"Creditors", under the Fair Debt Collection Practices Act (FDCPA) can sometimes become "debt collectors" if they're not careful -- and the same thing can happen in reverse: "Debt collectors" may stop being debt collectors, even though they seem to be debt collectors.
The FDCPA defines debt collectors very carefully, and very expansively, in a definition that I won't quote here. ( If you want to read it, click this and go to subsection (6). )
Then, after saying who is a debt collector, Congress gave six exceptions, people who would be debt collectors except that Congress says they're not. Those exceptions are:
(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.
Some of those make sense, right? Employees of creditors shouldn't be treated as debt collectors, because they're working for the creditor, so, even though they're collecting money for someone else (their employer) they get a free pass. (Interestingly, employees of debt collectors may not get that exemption... but that's for another day.)
Some are more complicated than others, and I'm not going to explain them all today. Instead, I'm going to focus on the bona fide fiduciary obligation.
A "fiduciary" is, in general, someone who has to put your interests ahead of their own. A good example is the "trustee" of a trust. If you have a trust fund, someone (the trustee) manages that fund. The trustee has to manage it to make money for you, not for the trustee, which makes the trustee a "fiduciary." If the trustee were to start doing things like, say, withdrawing and reinvesting money for no good reason, just to generate fees for himself, that would violate his duties.
As usual, these definitions are easier to understand when given real life examples, so let's look at a "Debt collector" who's not, because of a bona fide fiduciary obligation.
Here's the set-up: Guy borrows money on a student loan, and defaults. Student loan lender then assigns the debt to Collector, which goes after Guy. We know already that would tend to make the Collector a "debt collector," right?
Guy then pays back the loan in full, but Collector continues to garnish his wages. So does that violate the FDCPA?
Maybe. Maybe not. In the case of Rowe v. Educational Credit Management Corporation, Rowe (the Guy) sued Educational Credit Management Corporation, ECMC (the debt collector) for garnishing his wages. ECMC said that they couldn't be sued under the FDCPA because of the bona fide fiduciary exception, and they were mostly right, because student loan guarantors are "bona fide fiduciaries" of the government.
But... ECMC may not have been a guarantor. They may have been just another collector working for a guarantor -- which means they were covered by the FDCPA, maybe, after all.
Confused? I agree. It is confusing.
That's why you should always check with a lawyer. It's our job to unconfuse you.