After graduating from law school—and serving time in prison for attempting to collect debts by posing as an FBI agent—Barry Sussman theorized that if a debt-collection business collected only debts that it owned as a result of buying checks written on accounts with insufficient funds (NSF checks), it would not be subject to the Federal Debt Collection Practices Act (FDCPA). Sussman formed Check Investors, Inc., to act on his theory. Check Investors bought more than 2.2 million NSF checks, with an estimated face value of about $348 million, for pennies on the dollar. Check Investors added a fee of $125 or $130 to the face amount of each check (which exceeds the legal limit in most states) and aggressively pursued its drawer to collect. The firm’s employees were told to accuse drawers of being criminals and to threaten them with arrest and prosecution. The threats were false. Check Investors never took steps to initiate a prosecution. The employees contacted the drawers’ family members and used “saturation phoning”—phoning a drawer numerous times in a short period. They used abusive language, referring to drawers as “deadbeats,” “retards,” “thieves,” and “idiots.” Between January 2000 and January 2003, Check Investors netted more than $10.2 million from its efforts.

(a) The Federal Trade Commission filed a suit in a federal district court against Check Investors and others, alleging, in part, violations of the FDCPA. Was Check Investors a “debt collector,” collecting “debts,” within the meaning of the FDCPA? If so, did its methods violate the FDCPA? Were its practices unethical? What might Check Investors argue in its defense? Discuss.

(b) Are “deadbeats” the primary beneficiaries of laws such as the FDCPA? If not, how would you characterize debtors who default on their obligations?