Debt buyers: to be or not to be debt collectors?

On April 18th, the US Supreme Court heard the arguments for a case that could, as stated in our previous blog post, radically change the playing field for consumers, and make it more difficult to regulate debt collectors such as Midland Funding, LVNV, Portfolio Recovery Associates, Cach, and many others. In short, the argument turns on the interpretation of a word, and the decision will determine whether debt buyers will be considered debt collectors (and thus be subject to federal regulation through the FDCPA). As explained last week, the FDCPA is what protects consumers from harassment, and, if the court rules that they aren’t debt collectors, the FDCPA’s regulations will no longer apply to them. Though the arguments have now been heard by the court, they’re not yet accessible to the public, so we’ll turn our focus to an article written by Columbia law professor Robert Mann, who was able to preview the arguments.

According to Professor Mann, the questions the judges were asking don’t bode well for the borrowers, and consequently the side of consumer law. The problem for the borrowers, as I see in his article, is that the judges are not seeing the interpretation argued as being straightforward, as he quotes Justice Alito as saying it’s “not the first way you’d read that. It’s not the fiftieth way you would read that. . .you’re going really uphill on that.” This sounds quite daunting – and it is – but hope is not yet lost. Though the judges didn’t necessarily agree with the interpretation of the borrowers (as opposed to the debt buyers), they didn’t seem to think that the distinction the debt buyers are attempting to make between debt collector and debt buyer made sense. Indeed, Chief Justice Roberts realized that the industry has evolved quite a bit since Congress passed the FDCPA, and Congress wasn’t addressing these particular concerns with their wording.

Professor Mann concludes from his preview that the judges must be convinced that the regulation of these debt buyers is so necessary that they overlook the statutory text for the borrowers to be successful, yet he’s not optimistic. If his pessimistic reading proves to be the case, this means a new landscape for consumer lawyers, and a metaphorical Wild West mentality may be adapted by the debt buyers.

How do you think this case will be decided? What do you see as the potential consequences for either side?

 

–Breana N Smith

 

Ronald Mann, Argument analysis: Court dubious about reading Fair Debt Collection  Practices Act to reach debt buyers, SCOTUSblog (Apr. 19, 2017, 10:25 AM), http://www.scotusblog.com/2017/04/argument-analysis-court-dubious-reading-fair-debt-collection-practices-act-reach-debt-buyers/

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