Seventh Circuit Holds Passive Debt Buyers Covered by ICAA Prior to 2013 Amendment

On July 21, 2015, the Seventh Circuit Court of Appeals ruled that passive debt buyers were covered by the Illinois Collection Agency Act (the “Act”) prior to the Act’s most recent revision in 2013 amending the Act to explicitly define debt buyers and state that debt buyers are subject to the Act’s licensing provision.  In Galvan v. NCO Portfolio Management, Inc., 2015 U.S. App. LEXIS 12551 (7th Cir. July 21, 2015), the question was raised as to whether the defendant -- a passive debt buyer -- was required to register as a debt collection agency from June 2006 – June 2011.  Relying on deposition testimony from a lawyer in the Illinois Department of Financial and Professional Regulation – the agency charged with enforcing the Act, the district court said “no.”  The Illinois Supreme Court, however, recently held otherwise in LVNV Funding, LLC v. Trice, 32 N.E.3d 553 (Ill. 2015) (“Trice II”).   In Trice II, the state’s highest court held that a passive debt buyer defendant qualified as a collection agency under the Act in two respects: (1) under subsection 3(b) as an “assignee” of the original creditor; and (2) under subsection 3(d) as an entity that “buys . . . indebtedness and engages in collecting the same.”  Said decision made it clear that passive debt buyers using third party collection agencies do indeed qualify as collection agencies and this was true even before the Act was amended in 2013. For more information about this case or the Illinois Collection Agency Act generally, contact Joseph Messer at or (312) 334-3440.