Eleventh Circuit Decides Who Is Considered a “Debt Collector” Under the FDCPA

In Davidson v. Capital One Bank (USA), N.A., No. 14-14200, 2015 WL 4994733 (11th Cir. Aug. 8, 2015), the Eleventh Circuit interpreted the meaning of “debt collector” in the Federal Debt Collection Practices Act (FDCPA or the Act), 15 U.S.C. §§ 1692-92p (2015), and found that the respondent did not qualify as a debt collector, affirming the district court’s dismissal of the complaint.

In 2007, HSBC Bank Nevada, N.A. (HSBC) filed suit against Keith Davidson in state court to collect on Davidson’s credit card account. The parties reached a settlement during litigation; Davidson agreed to pay $500.00 to HSBC in exchange for HSBC terminating its collection suit. Davidson later failed to pay the settlement amount, and the state court entered judgment in favor of HSBC. In May 2012, Capital One Bank (USA), N.A. (Capital One) acquired approximately $28 billion of HSBC’s credit card accounts, including the account belonging to Davidson. Later in 2012, Capital One filed a collection suit against Davidson to collect on the same credit card account, alleging that the account was delinquent in the amount of $1,149.96.

Davidson filed a class action suit in the Northern District of Georgia in July 2013, alleging that Capital One’s activities violated the FDCPA. The FDCPA bans certain debt collection practices and allows individuals to sue debt collectors who fail to comply with the Act. Specifically, Davidson alleged that Capital One’s practices constituted false representation of the character, amount, or legal status of the debt owed under Section 1692e of the FDCPA. Capital One moved to dismiss the complaint on the grounds that it did not qualify as a “debt collector,” a requirement of the FDCPA, and therefore was not subject to liability under the FDCPA. The district court agreed with Capital One and dismissed Davidson’s complaint.

First, the Eleventh Circuit determined the meaning of the term “debt collector.” Second, the court determined if Capital One fell under that definition. Davidson’s argument, which centered around Section 1692a(6)(F)(iii) of the FDCPA—a provision that would not exclude Capital One from being a “debt collector” on the basis that the debt was acquired after default—was not persuasive to the court. Instead, the court looked to the plain language of the FDCPA’s statutory definition of a “debt collector” under Section 1692a(6): “any person who [1] uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or [2] who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” The court found that under the plain language of the statute, a person who does not otherwise meet the requirements of Section 1692a(6) is not a “debt collector” under the FDCPA.

Turning to whether Capital One is considered a “debt collector,” the court found that Davidson did not show that Capital One’s “principle purpose” is debt collection, though it was clear that Capital One does engage in at least some debt collection in the regular course of its business. Thus, Capital One did not qualify as a debt collector under the FDCPA’s first definition. The court next looked to the FDCPA’s second definition of “Debt Collector”, and found that Davidson failed to allege that Capital One regularly collects on debts owed or due to another. While the court recognized that Capital One does indeed collect debt owed to other entities, Davidson did not made any factual allegations showing Capital One regularly collects debts owed to another. The court thus concluded that Davidson’s complaint failed to sufficiently allege that Capital One is a “debt collector” under either definition in Section 1692a(6) of the FDCPA, and that Capital One was therefore not subject to liability under the Act. The court thereby affirmed the district court’s dismissal of Davidson’s complaint.

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