In Echlin v. PeaceHealth, the U.S. Court of Appeals for the Ninth Circuit held that a debt collection agency meaningfully participated in collection efforts even if it did not have authority to settle the account, did not receive payments, and was not involved in collection beyond sending two collection letters. Accordingly, the collection agency did not violate the Fair Debt Collection Practices Act by sending the letters on its own letterhead.
Michelle Echlin incurred a debt in the form of medical bills owed to PeaceHealth. After Echlin ignored multiple requests for payment, PeaceHealth referred her account to ComputerCredit, Inc. ("CCI"). CCI sent Echlin two collection letters on its letterhead but Echlin did not respond. In accordance with its agreement with PeaceHealth, CCI returned the account back to PeaceHealth. Echlin later filed a purported class action alleging that CCI's letters created a false or misleading belief that CCI was meaningfully involved in the collection of her debt—a practice known as flat-rating. CCI and PeaceHealth moved for summary judgment. The district court granted PeaceHealth's and CCI's motions for summary judgment, and Echlin appealed.
The Ninth Circuit found that CCI had meaningfully participated in collection of Echlin's debt because it controlled the content of collection letters it sent and did not seek PeaceHealth's approval prior to mailing. While CCI did not have authority to process or negotiate payments from PeaceHealth, CCI handled correspondence and phone inquiries from debtors. In addition, CCI personnel returned consumers' calls if requested. In rejecting Echlin's claims that CCI could not have meaningfully participated if it had not handled payments or taken further action in collecting on the account, the Court noted that "[m]eaningful participation in the debt-collection process may take a variety of forms," as shown by a long, non-exhaustive list of factors considered by courts across the country.
Notably, the Ninth Circuit distinguished cases that addressed the meaningful involvement by attorneys because those cases reflect concerns regarding the "unique sort of participation that is implied by letters that indicate the creditor has retained an attorney to collect its debts." The higher standard of involvement required of attorneys and law firms collecting a debt did not apply to non-attorneys.
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