A federal judge in Illinois has denied a request from a collection agency to dismiss a class-action lawsuit filed against it because it allegedly violated the Fair Debt Collection Practices Act by failing to itemize all of the “obscure elements” of the plaintiff’s debt in an initial collection letter, even though the total amount owed was accurate.
A copy of the ruling in the case of Vogel v. McCarthy, Burgess, & Wolff, Inc. can be accessed by clicking here.
The plaintiff received a collection letter from the defendant, alleging that she owed the original creditor $3,036.83. Following the instructions in the letter, the plaintiff disputed the debt. The subsequent verification notice included a breakdown of the amount owed, including $789 in “Misc. Charges,” $385 for a “Late Fee,” and $582.75 in “Optional Services.” The plaintiff then filed a lawsuit, alleging the defendant violated Section 1692(e) of the FDCPA, which prohibits collectors from misrepresenting the amount owed, among other provisions.
Even though the amount listed in the original collection letter was accurate, “the total amount of the debt owed can violate the FDCPA,” wrote Judge Edmond Chang from the District Court for the Northern District of Illinois, Easter Division. “As pertinent to Vogel’s case, an accurate total might be confusing if the nature of its individual components are masked.”
The defendant argued that it is not required to break out principal and interest in an initial communication with a debtor, because in a ruling from the Seventh Circuit Court of Appeals in Hahn v. Triumph Partnerships, the court ruled that “it is enough to tell the debtor the bottom line.”
Judge Chang ruled that while an unsophisticated consumer may be able to figure out that principal and interest are included in the amount owed in a collection letter, when additional fees are included, that changes the ballgame.
“Put another way, at the very least a debt collector must identify charges that an unsophisticated consumer cannot readily calculate, even ones the consumer may implicitly know they owe. For instance, debt collectors must explain or itemize service fees that are not based on a known rate, but rather estimated or assessed by the creditor or debt collector.”
