SCOTUS DEFINES BOUNDARIES OF FAIR DEBT COLLECTION PRACTICES ACT

In his first written opinion, Justice Gorsuch wrote on behalf of a unanimous Court that the Fair Debt Collection Practices Act does not apply to entities that purchase the debts of others and attempt to collect for themselves.

CitiFinancial Auto loaned money to consumers to purchase cars.  When certain consumers defaulted on their loans, Santander Consumer USA purchased those debts (at a discount, of course) and attempted to collect on their own behalf.  A class of consumers sued Santander on the premise that the efforts they were undertaking to collect the debts they now owned were violative of the FDCPA.

Justice Gorsuch began his opinion with a memorable paragraph:

Disruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry. From that scrutiny emerged the Fair Debt Collection Practices Act, a statute that authorizes private lawsuits and weighty fines designed to deter wayward collection practices. So perhaps it comes as little surprise that we now face a question about who exactly qualifies as a “debt collector” subject to the Act’s rigors. Everyone agrees that the term embraces the repo man—someone hired by a creditor to collect an outstanding debt. But what if you purchase a debt and then try to collect it for yourself-does that make you a “debt collector” too? That’s the nub of the dispute now before us.

Ultimately, the Court held that a company may collect debts that it purchased for its own account, like Santander did here, without triggering the statutory definition in dispute.

Read the full opinion here.

-Chris Lee

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