June 13, 2017 (Sacramento, CA) – The Receivables Management Association International (RMA) urges its membership and the broader receivables management industry to proceed with caution when interpreting yesterday’s United States Supreme Court ruling in the case of Henson v. Santander.
In this unanimous decision, the Court determined that Santander Consumer USA, Inc. did not fall under the plain meaning of the term “debt collector” in the federal Fair Debt Collection Practices Act (FDCPA) when it purchased defaulted loans originated by another lender and proceeded to collect on these loans because it was not seeking to collect the debts “owed another”. The act of purchasing the loans meant that the debt was owed to Santander—not another entity.
However, the Court left open the question of the applicability of the alternative FDCPA definition of “debt collector” which states that it also applies to “any business the principal purpose of which is the collection of any debts” (emphasis added). This unanswered question by the Supreme Court raises questions for debt buying companies who purchase and actively collect on their own debt. While these companies would not be collecting debt owed another, they are still engaged in collecting debt.
While all judicial decisions are based on the facts contained in the case, it is conceivable that the Santander decision may be used by debt buying companies that operate solely as an investment vehicle and do not engage in any debt collection activity themselves (aside from acquisition) to argue they are not subject to FDCPA regulation. However, RMA would urge all companies that operate under either the active or passive business model to consult with legal counsel before making any operational changes.
In the end, RMA does not see the Santander decision as lessening the consumer protections required of its membership due to the rigorous requirements of RMA’s Receivables Management Certification Program (RMCP). RMA estimates that over 80 percent of consumer receivables in the United States that have been sold on the secondary market are owned by companies who are RMCP certified and thereby bound by standards that already go above and beyond the requirements of the FDCPA.
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About Receivables Management Association International
Receivables Management Association International (RMA) is the nonprofit trade association that represents more than 550 companies that purchase or support the purchase of performing and nonperforming receivables on the secondary market. The Receivables Management Certification Program and Code of Ethics set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer. Receivables Management Association International provides its members with extensive networking, educational, and business development opportunities in asset classes that span numerous industries. The association continually sets the standard in the receivables management industry through its highly effective grassroots advocacy, conferences, committees, task forces, publications, webinars, teleconferences, and breaking news alerts. Founded in 1997 as Debt Buyers Association, the Receivables Management Association International is headquartered in Sacramento, California.