The Supreme Court heard arguments in a case brought under the Fair Debt Collection Practices Act that could, depending on how the court decides, affect financial institutions' debt collection activities. The case originated from a suit brought by auto loan borrowers against Santander Consumer USA. Its central question is whether Santander should be regulated as a debt collector after it purchased auto loan debts the borrowers had owed to CitiFinancial.
Santander had originally been hired by CitiFinancial to collect the debts; after purchasing the loans, the company claimed it should no longer be regulated as a debt collector by the CFPB, which administers federal fair debt collection practices rules. The borrowers – Ricky Henson and others – filed a class action lawsuit against the company over its alleged violations of the FDCPA. The case's outcome could impact financial institutions that currently are largely exempt from the CFPB's future debt collection rulemaking plans. If the court rules in favor of the borrowers, financial institutions could be more vulnerable to lawsuits alleging FDCPA violations. The CFPB is still in the beginning stages of the rule-making process regarding debt collection. The court's decision could come sometime this summer, but there is no set timeline.
in Compliance & Regulatory News