Santander v. Henson Opinion: What does it mean?

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.


US Supreme Court Opinion Split Over Debt Collection Case

On May 15th, the Supreme Court of the United States handed down a split opinion on Midland Funding, LLC v. Johnson. Essentially, Midland Funding had asserted a claim during Johnson’s bankruptcy case that Johnson owed them ten year old credit card debt. In the state this was filed, the statute of limitations is only six years in this kind of case, and had obviously expired. Naturally Johnson objected to paying a debt that had gone “stale”, and then further went forward and claimed that “filing a proof of claim on an obviously time barred debt was ‘false’, deceptive,’ ‘misleading,’ unconscionable,’ and ‘unfair’…” under the guidelines of the Fair Debt Collection Practices Act. The issue that had to be decided by the court was whether filing these “stale” debt claims in bankruptcy cases falls under the guidelines of the FDCPA – if they did, they would be subject to the consequences for unfair debt collection practices.

The opinion handed down by the Justices, however, concluded that they don’t fall into that category, because this case has to do specifically with bankruptcy law. Declaring bankruptcy entails not only a set of regulations that govern that process, but when an individual does start that process a “knowledgeable trustee” is appointed to them who should, in theory know enough to catch these “stale” debts before the consumer begins to pay them.

Yet, as I said, this was not a unanimous opinion – Justices Sotomayor, Ginsburg, and Kagan dissented, with Sotomayor publishing her dissent. (You can find the dissent after the opinion in the hyperlink provided earlier). While her fellow justices had examined the context of bankruptcy in particular to determine the role of the FDCPA, Sotomayor looked at the debt buying industry as a whole, and the particular vulnerability of consumers who were in the position of needing to declare bankruptcy, writing that, “Professional debt collectors have built a business out of buying stale debt, filing claims in bankruptcy proceedings to collect it, and hoping that no one notices that the debt is too old to be enforced by the courts. This practice is both “unfair” and “unconscionable.” She later concludes that, “It does not take a sophisticated attorney to understand why the practice I have described in this opinion is unfair. It takes only the common sense to conclude that one should not be able to profit on the inadvertent inattention of others. It is said that the law should not be a trap for the unwary. Today’s decision sets just such a trap.”

The Perrin Law Firm has successfully represented many consumers against these debt buying companies, and the FDCPA has proven to be the greatest tool available in our legal system to protect consumers from unsavory tactics like those outlined above. Though the Justices carefully outlined that this opinion doesn’t indicate how they will respond in yet another case involving junk debt buying companies (which we have written on here), this ruling does not necessarily inspire confidence. What do you think this decision means in the future of the FDCPA?

-Written by Breana Smith

*All briefs cited were taken from

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),

US Supreme Court to Decide Whether Junk Debt Buyers are Debt Collectors.


On April 18th, the US Supreme Court is going to hear the arguments from a case that could change the legal playing field for consumers being harassed or sued by junk debt collectors, and potentially not in the favor of the average American.  Companies like Midland Funding, LVNV, Portfolio Recovery Associates, CACH, buy what is commonly called “Junk debt”;  credit card, medical or other unsecured private debts, typically paying between 4¢- 8¢ on the dollar.  The debts are sold in “portfolios” or spreadsheets containing customer names, addresses, social security numbers, and other information about the old accounts.     Debt buyers sell and resell the debts multiple times through an industry that has no other purpose but to collect money that was owed to someone else.  Worse yet, the information being sold is often inaccurate and there is little documentation of who legally owns the debt.  So consumers have been sued multiple times, had their credit damaged, or been harassed for years over money they actually don’t owe.

Although debt collection when carried out responsibly is a legitimate business, the federal courts have documented serious abuses by the junk debt collection industry.  In 1977, Congress enacted the FDCPA (Fair Debt Collection Practices Act) to protect US citizens from harassment, abuse and dishonesty that was known to be occurring in the debt collection industry.  The FDCPA outlawed a varying forms of misconduct including, harassing or threating violence or criminal prosecution if a consumer didn’t pay, overstating the amount owed, calling family members or employers to shame consumers, filing lawsuits far from where a consumer lives, or threatening to sue on a debt that is beyond the statute of limitations.  Congress also created a private cause of action, or, in other words, established a precedent of fact to bring private lawsuits against debt collectors and their lawyers who violated the FDCPA.  The FDCPA doesn’t only protect those who owe debts, it protects those who are victims of identity theft, spouses, ex-spouses, parents, and even employers who can also fall victim to harassment and abuse by the debt collection industry when it wants to collect money by any means possible.

Debt buyers argue that because they buy old debt they should be exempt the FDCPA.   They argue they should be treated like the original lenders who typically are federally chartered banks.  The problem is that because they are not federally chartered banks debt buyer would also exempt from federal banking regulations.  That means that junk debt collectors could circumvent all federal regulation and behave like loan sharks, using all kinds of strong arm techniques to collect debts that were previously owed to another company.

A split of opinion has developed in the federal appeals courts, most recently, in the 4th Circuit Court of Appeals, where the court ruled that a debt buyer isn’t a debt collector because they aren’t collecting debt for someone else.  The majority of federal courts however have held that if a company is buying a debt already in default, then you’re buying it with the intention of pursuing collections and therefore you’re a debt collector.

In an effort to ensure junk debt buyers remain under the umbrella of federal regulation, Attorney Generals from 28 different US states, as well as D.C. have filed their own briefs (here’s an example of one of the briefs), asking the US Supreme Court to overturn the decision from the 4th Circuit Court of Appeals and state that Congress did in fact intend to regulate junk debt buyers.

If the junk debt buyers wins this fight in the US Supreme Court the average American will lose valuable federal protections against a hungry and unscrupulous agency.

-Written by Breana N Smith and John M. Perrin


*All briefs cited were taken from

“The Perrin Law Firm has successfully represented hundreds of consumers in litigation with junk debt buyers. By far, the FDCPA remains the greatest tool available within our legal system to protect American citizens from strong arm tactics, verbal abuse or outright trickery by one of the largest growing industries worldwide. Although oral arguments will be held on April 18th, it will likely be weeks or months before the Supreme Court rules. If the Supreme Court finds that debts buyers are exempt from the FDCPA, it will require Congress to amend the FDCPA to add more specific language to protect citizens under federal law.”

– John M. Perrin, attorney at law. The Perrin Law Firm