U.S. District Court Judge John R. Tunheim certified a class action under the Fair Debt Collection Practices act, premised on the fact that the debt collector defendant added a fee of 35% of the debt, as a collection fee, on top of the amount of the underlying debt. This, the Court held, was inconsistent with Eighth Circuit precedent. Under that precedent, one can only recover actual costs of collection along with the underlying debt when the agreement with the debtor provides that the debtor will be responsible for “actual costs of collection” (as many agreements do).
Defendant argued that, in a particular case, 35% of the underlying debt might be more, less, or equal to actual collection costs and, therefore, class action treatment of claims should be denied.
Judge Tunheim rejected this argument, focusing on the uniform contract language rather than its differential ramifications to each individual case.