This is one of those cases that when I, a non-lawyer, reads it, seems really important and something people need to pay attention to, but I’m likely glossing over or missing something that any lawyer would pick up in five seconds and point out why this case isn’t a very big deal at all. The Court of Appeals of Indiana has upheld a lower court’s ruling that determined a debt buyer that purchased a portfolio of defaulted student loans and placed an account with a collection agency meets the definition of “debt collector” both under Indiana state law and the Fair Debt Collection Practices Act.
The Background: The background and legal proceedings surrounding this case take up more than half of the 26-page ruling, so I’m going to skip over a lot that you should probably read on your own.
- The appellee/defendant filed a collection lawsuit in September 2020 against an individual to recover an unpaid student loan that had a balance of $7,558. The individual filed a counterclaim of her own, alleging the appellee/defendant was not licensed and was thus engaging in illegal conduct by violating the FDCPA and the Indiana Deceptive Consumer Sales Act.
- When it responded to the counterclaim, the appellee/defendant both admitted and denied it was a debt collector as defined by the FDCPA and said it retained the services of licensed agencies and attorneys to collect only on accounts that are valid, due, and owing.
- The appellee/defendant filed for summary judgment, attaching a letter from a compliance officer for the Indiana Secretary of State saying that if the company is collecting debt owed to the company on their own behalf they would not qualify as a collection agency.
- Even though a state court judge ruled the appellee/defendant was not a debt collector as defined by the FDCPA, another state court judge ruled it was, based in part on the appellee/defendant’s answers to the counterclaim.
The Ruling: After looking at the evidence and reviewing the testimony of the chief executive of the appellee/defendant, the Appeals Court ruled that the company constitutes a “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,” under Section 1692a(6) of the FDCPA.
