Home / Compliance / Judge Denies MTD in FDCPA Suit That Included Contingent Collection Fee in Initial Letter

Judge Denies MTD in FDCPA Suit That Included Contingent Collection Fee in Initial Letter

When is the right time to include a contingent collection fee in a collection letter? Not in the first one, according to a District Court judge in New Jersey, who has denied a defendant’s motion to dismiss a lawsuit accusing it of violating the Fair Debt Collection Practices Act by including collection costs in a letter that represented an attempt to collect more than what was owed at the time the letter was sent.

A copy of the ruling in the case of Reizner v. Pioneer Credit Recovery, Inc., can be accessed by clicking here.

The plaintiff obtained student loans for his son and ultimately defaulted on them, which led the Department of Education to place the accounts with the defendant for collection. The defendant sent the plaintiff a collection letter, which included the following table:

The plaintiff disputed the debt and requested verification. When he received the verification letter, the amount owed did not include the $15,206.71 in collection charges; just the $84,856.64 in principal and interest. In filing the suit, the plaintiff claims he did not owe the collection charge at the time the initial collection letter was sent and the letter therefore violated the FDCPA by attempting to collect an amount greater than what was actually owed.

Judge Jose Linares ruled the plaintiff had sufficiently stated a claim to survive a motion to dismiss “based on the allegedly false or misleading inclusion of a contingent fee that had yet to be charged, incurred, or due.”

Judge Linares did not include any mention of when the right time to include the collection fee was in his ruling.

Check Also

House Committee to Mark Up Stopping Bad Robocalls Act Today

The full House Committee on Energy and Commerce will meet this morning to mark up …

Leave a Reply

Your email address will not be published.

Skip to toolbar