In a recent decision, the Superior Court of New Jersey, Appellate Division, upheld the dismissal of a class action lawsuit filed against First National Collection Bureau, Inc. (FNCB). In an unpublished opinion, the court affirmed the lower court’s ruling that the plaintiff’s complaint failed to state a claim under the Fair Debt Collection Practices Act (FDCPA). This decision clarifies the scope of third-party communications under the FDCPA, particularly in the context of using third-party vendors for mailing collection letters.

Background

In 2015, the plaintiff obtained a credit card. After making payments for six months, the plaintiff ceased payments but continued to make purchases, leading the bank to cancel the account and transfer the debt. FNCB then engaged a third-party vendor to prepare and mail a collection letter to the plaintiff, which included his account number, the amount due, and his personal information.

In August 2023, the plaintiff filed a four-count putative class action complaint alleging violations of the FDCPA, the Consumer Fraud Act, negligence, and invasion of privacy due to FNCB’s sharing of his personal information with the third-party vendor. The parties later agreed to dismiss the Consumer Fraud Act claim. The trial court dismissed the remaining claims, leading to this appeal.

Analysis

The appellate court reviewed the trial court’s dismissal de novo, focusing on whether the plaintiff’s complaint sufficiently alleged a violation of the FDCPA. The FDCPA prohibits debt collectors from communicating with third parties in connection with debt collection, except under specific circumstances. The plaintiff argued that FNCB’s use of a third-party vendor to mail the collection letter constituted an impermissible third-party communication.

The court, however, found that the FDCPA’s restrictions on third-party communications apply only to communications whose primary purpose is to induce payment. FNCB’s transmission of information to the vendor was deemed an internal step necessary to facilitate mailing the collection letter, not a direct attempt to collect payment. Therefore, it did not violate the FDCPA.

The plaintiff also cited out-of-state decisions to support his claim that using a letter vendor was inherently abusive or deceptive. The court declined to consider these cases, noting that only U.S. Supreme Court decisions are binding on New Jersey courts regarding federal statutory interpretation.

Ultimately, the court concluded that the plaintiff’s complaint did not allege facts sufficient to establish an FDCPA violation. The use of a third-party vendor for mailing purposes did not constitute prohibited communication under the FDCPA, and the court affirmed the dismissal of the complaint.