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Debt Buyers Who Outsource Debt Collection Activities Cannot Sidestep the FDCPA

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.