- The Fair Debt Collection Practices Act (FDCPA) The 1977 law enacted by Congress that prohibits harassment and misleading conduct by debt collectors and allows consumers to sue “debt collectors” for violation of the statute range of deceptive and misleading conduct.
- Two FDCPA definitions of “debt collector” (1) anyone “in any business the principal purpose of which is the collection of any debts,” and (2) anyone “who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”
This decision is a victory for consumers. The court of appeals made clear that companies whose lifeblood is debt collection cannot evade liability for abusive tactics by contracting with other people to make the contact with consumers. As the court acknowledged, consumers who have been subject to abusive tactics can pursue relief against contractors who mislead consumers about purported debt, as well as against debt buyers who direct the activities of those contractors.Adam Pulver, the lead Public Citizen attorney in McAdory v. DNF Associates
In March 2017, a debt buyer called DNF Associates bought a debt allegedly owed by an Oregon resident to a retailer. DNF Associates makes its profits by buying defaulted consumer debts from creditors for pennies on the dollar and then using a network of contractors to collect on those debts. It then hired at least two companies to try and collect the debt.
One of these companies, called M.N.S. & Associates, engaged in a pattern of deceptive and misleading conduct in its interactions with the consumer, including withdrawing funds from her bank account before an agreed payment date. The consumer then sued DNF and M.N.S. for violations of the FDCPA. Enacted in 1977 by Congress, the FDCPA is a law that allows consumers to sue debt collectors for a range of deceptive and misleading conduct.
DNF argued in district court that it could not be sued under the FDCPA, because the statutory definition of “debt collector” applies only to entities that directly interact with consumers to collect debt. The district court agreed with DNF and dismissed the claims against it.
Public Citizen represented the consumer in her appeal of that decision to the U.S. Court of Appeals for the Ninth Circuit. We argued that DNF qualified as a debt collector under the FDCPA because its “principal purpose” is the collection of debt.
In March 2020, the Ninth Circuit issued a decision in our favor, holding that debt buyers that can still be held liable for violations of the FDCPA as “debt collectors,” even when they hire third party corporations to collect the debt.