What Is the Difference Between a Debt Collector and a Creditor?

Learn the difference between creditors and debt collectors for purposes of the FDCPA.

If any of your debts are in default, you've probably received numerous calls from debt collectors wanting you to make payments. The Fair Debt Collection Practices Act (FDCPA) protects debtors against abusive collection tactics by debt collectors. But it doesn't apply to your original creditor.

Read on to learn more about the difference between a debt collector and a creditor, and how it affects your rights under the FDCPA.

The FDCPA Protects Consumers Against Abusive Practices By Debt Collectors

Congress created the FDCPA to prohibit debt collectors from using unfair, deceptive, or abusive practices when collecting consumer debts. The FDCPA places numerous restrictions on what debt collectors are allowed to do when collecting debts and provides consumers with certain rights and remedies against those who violate any of its provisions. However, the FDCPA generally only applies to third party debt collectors, not a creditor.

Who Is Considered a Creditor under the FDCPA?

The FDCPA defines a "creditor" as the person or entity that extended you the credit in the first place (in other words, your original lender). Because the FDCPA is designed to protect debtors against third-party debt collectors, it doesn't apply to your original creditor or its employees.

But an exception to this rule exists: When collecting its own debts, a creditor must comply with the FDCPA if it uses a different name that implies a third party is attempting to collect the debt.

Who Is a Debt Collector Covered By the FDCPA?

Under the FDCPA, a debt collector generally refers to a third party regularly engaged in the business of collecting or attempting to collect debts owed to another person. Under the FDCPA, a "debt collector" is any person who:

  • uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts or
  • regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another.

    Exceptions to the FDCPA’s Definition of Debt Collector

    The FDCPA doesn't cover the following.

    Business debts. The FDCPA only applies to consumer debts incurred for personal or household expenses. It does not apply to corporate or business debts.

    Government employees when collecting debt in their official capacity. Federal or state employees are exempt from the FDCPA when collecting debts as part of their official duties.

    Legal process servers. Process servers are exempt from the FDCPA when serving legal process as part of judicial proceedings to enforce a debt.

    Persons not regularly engaged in the business of collecting debts. If a person or entity doesn't regularly collect debts on behalf of others, it might not be considered a debt collector under the FDCPA.

    When collecting debts on behalf of a related entity. If a person or entity is attempting to collect a debt on behalf of another company under the same ownership or corporate control, it won't be considered a debt collector if that person’s principal business isn't debt collection.

    Nonprofit organizations performing credit counseling and debt liquidation services at the consumer’s request. If a consumer requests credit counseling from or sends payments to a nonprofit organization that distributes the payments to his or her creditors, that organization isn't considered a debt collector.

    Debts incidental to a fiduciary obligation or escrow arrangement. If a person or entity is attempting to collect a debt which is incidental to a fiduciary obligation or escrow arrangement, it isn't considered a debt collector by the FDCPA.

    Debts originated by the debt collector. If a creditor originated the debt but later sold it to a third party, the original creditor is still not considered a debt collector when collecting that debt on behalf of the new entity that owns it.

    Debts obtained as security in a commercial credit transaction with the original creditor. If the person or entity obtained the debt as a security interest in a commercial credit transaction with the original creditor, it isn't considered a debt collector.

    Talk to a Lawyer

    If you think a debt collector has violated the FDCPA when trying to collect a debt from you, consider talking to an attorney to get advice about your options. You might be able to sue and recover money and other damages.

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