The U.S. Supreme Court recently ruled in Henson v. Santander Consumer USA Inc. that a purchaser of a debt is not a debt collector as defined by the Fair Debt Collection Practices Act (“FDCPA”) if it is regularly collecting debts that it owns. This includes if the debts were originated by a third party and purchased after default; as long as the party collecting owns the debt and collecting on its own behalf.
In doing do the Court held that a debt buyer must be collecting debts owned by/owed to a third party in order to be considered a “debt collector” and therefore subject to the FDCPA.
This new opinion curbs many debt collection lawsuits brought by consumers under the FDCPA for debt collection practices as the ONLY time a consumer now has a cause of action under the FDCPA is if a debt collector is collecting a debt on behalf of another party/creditor. ANY debt owned by that creditor that it is attempting to collect on itsof behalf takes the matter out of the FDCPA definition of a “debt collector” and a consumer cannot sue under that statute.