Have we decided on LVNV's Status- Collector or Creditor

[ZRScruggs]

Okay so here's my rundown of the situation.

I was reading some Case Law, the one with Russell-Allgood v. Resurgent et al (Civil Action Number: 1:06-CV-1943-JOF)

The Judge ruled:

The Fair Debt Collection Practices Act definition of “debt collector” generally

excludes “creditors.” See Catencamp v. Cendant Timeshare Resort Group Consumer

Finance, Inc., 471 F.3d 780 (7

th Cir. 2006). However, section 1692a(6) contains an

exception to this rule for any creditor “who, in the process of collecting his own debts, uses

any name other than his own which would indicate that a third person is collecting or

attempting to collect such debts.” Id. at 781. In her complaint, Plaintiff alleges that LVNV

outsources its debt collection to Resurgent. Plaintiff’s complaint, however, also alleges that

Resurgent’s collection letters stated that Resurgent, Ventus, and LVNV are related entities.Thus, unlike the situation in Catencamp, there was no attempt to hide the identity of the

creditor or debt collector acting on the creditor’s behalf and therefore, section 1692a(6)’s

exception does not apply. LVNV is not a “debt collector” under the Fair Debt Collection

Practices Act and therefore cannot be liable under the act.

But

FDCPA

803 § 4 et seq.

(4) The term “creditor” means any person who offers or

extends credit creating a debt or to whom a debt is

owed, but such term does not include any person to the

extent that he receives an assignment or transfer of a

debt in default solely for the purpose of facilitating collection

of such debt for another.

(6) The term “debt collector” means any person who uses

any instrumentality of interstate commerce or the mails

in any business the principal purpose of which is the

collection of any debts, or who regularly collects or

attempts to collect, directly or indirectly, debts owed

or due or asserted to be owed or due another. Notwithstanding

the exclusion provided by clause (F) of

the last sentence of this paragraph, the term includes

any creditor who, in the process of collecting his own

debts, uses any name other than his own which would

indicate that a third person is collecting or attempting

to collect such debts. For the purpose of section

808(6), such term also includes any person who uses

any instrumentality of interstate commerce or the mails

in any business the principal purpose of which is the

enforcement of security interests. The term does not include—

(A) any officer or employee of a creditor while, in

the name of the creditor, collecting debts for such

creditor;

( any person while acting as a debt collector for

another person, both of whom are related by common

ownership or affiliated by corporate control,

if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and

if the principal business of such person is not the

collection of debts;

© any officer or employee of the United States or any

State to the extent that collecting or attempting to

collect any debt is in the performance of his official

duties;

(D) any person while serving or attempting to serve legal

process on any other person in connection withthe judicial enforcement of any debt;

(E) any nonprofit organization which, at the request

of consumers, performs bona fide consumer credit

counseling and assists consumers in the liquidation

of their debts by receiving payments from such

consumers and distributing such amounts to creditors;

and

(F) 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

(i) is incidental to a bona fide fiduciary obligation

or a bona fide escrow arrangement;

(ii) concerns a debt which was originated by such person;

(iii) concerns a debt which was not in default at the

time it was obtained by such person; or

(iv) concerns a debt obtained by such person as a

secured party in a commercial credit transaction

involving the creditor.

So what I'm seeing is that LVNV is exempt under section (6)(F)(iv) if in fact they are a secured party in the transaction. a/k/a debt buyer.

However, they are not exempt under (6)(F)(iii) in most cases, as they buy defaulted debts, making them collectors under this section.

Now (4) makes it even more confusing. By using the qualifier "solely" there seems to be some wiggle room. LVNV may be construed as collecting for themselves, as they now own the debt. so Creditor according to this definition, because of imprecise writing.

Now (6)( makes the point against Resurgent Capital solidifying their claim as a non-debt collector (as I'm informed they have done this). Because 1) their sole business is debt collection and 2) they collecto for both LVNV and Sherman Acquisitions. My question is, do they get corporate shelter as they are under common ownership?

So I guess in summary:

Could anyone enlighten me as to what makes LVNV a secured party in a commercial transaction? Debt buying guidelines and laws?

Is the "solely" qualifer enough to let LVNV off the hook as a collector?

Seems to me they get off the hook as a technicality.

Please opine on this seeming discrepancy.

Thanks.

[Debt Guy]

You are trying to make this too hard.

Nascar and I hashed out part of this recently. Let me try to simplify and clarify. This is a semantics thing and requires some backing into the words.

LVNV (or any debt buyer) is both a collector and a creditor.

The term collector comes from the FDCPA and the FTC staff opinion letters that define all purchasers of charged-off debts and subject to the Act. Since OCs are explicitly not subject to the Act and collectors are -- viola! the DB must be a collector.

The Act talks about creditors and talks about collectors. The Act uses terms that describe a creditor in the context of the original creditor. This is not surprising as the Act was written when Jimmy Carter was president and the debt buying industry did not exist -- so there was never an contemplation of the need to different words to describe the difference between an OC and a DB.

So, for purposes of the FDCPA, a DB is a collector and not a creditor.

But, the FDCPA does not rule all facets of things financial and legal. In banking parlance commonly used for the last thousand years or so, a creditor is an entity to whom a debt is owed (source: Dictionary of Accounting and Financial Terms). If you owe me $50 then I am the creditor.

So, if you are talking about anything except the FDCPA, the DB is the creditor.

Further, and perhaps more on-point to the basis of your query, the DB has all the rights of the original creditor -- particularly as relates to bringing legal action to collect on the account.

Perhaps the easy way to think of it is this: If the DB is attempting to collect the debt then they are a collector but if they are in court then they are the creditor.

Does that make sense?

[ZRScruggs]

Thanks DebtGuy, that cleared up a lot of what I was wondering. I was leaning that way too, as to JDBs being both.

Hence, it's why you can hit them with a 623 in ragards to the FCRA.

I guess what my next question would be, is how can they, if considered a collector in all things FDCPA, not be held liable in court, or vicariously liable as a collector for an affiliate company (Resurgent because of common ownership) by the same FDCPA guidelines that. Or does it not work that way, is the 803(6)( not applicable in the converse to LVNV because of the commercial affiliation with Resurgent and Sherman?

From what I understand from your answer, LVNV is only considered as a "Creditor" in court, but a collector in business only when regarding the FDCPA. From that conclusion, they seem completely immune to any FDCPA charges. And that sucks as a point of fairness.

I guess in the consumer's defense is the FCRA, which allows for multiple causes of action and multiple punitive rewards.

In any event, thanks for the clarification.

[Debt Guy]

the DB is subject to the FDCPA morning, noon and night.

The FDCPA is very seldom applicable in the courtroom. As ironic as this may seem, litigating is not defined as a collection activity and this FDCPA just does not kick in. However, there are much more rigorous standards and requirements in the courtroom than with the FDCPA alone.

You are asking about affiliate companies. I'll give you my opinion and interpretation. this gets complicated fast. You know where you are trying to go and penetrate the corporate veil. If set up correctly, that is very difficult.

Company A is a holding company. a holding company is an entity that exists solely to own another company. Typically, this is done for licensing or legal reasons.

The holding company is sort of like a mothership. the mothership provides common support to a variety of subsidiary companies -- things like back office processing, accounting, computers, purchasing, hiring, etc.

The subsidiary company is the operating entity. This where the work gets done.

LVNV is a holding company. They own a variety of subsidiary collection companies (I don't remember the names but lets call the A, B, C and D).

LVNV can approach their business in either of two ways. First they can buy assets and then place them with one of their subsidiary collection companies. In this case, LVNV is defined as a collector under FDCPA -- but since LVNV has no collection staff and never contacts a consumer, it would be pretty hard to violate FDCPA.

Or, LVNV can purchase the assets and then sell the assets to the subsidiary collection companies. My interpretation says that LVNV not is not a collector for FDCPA purposes. They don't own anything.

What seems most objectionable to many consumers is the fact that LVNV bounces assets between the different subsidiary companies. As much as this many offend, my response is that they are only taking advantage of a legal structure that gives them more freedom and flexibility -- a very American thing to do.

While the "mothership" structure might make LVNV immune from FDCPA complaints, the subsidiary company is not. I don't think you have lost any protection that you had.

Now, with all that gum banging, exactly what is it you want to do with LVNV's gonads and why?

[ZRScruggs]

Very impressive, and well stated.

Okay. It's a situation involving the ladyfriend. I've been reading up on this site for a while now, as the topic interests me. Well, I told her I'd take a look at her account and see what was going on. She brought up LVNV, and I told her I'd check it out. Invariably many roads pointed back to here.

Well there was an account with a certain subprime credit card issuing bank, ended up getting sold to LVNV, then placed Resurgent who contracted with Allied Interstate.

Total inaccuracies all over the credit report on the part of LVNV.

Charge off date written three months after original charge off date from originating account. Inaccurate balance reported 30 dollars over reported high balance by Original Creditor and high balance reported by LVNV. Reported as a Factoring Account to one CRA. Several FCRA violations, and I'm trying to act in "Good Faith" to give them a chance to amicably resolve before filing suit.

I've sent a letter requesting Validation to Allied. Also drafted the dispute letters to the CRAs and am sending out tomorrow Priority Mail. (Or is CMRRR better for the CRAs?). Either way a dispute is about to happen. She is also enrolled in a credit recovery program with L. Harrison and Associates. And they've been one of the few Credit Repair Firms that actually do a good job as far as I can tell.

Anyway, moving on

I have to do some more research on Allied, but if they're a subsidiary as well, then they're the ones in violation of the FDCPA, which is one of the reasons I'm looking to make the connections behind the corporate veil.

Called Allied and noted verbally that the account was in dispute, followed up with two DV letters one addressed to Resurgent, one addressed to LVNV, and one to be sent tomorrow to Allied. It's been over five days, and we were the ones who initiated contact. It's been more than five days (allowing even time for mail) and no initial dunning letter sent out notifying of the right to validate. (Again, kind of preempted them by sending validation before the initial dunning letter was sent).

Waiting to see if accounts come back verified by the CRAs. (Is there a time frame I should wait before sending the dispute to the CRAs, or will sending them both at the same time suffice?)

I guess my real problem is that we live in an incredibly small town, and most of the populous here isn't very affluent, and even those affluent in terms of sophistication, are more than likely ignorant of their rights. To me, that a company can get by on such despicable and underhanded tactics with such a huge profit margin, is bastardizing the capitalistic ideals on which our country is built. And such blatant disregard of the law. And a continual violation of basic rights guaranteed not by some obscure precedent, but hte black letter of the law. It moves me to take action, to try to stop it. I'm sure many others here feel the same way.

The "bug" bit me so to speak, I think it's called consumer advocacy.

So that in a nut shell is my situation. A personal vendetta on behalf of the several similarly situated.

[Debt Guy]

Reported as a Factoring Account to one CRA

I think this is more an issue of how the specific CRA requires them to report than the DB/CA doing something funny.

I have to do some more research on Allied, but if they're a subsidiary as well, then they're the ones in violation of the FDCPA, which is one of the reasons I'm looking to make the connections behind the corporate veil.

Don't think Allied is part of that group.

To me, that a company can get by on such despicable and underhanded tactics with such a huge profit margin, is bastardizing the capitalistic ideals on which our country is built.

Bullcrap. You are either incredibly naive or have never heard of the great robber barons who build the great fortunes of this country. Don't mislead yourself that there is anything noble or honorable about "capitalistic ideals" -- capitalism is brutally aggressive and highly Darwinian with no moral standards whatsoever.

[admin]

In my opinion, LVNV there is no way that they are a creditor, they are a collector. It doesn't matter if they've purchased the debt. They do not extend credit nor issue it.

It's totally different if Bank One's credit cards were purchased by Chase. Chase is still extending credit on the purchased (acquired) credit card debts, so they are not a collector, but a creditor.

[1time2many]

In my opinion, LVNV there is no way that they are a creditor, they are a collector. It doesn't matter if they've purchased the debt. They do not extend credit nor issue it.

With that being said, does it give a DB or JDB the right to add intrest and fees to a purchased debt to inflate the value even more?

[Tazjeepcj7]

No, that right was probably included in the written agreement for the original debt.

[Debt Guy]

In my opinion, LVNV there is no way that they are a creditor, they are a collector. It doesn't matter if they've purchased the debt. They do not extend credit nor issue it.

for purposes of the FDCPA, a DB is a collector and not a creditor.

But, the FDCPA does not rule all facets of things financial and legal. In banking parlance commonly used for the last thousand years or so, a creditor is an entity to whom a debt is owed (source: Dictionary of Accounting and Financial Terms). If you owe me $50 then I am the creditor.

Sometimes a word has different meanings dependent upon the context in which you use the word.

[ZRScruggs]

Reported as a Factoring Account to one CRA

To me, that a company can get by on such despicable and underhanded tactics with such a huge profit margin, is bastardizing the capitalistic ideals on which our country is built.

Bullcrap. You are either incredibly naive or have never heard of the great robber barons who build the great fortunes of this country. Don't mislead yourself that there is anything noble or honorable about "capitalistic ideals" -- capitalism is brutally aggressive and highly Darwinian with no moral standards whatsoever.

Okay, you got me there. I'll rephrase. Capitalism in and of itself is pretty brutal, even the results of it (wage disparity, the gap between the monetary power and the majority consumer); perhaps what I meant was the ideal that capitalism manifests itself through, the freedom of being able to partake in it. You're right, there isn't a moralistic code to extortion, the system is what it is regardless of human input. But there is something honorable about having the ability to do business as we've chosen, regardless of the outcome (i.e. current situation we've put ourselves in as a whole). Perhaps it just shows that we as a society tend toward that which is self desctructive.

In any event, it seems we've settled the controversy. LVNV is both creditor under the FCRA and collector under the FDCPA, in which sense, they have to abide by both Acts.

In a sense this is good news for consumers, as you can both 623 them, and DV them if need be.

The downside of my issue with them is that the debt they "bought" was from CreditOne Bank, another known subsidiary of the Sherman Group.

Bummer.