A creditor may seek to collect an outstanding debt in several ways. However, because of “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors,” (15 U.S.C.
Is an entity that purchases debt from another entity and then attempts to collect that debt for its own benefit, including debts that are in default, considered a “debt collector” under the Fair Debt Collection Practice Act (FDCPA) and thus subject to the FDCPA’s restrictions?
In this case, the Supreme Court will decide whether an entity that attempts to collect from defaulted loans is a “debt collector” as defined in 15 U.S.C. § 1692a(6). This definition includes two prongs, and Petitioners Henson, et al. argue that in the second prong, “owed or due another” should be read as debts owed to the originator but due to the debt purchaser. See Brief for Petitioners, Ricky Henson, et al. at 19–20. Since the debt that Respondent Santander tried to collect was due to Santander, who is the purchaser of the debt, Petitioners argue that Santander was a debt collector under 15 U.S.C. § 1692a(6) and can therefore be held liable under the Fair Debt Collection Practice Act (FDCPA). See id. at 23. Moreover, they maintain that the Fourth Circuit’s contrary interpretation may encourage the debt industry to engage in practices like loan diversification to avoid regulation and liability under the FDCPA. See id. at 20–21. On the other hand, Santander contends that a number of textual cues in the statute, such as the grammar and repeated use of present tense, demonstrate that “owed or due another” regards the time of collection, which releases Santander of liability because during the period of collection Santander was not collecting on behalf of another entity. See Brief for Respondent, Santander Consumer USA, Inc. at 11. Moreover, Santander argues that most of the abusive practices that could be exempted from the FDCPA may be regulated by another statute. See id. at 14. At stake are the extent of legal accountability for debt purchasers and the incentives for purchasing debt. See Brief of Amici Curiae Jerome N. Frank Legal Services Organization et al. (“LSO”), in Support of Petitioner at 7; Brief of Amicus Curiae ACA International, in Support of Respondent at 17–18.
Is a company that regularly attempts to collect debts it purchased after the debts had fallen into default a “debt collector” subject to the Fair Debt Collection Practices Act?
Petitioners Ricky Henson, Ian Glover, Karen Pacouloute, and Paulette House (“Henson et al.”) received a loan from CitiFinancial Auto Credit, Inc., CitiFinancial Auto Corp., or CitiFinancial Auto, LTD (collectively, “CitiFinancial Auto”) to finance the purchase of an automobile. Henson et al. v. Santander Consumer USA, 817 F.3d 131, 134 (4th Cir. 2016). After Henson et al.
