Robert J. Goeringer, Esq.
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
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
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.
Thomas E. Kane