Collect your own debts? Technically, you might not be a debt collector. That’s according to the United States Supreme Court. In a unanimous decision last month, the Court ruled that a finance company seeking to collect debts for its own account may not fall under the category of “debt collector” as outlined in the Fair Debt Collection Practices Act.
If this sounds paradoxical, consider the original FDCPA definition:
“The term ‘debt collector’ means 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, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”
The crucial words of the definition, according to Justice Neil Gorsuch, are the final two: due another. In his 11-page opinion (PDF), the newest member of the bench wrote that the Act’s language “seems to focus our attention on third party collection agents working for a debt owner—not on a debt owner seeking to collect debts for itself.”
There’s more going on here than semantics. For auto finance companies, the SCOTUS decision in Henson v. Santander may present new, viable debt collection options… provided states don’t pick up the regulatory slack.
Our friends at Hudson Cook spoke to Subprime Auto Finance News about the details—click here to read the article, “What Supreme Court decision on debt collection means for auto finance.”
For more automotive finance news and guidance, visit our blog.
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