In a suit brought against Carrington Mortgage Services, LLC, the borrowers alleged that Carrington violated the Maryland Consumer Debt Collection Act (MCDCA), which largely incorporates the Fair Debt Collection Practices Act (FDCPA), and the Maryland Consumer Protection Act (MCPA) by charging $5 convenience fees to borrowers who paid monthly mortgage bills online or by phone.
The district court dismissed the case, but as the Fourth Circuit found Carrington to be a “collector” which under the pursuant to Md. Code Ann., Com. Law § 14-201(b) is defined as “a person collecting or attempting to collect an alleged debt arising out of a consumer transaction.” This contrasts with the definition of "debt collector" under the FDCPA at 15 U.S. Code § 1692a(6), which among other this includes the requirement that the debt be in default. That the Maryland legislature chose to incorporate the "substantive provisions" of the FDCPA found in sections 80 through 812, but not the definitions in section 803, thereby providing greater protections to Maryland consumers is a policy choice that Maryland or any other state is free to make.
Accordingly, the $5 convenience fee, which was not permitted by law, violated Maryland law.
While North Carolina was not as explicit in its incorporation of the FDCPA in N.C.G.S. §75-50 et seq., its definition of a "debt collector" as "any person engaging, directly or indirectly, in debt collection from a consumer except those persons subject to the provisions of Article 70, Chapter 58 of the General Statutes" is similarly broad and encompasses original creditors, subsequent assignees, regardless of whether the debt is in default.
It did not help Carrington Mortgage that Judge Wilkinson questioned how it made sense for Carrington Mortgage to process paper checks for free, when that cost it as much as $4, but charged $5 for online payments less that 50¢ .
For a copy of the opinion, please see: