In this episode of Consumer Finance Compass, Balch’s Jason Tompkins, partner in Balch & Bingham’s Consumer Finance Compliance & Defense Practice, explores the Seventh Circuit’s new decision ruling that the disclosure of personal information to a vendor is not an injury, discussing the issue of standing in this case. As he navigates the Nabozny v. Optio Solutions LLC decision, Jason offers three best practices for businesses to consider moving forward.
Debt collectors and other companies use third party vendors for a wide variety of activities. This case underscores that while plaintiffs may argue those practices violate the terms of the Fair Debt Collection Practices Act (FDCPA), it doesn’t necessarily lead to a federal lawsuit or liability for doing so.
Hosted by Balch & Bingham’s Jason Tompkins and Jonathan Hoffmann, Consumer Finance Compass is a video series navigating the latest issues in the complex regulatory sphere that is consumer finance. Jason and Jonathan are partners in the firm’s Birmingham office and members of the Consumer Finance Compliance & Defense Practice.
Welcome to Balch's Consumer Finance Compass, where we'll navigate the complex regulatory sphere that is consumer finance. My name is Jason Tompkins, and I'm a member of the Consumer Finance Compliance and Defense Practice. Today, we'll explore Nabozny v. Optio Solutions LLC, a recent decision from the Seven Circuit Court of Appeals.
In Nabozny, the issue was one of standing. You may recall that standing is a necessary ingredient to bring a case in federal court, and one requirement of standing is that the plaintiff suffer an injury. The decision from the Seventh Circuit that we're discussing today, a debt collector used a vendor to populate, print, and mail a letter to the debtor, the plaintiff here, Mrs. Nabozny. She claimed that by disclosing her information to that letter vendor, that the debt collector had violated the Fair Debt Collection Practices Act, which generally prohibits, subject to certain exceptions that don't apply here, the disclosure of personal information about a debt to any third party.
The lower courts have reached differing decisions about whether this is enough to be an injury for purposes of federal court standing. But the Seventh Circuit becomes the third court of appeals, after the Eleventh and the Tenth, to hold that it is not enough for standing. The premise that underlies all these appellate decisions is that Congress cannot simply enact an injury into existence. In other words, violation of the statute is not in and of itself an injury, there must be some consequence. When that consequence is monetary or physical harm, standing is easy, but when the consequence is more intangible, the question becomes a little bit more complex. In that situation, the injury has to bear some close relationship to a traditional harm that's been recognized by American courts. Nabozny argued here that that common law principle was one of invasion of privacy.