District Judge William J. Nealon of the Middle District of Pennsylvania issued two recent decisions holding that both a Quick Response (“QR”) code and a bar code appearing through the glassine window of an envelope containing a collection letter violate section 1692f(8) of the Fair Debt Collection Practices Act, which prohibits “using any language or symbol” other than a debt collector’s name and address on an envelope.
In his July 15 opinion in Styer v. Professional Medical Management, Judge Nealon held that disclosure of a QR code on a debt-collection envelope violates section 1692f(8) of the FDCPA as a matter of law. In his July 22 decision in Kostik v. ARS National Services, Judge Nealon held that embedding a debtor’s account number in a bar code violates section 1692f(8) of the FDCPA.
Both of these decisions rely on the Third Circuit’s August 28, 2014, decision in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), where it held that a debt collector’s disclosure of a debtor’s reference number through the transparent window of an envelope containing a collection letter violated section 1692f(8).
In Kostik, the debt collector argued that “imposing liability due to the possibility of illegal action by a third party is ‘inappropriate.’” It also argued that the FDCPA “was not intended to prohibit the disclosure of benign symbols on any envelope sent by a debt collector as a means of communicating with a consumer by use of the mails.” The company conceded that section 1692f(8) “prohibits any language or symbol from appearing on a debt-collection envelope,” but argued that courts have found benign symbols not to violate the act. Judge Nealon declined to address this benign symbol exception since the posture was a motion to dismiss, but he did state that 1692f(8) should not be read to create absurd results.
Judge Nealon relied on the Third Circuit’s ruling in Douglass, which held that “disclosure of the plaintiff’s account number implicated ‘a core concern animating the FDCPA—the invasion of privacy.’” He went on to state in Kostik that “The Third Circuit stated that the plaintiff’s account number was ‘a core piece of information pertaining to [plaintiff’s] status as a debtor and [defendant’s] debt-collection effort.’” Moreover, he relied on the Third Circuit’s conclusion in Douglass that “disclosure [of the account number] has the potential to cause harm to a consumer that the FDCPA was enacted to address.”
Because “bar codes can be easily deciphered by consumers using widely available free applications for smartphones,” and an “account number is not meaningless,” Judge Nealon held in Kostik that the complaint stated sufficient facts to state a claim for plausible relief. “By disclosing the bar code to the general public, it increased the risk that plaintiff would be a victim of identity theft,” the Court said.