California District Court Holds that a Debt Collector’s Retention of a Portion of a Transactional Fee Voluntarily Paid by the Consumer for Purposes of Convenience Was a Violation of the Rosenthal Fair Debt Collections Practices Act

By:  Nadia D. Adams

In April Lindblom v. Santander Consumer USA Inc., No. 15-cv-0990 (E.D. Cal. January 22, 2018), the United States District Court for the Eastern District of California held that the plaintiffs’ voluntary payment of a transactional fee that was not expressly authorized in the contract between the parties or by California state law was concrete injury sufficient to confer Article III standing.

The Court also held that where the underlying contract between the parties was silent on the debt collector’s retention of a transactional fee for online and telephone payments, the parties could not subsequently orally modify that contract to allow for the fee; the fee must be contemplated at the time the debt is created. Therefore, the debt collector’s portion of the fee violated the Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”). Continue reading