Email Collections

BY JAY AND ARTHUR WINSTON, WINSTON & WINSTON, P.C.

At a recent conference one of my colleagues asked why we cannot collect unpaid accounts by using e-mail. We would immediately save the cost of preparing a formal letter, the cost of postage and the post office could never match the speed and reliability within which the e-mail will reach the debtor. Furthermore, the creditor could respond quickly to any complaints of the debtor and why not use technology to improve the collection office. Unfortunately, sometimes technology and the law come face-to-face and this time technology may be the loser.

The entire premise presupposes that every debtor owns a computer connected to the Internet, has an e-mail address and knows how to use e-mail. Unfortunately, at this stage such is not the case as to consumers and the company would probably have to maintain two separate and distinct systems for collecting delinquent accounts. While most businesses do use e-mail, a large number of retail establishments as well as small individual entrepreneurs do not have a need for the computer, even if they do have the computer, they may not be connected to the Internet and e-mail.

When collecting debts from consumers, both Creditor and collection agencies are required to comply with both Federal and State Statutes. The principle federal statute is the Fair Debt Collection Practices Act (FDCPA). It sets a framework as to permissible and prohibited collection practices. Many states had adopted statutes substantially similar to the FDCPA which regulate both Creditors and their third party collectors. Furthermore, creditors must be careful not to violate a state’s Unfair Trade Practice’s statute because a court might consider an activity prohibited by the FDCPA as an unfair trade practice.

The Section 805(b) of the Fair Debt Collection Practices Act states in pertinent part that without the prior consent of a consumer, a debt collector may not communicate with any person other than the consumer or the spouse of the consumer in connection with the collection of a debt. The e-mail message is being transmitted through many Internet Service Providers and in many instances these messages are stored on the Internet Service Provider’s computer as well as on the computer which originated the message. If the message is viewed by anyone other than the recipient, the originator of the message will be exposed to liability under the Fair Debt Collection Practices Act. One might compare this to mailing a letter which falls into the wrong hands and the third party sees the letter. But with a letter, the sender of the letter deposited the letter in the postal box under the care of the United States Postal Service. A message by e-mail is a bit different, since e-mail is stored in your computer and the recipient’s computer indefinitely in several places and is available for inspection in several places. The problem might be solved if the consumer consents in writing to the use of e-mail regarding the collection of a debt, but this is unlikely since most debtors are not prone to make it easier for the creditor to communicate with the debtor. In fact, most creditors, collection agencies and attorneys know many debtors do not return telephone calls or respond to letters.

The Electronic Communications Privacy Act deals with entities providing electronic communication service to the public or entities providing remote computing service to the public and some courts have held that this portion of the law does not apply to an employer retrieving a person’s e-mail post transmission. The expectation of privacy diminishes once the transmission is complete. A recent case specifically allowed retrieval of stored e-mail by the employer even where the employee used his own personal access code. Laws are only violated when an e-mail is intercepted from intermediate storage or backup protection storage, both of which automatically occur during the course of transmission, or if the e-mail has been intercepted before the intended recipient has a chance to open it. Once an e-mail has been viewed by the recipient, these laws do not apply to subsequent viewing by the third party accessing the system, either with authorization or without authorization.

If the e-mail message is sent to a debtor at his home address, the debt collector would be protected under the Fair Debt Collection Practices Act if the spouse of the debtor accessed the e-mail message. On the other hand, if the parents of the debtor or the children of the debtor or the brother or sister of the debtor accessed the computer and opened the e-mail message, the court would treat this as third party disclosure and the debt collector may be in violation of the Fair Debt Collection Practices Act. The use of a family computer by children and parents and brothers and even friends is not uncommon and this could certainly be a risk in utilizing e-mail messages addressed to debtors. An express written consent from the debtor probably would solve this problem. But obtaining consent from the debtor is not an easy task.

Until this issue is addressed by the court, the recommendation is to delay collection efforts by use of e-mail in favor of the more conventional methods – or else become a case of first impression for the court.