The Eleventh Circuit’s recent 2-1 panel decision in Daniels v. Select Portfolio Servicing, Inc., provides a fresh example of the difficulty creditors face when navigating the requirements of the Fair Debt Collection Practices Act (FDCPA). In Daniels, the borrower alleged that the creditor’s periodic statements violated certain provisions of the FDCPA by demanding amounts not due. The creditor argued that the periodic statements were not communications “in connection with the collection of [a] debt” sufficient to trigger potential FDCPA liability in the first place because the statements were not only mandated by section 1026.41 of TILA’s Regulation Z (12 C.F.R. § 1026.1 et seq.) and contained the required information stated therein, but also followed Regulation Z’s model forms for periodic statements.  The district court granted the creditor’s motion to dismiss, and the borrower appealed.

The Eleventh Circuit’s majority opinion spent considerable time focusing on the fact that the periodic statements contained the first of two disclosures required by the FDCPA’s so-called “mini-Miranda” provision – that the creditor “is attempting to collect a debt” (15 U.S.C. § 1692e(11)). (The second required disclosure is that the communication is from a debt collector.)  The periodic statements at issue indeed stated: “[t]his is an attempt to collect a debt.” The court noted the FDCPA’s “mini-Miranda” provision requires this first disclosure only for the “initial communication.” 

The majority addressed the creditor’s argument that the court’s decision in Green v. Specialized Loan Servicing, LLC, 766 Fed. App’x 777 (11th Cir. 2019), mandated dismissal. The majority distinguished Green because the periodic statement at issue therein “contained no language beyond what is required by [section 1026.41]” whereas the periodic statements at issue in Daniels contained the first disclosure that is not required by section 1026.41 for any communication except the initial one. Because Green itself recognized that a periodic statement that conforms with Regulation Z “may nevertheless include additional language that constitutes debt collection,” the majority held that Green was distinguishable and rejected the creditor’s argument. 

The majority then addressed several points raised by the dissent, most notably the dissent’s argument that the court was creating a circuit split on the significance of the first disclosure in a communication. It began by addressing the first opinion from the Sixth Circuit, noting that it recognized in a footnote that the version of the FDCPA at issue therein required the first disclosure in all communications, not just the initial one, and that the FDCPA had recently been amended to require the first disclosure in only the initial communication. The majority then criticized the three subsequent opinions from the Seventh, Eighth, and Tenth Circuits as not recognizing that the modified FDCPA at issue therein no longer required the first disclosure in all communications.  Finally, it pointed out that neither the Seventh nor the Eight Circuit decisions explicitly held that the inclusion of the first disclosure is “legally irrelevant.” The creditor has moved for reconsideration en banc.

One should be aware of two possible mitigating considerations in the Daniels opinion. First, the majority emphasized the fact that it was deciding only whether the periodic statements at issue could constitute a communication in connection with the collection of debt sufficient to trigger potential FDCPA liability in the first place, and not expressing an opinion on the ultimate merits or even whether the borrower pled a sufficient factual basis for an FDCPA violation to survive a motion to dismiss. Second, the fact that the periodic statements included amounts in the total amount due that a state court had previously ruled would be due at the end of the loan may have colored the majority’s ruling, in that the statements may have presented better facts than typically encountered in an allegation of a demand for payment of amounts not properly due.   Creditors should be aware of the potential danger with including “this is an attempt to collect a debt” in written communications after the initial communication. More courts may be willing to find that such language “is what it says it is” – an attempt to collect a debt – or at least give more weight to the language. If so, decisions in favor of creditors on motions to dismiss FDCPA or bankruptcy discharge injunction violation claims, or even decisions on the merits of such claims, may become less likely.