THERE IS DEBT AND THERE IS DEBT ...
NOT ALL DEBT IS ALIKE UNDER CONSUMER PROTECTION LAWS THAT GOVERN DEBT COLLECTION AND DEBT COLLECTORS
Debt collection activities are regulated by the federal debt collection practices act, which contains a list of no-nos that constitute violations, but are actionable under the FDCPA only if the debt sought to be collected is a consumer debt as opposed to a business debt. Other limitations also apply.-- > Who is a debt collector under the FDCPA?
If the debt is a business debt, no private remedy is available under the FDCPA. But see -- > Texas DTPA and Texas Debt Collection Act.
American Express, for example will insist, either as a term of granting credit in the first instance, or by way of notice to card holders later, that certain types of credit or charge cards it issues are business cards and may only be used for business purposes even if the cardmember is an individual operating a sole proprietorship, which is not a distinct legal entity under Texas law.
American Express is known for issuing cards in the names of both business and owner even if the business is merely an assumed name (aka DBA for "doing business as") of an individual, i.e. a natural person as opposed to corporate entity (such as a PC, a PLLC, a LLC, or a INC). The apparent reason for this is to take the account out of the scope of the FDCPA and out of other consumer protection laws employing the same or a similar definition that also exclude business debt.
So what qualifies as consumer debt?
FDCPA DEFINITION OF CONSUMER DEBT
The FDCPA defines a “debt” as follows:
[A]ny obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.15 U.S.C. § 1692a(5) (2000). U.S.C. stands for United States Code, with the number preceding it referring to the Title, and the number behind it to the relevant Section within the Title. The FDCPA is part of the federal Consumer Protection Act.
|Definition of debt for purposes of FDCPA liability|
General cite for federal law protecting consumers against unscrupulous collection actions:
Fair Debt Collection Practices Act 15 U.S.C. § 1692, et seq.
TOPICS AND ISSUE IN (UN)FAIR DEBT COLLECTION
Can attorneys be sued for violations of the FDCPA?
Who is a debt collector under the federal FDCPA?
Federal FDCPA and TDCA compared
Enforcement of fair debt collection practices by the Texas Attorney General Consumer Protection Division