In his first opinion on the U.S. Supreme Court, Justice Neil Gorsuch addressed the question concerning who qualifies as a “debt collector” and, therefore, is subject to the FDCPA’s rigors. In framing that question, Justice Gorsuch wrote that everyone agrees the term “debt collector” embraces “the repo man – someone hired by a creditor to collect an outstanding debt.” As described by Justice Gorsuch, the “nub of the dispute” before the Court was whether an entity who purchases a debt and then attempts to collect it for itself is a “debt collector” under the FDCPA.
In deciding the “nub of the dispute,” the opinion focuses on statutory language defining the term “debt collector” to cover anyone who “regularly collects or attempts to collect … debts owed or due … another. “ 15 U.S.C. §1692a(6). Under that statutory language, the opinion explains that third party debt collection agents generally do qualify as “debt collectors,” while those who seek only to collect loans they originated generally do not. With that understanding, all which remained in dispute was how to classify entities that regularly purchase debts originated by someone else and then undertake to collect those debts for their own benefit. To answer that question, Justice Gorsuch carefully examined the statutory text and determined that the statute’s plain terms focus attention on third party collection agents working for a debt owner – not on a debt owner seeking to collect debts for itself. And, based on the language of the statute, it does not matter how an entity came to be the debt owner – whether by originating the debt or by later purchasing it.
As a result, SCOTUS resolved a split between certain Circuits as to whether an entity who purchases loans – performing or non-performing – from the originator qualifies as a “debt collector” under 15 U.S.C. §1692(a). And, by doing so, Justice Gorsuch provided some degree of clarity on the permissible reach of the FDCPA. However, the opinion is not the end all, be all on disputes as to who qualifies as a “debt collector” under the FDCPA, as SCOTUS did not address alternative arguments that the purchasing entity was a “debt collector” because it regularly attempts to collect debts for others as a servicer and because it was allegedly engaged in business “the principal purpose of which is the collection of any debts.” So, those arguments live to see another day.