The US Supreme Court has handed down a unanimous opinion in Henson v. Santander, the case debating whether a company who buys debt to collect it qualifies as a debt collector under the definition provided by the Fair Debt Collection Practices Act. (If a refresher is needed on the details in the case, you can see this blog post.) In short, the opinion has ruled that debt buyers are not actually debt collectors, and therefore not covered by the FDCPA, yet Justice Gorsuch set certain perimeters around the decision, which with some elucidation demonstrate that there is still hope for those seeking to prevent these companies from persisting in dishonest and abusive behavior towards consumers.
The opinion states that:
A company may collect debts that it purchased for its own account, like Santander did here, without triggering the statutory definition in dispute. By defining debt collectors to include those who regularly seek to collect debts ‘owed…another,’ the statute’s plain language seems to focus on third party collection agents regularly collecting for a debt owner – not on a debt owner seeking to collect debts for itself.
This statement sounds quite definite, but Justice Gorsuch is careful to set certain perimeters around it regarding what the opinion does not cover. As attorney April Kuenhoff points out (in her article which can be found here):
Although the Supreme Court concluded that debt buyers are not debt collectors under the FDCPA’s second definition of a debt collector that ‘regularly collects…debts owed or due…another,’ debt buyers can still fall under the FDCPA definition of debt collector if their ‘principal purpose…is the collection of any debt.
Therefore, there is still room for attorneys to bring FDCPA claims against debt buying companies alleging that debt collection is the principal purpose of the company, and amending complaints to include that and a factual basis for that claim is one way in which lawyers can still fight for the rights of consumers.
Yet, for those companies who engage in these practices but can prove that their primary purpose differs, the FDCPA’s reach falls short. As Justice Gorsuch concludes, that is where Congress should step in, as it is for the legislative bench to amend the Act to close the loophole for the debt buying industry. As the Perrin Law Firm has represented many clients who have faced abusive and deceptive practices perpetrated by these debt buying companies, this is an issue we feel strongly about – and in the hopes of rousing our Congressmen and women to also feel strongly, we encourage you to call your local representatives, and have the legislature take on the role of seeing the debt buying industry regulated for the protection of consumers.