A U.S. Circuit Court has ruled that a company that acquires a debt that is in default and then attempts to collect on it can only be defined as a “debt collector” under the Fair Debt Collection Practices Act if the primary business that company engages in is debt collections.
In this particular case, the court ruled that Capital One Bank is not a debt collector because that is not the company’s primary business operation.
The Eleventh Circuit Court actually broke ranks from other Circuit Court decisions in ruling in favor of Capital One. The plaintiff in the class action lawsuit claimed that Capital One should be defined as a “debt collector” because the credit card account in question was in default at the time that the company acquired the account as part of a portfolio of accounts acquired from HSBC. But the Court said that the timing was irrelevant because Capital One did not satisfy the definition of “debt collector,” as defined under the FDCPA.
Since collections represented only some part of Capital One’s business and not the primary portion, it can not be considered a debt collector. The Circuit Court’s ruling affirmed a District Court’s ruling that the case be dismissed.
A copy of the ruling can be downloaded here.
From the law firm of Burr & Forman:
The Eleventh Circuit’s holding tightens the reins on FDCPA plaintiffs who had been relying on the default status of assigned debts as evidence of a non-originating debt holder’s “debt collector” status under the FDCPA. Entities that collect debts that they own, and whose main business is something other than debt collection (such as issuing loans or credit cards), can now rely on Davidson to avoid FDCPA claims, at least in the Eleventh Circuit.
A U.S. Circuit Court has ruled that a company that acquires a debt that is in default and then attempts to collect on it can only be defined as a “debt collector” under the Fair Debt Collection Practices Act if the primary business that company engages in is debt collections.
In this particular case, the court ruled that Capital One Bank is not a debt collector because that is not the company’s primary business operation.
The Eleventh Circuit Court actually broke ranks from other Circuit Court decisions in ruling in favor of Capital One. The plaintiff in the class action lawsuit claimed that Capital One should be defined as a “debt collector” because the credit card account in question was in default at the time that the company acquired the account as part of a portfolio of accounts acquired from HSBC. But the Court said that the timing was irrelevant because Capital One did not satisfy the definition of “debt collector,” as defined under the FDCPA.
Since collections represented only some part of Capital One’s business and not the primary portion, it can not be considered a debt collector. The Circuit Court’s ruling affirmed a District Court’s ruling that the case be dismissed.
A copy of the ruling can be downloaded here.
From the law firm of Burr & Forman:
The Eleventh Circuit’s holding tightens the reins on FDCPA plaintiffs who had been relying on the default status of assigned debts as evidence of a non-originating debt holder’s “debt collector” status under the FDCPA. Entities that collect debts that they own, and whose main business is something other than debt collection (such as issuing loans or credit cards), can now rely on Davidson to avoid FDCPA claims, at least in the Eleventh Circuit.
