Are Corporations People Under the FDCPA?

Business People Shaking HandsIn a recent DBA Member Alert posted on LinkedIn, Jeremy Felder, Business Development Analyst with Chase Receivables, warns members that a “recent statutory change in Illinois commercial collection law requires immediate attention.”

As it relates to collections, the crux of the Illinois bill, signed into law and taking effect on Aug. 3, 2015, is that it removed the word “natural” before the word “person” in the definition of “debt” and “debtor.” Felder warns us that this expands the application of the Illinois Collection Agency Act (ICAA) to the collection of commercial debt. “Consequently, those collecting on debt owed by Illinois businesses must now comply with the same requirements that apply to consumer debt.” In other words, corporations can be considered people under the law.

DBA International states they believe that this was an inadvertent drafting error. “The ICAA was drafted to apply exclusively to natural persons (not commercial enterprises) and as such contains various requirements and terminology that would be challenging and in some cases impossible to apply at the company level.”

DBA International considers this a “substantive change,” and that it should not have been “hidden in a statutory ‘clean up’” with no implementation period nor time for “thoughtful deliberation.” DBA is working to reverse these two changes in the Illinois case.

The issue of Corporate personhood  also is discussed in a recent article in The National Law Review. It reports that in the case of Anarion Investments LLC v. Carrington Mort. Servs. LLC , “the Sixth Circuit held that legal entities, as well as natural persons, may file suit under the Fair Debt Collection Practices Act if it is attempting to collect personal debt.” The judge in the case cited the federal Dictionary Act wherein the word “person” includes legal entities unless the context indicates otherwise, and that Congress expressly defined the term “consumer” to mean a “natural person,” but made no such definition for “person.”

A little research reveals that since 1819 the U.S. Supreme Court has recognized corporations as having the same rights as natural persons to contract and to enforce contracts. In 1888, the Court affirmed the doctrine, holding, “Under the designation of ‘person’ there is no doubt that a private corporation is included [in the Fourteenth Amendment]. Such corporations are merely associations of individuals united for a special purpose and permitted to do business under a particular name and have a succession of members without dissolution.”[4] This doctrine has been reaffirmed by the Court many times since. To learn more about “when companies became people,” see

Opponents of Corporate Personhood seek to amend the U.S. Constitution to limit these rights to those provided by state law and state constitutions. Since the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission, which upheld the rights of corporations to make political expenditures under the First Amendment, there have been several calls for a U.S. Constitutional amendment to abolish Corporate Personhood.

Even if the affirmation of Corporate Personhood is not new under the law, Mr. Felder has brought to our attention an issue that, “all companies that operate within the collection industry must be aware of and immediately address” with regard to the FDCPA and other rules and regulations applicable to the industry.

Categories: Business Relationships, Compliance, Creditors Rights Law Firms, Debt Collection

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