On Aug. 7, the U.S. Court of Appeals for the Third Circuit issued an opinion in the case of Tepper v. Amos Financial (Case No. 17-2851) which has sent, and should send, shock waves to creditors and institutions that not only regularly purchase debt, but also those who can be classified as “debt collectors” under the Federal Fair Debt Collection Practices Act (FDCPA) 15. U.S.C. Section 1692.

In the somewhat recent U.S. Supreme Court case of Henson v. Santander Consumer USA, (137 S. Ct 1718 (2017)), Justice Neil Gorsuch, in his first opinion, left open the meaning of the definition of a “debt collector” under the FDCPA in holding that a debt purchaser is subject to the FDCPA if its principal business is the collection of debts. In the Henson case, the question was raised whether a bank which purchased a defaulted FDIC insured loan would be subject to the FDCPA, and the holding by the Supreme Court was that a person or entity that purchases a defaulted debt is not a “debt collector” and not subject to the FDCPA.