DECISION AND ORDER
Gloria Quinteros (“Plaintiff’) commenced this putative class action against MBI Associates, Inc. (“Defendant”), alleging a single cause of action based on violations of two sections of the Fair Debt Collection Practices Act (“FDCPA”), codified at 15 U.S.C. §§ 1692e(2) and 1692f(l). Plaintiff claims Defendant violated the FDCPA by sending her a debt collection notice that imposed a five-dollar processing fee for any payments made via credit card or check over the phone. Defendant moves to dismiss Plaintiffs complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons stated below, the Court denies Defendant’s motion to dismiss.
I. Factual Background
The following facts are taken from the Complaint. For the purpose of deciding Defendant’s motion to dismiss for failure to state a claim, the Court assumes these facts to be true and construes them in the light most favorable to Plaintiff, the non-moving party. See Chambers v. Time Warner, Inc.,
Plaintiff is a citizen of New York who resides within the Eastern District of New York and is a “consumer” within the meaning of the FDCPA. Compl. at ¶¶ 2-3; 15 U.S.C. § 1692a(3). Defendant is a New York-based company regularly engaged in the collection of debts allegedly owed by consumers and is therefore a “debt collec
On February 22, 2012, Defendant sent Plaintiff a collection letter seeking to collect a debt allegedly incurred by Plaintiff and owed to a third-party. See Compl. at 7 (“the Collection Letter”). The letter stated, in pertinent part:
Should you require more time to make payment or wish to make payment arrangements, please call this office upon receipt of this letter. Our office accepts Visa, MasterCard and American Express which you may pay over the phone or online at www.paymbi.com. There will be a $5.00 processing fee for all credit cards or checks over the phone.
Id. (the “Processing Fee Statement”). The letter also had a detachable form at the bottom of the page. Id. Printed in the perforated line were the words “Detach and Return with Payment.” Id. Directly above that line, the letter stated: “There will be a service charge of $20.00 for all returned checks.” Id. The detachable form itself included information regarding Plaintiffs outstanding debt, Defendant’s mailing address, a space where Plaintiff could indicate an “Amount Enclosed,” and an instruction to “use back of form” if Plaintiff elected to pay via credit card. Id.
On May 18, 2012, Plaintiff commenced this action against Defendant, alleging the Collection Letter violated 15 U.S.C. §§ 1692e(2) and 1692f(l), two sections of the FDCPA, by “engaging in deceptive practices, by making a false representation that it was entitled to receive compensation for payment by credit card, or by collecting an amount that was not authorized by contract or permitted by law.” Id. at ¶¶ 13-14,17.
II. Miotion to Dismiss Standard
To survive a motion to dismiss under Rule 12(b)(6), each claim must set forth sufficient factual allegations, accepted as true, “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
III. Discussion
One of the purposes of the FDCPA is to “eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692(e). The Second Circuit has stated that “[t]o achieve this goal, and to protect the most vulnerable population of debtors from abusive and misleading practices, we have construed [the] FDCPA to require that debt collection letters be viewed from the perspective of the ‘least sophisticated consumer.’ ” Greco v. Trauner, Cohen & Thomas, L.L.P.,
A. 15 U.S.C. § 1692f(l): Unfair or Unconscionable Means
15 U.S.C. § 1692f prohibits debt collectors from using “unfair or unconscionable means to collect or attempt to collect any debt.” The provision provides a non-exhaustive list of conduct that violates the FDCPA, including “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” 15 U.S.C. § 1692f(1). Plaintiff asserts Defendant violated § 1692f(l) by imposing a transaction fee “that was not authorized by contract or permitted by law.” Compl. at ¶ 14.
The Second Circuit has expressly applied § 1692f(1) to service charges collected to defray collection costs. See Tuttle v. Equifax Check,
If state law expressly permits service charges, a service charge may be imposed even if the contract is silent on the matter;
If state law expressly prohibits service charges, a service charge cannot be imposed even if the contract allows it;
If state law neither affirmatively permits nor expressly prohibits service charges, a service charge can be imposed only if the customer expressly agrees to it in the contract.
Id. at 13 (citing 15 U.S.C. § 1692f(l) and Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed.Reg. 50,097, 50,108 (Fed. Trade Comm’n 1988)) (emphasis in original).
Defendant does not contend that the processing fee described in the Processing Fee Statement is either expressly authorized by the contract underlying the debt or otherwise permitted by New York law.
the need for the FDCPA arose because of collection abuses such as use of obscene or profane language, threats of violence, telephone calls at unreasonable hours, misrepresentation of a consumer’s legal rights, disclosing a consumer’s personal affairs to friends, neighbors, or an employer, obtaining information about a consumer through false pretense, impersonating public officials and attorneys, and simulating legal process.
Id. at 2-3 (quoting Kropelnicki v. Siegel,
Defendant’s argument cuts against the plain language of § 1692f(l). “[T]he starting point for interpreting a statute is the language of the statute itself. Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc.,
Defendant’s other argument with respect to § 1692f(l) is equally unavailing. Defendant claims a credit card processing fee “is not incidental to the principal obligation” because it has nothing to do with the amount of the underlying debt or transaction out of which the debt arose, does not increase the amount of principal owed, and therefore is not a penalty or threat meant to induce payment, but is simply “the cost of doing business for the consumer who wishes to utilize the convenience and payment terms offered by charging off his debt to a credit card.” Def.’s Br. at 11-12. The FDCPA does not expressly define “incidental.” However, “the FDCPA is a remedial statute which should be liberally construed.” Harrison,
B. 15 U.S.C. § 1692e(2): False or Misleading Misrepresentations
15 U.S.C. § 1692e prohibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” The provision provides a non-exhaustive list of examples of conduct that violate the FDCPA, including “[t]he false representation of (A) the character, amount, or legal status of any debt; or (B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.” 15 U.S.C. § 1692e(2). Plaintiff asserts Defendant violated § 1692e(2) by “making a false representation that it was entitled to receive compensation for payment by credit card.” Compl. at ¶ 17.
Defendant argues that the Processing Fee Statement is not a false or misleading statement, but is “a kind of disclosure, accurately informing a debtor that he will incur a ‘processing fee’ should he elect to pay his , debt via credit card.” Def.’s Br. at 6. However, Defendant’s argument does not address the central premise underlying Plaintiffs claim. Plaintiff does not contend the Processing Fee Statement runs afoul of § 1692e(2) because the statement fails to disclose the nature of the fee or because it misrepresents the actual amount of the fee. Rather, Plaintiff argues the Processing Fee Statement violates the statute because it falsely implies that Defendant is entitled to collect the processing fee in the first place. In other words, Plaintiffs § 1692e(2) claim is contingent on her § 1692f(l) claim — if collec
The Court agrees. The “least sophisticated consumer” would likely be deceived by the Processing Fee Statement into believing that Defendant was legally entitled to collect the five-dollar fee. Indeed, even a shrewd consumer would be unlikely to question the legality of a seemingly reasonable five-dollar processing fee, much less turn to the statute books. Therefore, “[b]ecause the Court has concluded that Plaintiff has stated a claim under § 1692f(l) of the FDCPA, Plaintiff has also stated a claim under § 1692e(2).” Shami I,
Defendant’s attempts to distinguish Shami I miss the mark. First, Defendant asserts that its Collection Letter differed from the collection letter in Shami 1 in two ways: (1) the Collection Letter disclosed the amount of the transaction fee, whereas the letter in Shami I did not; and (2) the Collection Letter, unlike the letter in Shami I, did not “encourage” Plaintiff to choose a payment option that would incur the five-dollar transaction fee. Def.’s Br. at 7-8; Shami I,
Second, Defendant attacks Shami I for not having adopted the approach of the Sixth Circuit in Lee v. Main Accounts, Inc.,
Defendant insists that “[n]early the identical situation obtains in the instant matter.” Def.’s Br. at 9. Defendant claims the Collection Letter parallels that in Lee because, as set foi’th in an affidavit by Defendant’s president, Norman Alpren, Defendant does not force debtors to pay by credit card and does not receive “additional compensation” as a result of the processing fee because the costs associated with accepting credit card payments usual
These contentions are unconvincing. First, Defendant’s affidavit is outside the four corners of the pleadings and will not be considered for purposes of this motion to dismiss. See Friedl v. City of New York,
Finally, Defendant mischaracterizes the Sixth Circuit’s statement that an optional five-percent fee was not, by definition, an unconscionable or deceptive debt collection practice. Immediately after holding that the five-percent fee in Lee did not meet the definition of an unconscionable or deceptive practice, the Sixth Circuit cited Section 1345.03(B)(5) of the Ohio Consumer Sales Practice Act. That statute includes in its considerations the following: “Whether the supplier required the consumer to enter into a consumer transaction on terms the supplier knew were substantially one-sided in favor of the supplier.” Hence, the Sixth Circuit found the five-percent fee in Lee did not violate Ohio state law because the fee was optional; it did not make an analogous finding as to the FDCPA. Lee does not undermine Shami I, and it is entirely consistent with the Court’s conclusion that Plaintiff has stated a claim under 15 U.S.C § 1692e(2).
IV. Conclusion
For the reasons stated above, the Court concludes Plaintiff has stated a claim upon which relief may be granted under 15 U.S.C. §§ 1692e(2) and ,1692f(l). Defendant’s motion to dismiss is DENIED. The parties are directed to proceed with discovery on all outstanding issues.
SO ORDERED.
Notes
. Though neither party has addressed the issue in their briefing, New York General Business Law Section 518 prohibits the collection of a surcharge on purchases made by credit card. See Dkt. 9, at 8 (plaintiff stating without explanation that "nor do we believe that such a practice [of charging a fee for payment via credit card or check over the telephone] is permitted by law.”). However, a recent Southern District decision has held this statute void for vagueness and in violation of the First Amendment. See Expressions Hair Design v. Schneiderman,
. Further, even if this Court were to consider Defendant's affidavit, it is irrelevant that Defendant’s five-dollar processing fee is often insufficient to defray the costs of debt collection. The Sixth Circuit’s concern with "additional compensation” related to the identity of the collector of the processing fee, not whether the debt collector received a windfall. See Shami v. Nat’l Enter. Sys. (Shami II),