Monday, December 7, 2015

It's Official, Capitol One is NOT a Debt Collector

Sometimes, it can be quite difficult to know how to classify a particular business. Capitol One is one such difficult-to-identify business, but a recent ruling from the U.S. 11th Circuit Court of Appeals states that Capitol One is not legally considered a debt collector.

 This ruling came after the company was accused of violating the Fair Debt Collection Practices Act, which dictates how debt collectors must act and not act when attempting to collecting a debt. Because the court decided that Capitol One is not a debt collector, the complaints against it will not be heard.

The reason that Capitol One is not considered a debt collector is because it does not match the exact definition of a debt collector put forth by the Fair Debt Collection Practices Act. According to the Act, unless an agency’s “principal purpose” is to collect or attempt to collect a debt, it is not
considered a debt collector. Obviously, Capitol One does much more than just collect debts, so it does not meet this definition.

This is a lesson in semantics to keep in mind when it comes to your business. If you do in-house debt collecting in addition to running your business and managing its upkeep, you’re not going to be bound by all of the laws of the Fair Debt Collection Practices Act. If you hire an outside debt collection agency to do it for you, you will be! Capitol One got off easy this time, but your business might not- not unless you take the proper precautions to always act in accordance with the laws as they relate to collecting debts.

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