Every statute has a defined protected class and situations to which it applies. This information is located in the FDCPA definitions (15 USC 1692a). For example, only consumers are protected by the fair debt collection law, and it only applies to “consumer debts.” Read more below.
Section 1692(1) defines “Commission” as the Federal Trade Commission. The definition includes only the Federal Trade Commission, not necessarily the staff acting on its behalf.
Section 1692(2) defines “communication” as the “conveying of information regarding a debt directly or indirectly to any person through any medium.”
1. General. The definition includes oral and written transmission of messages which refer to a debt.
2. Exclusions. The term does not include formal legal action (e.g., filing of a lawsuit or other petition/pleadings with a court; service of a complaint or other legal papers in connection with a lawsuit, or activities directly related to such service). Similarly, it does not include a notice that is required by law as a prerequisite to enforcing a contractual obligation between creditor and debtor, by judicial or nonjudicial legal process.
The term does not include situations in which the debt collector does not convey information regarding the debt, such as:
- A request to a third party for a consumer to return a telephone call to the debt collector, if the debt collector does not refer to the debt or the caller’s status as (or affiliation with) a debt collector.
- A request to a third party for information about the consumer’s assets, if the debt collector does not reveal the existence of a debt.
- A request to a third party in connection with litigation (e.g., requesting a third party to complete a military affidavit that must be filed as a prerequisite to enforcing a default judgment, if the debt collector does not reveal the existence of the debt).
Section 1692(3) defines “consumer” as “any natural person obligated or allegedly obligated to pay any debt.”
General. The definition includes only a “natural person” and not an artificial person such as a corporation or other entity created by statute.
Section 1692(4) defines “creditor” as “any person who offers or extends credit creating a debt or to whom a debt is owed.” However, the definition excludes a party who “receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.”
General. The definition includes the party that actually extended credit or became the obligee on an account in the normal course of business, and excludes [53 Fed. Reg. 50102] a party that was assigned a delinquent debt only for collection purposes.Discussion
Section 1692(5) defines “debt” as a consumer’s ” . . . obligation to pay money arising out of a transaction in which the money, property, insurance, or services (being purchased) are primarily for personal, family, or household purposes . . ..”
1. The term includes:
- Overdue obligations such as medical bills that were originally payable in full within a certain time period (e.g., 30 days).
- A dishonored check that was tendered in payment for goods or services acquired or used primarily for personal, family, or household purposes.
- A student loan, because the consumer is purchasing “services” (education) for personal use.
2. The term does not include:
- Unpaid taxes, fines, alimony, or tort claims, because they are not debts incurred from a “transaction (involving purchase of) property . . . or services . . . for personal, family or household purposes.”
- A credit card that a card holder retains after the card issuer has demanded its return. The card holder’s’s account balance is the debt.
- A non-pecuniary obligation of the consumer such as the responsibility to maintain adequate insurance on the collateral, because it does not involve an “obligation . . . to pay money.”
Section 1692(6) defines “debt collector” as a party “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 another.”
Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.
1. The term includes:
- Employees of a debt collection business, including a corporation, partnership, or other entity whose business is the collection of debts owed another.
- A firm that regularly collects overdue rent on behalf of real estate owners, or periodic assessments on behalf of condominium associations, because it “regularly collects . . . debts owed or due another.”
- A party based in the United States who collects debts owed by consumers residing outside the United States, because he “uses . . . the mails” in the collection business. The residence of the debtor is irrelevant.
- A firm that collects debts in its own name for a creditor solely by mechanical techniques, such as (1) placing phone calls with pre-recorded messages and recording consumer responses, or (2) making computer-generated mailings.
- An attorney or law firm whose efforts to collect consumer debts on behalf of its clients regularly include activities traditionally associated with debt collection, such as sending demand letters (dunning notices) or making collection telephone calls to the consumer. However, an attorney is not considered to be a debt collector simply because he responds to an inquiry from the consumer following the filing of a lawsuit.
2. The term does not include:
- Any person who collects debts (or attempts to do so) only in isolated instances, because the definition includes only those who “regularly” collect debts.
- A credit card issuer that collects its cardholder’s account, even when the account is based on purchases from participating merchants, because the issuer is collecting its own debts, not those “owed or due another.”
- An attorney whose practice is limited to legal activities (e.g., the filing and prosecution of lawsuits to reduce debts to judgment).
3. Application of definition to creditor using another name.
Creditors are generally excluded from the definition of “debt collector” to the extent that they collect their own debts in their own name. However, the term specifically applies to “any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is” involved in the collection.
A creditor is a debt collector for purposes of this act if:
- He uses a name other than his own to collect his debts, including a fictitious name.
- His salaried attorney employees who collect debts use stationery that indicates that attorneys are employed by someone other than the creditor or are independent or separate from the creditor (e.g., ABC Corp. sends collection letters on stationery of “John Jones, Attorney-at-Law”).
- He regularly collects debts for another creditor; however, he is a debt collector only for purposes of collecting these debts, not when he collects his own debt in his own name.
- The creditor’s collection division or related corporate collector is not clearly designated as being affiliated with the creditor; however, the creditor is not a debt collector if the creditor’s correspondence is clearly labeled as being from the “collection unit of the (creditor’s name),” since the creditor is not using a “name other than his own” in that instance.
Relation to other sections. A creditor who is covered by the FDCPA because he uses a “name other than his own” also may violate section 807(14), which prohibits using a false business name. When he falsely uses an attorney’s name, he violates section 807(3).
4. Specific exemptions from definition of debt collector.
(a) Creditor employees. Section 1692(6)(A) provides that “debt collector” does not include “any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor.” (Discussion)
The exemption includes a collection agency employee, who works for a creditor to collect in the creditor’s name at the creditor’s office under the creditor’s servision, because he has become the de facto employee of the creditor.
The exemption includes a creditor’s salaried attorney (or other) employee who collects debts on behalf of, and in the name of, that creditor.
The exemption does not include a creditor’s former employee who continues to collect accounts on the creditor’s behalf, if he acts under his own name rather than the creditor’s.
(b) Creditor-controlled collector. Section 1692(6)(B) provides that “debt collector” does not include a party collecting for another, where they are both “related by common ownership or affiliated by corporate control, if the (party collects) only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts.” (Discussion)
The exemption applies where the collector and creditor have “common ownership or . . . corporate control.” For example, a company is exempt when it attempts to collect debts of another company after the two entities have merged.
The exemption does not apply to a party related to a creditor if it also collects debts for others in addition to the related creditors.
(c) State and federal officials. Section 1692(6)(C) provides that “debt collector” does not include any state or federal employee “to the extent that collecting or attempting to collect any debt is in the performance of his official duties.” (Discussion)
The exemption applies only to such governmental employees in the performance of their “official duties” and, therefore, does not apply to an attorney employed by a county government who also collects bad checks for local merchants where that activity is outside his official duties. [53 Fed. Reg. 50103]
The exemption includes a state educational agency that is engaged in the collection of student loans.
(d) Process servers. Section 1692(6)(D) provides that “debt collector” does not include “any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt.” (Discussion)
The exemption covers marshals, sheriffs, and any other process servers while conducting their normal duties relating to serving legal papers.
(e) Non-profit counselors. Section 1692(6)(E) provides that “debt collector” does not include “any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors.”(Discussion)
This exemption applies only to non-profit organizations; it does not apply to for-profit credit counseling services that accept fees from debtors and regularly transmit such funds to creditors.
(f) Miscellaneous. Section 1692(6)(F) provides that “debt collector” does not include collection activity by a party about a debt that “(i) is incidental to a bona fide fiduciary obligation or . . . escrow arrangement; (ii) . . . was originated by such person; (iii) . . . was not in default at the time it was obtained by such person; or (iv) [was] obtained by such person as a secured party in a commercial credit transaction involving the creditor.” (Discussion)
The exemption (i) for bona fide fiduciary obligations or escrow arrangements applies to entities such as trust departments of banks, and escrow companies. It does not include a party who is named as a debtor’s trustee solely for the purpose of conducting a foreclosure sale (i.e., exercising a power of sale in the event of default on a loan).
The exemption (ii) for a party that originated the debt applies to the original creditor collecting his own debts in his own name. It also applies when a creditor assigns a debt originally owed to him, but retains the authority to collect the obligation on behalf of the assignee to whom the debt becomes owed. For example, the exemption applies to a creditor who makes a mortgage or school loan and continues to handle the account after assigning it to a third party. However, it does not apply to a party that takes assignment of retail installment contracts from the original creditor and then reassigns them to another creditor but continues to collect the debt arising from the contracts, because the debt was not “originated by” the collector/first assignee.
The exception (iii) for debts not in default when obtained applies to parties such as mortgage service companies whose business is servicing current accounts.
The exemption (iv) for a secured party in a commercial transaction applies to a commercial lender who acquires a consumer account that was used as collateral, following default on a loan from the commercial lender to the original creditor.
(g) Attorneys. A provision of the FDCPA, as enacted in 1977 (former section 1692(6)(F)), providing that “debt collector” does not include “any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client,” was repealed by Pub. L. 99-361, which became effective in July 1986. Therefore, an attorney who meets the definition set forth in section 1692(6) is now covered by the FDCPA.
Section 1692(7) defines “location information” as “a consumer’s place of abode and his telephone number at such place, or his place of employment.”
This definition includes only residence, home phone number, and place of employment. It does not cover work phone numbers, names of servisors and their telephone numbers, salaries or dates of paydays.
Section 1692(8) defines “state” as “any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.”
I answer this question most often! Consumers want to know if a debt collector has violated the law and, on investigation, we discover they are dealing with a creditor attempting to collect his own debt rather than an actual “debt collector”.
Creditors are excluded from the Fair Debt Collection Practices Act and therefore cannot be held accountable under the act. Under this law, a “Creditor” is not considered a “Debt Collector” unless . . . creditors, in the process of collecting their own debts, use any name other than their own which would indicate that a third person is collecting or attempting to collect such debts.
Creditors that use a different name to collect debts become Debt Collectors and thus must adhere to the FDCPA.
However, this is not to say that creditors can just do whatever they want. They can be held accountable under other federal and state creditor and banking laws.
There are three important points here:
1. The statute of limitations for credit reporting is 7 – 10 years depending on what information is being reported. For instance, bankruptcy can be reported to 10 years. (In reality, credit history on credit cards, loans, mortgages etc. are reported for 7 years and 6 months due to the 180 day rule).
2. The statute of limitations for credit reporting is NOT the same thing as the statute of limitations on debt collection!
All states have their own statute of Limitations for the enforcement of a debt. In other words, the number of years that a debt can be enforced through the courts. Debts typically fall into one of the following categories:
- Open-ended Credit Contracts
- Oral Agreements
- Promissory Notes
- Written Contracts
See this page for a listing of each State’s statute of Limitations and ALWAYS check with your State Attorney General’s Office to ensure the statute has not changed or been amended.
WARNING! Once you incur a debt, it remains a valid debt until paid or discharged in a bankrtcy! Even if the statute of limitations for collection runs out, collectors can still attempt to collect the debt.
3. The statement, “whether or not such obligation has been reduced to judgment” is telling us that we do not necessarily have to have a Judge decree that a debt is valid to have it reported in our credit reports or for a collector to attempt collection activities.
One way to be sure you are dealing with a “Debt Collector” and not a “Creditor” is to
Take the last two words “due another”, from the sentence . . . One who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another
These two words are the key! Creditors collect their own debts while “Debt Collectors” are in the business of collecting money on behalf of another individual or business.
A Many companies now have their own collection departments and as long as they use the same name as the business they are considered “a creditor attempting to collect a debt” and NOT a Debt Collector.
B If I owned a Lemon Aid stand and, after extending credit to several people, I attempted to collect money owed me, I am a creditor because I am collecting my own debts and I’m not in the principal business of collecting debts.
D These people are not collecting anything, they are only officially notifying you of pending actions or actions already taken. For instance, a police officer, or officer of the court serving you with official papers informing you of a debt owed or a court appearance because of an overdue debt. Foreclosure notices are good examples.
E The key words here are, “at the request of consumers”. In other words you have contracted with a nonprofit consumer credit counseling service to collect money from you to pay your creditors (normally you send them a monthly check for a predetermined amount). If you terminate the contract their services stop and no attempt is made by them to collect the predetermined monthly check from you. Your accounts revert to the original creditor.
F An example might involve a Real Estate transaction where certain money was supposed to be placed in escrow for tax purposes but you failed to do so. The bank holding the mortgage may attempt to collect the money in order to satisfy the tax bill. Once again, the person attempting to collect this debt is not in the business of collecting debts for a living and are collecting because of a relationship with or connection to the debt owed.
If you believe you are a victim of unfair or illegal debt collection tactics, submit your information to a FREE* Fair Debt Lawyer by:
- Clicking here for a FREE* Fair Debt Case Review;
- Calling toll free 888-FDCPA-LAW (888-332-7252);
- Clicking here to locate a FREE* Fair Debt Lawyer.
The debt collector may just be liable to you for statutory damages of to $1,000, plus any actual damages suffered, plus attorney fees!