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Debt Collectors Not Necessarily Debt Collectors

The Eleventh Circuit recently weighed in on an important debate regarding the definition of a “debt collector” under the Fair Debt Collection Practices Act (FDCPA), 15 U.SC. 1692, et seq. In Davidson v. Capital One Bank (USA), N.A., Docket No. 1:13-cv-02307-WSD (11th Cir. 2015), the Court concluded that Davidson failed to properly allege that Capital One met the definition of a “debt collector” under the FDCPA and thus be subject to liability. The basic facts are that a judgment was entered in favor of HSBC Bank against Davidson on a debt owed to HSBC. This debt was subsequently purchased by Capital One. Capital One then filed suit against Davidson to collect on the debt. Davidson then sued Capital One pursuant to the FDCPA for falsely alleging certain amounts due on the debt.

There was no dispute that Capital One acquired the debt after it was in default and thus on its face Capital One would seem to fall within the definition of a “debt collector” under the FDCPA. However, the Eleventh Circuit was not persuaded by Davidson’s allegations. The reason being, the Court found that based on Davidsons allegations in his amended complaint, Capital One did not meet the definition of a “debt collector” under the FDCPA because “to qualify as a debt collector under the FDCPA, Capital One had to “regularly” collect or attempt to collect on debts “owed or due another” or the principal purpose of Capital One’s business had to be “the collection of any debts,” see id. § 1692a(6), and Capital One did not satisfy either requirement.”

It is important to note that the Court did not determine that Capital is not a debt collector; the Court concluded that Davidson failed to properly allege one of two potential ways an entity meets the definition of a debt collector. It remains to be seen whether in fact Capital One could be considered a debt collector if Davidson had properly alleged that Capital One “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts,” or (2) “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. 1692a(6).

Nonetheless, it makes for an interesting debate in the FDCPA world. This is a win for the debt collectors – or non-debt collectors.