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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
20580
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Division of Credit Practices
Bureau of Consumer Protection
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May 17, 1993
Mr. E. Cardonick
777 N. MacQuesten Parkway, # 403
Mt. Vernon, New York 10552
Dear Mr. Cardonick:
This is in reply to your letter of April 15, 1993 (which I incorporate
by reference), concerning whether a company that provides servicing
and collection assistance to a creditor on the creditor's premises
in the name of the creditor (Bob, Inc.) is a "debt collector"
under Section 803(6) of the Fair Debt Collection Practices Act.
We cannot answer your question definitively without more information.
However, we can provide the following:
- 1) While it appears possible that persons provided by Bob,
Inc. to its creditor clients become de facto employees
of the clients while they are working there, it appears that
Bob, Inc. is still an independent contractor engaged in the
collection business. It is Bob, Inc., not the persons whom Bob,
Inc. supplies, that is apparently paid by creditor clients for
their collection work. The exemption in Section 803(6)(A) of
the Act applies only to "officers or employees of a creditor."
Bob, Inc. itself does not appear to be an employee of its clients
although the persons Bob, Inc. supplies may be while they are
working there. Thus, if Bob, Inc. otherwise falls within the
definition of debt collector in Section 803(6), it still appears
to be covered by the Act.
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- 2) It is also possible that Bob, Inc. and its employees are
operating as "servicing organizations" whose activities
concern debts which were not in default when obtained. Section
803(6)(F)(iii) exempts such parties from the coverage of the
Act. The key word is "default"; whether the debts
at issue are delinquent or in default is a question of fact.
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- 3) Finally, the answer to your question depends upon the other
aspects of Bob, Inc's business and whether these aspects involve
debt collection activities. If they do, Bob, Inc. would definitely
be a "debt collector"; if they do not, then Bob, Inc.'s
status would depend upon its relationship with its creditor
clients.
I hope this has been helpful.
Sincerely,
John F. LeFevre
Attorney
Division of Credit Practices
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