation of the FDCPA," the Ninth Circuit asserted in its opinion.