There is the letter of the law and the spirit of the law. How much weight courts should give those differing perspectives is a topic of much legal debate. Prevailing views on the subject can change over time and so they have recently regarding the legal means for stopping creditor harassment.
It was just over a year ago that we offered up a series of entries on this blog about the Fair Debt Collection Practices Act. At the time, there was a view that FDCPA’s restrictions on debt collector strategies deemed abusive or deceptive would apply not only to agencies collecting for creditors, but also to companies that buy the debt and then go after consumers for whatever they can get. Things have changed.
Change in the tide
Earlier this month, the U.S. Supreme Court unanimously ruled that the letter of FDCPA does not specifically say that collection practice restrictions apply to companies that buy debt and then seek to recover. The justices agreed that FDCPA only controls the actions of collectors seeking money on behalf of creditors.
The opinion – the first written by new justice, Neil Gorsuch – upholds a lower court ruling dismissing a proposed class action lawsuit against Santander Consumer USA Holdings Inc. The plaintiffs, consumers who defaulted on car loans, claimed violations of the FDCPA after their debt was sold to Santander.
The finding of the courts is that the letter of the law applies only to debt collectors and that, by virtue of Santander having bought the debt, it had become a creditor. Gorsuch’s opinion states that if Congress wants the FDCPA to apply more broadly, it will have to amend the law.
Many observers would likely agree that there is little chance of that happening under the current power structure in Washington. Meantime, protection from collector harassment may still be available. But it’s up to the consumer to speak with a skilled attorney to learn about their options.