7th Circuit Clarifies FDCPA Application of Administrative Fees and Definition of “Consumer”
The Seventh Circuit issued noteworthy opinions in two cases this fall concerning FDCPA coverage, one involving fees charged by repossessors, and the other concerning a consumer’s standing to sue over a debt that the consumer alleges does not exist.
In the first case, a consumer alleged that a repossessor violated the FDCPA’s prohibition on unfair debt collection practices by charging her a $100 assessment fee to allow her to collect her valuables from a repossessed vehicle. The district court found on the evidence that the fee was listed as an administrative fee charged by the repossessor for its own services and paid by the creditor. The court of appeals affirmed. Because the repossessor was not acting as a debt collector, demanding repayment of the auto loan on behalf of the creditor, and because the fee was to be paid by the creditor for services rendered by the repossessor, the administrative fee was not impermissible.
In the second case, the court of appeals reversed the district court’s dismissal, on its own initiative, of an FDCPA case for lack of standing. The district court had held that a consumer who disputed the underlying debt did not have standing to bring a suit under the FDCPA because the statute applies to consumers who are “obligated or allegedly obligated to pay any debt.” The court of appeals held that the FDCPA creates two types of qualifying consumers, “a person obligated to pay any debt” and “a person allegedly obligated to pay any debt.” Thus, the consumer—who was allegedly obligated to pay the putative debt—was a qualifying consumer under the FDCPA.
The first case is Duncan v. Asset Recovery Specialist, Inc., et al., No. 17-2598 (7th Circ. 2018). The second case is Loja v. Main Street Acquisition Corporation, et al., No. 17-2477 (7th Cir. 2018).
