Magistrate Judge Maria Valdez rejected a motion to dismiss and found that a debt purchaser and a payment processor can both qualify as a debt collector under the Fair Debt Collection Practices Act. As to UDH, which argued it was only a “debt buyer,” the court looked to the standard set forth in McMahon v. LVNV Funding, LLC, 301 F.Supp.3d 866, 884 (N.D. Ill. Mar. 14, 2018):
UDH qualifies as a debt collector under the “principal purpose” definition because it “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts.”
“[e]ven if the second prong [of the FDCPA’s definition of debt collector] . . . require[s] interaction with debtors, the plain language of the first prong does not.”
As to Payment Management Services USA, LLC, which argued it was merely a payment processor, the court found that the confusing letter allowed suit:
While UDH is listed as the current creditor, the letter is unclear on whose behalf the payment was being collected. Id. (stating “Pursuant to our . . . client’s approval we are authorized to offer you a settlement . . .” without identifying the client by name). Without more, Plaintiff may have reasonably believed that PMS was collecting the outstanding debt, not simply processing it. Construing all reasonable inferences in Plaintiff’s favor, the letter does not completely foreclose the possibility that PMS could satisfy the definition of “debt collector” under the FDCPA.