Two months after taking his seat on the Supreme Court, Justice Gorsuch finally got to have his say on a case. Weirdly, it was the first case he asked zero questions about.
I’ve been waiting since February for a clear sense of what Gorsuch really thinks. And now we have our first written piece of evidence in Henson v. Santander Consumer USA. Here’s the one-sentence version of the 13-page ruling: He decided companies that buy up defaulted debts should absolutely be able to harass consumers about them.
But before you get angry at Gorsuch, you should know that even the most liberal justices agreed with him. It’s actually court tradition to let the new guy author a unanimous court opinion, and this case was a softball — fully accepting the ruling of lower courts.
The ruling places the blame exactly where it belongs: on Congress, for abandoning a poorly worded law. Here’s why that’s a good thing…
Debt collection laws are moth-eaten
The main law protecting consumers from crazy debt collectors is the Fair Debt Collection Practices Act, the law challenged in this case. It was written in 1977 and hasn’t ever gotten a major update.
Lots of things change in 40 years, as Gorsuch’s opinion points out. The Consumer Financial Protection Bureau wants to step up and fill in the void, but Republicans hate that idea even as they sit on their hands.
As it stands, the law defines collector harassment and sets boundaries for what they can do — like showing up on your doorstep — and can’t. The can’t list is a lot longer: Beat you up, refuse to leave your property, humiliate you by broadcasting your debt to everybody you know, and so on.
That list could be better, but that wasn’t the problem here. The issue in Henson v. Santander Consumer USA was whether Santander counts as a “debt collector” under the law.
Because Santander purchased $3.5 billion in auto loan debt from CitiFinancial and tried to collect on it — and was no longer collecting on Citi’s behalf — the Supreme Court decided the law did not apply.
The ruling used Gorsuch’s favorite phrase: “plain text.” According to the FDCPA, a debt collector is someone who “regularly collects or attempts to collect … debts owed or due … another.” Santander was a debt buyer, not a debt collector.
Debt buying wasn’t a thing when the law was written, but it’s big business now: You grab up old loans a lender doesn’t want to deal with anymore for pennies on the dollar, and then you squeeze consumers to pay up. If only a few crack, you can break even — so it’s easy to profit, too. That’s why debt-buying now accounts for a third of the industry’s revenue, over $4 billion a year, according to the CFPB.
That number is probably going to increase because of the ruling, but it also might motivate Congress to act.
Gorsuch takes borrowers’ arguments seriously
Even if Gorsuch didn’t ultimately side with the defaulted auto-loan borrowers who originally brought the case, he handled their arguments very thoroughly — a lot more thoroughly than he probably needed to, according to experts.
Says the award-winning SCOTUSBlog, my favorite site for Supreme Court news and analysis: “The two most salient features of this particular opinion are an effort to craft memorable prose and a commitment to taking seriously all of the arguments of the losing party.”
While the opinion is 13 pages, SCOTUSBlog points out Gorsuch “all but resolves the controversy in a single paragraph.” He says:
By its plain terms this language seems to focus our attention on third party collection agents working for a debt owner—not on a debt owner seeking to collect debts for itself. Neither does this language appear to suggest that we should care how a debt owner came to be a debt owner — whether the owner originated the debt or came by it only through a later purchase.
Nearly all the rest is a painstaking analysis of the linguistic arguments the plaintiffs’ attorneys made about the law’s wording and what Congress intended. It gets into gritty details without legalese: There’s an argument about the past participle of the verb “to owe,” with examples of where Congress used language differently.
This is not just respectful, it’s instructive. It will help people argue future cases, it’s readable by the average person, and if Congress could be bothered to pay attention, it would help them write better laws. Gorsuch is quite clear that the law could easily go either way, if it had only been written better — and updated accordingly:
In the end, reasonable people can disagree with how Congress balanced the various social costs and benefits in this area. We have no difficulty imagining, for example, a statute that applies the Act’s demands to anyone collecting any debts, anyone collecting debts originated by another, or to some other class of persons still. Neither do we doubt that the evolution of the debt collection business might invite reasonable disagreements on whether Congress should reenter the field and alter the judgments it made in the past.
Gorsuch is doing exactly what he was hired to do, and so far — we don’t have a lot to go on, yet — I’d say he’s Trump’s best hire. Now Congress needs to do its job, and update the FDCPA to protect consumers from aggressive collectors and debt buyers.
Article last modified on August 8, 2017. Published by Debt.com, LLC .