EDCA Judge Grants MTD in FDCPA Service Fee Case

A District Court judge in California has granted a defendant’s motion to dismiss a class-action lawsuit after it was sued for violating the Fair Debt Collection Practices Act when it was sued because the collection agency it placed a debt with sent a collection letter that indicated the plaintiff would have to pay a service fee if he made a payment using a debit or credit card.

A copy of the ruling in the case of Martinez v. Integrated Capital Recovery et al can be accessed by clicking here.

The plaintiff received a collection letter offering a payment plan to repay a debt of $757.47. The letter also included the following statement: “A service fee of $9.95 may be charged for payments if paying by Credit/Debit card depending on consumer’s location and applicable contractual documents.”

The plaintiff sued the collection agency that sent the letter as well as the creditor to whom the debt was owed, a debt buyer — the defendant that filed the motion to dismiss. He alleged the statement violated Section 1692e(10) of the FDCPA by making a false representation in the collection of a debt and Sections 1692f and 1692f(1) by attempting to collect more than what was owed and attempting to collect an amount not expressly authorized by the agreement.

The defendant filed its motion, arguing that the plaintiff lacked standing because he did not pay the service fee or that a payment was made using a debit or credit card, and that it should not be held liable for the conduct of the debt collector that was working on behalf of the defendant.

In response, the plaintiff claimed he suffered an informational injury that was sufficient to confer standing and that the defendant can be held vicariously liable for the actions of the debt collector.

While admitting that collecting a service free from the plaintiff “may have been unlawful,” Judge Anthony Ishii of the District Court for the Eastern District of California noted that the complaint contained “no creditable allegation” that the statement that the agency may collect service fees in some cases is false. “In other words, the ‘least sophisticated debtor’ would see this as accurate information useful in selecting a mode of payment, not a threat to impose unlawful fees or a false statement as to ICR’s power with respect to debt collection.”

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