The Fair Debt Collection Practices Act (“FDCPA”) protects consumers against the harassing and oppressive actions of a debt collector. A debt collector is: (i) any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts; (ii) who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another; (iii) any creditor who in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts; or (iv) any person who uses any instrumentality of interstate commerce or mails in any business the principal purpose of which is the enforcement of a security interest. As such, the definition of debt collector does not only extend to the entity collecting the debt, but also the entity that holds the debt if the debt holder’s principal purpose is the collection of those debts. This fact was illustrated in Barbato v. Greystone All., LLC, 916 F.3d 260, 262 (3d Cir. 2019).
In Barbato, plaintiff Mary Barbato incurred a debt with GE Capital Corporation (“GE”). That debt was transferred between several companies and was ultimately acquired by Crown Asset management, LLC (“Crown”). Crown was in the business of buying debts that were in collections and used the services of Turning Point to collect on the debts it purchased. The plaintiff filed suit against Crown and Turning Point for violations of the FDCPA. In attempting to have the case against it dismissed, Crown argued that it was only a creditor and should not be considered a debt collector since it outsourced the actual collection to Turning Point. The district court disagreed with Crown’s argument. Crown then appealed the district court’s determination to the Third Circuit. The Third Circuit agreed with the district court in finding that Crown was a debt collector and held that a debt collector under the FDCPA includes any entity that has a “principal purpose” of collecting on a debt, regardless of whether it outsources the debt collection activity to a third party. This determination reinforces the consumer protection purposes behind the enactment of the FDCPA.
If you believe you have been subjected to any conducted by a debt collector that is intrusive, harassing or improper, it is important to seek the guidance of a skilled FDCPA and Consumer Protection Attorney as soon as possible. To schedule a consultation to discuss your situation with one of our attorneys, contact The Kim Law Firm, LLC today by calling 855-996-6342.
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Passive owners and the agencies they hire
Some debt buyers never speak to a consumer. They purchase portfolios, hold them as an asset, and hire outside agencies and law firms to do the collecting, then argue that the statute’s obligations belong to the vendors rather than to them. Courts have looked closely at that arrangement, because a company whose principal business is acquiring defaulted debt is squarely within what the Fair Debt Collection Practices Act was written to reach, whether or not it places the calls itself.
- LVNV Funding — holds purchased accounts while collection is handled elsewhere.
- Resurgent Capital Services — performs the servicing work for affiliated ownership entities.
- Cavalry Portfolio Services — the operating company paired with a separate acquisition arm.
- Portfolio Recovery Associates — buys and collects through the same corporate family.
- Radius Global Solutions — a vendor agency collecting accounts owned by others.
- National Credit Systems — works placed accounts for creditors and property owners.
When a letter arrives, read it for two names rather than one: the current owner of the account and the agency contacting you on its behalf. Keep every letter, since the disclosures on them are what establish the relationship between the companies. Where an owner directs the collection strategy while a vendor executes it, both may answer for what the vendor did, and a validation request sent early forces the arrangement into writing before anyone has an incentive to describe it differently.
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