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CFPB files amicus brief in Seventh Circuit FDCPA case

Posted in Debt Collection

The CFPB, together with the FTC, has filed an amicus brief in Franklin v. Parking Revenue Recovery Services, Inc., an FDCPA case pending in the Seventh Circuit.  The CFPB joined the brief at the request of the FTC, which had been asked by the court to address the question of whether an unpaid parking fee, consisting of a $1.50 daily parking fee and a $45 nonpayment fee, is a “debt” within the meaning of the FDCPA.

The FDCPA defines a “debt” as “any obligation…of a consumer to pay money arising out of a [consumer purpose] transaction.”  In their motion for summary judgment, the defendants argued that the $46.50 charge was a “fine” much like a parking ticket rather than a debt subject to the FDCPA.  In response, the plaintiffs argued that parking in the lot was a transaction and the $45 nonpayment fee was a late fee arising out of the underlying transaction.

The district court agreed with the defendants that the $46.50 charge was a “fine” and therefore did not result from a consensual transaction.  Accordingly, the district court granted the defendants’ motion for summary judgment.

In their brief, the CFPB and FTC argue that a “transaction” under the FDCPA resulted when the plaintiffs used the parking services offered to the public in exchange for a stated fee.  They assert that these circumstances demonstrated a mutual agreement to engage in a transaction in which services were exchanged for the plaintiffs’ implicit promise to pay.  They also argue that the district court misapplied judicial precedent and FTC staff guidance in describing the money owed by the plaintiffs as a “fine” because a fine does not typically arise from a mutual agreement between the parties.  According to the FTC and CFPB, none of the examples of monetary obligations discussed in the FTC FDCPA Commentary (fines, alimony, taxes and tort claims) “are tied to quid-pro-quo exchanges of money for service” and therefore do not result from a “transaction.”