Collector - September 2017 - 43

IAP

The Supreme Court was not persuaded by
the consumers' policy interest arguments that
Santander's ability to dodge the FDCPA by
purchasing the consumers' defaulted debts is a
loophole that was not intended by Congress in
enacting the FDCPA. Despite the consumers'
contention that the inclusion of debt buyers
in the FDCPA's definition of "debt collector"
makes sense because of Congress's purpose and
justifications for enacting the statute-to "deter
untoward debt collection practices"- the
court ruled that "it is never our job to rewrite a
constitutionally valid statutory text under the
banner of speculation about what Congress
might have done had it faced a question that,
on everyone's account, it never faced."
Before the Supreme Court's decision,
the Fourth Circuit's decision in Henson
placed it in the midst of a circuit split
on the question of whether a debt
purchaser qualifies as a "debt collector"
under the FDCPA. The Fourth Circuit's
decision joined those in the Ninth and
Eleventh Circuits holding that collectors
of purchased defaulted debt are not debt
collectors subject to the FDCPA. The
Third, Fifth, Sixth and Seventh circuits
and the District of Columbia Court of
Appeals have each, to some extent, held
the opposite.
As ACA reported previously, the Henson
consumers filed a class action against
Santander, alleging that it violated the
FDCPA by engaging in abusive, harassing
and deceptive attempts to collect the
defaulted debts. The consumers alleged
that Santander was a consumer finance
company that acquires defaulted debt
for a "few cents on the dollar" and,
therefore, was a "debt collector" under the
FDCPA. Santander moved to dismiss the
consumers' complaint on the basis that
Santander did not meet the definition of
"debt collector" under the FDCPA.
On appeal, the Fourth Circuit held
that the consumers had not alleged that
Santander was acting as a debt collector
under the FDCPA. Because the consumers
alleged that Santander purchased and,
thus, owned the debt, Santander was not
collecting on behalf of another, and the

COLLECTOR 09.17

FDCPA does not apply to creditors who
collect debts on their own accounts.
Questions regarding the scope of the
FDCPA, illustrated by the Henson case,
are arising at the same time that the debt
collection regulatory landscape-for
both first- and third-party collection
issues-is undergoing a seismic shift
as the Consumer Financial Protection
Bureau continues to seek to regulate debt
collection activities. This case is important
because the Supreme Court's decision may
significantly reduce a source of consumer
class-action litigation against lenders, loan
servicers and collection agencies alike,
and because it may impact debt collection

licensing, regulation and enforcement at
the state level.
ACA's efforts to proactively support the
credit and collection industry are part of
the association's Industry Advancement
Program, and are made possible by funding
through ACA's Industry Advancement Fund.
If you want to read more about the
most recent significant judicial decisions
involving the credit and collection industry,
ACA members can always find concise case
summaries at www.acainternational.org/
industry-advancement-program.
Karen Scheibe Eliason is ACA International's
corporate counsel.

43


http://www.acainternational.org/industry-advancement-program http://www.acainternational.org/industry-advancement-program http://www.webrecon.com

Table of Contents for the Digital Edition of Collector - September 2017

Collector - September 2017 - Cover1
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