23 F.4th 370
4th Cir.2022Background
- Plaintiffs Ashly Alexander and Cedric Bishop are Maryland homeowners who paid monthly mortgage installments online or by phone and were charged $5 convenience fees by Carrington Mortgage Services, the mortgage servicer.
- The original mortgage notes required payment by cash, check, or money order at a specified mailing address and did not expressly authorize convenience fees; plaintiffs paid the $5 fee multiple times.
- Plaintiffs sued under the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA), alleging Carrington’s fees violated the FDCPA provision incorporated into the MCDCA and that Carrington attempted to enforce a non-existent right.
- The district court dismissed all claims, holding Carrington was not an MCDCA “collector,” was not a federal “debt collector,” the fees were permitted by law, and plaintiffs voluntarily chose the online option.
- The Fourth Circuit reversed in part: it held Carrington is a “collector” under the MCDCA, the $5 convenience fees constitute an “amount” under FDCPA §1692f(1), and “permitted by law” requires affirmative legal authorization—so the fees were not permitted; it remanded the §14-202(8) claim and revived the MCDCA-based MCPA derivative claim, but affirmed dismissal of the standalone MCPA claim for failure to plausibly plead reliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carrington is a “collector” under the MCDCA | Carrington collects mortgage payments and thus is a collector under Md. Code Ann., Com. Law §14-201(b) | Servicing/accepting payments is not debt collection; only active enforcement falls within MCDCA | Carrington is a "collector" under the broad statutory definition; state definition controls even if broader than FDCPA |
| Whether the $5 convenience fees are an “amount” under FDCPA §1692f(1) (incorporated by MCDCA) | Convenience fees are collection of an amount tied to the debt and thus covered | FDCPA applies only to amounts incidental to the debt; convenience fees are not incidental | Fees are an “amount” under §1692f(1); the statute’s term "any amount" is broad and includes such fees |
| Whether the fees were “permitted by law” under §1692f(1) | “Permitted by law” requires affirmative legal authorization (statute or other law) | Absence of an express prohibition suffices; contract assent (clickwrap) or lack of prohibition permits charging | “Permitted by law” requires affirmative sanction or express permission; here fees were not permitted by law and original agreements did not authorize them |
| Whether plaintiffs’ §14-202(8) claim (attempting to enforce a non-existent right) survives | Fees not permitted by law means Carrington claimed a right it did not have | Plaintiffs voluntarily chose online payments; thus Carrington had the right to charge the fee | District court dismissal vacated and claim remanded for further consideration consistent with holding that fees were not permitted by law |
| Whether standalone MCPA unfair/deceptive claim survives | Plaintiffs allege deceptive practice and reliance | Carrington denies actionable deception; plaintiffs lacked plausible reliance allegations | Dismissal affirmed: plaintiffs failed to plausibly plead reliance and actual injury under MCPA |
Key Cases Cited
- Andrews & Lawrence Pro. Servs. v. Mills, 223 A.3d 947 (Md. 2020) (MCDCA and MCPA are remedial; statutes construed liberally)
- Ali v. Federal Bureau of Prisons, 552 U.S. 214 (2008) (interpretation of the word “any” as expansive)
- United States v. Gonzales, 520 U.S. 1 (1997) (textual reading of statutory terms)
- Fed. Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95 (1941) ("including" indicates illustrative, non-exhaustive list)
- FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) (statutes should be read as a symmetrical and coherent regulatory scheme)
- Seeger v. AFNI, Inc., 548 F.3d 1107 (7th Cir. 2008) ("permitted by law" requires express permission under FDCPA analysis)
- Tuttle v. Equifax Check, 190 F.3d 9 (2d Cir. 1999) (state law must affirmatively permit service charges absent express contract authorization)
- Hawley v. United States, 919 F.3d 252 (4th Cir. 2019) (interpretive guidance on statutory phrasing)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading reliance)