UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

Division of Credit Practices
Bureau of Consumer Protection

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.
 
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.
 
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