A District Court judge in Washington has denied a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act class-action case over alleged “junk” fees, ruling that the plaintiffs adequately pleaded plausible claims under the FDCPA and related state consumer protection laws. What makes this case even more interesting is that the Consumer Financial Protection Bureau has filed its own amicus brief in favor of the plaintiffs.
The background: The plaintiffs claim that the defendant, acting as a mortgage servicer, imposed a $25 fee on borrowers requesting written payoff statements, which they argue constitutes an illegal “pay-to-pay” fee. The plaintiffs allege that the fees were not authorized by the underlying loan agreements and violated the FDCPA. Specifically, they assert that these fees were excessive and unrelated to any actual service rendered, describing them as “junk” fees.
- In addition to the FDCPA claims, the plaintiffs have raised state-level consumer protection claims, accusing the defendant of breaching Washington’s Consumer Protection Act (WCPA), the Maryland Consumer Debt Collection Act (MCDCA), and other relevant laws. The plaintiffs argue that the servicer acted as a debt collector and that these fees represent an unlawful attempt to collect on a debt.
The ruling: The defendant sought to dismiss the claims based on several arguments, including the assertion that the plaintiffs failed to comply with a notice-and-cure provision in their loan agreements. This provision, the defendant argued, required borrowers to notify the servicer of any breach and provide an opportunity to correct the issue before filing suit. The servicer also claimed that the fees were legally justified as they were charged for expedited payoff requests and did not violate any loan terms or laws.
- However, Judge Barbara Jacobs Rothstein of the District Court for the Western District of Washington rejected these arguments. In its ruling, Judge Rothstein noted that the plaintiffs had sufficiently alleged that the fees were unauthorized and unrelated to any legitimate service, which falls under the scope of the FDCPA’s prohibitions against unfair practices. She also ruled that the notice-and-cure provision did not bar the plaintiffs’ statutory claims under the FDCPA and state laws, as those claims arose from statutory duties independent of the loan agreements.
- Moreover, Judge Rothstein emphasized that the FDCPA is designed to protect consumers from abusive debt collection practices and that pre-suit notice requirements should not unduly burden plaintiffs’ ability to enforce their statutory rights.
