According to a recent (1/2/14) Eleventh Circuit Court of Appeals ruling that the violation depends upon the langauge in the contract signed. In this case the court found that there was a violation of Fair Debt Collection Practices Act (FDCPA) when Franklin Collection Service, Inc. charged a consumer a collection fee that was based on a percentage of the debt balance rather than actual costs. The found that 15 U.S.C. §1692f. Unfair practices was violated.

See the original ruling in Bradley v. Franklin Collection Service.

It appears that the language that was in question concerning illegal collection fees was:

[quote]“In the event of non-payment…I agree to pay all costs of collection, including a reasonable attorney’s fee…”[/quote]

The key point was Franklin charged more than what the actual cost of collection by placing a percentage collection fee upon the original amount due. The court determined that this was an illegal collection fee.

However there does seem to be language that may allow a percentage based collection such as:

[quote]“You agree to reimburse us the fees of any collection agency, which may be based on a percentage at a maximum of 33% of the debt, and all costs and expenses, including reasonable attorneys’ fees, we incur in such collection efforts.”[/quote]

See Seeger v. AFNI, Inc., 548 F.3d 1107, 1110, 1113 (7th Cir. 2008); see also Boatley v. Diem Corp., No. CIV. 03-0762-PHX-SMM, 2004 WL 5315892, *5-6 (D. Ariz. Mar. 24, 2004).

In short, if you feel that your rights may have been violated seek a qualified consumer credit attorney to help you read and understand the language in the contracts a debt collector may present to you. If you are having a hard time working with the debt collection agency then we may be able to assist. The Pettit Law Firm offers free consultations concerning FDCPA, FCRA, TCPA, and HIPAA violations. You can call (214) 506-2500 or (877) 978-FCRA to speak with an attorney.