Free registration is required to access these resources. Login or Register.

Premium compliance products are also available in the insideARM Store

The U.S. District Court for the Eastern District of New York earlier this year denied a debt collector’s motion to dismiss an FDCPA case, holding that its $5 surcharge for payments via credit card may have violated the law.  The case has apparently been used recently against many other debt collectors.

In Quinteros v. MBI Associates, Inc., 2014 WL 793138 (E.D.N.Y. Feb. 28, 2014), the debtor received a debt collection notice from the debt collection agency, which stated that the debtor would pay a $5 processing fee for optional credit card or check by phone payments.

The letter stated, in pertinent part:

Should you require more time to make payment or wish to make payment arrangements, please call this office upon receipt of this letter. Our office accepts Visa, MasterCard and American Express which you may pay over the phone or online at www.paymbi.com. There will be a $5.00 processing fee for all credit cards or checks over the phone.

The debtor then sued for a violation of the FDCPA contending that the $5 charge was not expressly authorized in the underlying debt contract.

Defendant moved to dismiss Plaintiff’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.

In February, the District Court judge denied the defendant’s motion to dismiss, holding that (i) the collection of any amount not expressly authorized in the underlying debt contract is a violation of the FDCPA, regardless of whether the debt collector is engaged in an abusive practice; and (ii) the notice sent to the debtor that referenced the $5 processing fee violated the FDCPA’s prohibition on misleading documents because it implied that the defendant could legally receive this payment.

Although this ruling is older than most we cover, it has become more relevant in recent months. An insideARM.com reader tipped us off that this particular ruling was being used in other recent case filings. After making a few calls, we learned that this was indeed the case.

It also aligns with a recent recommendation from the North Carolina Collectors Association that urged collection agencies in that state to stop charging payment convenience fees while the association works with state regulators on a “new interpretation or change the law.”

 


Related Products

Telephone Communication Compliance: The CFPB's Consent Orders Thumbnail

Telephone Communication Compliance: The CFPB's Consent Orders

Our Telephone Communication Compliance: The CFPB’s Consent Orders guide is designed to help debt collectors comply with consent orders that hint at telephone communication violations. The report includes easy-to-understand explanations of each consent order and a comprehensive chart of all relevant consent orders, keeping the information you need right at your fingertips! This paper has been excerpted from insideARM's larger "The CFPB's Consent Orders Regulating the ARM Industry" report, available for sale now.

Staying Compliant – and Out of Court – with the TCPA Thumbnail

Staying Compliant – and Out of Court – with the TCPA

This reference guide distills the information presented in our webinar. It comes complete with a link to the full recording of the webinar – great for use for all-staff trainings and quarterly in-services -- as well as the slide deck and full transcript of the webinar. This guide doesn’t just walk through what agencies should and should not be doing, going forward -- it contains the full Q&A from the webinar, too. (This product is approved for DBA International Certification Credit.)

The CFPB's Consent Orders Regulating the ARM Industry Thumbnail

The CFPB's Consent Orders Regulating the ARM Industry

Our guide on The CFPB’s Consent Orders Regulating the ARM Industry is the first report of its kind designed to help debt collectors comply with consent orders. The report includes easy-to-understand explanations of each consent order and a comprehensive chart of all relevant consent orders, keeping the information you need right at your fingertips! This report will be updated quarterly.

UPDATED! CFPB’s Advice to the Consumer (through March 2016) Thumbnail

UPDATED! CFPB’s Advice to the Consumer (through March 2016)

The Consumer Financial Protection Bureau hosts more than 80 of the most common consumer questions about debt collection on its Ask CFPB website. And since the Bureau was created for the sole purpose of representing and protecting consumers, debt collectors need to know how the CFPB communicates with them. That’s why insideARM compiled the answers to all 88 questions in one user-friendly report. Using the CFPB’s guidance as a model for your own compliance priorities, policies and procedures means your company will be able to keep up with the Bureau before it feels the need to examine your agency. ALL ANSWERS UPDATED THROUGH MARCH 2016.

Advertisement