[hannah]

In this case two consumers received a collection notice that sought to collect a collection fee of 15% of the original balance owed and were found to be entitled to summary judgment on their claim that the debt collector violated the FDCPA. The addition of the collection fee was not authorized by either the underlying agreement between the debtors and their creditors or by applicable state law. (Seeger v. AFNI, Inc., No. 05-714 (E.D. Wis. 06/01/07).

Marvin Seeger and Bradley Gamroth entered into agreements with Cingular, a cell phone carrier, and were billed for a set number of minutes per month and charged per minute if they exceeded their allotment. AFNI Inc. purchased the accounts and sent collection letters to Seeger and Gamroth, seeking a collection fee of 15% of the amount of the original balance owed. Nothing in the account data provided to AFNI by the carrier specified that AFNI should charge or was permitted to charge such a fee.

So Seeger and Gamroth brought a putative class action, alleging that AFNI's pursuit of a collection fee violated 15 USC 1692f of the FDCPA. After a class was certified, AFNI moved for summary judgment. The District Court found that, as Cingular's assignee, AFNI had the same rights as Cingular in collecting debts. While Cingular was permitted under its agreements with Seeger and Gamroth to charge for reimbursement of a collection fee, it was not entitled to charge such a fee itself, and neither was AFNI.

The court concluded that, since the fee also was not permitted under Wisconsin law and was not authorized by agreement as required under the FDCPA, AFNI's conduct violated Section 1692f(1) of the act and the District Court also found that AFNI was not entitled to the bona fide error defense. An AFNI representative acknowledged in a letter that the representative "did not see" that the addition of a collection fee is permitted by Wisconsin law. Given this admission, it was unlikely that AFNI genuinely believed Wisconsin law permits the addition of collection fees, even with express contractual authorization.

The court granted Seeger and Gamroth's motion for summary judgment on their Section 1692f claim.

Case attached.