FDCPA Covered Entities and Exemptions 2 — Questions and Answers
Question 1: A bank's internal collections department contacts a consumer about a defaulted loan. Is the bank covered by the FDCPA?
- Generally no, because the bank is collecting its own debt (Correct answer)
- Yes, all collection activity by banks is covered
- No, banks are completely regulated by the OCC instead
- Yes, if the loan is more than 90 days past due
Correct answer: Generally no, because the bank is collecting its own debt
A creditor collecting its own debt through internal collections is generally not a debt collector under the FDCPA.
Question 2: A company regularly collects debts for its affiliated companies. Is it a debt collector under the FDCPA?
- It depends on whether the companies are truly separate legal entities and whether collection is in a different name (Correct answer)
- No, affiliated companies are always treated as one entity
- Yes, any intercompany collection is third-party collection
- No, as long as all companies share the same parent corporation
Correct answer: It depends on whether the companies are truly separate legal entities and whether collection is in a different name
Intercompany collection may or may not constitute third-party debt collection depending on corporate structure and whether the consumer can distinguish the entities.
Question 3: Which of the following professionals is expressly covered as a debt collector under the FDCPA?
- An attorney who regularly collects consumer debts through litigation (Correct answer)
- A process server who delivers collection lawsuits
- An accountant who reconciles debt accounts for a collector
- A software developer who builds collection management systems
Correct answer: An attorney who regularly collects consumer debts through litigation
Attorneys who regularly engage in consumer debt collection litigation are debt collectors under Heintz v. Jenkins (1995).
Question 4: A nonprofit consumer credit counseling agency collects payments from consumers and forwards them to creditors. Is the agency a debt collector?
- Generally no, if the agency's principal business is not debt collection and it meets other criteria (Correct answer)
- Yes, because it handles debt payments on behalf of creditors
- No, nonprofits are always exempt from the FDCPA
- Yes, all third-party payment handling is covered
Correct answer: Generally no, if the agency's principal business is not debt collection and it meets other criteria
Nonprofit credit counseling agencies are generally not considered debt collectors if their principal purpose is consumer counseling rather than debt collection.
Question 5: A mortgage servicer begins servicing a loan that was already in default when the servicer acquired it. Is the servicer a debt collector?
- Yes, servicers who acquire defaulted loans are treated as debt collectors (Correct answer)
- No, mortgage servicers are never debt collectors under the FDCPA
- Yes, but only for the first 90 days of servicing
- No, servicers are creditors because they hold the loan
Correct answer: Yes, servicers who acquire defaulted loans are treated as debt collectors
A mortgage servicer who acquires a loan already in default is a debt collector for purposes of the FDCPA.
Question 6: Which of the following debts is NOT covered by the FDCPA?
- A business owner's commercial line of credit used solely for business (Correct answer)
- A personal credit card balance
- A medical bill for personal healthcare
- A student loan taken for personal education
Correct answer: A business owner's commercial line of credit used solely for business
Business debts — including a commercial line of credit used purely for business purposes — are outside the FDCPA's scope.
FDCPA Covered Entities and Exemptions 2
A bank's internal collections department contacts a consumer about a defaulted loan.
Is the bank covered by the FDCPA?