FTC and CFPB File Amicus Brief in Carmen Franklin v. Parking Revenue Recovery Services, Inc.

Earlier this month, the Federal Trade Commission, together with the Consumer Financial Protection Bureau (CFPB) filed an Amicus Brief with the U.S. Court of Appeals for the Seventh Circuit in the case of Carmen Franklin and Jenifer Chism, Plaintiffs, v. Parking Revenue Recovery Services, Inc. and Bryon Bellerud II, PC.

The purpose of the Brief was to address the question posed by the Court to the FTC: “Is an unpaid parking-lot fee (here consisting of a $1.50 daily parking fee and a nonpayment penalty of $45) a “debt” within the meaning of the Fair Debt Collection Practices Act (FDCPA)?”

Here is the background:

In June 2012, Franklin parked her car in a lot owned by the public commuter railroad, and operated by a private company, CPS Chicago Parking, LLC. The lot charges $1.50 per day for its parking spaces. CPS believed that Franklin did not pay the fee, and issued parking violation notices demanding payment of the $1.50, plus an additional fee of $45. CPS sent the matter to Parking Revenue Services, a debt collection firm. Byron Bellerud II, P.C., counsel for the debt collection firm, sent dunning letters to the plaintiff seeking payment of $46.50.

The plaintiff subsequently filed a class action compliant in the Northern District of Illinois, alleging the following FDCPA violations:

Making a false representation in the demand letters that, to avoid a presumption of validity, plaintiffs must dispute charges and fees in writing.
Attempting to collect the additional $45 charge without express authorization to impose that charge.
Making false, deceptive, or misleading representations.

The defendants moved for summary judgment, suggesting that the fee charged for failure to pay the parking fee was a fine, like a parking ticket, and not a debt subject to the FDCPA. The Court granted this motion, finding that the charge was indeed a “fine” and not a debt that was the “byproduct of a consensual transaction,” as stated in the FDCPA.

In their Brief, the FTC and CFPB argue that Congress broadly defines “debt” in FDCPA to mean “any obligation to pay money arising out of a [consumer] transaction,” but that it left “transaction” undefined. Providing numerous examples in which a consumer’s acceptance of services evidences a “transaction” under the FDCPA, they ask the 7^th Circuit to reverse the district court’s decision.

insideARM Perspective

This case is complicated by the private company operating the lot which is publicly owned.

Parking fines that the government levies are not considered a debt under the FDCPA, because they are not the result of a voluntary, bargained for contract. However in the case of a privately-managed lot, giving rise to a contract between a consumer and a business, FDCPA jurisdiction may be implied under current caselaw.

The facts can weigh in favor of either side, because of a grey area within the rules. One might ask whether the FTC and CFPB are looking to clarify the intent of the FDCPA, or expand its jurisdiction into this scenario.