UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division of Credit Practices
Bureau of Consumer Protection
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September 15, 1993
Robert J. Goeringer, Esq.
Attorney at Law
30 Bryan Wynd, Suite 200
Glenmoore, Pennsylvania 19343-9552
Dear Mr. Goeringer:
This is in response to your letter of August 30, 1993, in which
you request a staff opinion regarding the Fair Debt Collection
Practices Act (FDCPA). You state that you represent Century Financial
Services, Inc. ("Century"), which has contracted with
First Premier Bank, N.A. ("the Bank") to perform all
marketing and servicing functions for the Bank's MasterCard and
Visa credit cards. Century performs all marketing of the Bank's
cards directly; it performs all other servicing functions required
by the Bank contract through its wholly-owned affiliate, Bancard
Center Inc. ("BCI"). Century and BCI perform services
for no entity other than the Bank.
According to your letter, "BCI processes the application,
arranges for issuance of the card, sets up the account, arranges
for billing, performs customer services, and receives and processes
all billing disputes." BCI performs all services under the
Bank's name.
The Bank also contracts with First Data Resources Inc. ("FDR"),
a large credit card processor, which, under the Bank's name, "process[es]
transactions and payments, send[s] periodic statements . . . [and]
send[s] letters to cardholders who are overlimit or late in their
payments." Century prepares all standard notices, including
collection letters used by both FDR and BCI. All notices must
be approved by the Bank. The collection activities of BCI and
FDR are coordinated, in that, when a cardholder is overlimit or
late in his payments, he receives telephone calls from BCI and
collection letters from FDR requesting that he bring the account
current and avoid cancellation of card privileges.
You suggest that Century and BCI are not covered by the FDCPA
because two provisions of the Act exempt them from the FDCPA's
definition of "debt collector." We disagree with your
first suggestion but agree with your second.
Section 803(6)(F)(ii) provides that the definition of "debt
collector" excludes "any person collecting or attempting
to collect any debt owed or due or asserted to be owed or due
another to the extent such activity . . . concerns a debt which
was originated by such person."
You contend that, because Century markets the Bank's credit cards
and BCI performs all card-related functions, Century and BCI "originate"
the debts with the Bank's cardholders and therefore fall within
this exemption. The Commission Staff Commentary on the FDCPA,
53 Fed. Reg. 50,097 (1988) ("Commentary"), however,
states that the exemption for originators "applies to the
original creditor collecting his own debts in his own name."
Id. at 50,103 (emphasis added). It appears from the scenario
you have described that the Bank is the cardholders' creditor.
Century and BCI are not creditors and thus are not covered by
Section 803(6)(F)(ii).
You also cite Section 803(6)(F)(iii), which provides that the
definition of "debt collector" excludes "any person
collecting or attempting to collect any debt owed or due or asserted
to be owed or due another to the extent such activity . . . concerns
a debt which was not in default at the time it was obtained by
such person."
Based on your letter, it appears that BCI is involved with cardholders'
credit card accounts long before the accounts go into default.
In fact, BCI is involved with accounts before cardholders have
even received their credit cards. Because the debts that BCI is
attempting to collect when it makes collection calls were not
in default when BCI obtained them, BCI is not a "debt collector"
for purposes of the FDCPA, and the Act does not apply to its collection
activities.
The views expressed herein represent an informal staff opinion.
As such, they are not binding on the Commission. They do, however,
reflect the staff's current enforcement position.
Sincerely,
Thomas E. Kane
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