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Tepper v. Amos Financial, LLC

United States Court of Appeals, Third Circuit

August 7, 2018


          Argued June 5, 2018

          Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil Action No. 2-15-cv-05834) District Judge: Honorable J. Curtis Joyner

          Erik M. Helbing (Argued) Helbing Law, LLC Counsel for Appellant.

          Michael J. Palumbo Anthony J. Gingo Gingo Palumbo Law Group Matthew R. Rosenkoff Taylor English Duma LLP Counsel for Amicus Appellant.

          Gleb Epelbaum John J. Jacko, III (Argued) Fellheimer & Eichen Counsel for Appellee.

          Carlo Sabatini Brett Freeman Sabatini Law Firm Daniel A. Edelman Francis Greene Edelman, Combs, Latturner & Goodwin LLC Counsel for Amicus Appellee.

          Before: AMBRO, JORDAN, and VANASKIE, Circuit Judges.


          AMBRO, Circuit Judge.

         Many would gladly pay Tuesday for a hamburger today. Of course, not all of those who fall into debt make payments timely, and debt collection has become a professional trade. The Fair Debt Collection Practices Act (the "FDCPA" or "Act"), 15 U.S.C. § 1692, et seq., regulates their efforts. Under it, debt collectors are prohibited from engaging in deceptive, abusive, or otherwise unfair practices to collect debts. When these practices occur, the Act gives debtors a private right of action to seek recourse, with the possibility of receiving statutory damages.

         The Act does not apply, however, to all entities who collect debts; only those whose principal purpose is the collection of any debts, and those who regularly collect debts owed another are subject to its proscriptions. Those entities whose principal business is to collect the defaulted debts they purchase seek to avoid the Act's reach. We believe such an entity is what it is-a debt collector. If so, the Act applies.

         I. Background

         A. "Debt Collectors" Under the Fair Debt Collection Practices Act

         The FDCPA is a "remedial legislation" aimed, as already noted, "to eliminate abusive debt collection practices by debt collectors." Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015) (quoting § 1692(e); Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013)). Importantly, it applies only to "debt collectors," Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000), defined as any person: (1) "who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts" (the "principal purpose" definition); 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 "regularly collects for another," or "regularly collects," definition).[1] § 1692a(6). Specifically excluded from the definition's reach are, in relevant part, a creditor's officers and employees collecting debts for the creditor, a company collecting debts only for its non-debt-collector sister company, an entity collecting a debt it originated, and one collecting a debt it obtained that was not in default at the time of purchase. § 1692a(6)(A), (B), (F).

         "Creditors-as opposed to 'debt collectors'- generally are not subject to the [Act]." Pollice, 225 F.3d at 403. A "creditor" is any person: (1) "who offers or extends credit creating a debt[;] or" (2) "to whom a debt is owed." § 1692a(4). Excluded is "any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." Id. Notably, the Act, by its terms, contemplates that an entity may be both a debt collector and a creditor, stating that "debt collector" also includes "any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts." § 1692a(6).

         The landscape of debt collection has changed since the FDCPA's enactment in 1977, and not all those who collect debt look like the classic "repo man." The Federal Trade Commission reported in 2009 that "[t]he most significant change in the debt collection business in recent years has been the advent and growth of debt buying." Federal Trade Commission, Collecting Consumer Debts: The Challenges of Change - A Workshop Report 13 (2009). No longer do creditors simply hire debt collectors to serve their named role; rather, with increased frequency creditors sell debt to purchasers, who may again resell the debt, hire outside debt collectors to undertake collection efforts, or attempt to collect on their own. See Federal Trade Commission, The Structure and Practices of the Debt Buying Industry 1 ...

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