Is a Debt Buyer a Debt Collector under the FDCPA?

This article focuses on a commonly asked question: is a debt buyer (for example, LVNV Funding, www.lvnvfunding.com, is a well-known purchaser of consumer debt) the same as a “debt collector” pursuant to the Fair Debt Collection Practices Act?  The short answer is yes, a debt buyer will most likely be a debt collector for purposes of the FDCPA.

Under the Act, “debt collectors” are defined as entities “who regularly collect or attempt to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”  15 U.S.C. § 1692a(6).

In litigation, a debt buyer might contended that it is not a debt collector.  It might claim that it is merely a “passive debt buyer.”  This precise argument has been rejected again and again by various courts.  See, e.g., Murr v. Tarpon Finan. Corp., No. 3:10–CV–372, 2014 WL 546690, at *4 (E.D. Tenn. Feb. 10, 2014); Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir. 2012); Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985); Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003); F.T.C. v. Check Investors, Inc., 502 F.3d 159, 173 (3d Cir. 2007); Munoz v. Pipestone Finan., LLC, 397 F. Supp. 2d 1129, 1133 (D. Minn. 2005); Flint v. EMC Mortg. Corp., No. 05-4137-CV-C-SOW, 2005 WL 2237693, at *2 (W.D. Mo. Sept. 14, 2005).

The Circuit courts have uniformly held that the statutory definition of “debt collector” includes debt buyers.  Those courts have determined that the operative inquiry under Section 1692a(6) is “the status of the debt at the time it was acquired.”  Check Investors, 502 F.3d at 173.  If the debt in question was in default at the time it was acquired by an entity, that entity is considered a debt collector.  Schlosser, 323 F.3d at 536; Bridge, 681 F.3d 355, 359.  The analysis is no more complicated than that.

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