Back in April, we discussed how the number of justices on the Supreme Court of the United States was finally restored to nine, as Justice Neil Gorsuch officially took his place on the bench for oral arguments.
We also discussed how one of the first cases in which he participated was Henson v. Santander Consumer USA, which examined what many called a critical oversight in the Fair Debt Collection Practices Act, which was passed back in 1977.
To recap, the case concerned car loans originally made by CitiFinancial, which were serviced by Santander, a Dallas-based consumer finance company. Here, Santander eventually purchased defaulting car loans directly from CitiFinancial and attempted to collect the money owed.
Santander was eventually hit with a proposed class action lawsuit filed by four Maryland consumers in federal court back in 2012. The crux of the filing was that Santander had repeatedly violated the FDCPA, including speaking with consumers represented by attorneys and making false statements concerning debts.
The case ultimately made its way to the U.S. Court of Appeals for the Fourth Circuit, which upheld the lower court’s dismissal of the proposed class action. Here, the appellate court found that while Congress did introduce stringent regulations for those firms that collect debts for others via the FDCPA, the landmark bill did not address third-party companies that buy debts and attempt to collect on their own (i.e., creditors).
Given this reality and the fact that Santander was properly classified as a creditor, the 4th Circuit held the FDCPA did not apply. This decision was appealed to the nation’s high court.
In recent developments, SCOTUS affirmed this ruling by a 9-0 margin in a decision handed down on Monday.
In his first decision, Gorsuch wrote that the FDCPA, as currently written, does not indicate that third-party debt buyers are to be treated as debt collectors and does not enter into any such discussion.
“So a company collecting purchased default debt for its own account – like Santander – would hardly seem to be barred from qualifying as a creditor under the statute’s plain terms,” he wrote.
Gorsuch went on to write that while the FDCPA may fail to account for a new business model within the debt collection industry, real change could only come from Congress.
The decision was immediately condemned by consumer rights advocates, with many fearing the decision will open the door for lenders to enter into unscrupulous arrangements with debt collectors who can now freely circumvent the FDCPA — to the detriment of consumers.
Consider speaking with a skilled legal professional who can pursue solutions if you have endured sustained harassment from debt collectors and would like to learn more about your rights and your options.