• Does the FDCPA Cover a Party That Purchases Defaulted Debt for Its Own Account?
  • May 3, 2017 | Author: Henry C. Kevane
  • Law Firm: Pachulski Stang Ziehl & Jones LLP - San Francisco Office
  • The Fair Debt Collection Practices Act (FDCPA) rests on a policy determination by Congress that original lenders, concerned about reputational harm, act with greater self-restraint when collecting consumer debts. Independent debt collectors, on the other hand, have little reason to be concerned either with future business or a consumer’s opinion of them and, hence, lack similar incentives to modulate aggressive collection conduct. Thus, the FDCPA only regulates the collection practices of two defi ned classes of “debt collectors”: those whose “principal purpose” is the collection of debts, and those who regularly collect debts “owed or due another.” It does help to note that the defi nition of a debt collector also includes a third category. A creditor (a party to whom a debt is owed) will be treated as a debt collector under the FDCPA if it uses any name other than its own to collect its debts—a practice that might be rather misleading to consumers because it would tend to defl ect any sharp practices away from the creditor. Although this article generally differentiates between a creditor (i.e., an original lender, typically not subject to the FDCPA) and a debt collector, the FDCPA itself does not render those terms mutually exclusive.