Third Circuit Upholds Finding That Purchaser Of Debt Is Subject To The Requirements Of The Fair Debt Collection Practices Act

Barbato v. Greystone Alliance, LLC, No. 18-1042 (3d Cir. Feb. 22, 2019), Krause, J. – The United States Court of Appeals for the Third Circuit recently held that an entity, which acquired debt for the principal purpose of collecting such debt, qualified as a “debt collector” under the Fair Debt Collection Practices Act (the “Act”) even though the acquiring entity hired a third party to undertake collection efforts. Barbato presented an opportunity for the Third Circuit to answer an important question that emerged in the wake of the United States Supreme Court’s decision in Hanson v. Santander Consumer USA Inc.: Does a purchaser of debt qualify as a debt collector under the principal purpose theory of the Act? The Third Circuit answered the question in the affirmative.