Ms. Jill Cline
Dear Ms. Cline:
I have received Stephanie Griffin's letter of December 14, 1990 and the copy of the solicitation flier that Diversified Mortgage, Inc. (DMI) plans to have various debt collection agencies insert in their mailings. Although Ms. Griffin no longer works for DMI, you have indicated to me that her letter accurately conveys what DMI plans to do. You ask whether providing this flier to debt collection agencies for inclusion in dunning mailings brings DMI within the definition of a "debt collector" under the Fair Debt Collection Practices Act ("the FDCPA" or "the Act").
The flier reads as follows:
Ms. Griffin's letter indicates that, in addition to supplying the collection agencies with fliers to include in their mailings, DMI plans to make loans to willing consumers and "inform the collection agency of what steps are being taken to clear the debt . . . if the debtor chooses to release such information." You indicated that, for the portion of each loan that is owed to the collection agency's client, you would issue a check in the name of that client. Thus, the collector's clients, not the borrower, would be the payees on the checks.
Based on your description of the actions DMI plans to take, we believe that DMI would be a debt collector for purposes of the FDCPA. Section 803(6) of the FDCPA defines debt collector as:
Since the actions DMI contemplates would not constitute "direct" attempts to collect debts, the issue is whether the actions would constitute "indirect" attempts to collect debts as set forth in the Act. In and of itself, DMI's supplying solicitation fliers to a collection agency for mailing to those on the agency's debtor rolls probably would not constitute an indirect attempt by DMI to collect a debt. The text of the flier appears to offer a "no-strings-attached" home equity loan, giving no clear indication of a relationship between DMI and the collection agency.
However, when DMI supplies fliers in conjunction with the other actions that DMI contemplates, i.e., making loans to willing debtors, informing the collection agency of the status of the debts, and issuing checks directly to the collection agency's clients, DMI functions as an assistant to the collection agency in its attempts to collect the debts owed to the agency's clients. The Commission staff believes that any person or entity that assists a debt collector in collecting debts is itself indirectly attempting to collect debts owed another and, thus, would be covered by the Act.
Finally, we note that if DMI undertook these actions, it clearly would meet the final criterion under S 803(6) of the Act -- that the attempts at debt collection be "regular." Routinely supplying solicitation fliers to a collection agency which would, then mail them to the many people on its list of debtors certainly would constitute a "regular" activity, i.e., an activity conducted routinely or at periodic intervals. Similarly, updating the collection agency about the status of debts and issuing checks in the name of the collection agency's creditors would presumably occur on an ongoing basis.
Accordingly, it is the opinion of the Commission staff that the actions you describe in your letter would bring your firm within the definition of a "debt collector" under Section 803(6) of the Act.
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