What’s in a name? SCOTUS narrows definition of “Debt Collector”

When is a debt collector not collecting a debt? Apparently when the collector has purchased the debt for collection.

This week a unanimous Supreme Court held that debt purchasers– companies that buy debt from credit card companies and others, and then try to collect that debt by calling/harassing consumers– do not fall within the definition of a “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”).

You can read the opinion here.

According to SCOTUS, the case turned on the text of the FDCPA which defines a “debt collector” as one that collects debts “owed or due another.”

Because most debt collectors are collecting on debts they purchased from the original creditor, generally at pennies on the dollar, they are technically collecting on behalf of themselves.

The reasoning is straight-forward, but its application will have substantial ramifications for the debt collection industry, which can now avoid compliance with the FDCPA so long as the collector is working to recoup a debt it purchased.

If you have questions about the FDCPA, contact the attorneys at Bryan & Terrill, 918-935-2777.