Is a Debt Collector Illegally Charging More Than You Owe?

Using “unfair or unconscionable means” to collect a debt is prohibited by 15 U.S.C. Section 1692f. Section 1692f(1) makes the following a violation of the law:

The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

What Money is a Debt Collector Allowed to Demand?

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector can’t employ unfair practices to collect a debt. This section of the law (15 U.S.C. Section 1692f(1)) makes it illegal for debt collectors to tack on extra amounts that aren’t included in the agreement you entered into with the creditor.

What does this mean? When you obtain a credit card, take out a personal loan, or even sign a form taking financial responsibility for a doctor’s office visit, you’ve entered into an agreement. Most people sign forms without reading the fine print – in fact, that’s why creditors have fine print – but the paperwork you sign dictates what amount a debt collector can collect. This original document outlines whether interest, fees, collection expenses, and so forth can be added to the amount you owe. If one or more of those other amounts are included in the contract, then a debt collector can demand that you pay those amounts. If not, then it is illegal for a debt collector to make that demand.

What are Examples of Illegal Debt Collection Charges?

Examples of possible illegal charges include:

  • Collection charges
  • Interest charges
  • Dishonored back check charges
  • Service charges
  • Attorney fees
  • Litigation costs
  • Collection agency fees
  • Late fees
  • Prepayment fees
  • Charges under dispute
  • Criminal penalties
  • Taxes

In Kaymark v. Bank of America (7834 F.3d 168, 174, 3d Cir. 2015), the plaintiff had refinanced his home. The paperwork said that the lender could charge him “fees for services performed in connection with” a mortgage default, and that the lender could collect “all expenses incurred.” Later, he received a foreclosure notice itemizing the amounts owed, including those for principle, interest, late charges, escrow, title report, attorney fees, and property inspection. Because the attorney fees, title report fees, and property inspection fees had not actually been incurred, the court ruled that the debt collector was not authorized to collect those fees under Section 1692f(1) of the FDCPA.

In Kojetin v. C U Recovery (212 F.3d 1318, 8th Cir. 2000), the appellate court affirmed the district court’s ruling that the debt collector violated Section 1692f(1) of the FDCPA by sending a validation notice to the plaintiff that included a collection fee totaling 15 percent of the balance. In actuality, the agreement the plaintiff had signed when taking out the loan allowed for actual collection costs and not a percentage of the outstanding balance.

Other courts have ruled on cases with different sets of circumstances. In one, the court ruled that the authorized amounts must exist in the contract the consumer signed, rather than the contract between the collection agency and the creditor. Another ruled that a sign at a store’s check cashing counter indicating that there would be a charge for a bounced check did not create a contract between the store and the customer. A different court noted that keeping a consumer’s garnished wages without obtaining a judgment, as required by state law, violates Section 1692f(1) of the FDCPA.

Have Debt Collectors Asked for Illegal Charges? We Can Help!

If a debt collector has asked you to pay illegal fees, then they may have violated the FDCPA. With Lemberg Law’s help, you can fight back. We can help you sue lawbreaking debt collectors and recover up to $1,000. Because the debt collection agency must pay your court costs and legal fees, our help won’t cost you a dime.

Lemberg Law attorneys protect consumers from abusive debt collection agencies. If you are receiving unwanted collection calls at work, then you could have a case against the collection agency. Contact Lemberg Law at 844-685-9200 ☎ or complete our online form for a no-cost, no-obligation consultation.

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