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Supreme Court finds some collectors aren’t subject to FDCPA

It’s been a busy year for the Fair Debt Collection Practices Act. Enacted by Congress in 1977, the statute has been tested by the Supreme Court of the untied States on several occasions in the past. But two cases made their way to the nation’s highest court this year. You may remember our prior blog post about the Midland Funding, LLC v. Johnson case.

Today, a unanimous Supreme Court held that a bank that purchases defaulted debt to service as if it were originally there own debt is not a debt collector unless their principal business is the collection of debts. Justice Gorsuch noted in the opening few paragraphs that:

Disruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection indus- try. 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.

This ruling does not affect the status of companies whose principal business is the collection of defaulted consumer debts or those companies that are attempting to collect on behalf of other creditors.

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