U.S. Supreme Court Holds Debt Purchaser Collecting Its Own Debt Is Not Subject to FDCPA

This article was originally published on the Maurice Wutscher blog and is republished here with permission.

A purchaser of a defaulted debt who then seeks to collect the debt for itself is not a “debt collector” subject to the federal Fair Debt Collection Practices Act under an opinion delivered today by the U.S. Supreme Court.

The issue before the Court was whether a purchaser of defaulted debt meets the FDCPA’s definition of a “debt collector” as one who “regularly collects or attempts to collect . . . debts owed or due . . . another.” 15 U. S. C. §1692a(6).

Here, Santander Consumer USA Inc. acquired defaulted loans from CitiFinancial Auto and then began to collect on those loans. The petitioners argued this activity made Santander a debt collector subject to the FDCPA.  The Fourth Circuit Court of Appeals disagreed because the debt purchaser was not seeking to collect a debt “owed . . . another.” The Supreme Court affirmed in a unanimous decision.

The opinion did not consider whether a purchaser of defaulted debt is engaged “in any business the principal purpose of which is the collection of any debts.” §1692a(6).

A copy of the decision in Henson v. Santander Consumer USA Inc. is available here.

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Editor's note: RMA International is urging caution when interpreting this decision.