Re: BBB Complaint w/ Midland's "Factoring
[ Edited ]
10-04-2012 06:57 PM - edited 10-04-2012 06:59 PM
Factoring is a totally legal and acceptable business practice, wherein a party purchases delinquent debt from creditor, enabling the creditor to turn a receivalble asset into instant cash, albiet at less than its full potential value.
Why can they not report their business as what it is?
Having become owner of the debt, they are entitled to legitimate fees.
The issue is what is legitimate, not that they cannot add any additional amounts.
It is well-established case law that a party who purchases a delinquent debt is a "debt collector" and thus subject to the requirements of the FDCPA.
Section 808(1) of the FDCPA addresses the specific issue of what a debt collector is or is not permitted to collect.
In a nutshell, it specifies that they may not attempt to collect any amount, including any fees, interest, etc., unless such amounts were either specfically authorized in the consumer's original account agreement with creditor, or are otherwise specfically authorized by law.
I thus see the issue as one of whether whatever they are attempting to collect is authorized under the strict limitations of FDCPA 808(1), and not some descriptor such as a "factoring company."