No. 14-3774 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

 

CARMEN FRANKLIN, et al., 

Plaintiffs-Appellants, 

v. 

PARKING REVENUE RECOVERY SERVICES, INC., et al., 

Defendants-Appellees 

 

On Appeal from an Order of The United States District Court 

For the Northern District of Illinois 

Hon. Edmond E. Chang 

Case No. 13-02578 

 

BRIEF OF AMICI CURIAE 

FEDERAL TRADE COMMISSION and 

CONSUMER FINANCIAL PROTECTION BUREAU

 

TO-QUYEN TRUONG

 Deputy General Counsel 

JOHN R. COLEMAN

 Assistant General Counsel 

NANDAN M. JOSHI

THOMAS M. MCCRAY-WORRALL

 Counsel 

Consumer Financial Protection 

Bureau 

Washington, D.C. 20552 

JONATHAN E. NUECHTERLEIN

 General Counsel 

JOEL MARCUS

 Director of Litigation 

LESLIE RICE MELMAN

 Assistant General Counsel 

Federal Trade Commission 

600 Pennsylvania Ave. NW 

Washington, DC 20580 

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TABLE OF CONTENTS 

 Page 

TABLE OF AUTHORITIES ....................................................................... ii

INTEREST OF AMICI CURIAE ............................................................... 1

QUESTION PRESENTED ......................................................................... 2

STATEMENT OF THE CASE ................................................................... 2

A. Statutory Background ..................................................................... 2

B. Facts and Procedural History ......................................................... 4

ARGUMENT ............................................................................................... 7

CONCLUSION ......................................................................................... 17

CERTIFICATE OF SERVICE 

 

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ii 

TABLE OF AUTHORITIES 

Cases Pages

A.E.I. Music Network, Inc. v. Bus. Computers, Inc., 290 F.3d 952 (7th 

Cir. 2002) ................................................................................................. 8 

Accord Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379 (3d Cir. 

 2000) ........................................................................................................ 9 

Al’s Serv. Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720 (7th Cir. 

 2010) ........................................................................................................ 8 

Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322 

(7th Cir. 1997) ......................................................................... 6, 7, 10, 15 

Beauvior v. Israel, 2014 U.S. Dist. LEXIS 109047 (E.D.N.Y. 2014) ...... 12 

Berman v. GC Servs. Ltd. P’shp, 146 F.3d 482 (7th Cir. 1998) .............. 15 

Betts v. Equifax Credit Info. Servs., 245 F. Supp. 2d 1130 (W.D. Wash. 

2003) ...................................................................................................... 13 

Bridge v. Ocwen Fed. Bank, 681 F.3d 355 (6th Cir. 2012) ....................... 1 

Brines v. XTRA Corp., 304 F.3d 699 (7th Cir. 2002) ................................. 8 

Coretti v. Lefkowitz, 965 F. Supp. 3 (D. Conn. 1997) .............................. 12 

DIRECTV, Inc. v. Cephas, 294 F. Supp. 2d 760 (M.D.N.C. 2003) .......... 12 

Durso v. Summer Brook Preserve Homeowners Ass’n, 641 F. Supp. 2d 

1256 (M.D. Fla. 2008) ........................................................................... 14 

Eades v. Kennedy, P.C. Law Offices, 799 F.3d 161 (2d Cir. 2015) ......... 14 

Case: 14-3774 Document: 37 Filed: 12/11/2015 Pages: 24
iii 

Grimard v. Palmer, Reifler & Assocs., P.A., 2007 U.S. Dist. LEXIS 

55733 (E.D. Mich. 2007) ....................................................................... 12 

Gulley v. Markoff & Krasny, 664 F.3d 1073 (7th Cir. 2011) ................... 13 

Harper v. Collection Bureau of Walla Walla, 2007 U.S. Dist. LEXIS 

88993 (W.D. Wash. 2007) ..................................................................... 13 

Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir. 1998) .... 15 

Jenkins v. Heintz, 25 F.3d 536 (7th Cir. 1994), aff’d, 514 U.S. 291 

 (1995) ..................................................................................................... 11 

Keele v. Wexler, 149 F.3d 589 (7th Cir. 1998) .......................................... 16 

Mabe v. G.C. Servs. Ltd. P’shp, 32 F.3d 86 (4th Cir. 1994) .................... 15 

McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014) .......... 1 

Newman v. Boehm, Pearlstein & Brights, Ltd., 119 F.3d 477 (7th Cir. 

1997) ...................................................................................................... 14 

Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227 (3rd Cir. 2005) ........... 9 

Rizzo v. Pierce & Assocs., 351 F.3d 791 (7th Cir. 2003) .......................... 10 

Shorts v. Palmer, 155 F.R.D. 172 (S.D. Ohio 1994) ................................ 12 

Shula v. Lawent, 359 F.3d 489 (7th Cir. 2004) ....................................... 10 

Williams v. Redflex Traffic Sys., Inc., 2008 U.S. Dist. LEXIS 22723 

(E.D. Tenn. 2008) .................................................................................. 13 

Yon v. Alliance One Receivables Mgmt., Inc., 2007 U.S. Dist. LEXIS 

89492 (S.D. Fla. 2007) ........................................................................... 13 

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Statutes

12 U.S.C. § 5491(a) ..................................................................................... 2 

15 U.S.C. § 1692(a) ..................................................................................... 3 

15 U.S.C. § 1692(e) ..................................................................................... 3 

15 U.S.C. § 1692a(5) ..................................................................... 1, 3, 7, 16 

15 U.S.C. §§ 1692d-1692f ........................................................................... 3 

15 U.S.C. § 1692f(1) .................................................................................... 3 

15 U.S.C. § 1692g(a)(3) ............................................................................... 3 

15 U.S.C. § 1692k ....................................................................................... 4 

15 U.S.C. § 1692k(a) ................................................................................... 4 

15 U.S.C. § 1692l(b)(6) ................................................................................ 2 

15 U.S.C. § 1692l(d) .................................................................................... 2 

Rules

Fed. R. App. P. 29(a) ................................................................................... 1 

Legislative Materials 

S. Rep. No. 382, 95th Cong., 1st Sess. (reprinted in 1977 U.S. Code 

Cong. & Admin. News 1695)................................................................. 16 

Miscellaneous

Black’s Law Dictionary (10th ed. 2014) ................................................... 13 

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FTC, Repairing a Broken System: Protecting Consumers in Debt 

Collection Litigation and Arbitration, Commission and Staff Reports 

(July 2010), 

https://www.ftc.gov/sites/default/files/documents/reports/federaltrade-commission-bureau-consumer-protection-staff-report-repairingbroken-system-protecting/debtcollectionreport.pdf ............................... 1 

FTC, The Structure and Practices of the Debt Buying Industry (January 

2013), http://www.ftc.gov/os/2013/01/debtbuyingreport.pdf ................. 1 

Statements of General Policy or Interpretation, Staff Commentary on 

the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097 (1988) .... 15 

 

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INTEREST OF AMICI CURIAE 

The Federal Trade Commission, an agency of the United States, 

files this brief under Federal Rule of Appellate Procedure 29(a) and in 

response to the Court’s order of September 11, 2015. We address the 

question whether a supposed unpaid parking fee is a “debt” within the 

meaning of the Fair Debt Collection Practices Act (FDCPA or Act), 15 

U.S.C. § 1692a(5). We do not address the merits of plaintiffs’ claims 

beyond the threshold definition of “debt.” 

The FTC has an interest in this case because abusive debt 

collection practices are a primary focus of the Commission’s consumer 

protection efforts. The Commission has brought many cases enforcing 

the FDCPA, and published several reports on problems in the debt 

collection industry.1 In private FDCPA cases, this Court and others 

have relied on the Commission’s expertise. See, e.g., McMahon v. LVNV 

Funding, LLC, 744 F.3d 1010, 1020 (7th Cir. 2014); Bridge v. Ocwen 

Fed. Bank, 681 F.3d 355, 361 (6th Cir. 2012). 

 

1 See, e.g., FTC, The Structure and Practices of the Debt Buying Industry

(January 2013), http://www.ftc.gov/os/2013/01/debtbuyingreport.pdf; FTC, 

Repairing a Broken System: Protecting Consumers in Debt Collection 

Litigation and Arbitration, Commission and Staff Reports (July 2010), 

https://www.ftc.gov/sites/default/files/documents/reports/federal-tradecommission-bureau-consumer-protection-staff-report-repairing-brokensystem-protecting/debtcollectionreport.pdf.

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The Consumer Financial Protection Bureau joins this brief. The 

CFPB shares the FTC’s interest in protecting consumers from unlawful 

debt collection practices. Congress has charged the CFPB with 

responsibility for “regulat[ing] the offering and provision of consumer 

financial products and services under Federal consumer financial 

law[],” which includes the FDCPA. 12 U.S.C. § 5491(a). The FDCPA 

authorizes the CFPB to enforce the FDCPA, 15 U.S.C. § 1692l(b)(6), and 

to “prescribe rules with respect to the collection of debts by debt 

collectors.” 15 U.S.C. § 1692l(d). 

QUESTION PRESENTED 

In its order of September 11, 2015, the Court asked the FTC to 

address this question: “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 FDCPA? 

STATEMENT OF THE CASE 

A. Statutory Background 

Congress enacted the FDCPA in 1977 in light of “abundant 

evidence of the use of abusive, deceptive, and unfair debt collection 

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practices by many debt collectors.” It intended the statute to 

“eliminate” such abusive practices. 15 U.S.C. § 1692(a), (e). 

The FDCPA generally prohibits “any” harassing or abusive 

conduct, “any” deceptive or misleading representation, and all “unfair or 

unconscionable means” of collecting debts. 15 U.S.C. §§ 1692d-1692f 

(emphases added). The statute lists more than two dozen examples of 

prohibited abusive, misleading, and unfair debt collection practices. Id. 

Of particular relevance here, the Act prohibits a debt collector from 

adding any amount to the underlying debt unless such additional 

amounts are authorized by law or the agreement that created the debt. 

15 U.S.C. § 1692f(1). The Act also requires debt collectors to notify 

consumers that a debt will be presumed valid unless the consumer 

disputes it. See 15 U.S.C. § 1692g(a)(3). 

The FDCPA broadly defines a “debt” to mean: 

Any obligation or alleged obligation of a consumer to pay 

money arising out of a transaction in which the money, 

property, insurance, or services which are the subject of the 

transaction are primarily for personal, family, or household 

purposes, whether or not such obligation has been reduced to 

judgment. 

15 U.S.C. § 1692a(5) (emphasis added). Thus, the term “debt” 

encompasses “any” obligation to pay money so long as that obligation 

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“aris[es] out of a transaction.” Congress did not define the term 

“transaction.” 

Section 813 of the Act makes “any debt collector who fails to 

comply with any provision” of the Act “with respect to any person” 

strictly liable for actual damages. 15 U.S.C. § 1692k(a) (emphasis 

added). Nothing in the FDCPA exempts debt collectors from compliance 

or from liability based on the reasons for a consumer’s delinquency or 

her conduct in avoiding payment. 

B. Facts and Procedural History 

In June 2012, plaintiffs parked their cars in a parking lot owned 

by Metra, the public commuter railroad, but operated under contract by 

a private entity, CPS Chicago Parking, LLC (CPS). Dist. Ct. Op. 2. The 

lot offers parking spaces to all comers at the rate of $1.50 per day. 

Believing that plaintiffs had not paid the daily fee, CPS issued 

plaintiffs parking violation notices demanding payment of the $1.50 

parking charge and an additional fee of $45. CPS sent the matter for 

collection to a debt collector, Parking Revenue Recovery Services, Inc., 

whose counsel, defendant Byron Bellerud II, P.C., sent plaintiffs 

dunning letters seeking payment of $46.50. Dist. Ct. Op. 3-4. 

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Plaintiffs filed a class action complaint in the Northern District of 

Illinois, alleging that defendants had violated the FDCPA by (1) making 

a false representation in the demand letters that, to avoid a 

presumption of validity, plaintiffs must dispute charges and fees in 

writing; (2) attempting to collect the additional $45 charge without 

express authorization to impose that charge; and (3) making false, 

deceptive, or misleading representations. 

Defendants moved for summary judgment, contending that “the 

$46.50 charged to each Plaintiff for failure to pay the $1.50 parking fee 

[was] a fine, much like a parking ticket,” and not a debt subject to the 

FDCPA. Dist. Ct. Op. 7. Plaintiffs argued in response that parking in 

the lot was a “transaction” under the statute – namely, CPS offered a 

place to park and plaintiffs accepted the offer by parking their cars in 

CPS’s lot. Id. As a consequence, they contended, the $45 charge was 

merely a late fee arising out of the underlying transaction. Id. 

In the order on review, the court granted defendants’ motion for 

summary judgment. It found that the $46.50 charge was a “fine” and 

therefore “not the byproduct of a consensual transaction.” Dist. Ct. Op. 

11-12. It necessarily followed, the court reasoned, that the money the 

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defendants were attempting to collect was not a “debt” within the 

meaning of the FDCPA. Id. 

Specifically, the district court found the $45 charge to more closely 

resemble a “fine imposed for violation of a rule or law” than “a late fee 

imposed on a pre-existing” and “consensual” obligation to pay. Dist. Ct. 

Op. 9. According to the district court, no “mutual agreement occurs 

when [a] parker fails to pay the fee” because “acceptance of the service 

alone is not sufficient evidence of acceptance of an obligation to pay.” 

Dist. Ct. Op. 11. The court determined further that even if the 

plaintiffs had paid the $1.50 daily parking fee, that still would not be 

enough to transform the fine into a debt because the parking violation 

notice does not “seek[] payment of a contracted-for amount,” but 

“impos[es] a penalty for violating the rules of the lot requiring payment 

to park.” Dist. Ct. Op. 9-10. 

The district court distinguished this Court’s holding in Bass v. 

Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1326 (7th 

Cir. 1997), that a bounced check constituted a debt under the FDCPA. 

The district court reasoned that in Bass, the check “evidence[d] the 

drawer’s obligation to pay for the purchases made with the check” and 

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proved that “the shopper ha[d] voluntarily engaged in a mutual 

transaction with the shop owner and promised to pay for a particular 

good or service.” Dist. Ct. Op. 10 (citation omitted). By contrast, the 

district court reasoned, a failure to pay by the user of a parking lot more 

closely resembles theft, which this Court has found not to amount to a 

transaction. Dist. Ct. Op. 9 (citing Bass, 111 F.3d at 1326). 

ARGUMENT 

Using a parking lot that is open to all customers on stated terms 

results in a “transaction” within the meaning of the FDCPA. Any 

obligation to pay that “aris[es] out of” that transaction is a “debt” 

subject to the statutory protections. The Court should reverse the 

district court’s decision to the contrary. 

1. The FDCPA broadly defines “debt” to mean “any obligation 

 * * * to pay money arising out of a [consumer] transaction.” 15 U.S.C. 

§ 1692a(5). Here, the critical statutory term is “transaction,” which 

Congress left undefined. This Court has held that Congress used 

“transaction” as “a broad reference to many different types of business 

dealings between parties.” Bass, 111 F.3d at 1325. That “ordinary 

meaning,” the Court held, is “clear and unrestricted.” Id. at 1326. “As 

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long as [a] transaction creates an obligation to pay, a debt is created” 

under the statute. Id. at 1325. 

Parking in a lot that is open to the public for a stated fee is a 

“transaction.” Entering the lot and occupying a space creates an 

implied contract: the lot owner offers to provide a space for a stated fee, 

and the consumer accepts that offer – and agrees to pay the fee – by 

parking there. The action of parking “takes the place of articulate 

acceptance” of the offer. Brines v. XTRA Corp., 304 F.3d 699, 703 (7th 

Cir. 2002). Such an agreement through action is “a true contract” that 

“contain[s] all necessary elements of a binding agreement [and] differs 

from other contracts only in that it has not been committed to writing or 

stated orally in express terms, but rather is inferred from the conduct of 

the parties.” A.E.I. Music Network, Inc. v. Bus. Computers, Inc., 290 

F.3d 952, 956 (7th Cir. 2002) (quotations omitted). In short, “the 

circumstances allow an inference that the parties had a deal.” Al’s Serv. 

Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720, 726 (7th Cir. 2010). 

The district court therefore erred when it concluded that “acceptance of the service alone is not sufficient evidence of acceptance of an 

obligation to pay.” Dist. Ct. Op. 11. To the contrary, courts have found 

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acceptance of service evidences a “transaction” under the FDCPA. For 

example, a homeowner’s use of water and sewer services resulted in a 

“transaction” even when the user had no formal agreement with the 

utility. Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227 (3rd Cir. 2005). 

The homeowner’s use of municipal services “in whatever manner” gave 

rise to “the kind of pro tanto exchange contemplated by the FDCPA.” 

Id. at 233 n.8 (emphasis added). In other words, usage alone resulted 

in a “transaction” that gave rise to a “debt.” Id. Accord Pollice v. Nat’l 

Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000) (homeowner’s 

request for water and sewer services, accompanied by evidence of his 

consumption, involved a “transaction” giving rise to an “obligation to 

pay”). 

For the same reason, a “transaction” under the FDCPA was 

created when plaintiffs used the parking services offered to the public in 

exchange for a stated fee. Parking a car in a lot open to the public is no 

different from using utility services offered to all homeowners. Nor is it 

different from many commercial dealings in which people engage daily, 

such as visiting a doctor, ordering groceries, or calling a pharmacy to 

request delivery of prescription refills. In each such case, using the 

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offered service by itself results in a transaction that creates an 

obligation to pay. 

Because the act of parking constitutes a transaction under the 

FDCPA, both the $1.50 fee and the $45 penalty for failure to pay the fee 

“aris[es] out of” the transaction and are debts under the statute. See, 

e.g., Shula v. Lawent, 359 F.3d 489, 491 (7th Cir. 2004) (court costs 

arising out of debt collection suit are incidental to the debt because “had 

it not been for the suit * * * no claim for costs would have arisen”). The 

extra amount added for non-payment of the initial debt is akin to an 

authorized late-fee that may be imposed on an untimely payment of a 

debt. See Rizzo v. Pierce & Assocs., 351 F.3d 791, 793 (7th Cir. 2003). 

2. The district court’s restrictive reading of “transaction” conflicts 

with this Court’s instruction that the term be read broadly in keeping 

with its “ordinary meaning.” Bass, 111 F.3d at 1326. The district court 

stated that the question here is “whether the fee stems from an 

underlying consensual transaction creating an obligation to pay.” Dist. 

Ct. Op. 8-9. But the court then found that “[a]cceptance of the [parking] 

service alone is not sufficient evidence of acceptance of [that] obligation 

to pay.” Dist. Ct. Op. 11. That was error for the reasons set forth 

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above. The district court also suggested that no transaction occurred 

because Metra would not have consented “to a person leaving his car in 

the lot without paying.” Dist. Ct. Op. 11 & n.5. Whether a transaction 

occurred, however, cannot turn on what Metra would have done had it 

known that a particular consumer would not pay. Under that standard, 

no transaction would ever occur under the FDCPA because no service 

provider would ever agree to provide services to a consumer who the 

service provider knew would not pay for them. Given this Court’s broad 

reading of “transaction,” the district court could not “disregard plain 

statutory language” in favor of a more restrictive reading that it views 

as “more reasonable.” Jenkins v. Heintz, 25 F.3d 536, 539 (7th Cir. 

1994), aff’d, 514 U.S. 291 (1995). 

The district court compounded this error by assuming that 

plaintiffs had not paid the parking fee and equating them with thieves. 

Even if the record had shown that plaintiffs did not pay, the parking fee 

would still be a debt arising from a transaction. This case differs from 

that of a thief and his victim who have no mutual agreement.2 In that 

 

2 By contrast, a grocery store shopper does not accept an offer by placing 

the items he likes in his cart. The entire transaction – offer and 

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situation, the thief’s eventual obligation to pay for stolen goods arises 

from criminal and tort law, not from a “meeting of the minds” of the 

parties to a mutual business agreement. See Grimard v. Palmer, Reifler 

& Assocs., P.A., 2007 U.S. Dist. LEXIS 55733 (E.D. Mich. 2007) 

(obligation arising from settlement of shoplifting allegations not a 

“debt” under the FDCPA); Shorts v. Palmer, 155 F.R.D. 172, 176 (S.D. 

Ohio 1994) (shoplifter “never had a contractual arrangement of any 

kind with * * * the defendants”). In the absence of a mutual agreement, 

courts have held that theft does not give rise to a “debt” under the 

FDCPA. See, e.g., Beauvior v. Israel, 2014 U.S. Dist. LEXIS 109047 

(E.D.N.Y. 2014) (stealing natural gas through meter tampering); 

DIRECTV, Inc. v. Cephas, 294 F. Supp. 2d 760, 764 (M.D.N.C. 2003) 

(stealing satellite TV service); Coretti v. Lefkowitz, 965 F. Supp. 3 (D. 

Conn. 1997) (using illegal coding device to steal premium cable service). 

In this case, by contrast, CPS offered parking services at the 

stated rate to all comers, and plaintiffs accepted that offer by parking 

their cars in the lot. As set forth above, these circumstances 

demonstrate a mutual agreement to engage in a transaction. 

 

acceptance – does not occur until the merchant accepts his payment at 

the register. 

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3. The district court also misapplied judicial precedent and FTC 

staff guidance in describing the money allegedly owed by plaintiffs here 

as a “fine” instead of a debt. Dist. Ct. Op. 8, 12, 15. A “fine” generally 

refers to a pecuniary criminal punishment or civil penalty payable to 

the public treasury. Black’s Law Dictionary 749 (10th ed. 2014). A fine 

typically does not arise from a mutual agreement between the parties – 

i.e., a “transaction” – or an express or implied-in-fact contract for goods 

and services. For example, the case principally relied on by appellees 

(Br. 23), Gulley v. Markoff & Krasny, 664 F.3d 1073 (7th Cir. 2011) (per 

curiam), involved fines levied on a property owner for failure to comply 

with municipal codes. The Court held that the fines were not debts 

because they did not “aris[e] from consensual consumer transactions.” 

Id. at 1075.3 

Some cases have acknowledged that a “fine” can encompass 

private penalties in the limited circumstance of a community whose 

 

3 See also Williams v. Redflex Traffic Sys., Inc., 2008 U.S. Dist. LEXIS 22723 

(E.D. Tenn. 2008), aff’d on other grounds, 582 F.3d 617 (6th Cir. 2009) 

(unpaid traffic tickets); Harper v. Collection Bureau of Walla Walla, 2007 

U.S. Dist. LEXIS 88993 (W.D. Wash. 2007) (fine for driving with suspended 

license); Yon v. Alliance One Receivables Mgmt., Inc., 2007 U.S. Dist. LEXIS 

89492 (S.D. Fla. 2007) (traffic ticket); Betts v. Equifax Credit Info. Servs., 245 

F. Supp. 2d 1130, 1133 (W.D. Wash. 2003) (fee for impoundment imposed by 

state statute).

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members have agreed to be bound by a set of rules. See, e.g., Durso v. 

Summer Brook Preserve Homeowners Ass’n, 641 F. Supp. 2d 1256, 1265 

(M.D. Fla. 2008) (fines for parking boat and trailer in violation of 

subdivision rules). But even in those situations, courts have carefully 

distinguished “fines” for actions that violate pre-existing covenants from 

“debts” arising out of a transaction. Compare id. at 1264-65 with 

Newman v. Boehm, Pearlstein & Brights, Ltd., 119 F.3d 477, 481 (7th 

Cir. 1997) (past due homeowners’ assessments were “debts” under the 

FDCPA because “the obligation to pay in these circumstances arose in 

connection with the purchase of the homes themselves”). 

Appellees cannot escape the requirements of the FDCPA by 

characterizing the “debts” they seek to collect as “fines.” At bottom, 

they seek fees arising from a consumer transaction in which services 

were exchanged for plaintiffs’ implicit promise to pay. Plaintiffs’ 

dealings with CPS are precisely “that type of pro tanto exchange which 

the statutory definition [of debt] envisages.” Eades v. Kennedy, P.C. 

Law Offices, 799 F.3d 161, 170 (2d Cir. 2015) (citations omitted). 

For these reasons, appellees get no help from the FTC’s 1988 Staff 

Commentary opining that “fines” are not “debts” under the FDCPA. See

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Statements of General Policy or Interpretation, Staff Commentary on 

the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50102 (1988) 

(cited at Brief for Appellees at 23). None of the monetary obligations 

discussed in that Commentary – fines, alimony, taxes, and tort claims – 

are tied to quid-pro-quo exchanges of money for service. They therefore 

do not arise from a “transaction.” See, e.g., Mabe v. G.C. Servs. Ltd. 

P’shp, 32 F.3d 86 (4th Cir. 1994) (child support obligation arising from 

administrative order); Berman v. GC Servs. Ltd. P’shp, 146 F.3d 482 

(7th Cir. 1998) (past due unemployment insurance contributions); 

Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir. 1998) 

(alleged obligation for damages arising from accident). 

4. As this Court has acknowledged, the definition of “debt” “serves 

to limit the scope of the FDCPA.” Bass, 111 F.3d at 1324. Thus the 

narrowed reading of that term adopted by the district court may leave 

unprotected any number of mutual agreements that are not formally 

documented. For example, a patient who receives medical treatment 

without an express agreement to pay is entitled to protection from 

abusive debt collection practices as much as the patient who signs a 

contract up front. 

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Congress did not intend the statute to apply narrowly. To ensure 

comprehensive coverage, it used the broad term “transaction” to refer to 

the entire range of mutual dealings. Congress also extended the 

coverage of the statute to “[a]ny obligation or alleged obligation of a 

consumer to pay money arising out of a transaction.” 15 U.S.C. 

§ 1692a(5) (emphasis added). The district court’s decision undermines 

that inclusive intent. 

Indeed, when it enacted the FDCPA, Congress specifically rejected 

a rationale relied on by the district court. As this Court has noted, “the 

FDCPA’s legislative history reflects that Congress acknowledged there 

may be a ‘number of persons who willfully refuse to pay just debts,’ * * * 

but apparently ‘believe[d] that the serious and widespread abuses’ of 

debt collectors outweighed the necessity to carve out an exception for 

these so-called ‘deadbeats.’” Keele v. Wexler, 149 F.3d 589, 596 (7th Cir. 

1998) (quoting S. Rep. No. 382, 95th Cong., 1st Sess. 3 (reprinted in 

1977 U.S. Code Cong. & Admin. News 1695, 1697)) (emphasis and 

alteration in original). But by the district court’s logic, a consumer’s 

mere failure to pay an obligation arising out of a transaction erases the 

transaction itself and leaves the consumer without any protection from 

Case: 14-3774 Document: 37 Filed: 12/11/2015 Pages: 24
17 

any subsequent unlawful debt collection practices. That result 

contravenes Congress’s policy determination that a debt under the 

FDCPA comes about when the underlying obligation to pay arose out of 

a transaction. When that test is satisfied, as it is here, Congress 

intended the consumer to be protected even if she fails to meet her 

obligation to pay. 

CONCLUSION 

 The decision of the district court should be reversed. 

 Respectfully submitted, 

TO-QUYEN TRUONG 

Deputy General Counsel 

JOHN R. COLEMAN 

Assistant General Counsel 

NANDAN M. JOSHI 

THOMAS M. MCCRAY-WORRALL 

Counsel 

Consumer Financial Protection 

Bureau 

1700 G Street, N.W. 

Washington, D.C. 20552 

JONATHAN E. NUECHTERLEIN 

General Counsel 

JOEL MARCUS 

Director of Litigation 

/s/ Leslie Rice Melman 

LESLIE RICE MELMAN 

Assistant General Counsel for

Litigation 

Federal Trade Commission 

600 Pennsylvania Ave., N.W. 

Washington, D.C. 20580 

(202) 326-2478 

(202) 326-2477 (fax) 

lmelman@ftc.gov 

December 11, 2015 

Case: 14-3774 Document: 37 Filed: 12/11/2015 Pages: 24
1 

CERTIFICATE OF SERVICE 

 I hereby certify that on December 11, 2015, I filed the foregoing 

with the Court’s appellate CM-ECF system, and that I caused the 

foregoing to be served through the CM-ECF system on all other parties 

in this case, who are registered ECF users. 

 /s/ Leslie Rice Melman_____ 

 LESLIE RICE MELMAN 

 

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