The Hunstein Decision Effects and Next Steps

On April 21, the U.S. Court of Appeals for the Eleventh Circuit upended the debt collection and loan servicing industries with its ruling in Hunstein v. Preferred Collection and Management Services, Inc. The Eleventh Circuit found that sharing information about a debt with a vendor, in this case a mailing vendor, violates Section 1692c of the FDCPA. The practical implications of this decision could be massive as it threatens debt collectors’ and loan servicers’ ability to rely on vendors, including mailing vendors, data-hosting services, insurance providers, and property appraisers. Even first-party creditors are not entirely insulated from the Hunstein decision because (1) certain states apply portions of the FDCPA to first-party creditors and (2) debt collectors may have to fundamentally alter their business models and pricing in order to comply with the decision.