Illinois district court says that debt collector violates the FDCPA by not itemizing breakdown of the amount owed

The debotr in Vogel v. McCarthy, Burgess, & Wolff, Inc., No. 17 C 6681 (N.D. Ill. Aug. 6, 2018) sued the debt collector for violating the FDCPA by failing to itemize the elements of her total debt in a collection letter. The court ruled that an unsophisticated consumer could be confused about what is owed if the individual components of the debt are not disclosed and let the complaint stand.

The debt collection letter at issue stated an account with a total balance but it did not contain an itemized breakdown of the amount owed. The letter did state that the consumer could dispute the debt, which the consumer did. The debt collector responded with a debt verification letter which enclosed an itemized receipt from the creditor. Unlike the initial letter, the itemized receipt broke down the total amount of debt, including line items for “Misc. Charges,” a “Late Fee,” and “Optional Services.”

After receiving the itemized receipt, the consumer filed suit, alleging that the debt collector’s attempt to collect an inflated amount with improper add-on charges amounted to a false or misleading representation under the FDCPA.

The debt collector moved to dismiss contending that the amount stated in the initial letter was not misleading, because it reflected the exact amount of debt communicated to the debt collector by the creditor. The court denied the motion.

Viewed from the perspective of an unsophisticated consumer, the court said, even an accurate representation of the total amount of the debt owed can violate the FDCPA. For example, an accurate total might be confusing if the nature of its individual components is masked. In this case the court said it was plausible that the initial letter was misleading because an unsophisticated consumer could be confused as to how the “total amount” was arrived at. The lack of itemization limited the consumer’s ability to understand and challenge the validity of the individual charges.

The court was unmoved by the debt collector’s argument that it was not required to itemize the debt in the initial letter, because the Seventh Circuit has stated that a debt collector need not break out principal and interest; it is enough to tell the debtor the bottom line. The court stated that although the Seventh Circuit recognized that interest may be included in a total amount undifferentiated from the principal, the same could not be said for fees and other additional charges—even ones explicitly agreed to at some point. “Whereas an unsophisticated consumer with ‘rudimentary knowledge about the financial world’ can reasonably understand that an amount includes interest where the contract provides for interest charged at a set rate (such as a per diem rate), … other miscellaneous fees and charges are a different story.”

In viewing the allegations in the consumer’s favor, the court concluded the charges fell readily in the category of charges that require further explanation by the debt collector—especially if the consumers are to be able to dispute their debts.


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

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