Supreme court neutered FDCPA

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http://www.bloomberg.com/politics/articles/2017-06-12/high-court-unanimously-backs-debt-collector-in-gorsuch-opinion

I hate to blog, but I am surprised this hasn't been mentioned yet.  FDCPA does not cover creditors (owners of debt) only 3rd party debt collectors.

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Congress neutered it. The Supreme Court just explained what Congress really wrote. A Court ruling (unanimously, even) on the statute instead of mind-reading is refreshing. If we could count on court cases being decided on the letter of the law, we'd have a lot less of them and a lot more respect for the law. Now, Congress, the Court has done its job and told you you blew it...Fix it.

ETA: While you're fixing it, give people who are being erroneously pestered about someone else's debts standing too.

http://www.acainternational.org/news/scotus-to-hear-important-fd...

Holy crap this is a monster deal. It used to be that if you purchased a debt IN DEFAULT, you were then a debt collector. If you purchased a debt that was current and not in default, you were fine. Now apparently if you buy any sorts of debts, you are fine, as far as the FDCPA goes...

But thankfully many states have equivalent laws to the FDCPA, so all is not lost.

You can bet your rear that a ton of new debt buyers are going to pop up and start violating the FDCPA with impunity.

While you're fixing it, give people who are being erroneously pestered about someone else's debts standing too.

You already have standing to sue if you are getting wrong number calls. Courts have ruled so for years.

https://www.gpo.gov/fdsys/pkg/USCOURTS-ksd-2_10-cv-02024/pdf/USC...

Moreover, plaintiff has cited a number of cases in which courts have confirmed
that non-debtors may assert claims under the FDCPA. See, e.g., Montgomery v.
Huntington Bank, 346 F.3d 693, 697 (6th Cir. 2003) (Section 1692d and 1692e are not
limited to “consumers”; son of debtor could bring claim for damages from repossession
of debtor’s car); Wright v. Finance Serv. of Norwalk, Inc., 22 F.3d 647, 649-50 (6th Cir.
1994) (“absent a limitation in the substantive provisions, the ordinary and common
understanding of § 1692k is that any aggrieved party may bring an action under §
1692e;” claim was not limited only to the addressee of the offending letters).2
Courtshave also reached this conclusion, based on the language of the statute, in cases like the
one at bar, involving telephone calls to the wrong person. See Kerwin v. Remittance
Assistance Corp., 559 F. Supp. 2d 1117, 1123 (D. Nev. 2008) (permitting claim under
Section 1692d of the FDCPA based on telephone calls to the wrong number); Bank v.
Pentagroup Fin., LLC, 2009 WL 1606420, at * 5 (E.D.N.Y. June 9, 2009)

Does this mean that if a consumer receives a PYBDB letter from a "debt buyer", the consumer no longer has the right to request validation? What protects the consumers now?
codename47 said:   IMBoring25 said:   While you're fixing it, give people who are being erroneously pestered about someone else's debts standing too.You already have standing to sue if you are getting wrong number calls. Courts have ruled so for years.
...plaintiff has cited a number of cases in which courts have confirmed that non-debtors may assert claims under the FDCPA.
Do you still have standing now that debt buyers aren't subject to FDCPA?

Wait so who is still subject to FDCPA if it's not debt collectors who buy any kind of debt? Only debt collectors working on the debt owed to another, not if they are the ones to whom the debt is owed?

So if debt collector buys the debt, they are no longer a debt collector subjected to FDCPA. Then what prevents them from just making up debt obligations, multiplying amount owed by 10, etc? Who would you request validation from then? Not that debt validation itself is very well explained in terms of requirement by the FDCPA anyway. But the whole thing sounds very ominous for consumer protection.

if they arent a debt collector, what exactly are they asking for, since they cannot collect a debt?

Shandril said:   Wait so who is still subject to FDCPA if it's not debt collectors who buy any kind of debt? Only debt collectors working on the debt owed to another, not if they are the ones to whom the debt is owed?

So if debt collector buys the debt, they are no longer a debt collector subjected to FDCPA. Then what prevents them from just making up debt obligations, multiplying amount owed by 10, etc? Who would you request validation from then? Not that debt validation itself is very well explained in terms of requirement by the FDCPA anyway. But the whole thing sounds very ominous for consumer protection.

  I'm not commenting on the applicability of this ruling to the situation or any other specifics of your question because I don't know. However, if the FDCPA doesn't apply to a company, what's to stop them from making up debt obligations/falsely inflating debt would be other tort laws and possibly charges like mail fraud. Not commenting on the ability of those other laws to protect consumers, the effectiveness/ease of enforcement, or whether they would specifically apply, but that's what I would imagine.

marginoferror said:   
Shandril said:   Wait so who is still subject to FDCPA if it's not debt collectors who buy any kind of debt? Only debt collectors working on the debt owed to another, not if they are the ones to whom the debt is owed?

So if debt collector buys the debt, they are no longer a debt collector subjected to FDCPA. Then what prevents them from just making up debt obligations, multiplying amount owed by 10, etc? Who would you request validation from then? Not that debt validation itself is very well explained in terms of requirement by the FDCPA anyway. But the whole thing sounds very ominous for consumer protection.

  I'm not commenting on the applicability of this ruling to the situation or any other specifics of your question because I don't know. However, if the FDCPA doesn't apply to a company, what's to stop them from making up debt obligations/falsely inflating debt would be other tort laws and possibly charges like mail fraud. Not commenting on the ability of those other laws to protect consumers, the effectiveness/ease of enforcement, or whether they would specifically apply, but that's what I would imagine.

  
The threshold to prove fraud in court is a lot higher than the one for incorrect compliance with debt validation under FDCPA.

shitrus said:   if they arent a debt collector, what exactly are they asking for, since they cannot collect a debt?
"Debt collector" now means a company attempting to collect a debt owed to another company. These types of debt collectors are subject to the FDCPA.
But if a company purchases the debt obligation, whether its in default or not, they are no longer considered "debt collectors" subject to the FDCPA.

In other words, the original creditor can attempt to collect to you as long as they still own the debt. Another company can attempt to collect from you if they have purchased the debt. And neither would be subject to the FDCPA.

BrianGa said:   
shitrus said:   if they arent a debt collector, what exactly are they asking for, since they cannot collect a debt?
"Debt collector" now means a company attempting to collect a debt owed to another company. These types of debt collectors are subject to the FDCPA.
But if a company purchases the debt obligation, whether its in default or not, they are no longer considered "debt collectors" subject to the FDCPA.

In other words, the original creditor can attempt to collect to you as long as they still own the debt. Another company can attempt to collect from you if they have purchased the debt. And neither would be subject to the FDCPA.

  Thanks for the translation.

Whelp... We're screwed.

If your sole purpose and function as a place of business is to purchase other people's debts... I'm sorry, but you're a debt collector. Doesn't matter if you own the debt or are collecting on behalf of someone... Let's put it this way, if 90% of your revenue is collecting debt... You're a debt collector. 

This is pretty ridiculous.

justignoredem said:   Whelp... We're screwed.

If your sole purpose and function as a place of business is to purchase other people's debts... I'm sorry, but you're a debt collector. Doesn't matter if you own the debt or are collecting on behalf of someone... Let's put it this way, if 90% of your revenue is collecting debt... You're a debt collector. 

This is pretty ridiculous.

  
The law is quite clearly worded (hence the unanimous SCOTUS decision).  FDCPA clearly only covers third party debt collectors, not attempts by the actual creditor to collect on debts owed to them.  

What is this, credit boards? Pay your bills deadbeats.

Bring on the red.

VagrTiger said:   
The threshold to prove fraud in court is a lot higher than the one for incorrect compliance with debt validation under FDCPA.

I agree there.

But then if debt collectors who buy the debt from someone else don't have to honor validation requests (because they are not labeled as debt collectors subject to FDCPA), your only recourse from them making any claim of you owing them a debt is indeed a court action. That's quite a different threshold to overcome for consumers. There also may not be any statutory remedies as described in FDCPA for harassing debt collection efforts.

So fast forward to when debt collectors start taking advantage of this more systematically - including adjusting their strategy to buying debt more consistently rather than doing debt collection efforts on behalf of others, and it could get out of hand quickly (think of more debt collector abuses and longer waits for small claim court to hear cases that are usually ended at validation). That does not sound like a good development for any consumer.

Shandril said:   
VagrTiger said:   
The threshold to prove fraud in court is a lot higher than the one for incorrect compliance with debt validation under FDCPA.

I agree there.

But then if debt collectors who buy the debt from someone else don't have to honor validation requests (because they are not labeled as debt collectors subject to FDCPA), your only recourse from them making any claim of you owing them a debt is indeed a court action. That's quite a different threshold to overcome for consumers. There also may not be any statutory remedies as described in FDCPA for harassing debt collection efforts.

So fast forward to when debt collectors start taking advantage of this more systematically - including adjusting their strategy to buying debt more consistently rather than doing debt collection efforts on behalf of others, and it could get out of hand quickly (think of more debt collector abuses and longer waits for small claim court to hear cases that are usually ended at validation). That does not sound like a good development for any consumer.

  Yeah. I can imagine that. R.I.P consumer protection. I don't know if it's relevant or not, but I have just read an article at http://www.whycall.me/news/judge-rules-that-targets-harassing-de... about someone who sued collection agency because of the violations that it has done to her. I think the only and easiest way for us to counter those debt collectors is through the court now. I personally never had any outstanding debts (and hopefully I will not have one), so I don't quite understand about this matter. Thank you for all the replies. I think it will be useful for me in the future.

wilesmt said:   What is this, credit boards? Pay your bills deadbeats.

Bring on the red.

  
Yes, because having to prove that you are the debt holder is equivalent to PYBDB. No no no, don't you know how the system works? GUILTY until proven innocent.

I sincerely hope you get into a fun identify theft issue where your name is associated with a debt ridden individual. Let's see how much you value your rights. 

justignoredem said:   
wilesmt said:   What is this, credit boards? Pay your bills deadbeats.

Bring on the red.

  
Yes, because having to prove that you are the debt holder is equivalent to PYBDB. No no no, don't you know how the system works? GUILTY until proven innocent.

I sincerely hope you get into a fun identify theft issue where your name is associated with a debt ridden individual. Let's see how much you value your rights. 

  
I've been in the situation of having debt collectors after me without it being wrong identity and without being a deadbeat.

It was an estate issue, I couldn't legally pay them until we had all the numbers and one doctor was fighting things with Medicare.

I got the last laugh on it, though--while the debts were legitimate they refused to follow procedures and file with the court like they were supposed to.  That rendered the debts uncollectable and given the treatment I had gotten from the debt collectors I told them all to pound sand.  (The ones that had listened never sent debt collectors after me in the first place--and they got 100%.)

I think there is an extension here, if they are not subject to FDCPA how long until they can no longer report debts to collection agencies as well. That has always been their MAIN leverage and why FDCPA comes into play.

The fact that they were legal collectors is WHY they could file. It should just take a challenge to have it removed if they are not a legitimate "debt collector."



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