The U.S. District Court for the District of New Jersey recently granted a debt collector's motion for summary judgment for lack of standing under Spokeo v. Robbins in an FDCPA putative class action arising from online payment processing fees where the collection account at issue did not belong to the debtor.
A copy of the opinion is available at: Link to Opinion
The plaintiff received a dunning letter from a collector allowing him to make payments by phone or online subject to a $4.95 processing fee. Similar payments made by mail would not be subject to the processing fee. Although the account at issue did not belong to him, the plaintiff filed suit on behalf of himself and a putative class for violations of the federal Fair Debt Collection Practices Act. Specifically the plaintiff alleged violations of 1692e and 1692f of the FDCPA claiming that the processing fee was not authorized by the contract.
The plaintiff argued that "[t]he only question to be resolved in this action is whether the Defendant's actions, in attempting to charge a $4.95 processing fee to consumers paying their debts via credit card, violates the FDCPA," and that the processing fee violated the FDCPA because it was not "expressly permitted by the contract creating the debt."
The defendant countered that its reference to a processing fee did not violate the FDCPA because the plaintiff "could have paid by mail without incurring a processing fee," and the relevant state law "permits charging consumers processing fees so long as the consumers have another option to pay without incurring a fee."
The Court noted, however, that the parties did not dispute that the plaintiff never signed any agreement with the creditor. Before addressing whether the processing fee violated the FDCPA, the District Court addressed whether the plaintiff had standing under Article III of the U.S. Constitution, which limits the jurisdiction of federal courts to cases or controversies.
Relying on the recent Supreme Court case Spokeo v. Robbins, the Court held that the plaintiff must demonstrate he suffered (1) an injury in fact; (2) that is fairly traceable to the challenged conduct of the defendant; and (3) is likely to be redressed by a favorable judicial decision.
Focusing on the injury in fact requirement, the District Court found that the purported violation was no more than a bare procedural violation divorced of any concrete harm. The plaintiff testified that the account at issue was not his account and that he thought the collection letter was a scam. Thus, the Court found that it was undisputed that there was no risk that the plaintiff would pay the $4.95 processing fee because he never had an account with the creditor.
Accordingly, the Court held that the plaintiff admitted that he did not suffer any actual harm and thus lacked standing.
Although it did not address the issue regarding the $4.95 processing fee, the District Court did add a footnote that suggests that it would similarly have granted summary judgment on the processing fee if it were to go that far in light of a recent, non-precedential opinion from the Third Circuit in Szczurek v. Professional Mgmt., Inc.
Ralph T. Wutscher
Maurice Wutscher LLP
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