On behalf of a unanimous Supreme Court, Justice Neil Gorsuch delivered his first opinion on June 12 to determine whether debt purchasers fall within the statutory language under the Fair Debt Collection Practices Act (FDCPA) as debt collectors. The Court determined that a company may collect debts that it purchased for its own account without triggering the statutory definition of a “debt collector” under the FDCPA.

The FDCPA, effective in 1978, was designed to protect consumers from abusive, deceptive, and unfair debt collection practices. The FDCPA defines a debt collector as any person who regularly collects, or attempts to collect, consumer debts for another person or institution. Henson v. Santander Consumer USA involved a typical debt collection scenario: CitiFinacial Auto loaned money to the Petitioners for the purpose of purchasing automobiles; the Petitioners defaulted on those auto loans; Respondent Santander purchased the defaulted loans from the originator CitiFinancial Auto; and Santander sought to collect on the debt owed. Both the district court and the Fourth Circuit ruled against the Petitioner, holding that Santander did not meet the definition of a debt collector under the FDCPA because the company did not regularly seek to collect debts “owed . . . another.” Rather, Santander only collected debts that it purchased and owned, therefore not triggering the protections afforded to the Petitioners offered by the FDCPA.

The Supreme Court agreed with the lower courts and addressed the following Petitioner arguments:

  • The word “owed” in the statute is the past participle of the verb “to owe” suggesting that the debt collector definition must exclude loan originators but embrace debt purchasers like Santander.
  • Had Congress been aware of the emerging default debt market at the time it drafted the statute, Congress would have included debt purchasers under language of the FDCPA.

Gorsuch countered that such past participles are “routinely used as adjectives to describe the present state of a thing” and “Congress also used the word ‘owed’ to refer to present debt relationships in neighboring provisions of the Act…” Further, despite Gorsuch’s classic description of “[d]isruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry”, he noted that “it is not this Court’s job to rewrite a constitutionally valid text under the banner of speculation about what Congress might have done…”

The Court expressly provided that it did not address two related questions in the opinion. First, whether a third party collection agent for debts owed to others could qualify as a debt collection. Second, was there an alternative definition for “debt collector” available under the FDCPA, that would include an entity engaged “in any business the principal purpose of which is the collection of any debts.” This may set the stage for the next legal battle over the issue or, as the Court stated, “these are matters for Congress, not this Court, to resolve.”