Texas Commercial Law Firm

FFC argued that the FDCPA was referring to temporary assignments for the purposes of collection which FFC contended are common in the collection industry. It asserted that in such instances, debts are truly being collected for another. FFC argued further that since the assignments it received were permanent, it was not collecting debts on behalf of another and therefore was not a debt collector under the Act. The Fifth Circuit Court rejected FFC's arguments noting that the Act does not refer to "temporary assignments" but rather just to "assignments". The Court pointed out that such a reading would make it relatively easy to avoid coverage of the Act by making "temporary" assignments look like "permanent" assignments. To resolve the ambiguity, the Court turned to the legislative history of the Act and noted:

The target and emphasis of the Act are "third-party" or "independent" collectors of "past-due" or "delinquent" debts. As the Senate Committee that considered the Act wrote,

The committee intends the term "debt collector," subject to the exclusions discussed below, to cover all third persons who regularly collect debts for others. The primary persons intended to be covered are independent debt collectors. [Emphasis theirs][cites omitted].

The Committee explained that it limited the Act's coverage to third-party collectors of past due debts because,

Unlike creditors, who generally are restrained by the desire to protect their good will when collecting past due accounts, independent collectors are likely to have no future contact with the consumer and often are unconcerned with the consumer's opinion of them.

ID. at 1486. The Court concluded that independent collectors of past due accounts originated by a third party and assigned to the collector fall into the category of debt collectors which Congress intended the Act to cover. The Court held:

Even though FFC collects debts for itself, it is still a debt collector within the meaning of [the FDCPA] because the corporation regularly collects debts and debt collection is its principal purpose, and because the debts the corporation collects were already in default when they were assigned to the corporation and thus the corporation falls within the assignee exception to the definition of creditor.

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