WASHINGTON–The Supreme Court has ruled unanimously that law firms performing nonjudicial foreclosures are not debt collectors under the Fair Debt Collection Practices Act (FDCPA).
The court ruled that while the defendant in the case, McCarthy & Holthus LLP, is subject to the FDCPA’s provisions specifically related to enforcing a security interest, it is not subject to the remaining provisions of the statute since it does not fall within the scope of the primary definition of “debt collector.”
Specifically, the Supreme Court cited wording in the Fair Debt Collection Practices Act, which offers a limited purpose definition as it relates to enforcing security interests. The statute states that “for the purpose of section 1692f(6),” the term debt collector “also includes” those enforcing security interests. The court was satisfied that using the term “also” means that entities that enforce security interests do not fall into the primary definition of debt collector.
The court said a review of the FDCPA’s legislative history supports the definition, and as a result did not buy the plaintiff’s argument the limited-purpose definition was meant to apply to those who enforce security interests but have no direct communication with consumers, such as “repo men.”
Justice Sotomayor, in a concurring opinion, urged Congress to clarify the statute.