The Court of Appeals for the Sixth Circuit has upheld a lower court’s summary judgment ruling in favor of a defendant that was sued for allegedly violating the Fair Debt Collection Practices Act because it charged additional collection fees on top of a delinquent debt, even though those costs were expressly authorized in the agreement between the creditor and the defendant.
A copy of the ruling in the case of Sparks v. EquityExperts.org, LLC, can be accessed by clicking here.
The plaintiffs fell behind on their homeownership association fees and the account was placed with the defendant for collection. Along with collecting the unpaid amount – $220 — the balance ultimately ballooned to more than $1,000 as a result of fees and costs that were added to the account by the defendant. The plaintiffs fled suit, alleging the defendant violated Sections 1692e(2)(A) of the FDCPA by misrepresenting the amount of the debt and 1692f(1) by collecting an amount that was not expressly authorized.
A Declaration between the creditor and the defendant did allow for such costs to be added, but the plaintiffs argued that it was not the responsibility of the defendant to collect those costs from the defendant. The plaintiffs also attempted to argue that the additional costs should not have been collected until the original debt was paid, but the Appeals Court correctly noted that such an arrangement was impractical and could create a never-ending cycle of collections.
The plaintiffs also argued that the costs should have been limited to legal fees and costs, and other “ill-fitting claims” that the Appeals Court did not find persuasive. The Appeals Court did note that had the plaintiffs argued the amount of costs was unreasonable, that might have led to a different ruling, but otherwise affirmed the lower court’s summary judgment ruling in favor of the defendant.
