Legal Definitions - debt collector

A debt collector is a business or individual whose primary activity involves collecting debts that consumers owe to other companies or individuals. This includes agencies that contact debtors by mail, phone, or electronic means across state lines. The term also applies to an original creditor (the company someone owes money to) if they use a different name to collect their own debt, making it seem like a separate entity is involved. However, under the Fair Debt Collection Practices Act (FDCPA), a federal law that regulates how debt collectors can interact with consumers, the term generally does not include the original creditor's own employees or companies that are directly affiliated with the original creditor.

Here are some examples:

• Imagine a situation where a consumer falls behind on payments for a personal loan from a bank. After several months, the bank decides to sell the unpaid loan account to a company called "Global Recovery Services." When Global Recovery Services then contacts the consumer to demand payment, they are acting as a debt collector because their principal business is collecting debts owed to a third party (the original bank).

• Consider a large online subscription service that has many customers with overdue accounts. Instead of their regular customer service or billing department contacting these customers, they create a separate internal unit called "Account Resolution Bureau." This unit uses its distinct name in all communications, leading customers to believe they are dealing with an independent collection agency. In this scenario, the online subscription service, through its "Account Resolution Bureau," would be considered a debt collector under the FDCPA because it is using a name that suggests a third party is collecting the debt, even though it's still the original creditor.