On July 19, 2019, in Richardson v. Diversified Consultants, Inc. (DCI), Judge Robert M. Dow, Jr. from the N.D. of Ill. granted DCI's motion for summary judgment, and denied plaintiff's motion, on plaintiff's claim that an 18% collection fee for Verizon Wireless violated the FDCPA and the Illinois Collection Agency Act. The case marked another win for contract-based collection fees in the Seventh Circuit.
Verizon's terms and conditions stated, "If you fail to pay on time and Verizon Wireless refers your account(s) to a third party for collection, a collection fee will be assessed and will be due at the time of the referral to the third party. The fee will be calculated at the maximum percentage permitted by applicable law, not to exceed 18 percent." Plaintiff argued he never agreed to the collection fee and that a percentage-based fee is an impermissible penalty clause.
Sessions, Fishman, Nathan & Israel successfully argued that plaintiff agreed to the collection fee despite the lack of a signature where the record showed plaintiff was mailed a copy of the terms and conditions prior to activating his account, and those terms clearly provided for the percentage fee. Moreover, the record showed that DCI charged Verizon an 18% commission on collected accounts, meaning Verizon's cost of collection was effectively passed on to plaintiff.
The court also awarded DCI summary judgment on plaintiff's claim under the Illinois Collection Agency Act, joining a growing list of judges in Illinois who have found there is no private right of action under the statute.
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