Third Circuit Snares Passive Debt Buyers in FDCPA

  • Written by Anita Boomstein & Brett Natarelli for JD Supra

Passive debt buyers are debt collectors under the Fair Debt Collection Practices Act (FDCPA) if their “principal purpose” is buying debt, even if they outsource collections, the U.S. Court of Appeals for the Third Circuit has ruled, broadening liability under the statute.

Finding that the “principal purpose” of the defendants’ business was the collection of debts, the court said they “should bear the burden of monitoring the activities of those they enlist to collect debts on their behalf.”

Mary Barbato obtained a consumer credit card from GE Electric Capital Corporation and GE Money Bank in 2007. She made her last payment on the account in November 2010, leaving an outstanding balance.

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