Opinion ID: 180506
Heading Depth: 3
Heading Rank: 2

Heading: Transaction

Text: This Court previously has recognized the broad scope of debt in the FDCPA, agreeing with the Seventh Circuit that `[a]s long as the transaction creates an obligation to pay, a debt is created.' Brown v. Budget Rent-A-Car Sys. Inc., 119 F.3d 922, 924 (11th Cir.1997) (quoting Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1325 (7th Cir. 1997)) (holding that debt in FDCPA does not require an extension of credit). We have also stated that, at a minimum, a `transaction' under the FDCPA must involve some kind of business dealing or other consensual obligation. Hawthorne v. Mac Adjustment Inc., 140 F.3d 1367, 1371 (11th Cir.1998). I.C. System contends that PayPal provided no service to Oppenheim for which he refused to pay, and that Oppenheim's obligation to return the fraudulent funds to PayPal existed regardless of any contractual relationship with I.C. System. We take I.C. System to mean, therefore, that Oppenheim's failure to reimburse PayPal was not a transaction and thus does not fall within the ambit of the FDCPA. We disagree. In support of its contentions, I.C. System cites Arnold v. Truemper, 833 F.Supp. 678 (N.D.Ill.1993). Arnold involved a bank that accidentally allotted a $20,000 credit to the plaintiffs' bank account when the plaintiffs had deposited only $2,000. Id. at 680. When the bank requested a return of the erroneously credited money, plaintiffs refused and ultimately filed suit alleging that the bank's collection attempts violated the FDCPA. Id. at 680-81. The district court, however, ruled that the complaint failed to state a claim because the improper credit did not arise out of any transaction and thus did not constitute a debt under the FDCPA. Id. at 685-86. See also Orenbuch v. Leopold, Gross & Sommers, P.C., 586 F.Supp.2d 105, 108 (E.D.N.Y.2008) (obligation to refund erroneously paid salary, due to accounting error, did not arise from a consumer transaction and therefore not a debt under the FDCPA). In this case, however, the district court correctly distinguished Arnold because Oppenheim's payment obligation did arise from a transaction. The factual scenario here would be more analogous to Arnold had Oppenheim set up a PayPal account and, without Oppenheim having used PayPal's services to transmit any funds, PayPal improperly credited his account. Here, however, Oppenheim had utilized PayPal's services in a transaction and, according to the terms of that transaction, was under a contractual obligation to repay the money. See PayPal User Agreement ¶ 4.5 (stating that, under PayPal's right of reversal, PayPal user is liable for full amount of invalidated payment). Oppenheim's transaction with PayPal did not cease upon the transfer of funds to his account; rather, he remained under a continuing contractual obligation to refund any invalidated paymentsan obligation which arose from the transaction itself. By contrast, there is no indication that the plaintiffs in Arnold or Orenbuch had a contractual obligation dictating their liability in the event of any overpayment. Contrary to I.C. System's contention, Arnold and Orenbuch do not stand for the proposition that one who improperly receives money does not incur a debt subject to the FDCPA. Rather, they stand for the proposition that a consumer's obligation must arise from a transaction in order for the FDCPA to apply. In this case, Oppenheim's obligation to PayPal amply meets that test.