Daniel P. Shapiro, Esq.
Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd.
55 East Monroe Street
Chicago, Illinois 60603-5802
||Section 803(6) of the Fair Debt Collection Practices Act, 15
U.S.C. § 1692a(6)
Dear Mr. Shapiro:
This is in
response to your letter requesting a staff opinion regarding the Fair Debt Collection
Practices Act ("FDCPA"). You ask whether your client, Applied Card Systems, Inc.
("ACS"), is a "debt collector," as that term is defined by the FDCPA.
The following is your description of ACS's activities that you provided in your letter:
ACS is a Delaware corporation which has been operating since 1987. It is in the
business of servicing the consumer credit card portfolios of lending institutions. Those
lenders typically market to potential card holders using direct mail and disclose in those
mailings that the credit cards will be serviced by ACS, referencing it by name. Other than
marketing, ACS performs all of the servicing tasks and functions regarding the card
applicants and, ultimately, the card holders. Specifically:
- ACS receives the card application/agreement in the mail directly from the applicant;
- ACS recommends the application for approval or decline based upon criteria established
by the lenders and then sends notice of acceptance or rejection to the consumer when a
final decision is made;
- ACS places the order with the card manufacturer to have the credit card sent to the card
- ACS processes and sends monthly billing statements to the card holder;
- ACS receives payments directly from the card holder and processes those payments;
- ACS receives in-bound customer service inquiries, via telephone and written
communication, from card holders such as questions regarding billing statements, reports
of lost or stolen cards, and reports of payment disputes with vendors;
- ACS receives written communications from third parties such as notices from bankruptcy
courts or other entities, affecting the card holder, and processes such communications;
- In the event of a past-due account ("default"), ACS performs all collection
- In the event the debt is charged off by the lender, ACS may continue collection efforts,
may refer the account to a third-party collector or, at the lender's discretion, may
manage the arbitration process as prescribed in the credit card agreement.
803(6)(F)(iii) of the FDCPA, 15 U.S.C. § 1692a(6)(F)(iii), provides that the term
"debt collector" does not include
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 . . . (iii) concerns a debt which was not
in default at the time it was obtained by such person.
Based on your
description of ACS's business activities, it appears that all of the credit card accounts
that ACS obtains from lending institutions "are owed or due or asserted to be owed or
due another." It also appears that ACS obtains these accounts before they are in
default. Based on your description, therefore, it appears that section 803(6)(F)(iii)
excludes ACS from the definition of "debt collector" and, thus, most of the
FDCPA's provisions. Please note, however, that ACS's activities are still governed by
other statutes, such as Section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C.
§ 45(a)(1), which prohibits "unfair or deceptive acts or practices in or
I hope this has
been helpful. The views set forth in this informal staff opinion are those of the staff
and are not binding on the Commission.
Thomas E. Kane