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Gorsuch Writes First Supreme Court Opinion With Unanimous Backing

Gorsuch Writes First Supreme Court Opinion With Unanimous Backing

Answer: When it's a bank that has purchased defaulted loans, hoping to collect a few pennies on each dollar.

Their debts had been sold to Santander, which then tried to collect on them.

The U.S. Supreme Court on Monday declined to expand a federal law targeting alleged harassment and threats in debt-collection tactics, saying oversight of distressed debt buyers that then become collection entities isn't within the court's purview.

Whether or not Santander violated the FDCPA rules has never been decided, since both the District Court judge and the Fourth Circuit Court of Appeals - and now the Supreme Court - said the case against the bank should be dismissed because its debt-collection practices aren't covered by that law. In this case, however, Santander Consumer was not a "repo man" in the usual sense, as they owned the debt they were collecting from Henson.

The opinion did not consider whether a purchaser of defaulted debt is engaged "in any business the principal goal of which is the collection of any debts".

In the end, he said, Congress can change the Fair Debt Collection Practices Act, to cover anyone who tries to collect a debt.

"By its plain terms this language seems to focus our attention on third party collection agents working for a debt owner - not on a debt owner seeking to collect debts for itself", Gorsuch wrote.

Rather than hire a traditional collection agency, Citi sold the debts, $3.5 billion worth, to Santander, which immediately began hounding the one-time vehicle owners.

Santander, which said it was pleased with the ruling, is a Dallas-based consumer finance company specializing in auto loans, owned in part by a subsidiary of Banco Santander, the euro zone's second-largest bank by market value. Gorsuch wrote in his folksy opening paragraph.

In the court's opinion, since Santander purchased the underlying loan portfolio from Citi, the bank was effectively trying to collect on debts it owns, which wouldn't trigger the FDCPA.

Now, the decision states that there is still room for Congress to create rules to more comprehensively protect borrowers - like, say, "a statute that applies the Act's demands to anyone collecting any debts, anyone collecting debts originated by another, or to some other class of persons still" - but that that's a job for lawmakers, not the judiciary.

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