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Security Credit System Unauthorized 2.5% Processing Fee FDCPA Class Action

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Hand Reaching Out to Demand Payment

The Fair Debt Collection Practices Act (FDCPA) tries to keep third-party debt collectors from various forms of abusive or deceptive behavior. At issue in this case, the complaint claims, is Security Credit System, Inc.’s attempt to charge an extra 2.5% processing fee for debts paid with a credit card.

The class for this action is all individuals with addresses in Tennessee to whom Security Credit System sent a letter, between August 31, 2017 and September 21, 2018, for collection of a consumer debt owed to Bethel University T-1 which charges a 2.5% processing fee on payments made with a credit card.

Plaintiff Treva Huspon allegedly owes a consumer debt to Bethel University T-1, where the money was used for personal, family, or household purposes. At some point, Bethel assigned Security to collect the debt.

Security sent Huspon a collection letter dated June 7, 2018. The letter is attached to the complaint as Exhibit A.

Near the top of the letter, on the right-hand side, is the sentence, “I wish to pay by credit card (check one)” with two checkable boxes, for MasterCard and Visa. Below that is the sentence, “There will be a 2.5% processing fee added to your charged amount.”

The complaint alleges that the underlying agreement with Bethel did not authorize the charging of a 2.5% processing fee simply for the use of a credit card. Also, the complaint says, “there is not law in Tennessee that expressly permits to charge a processing fee of 2.5% of the payment amount.”

It claims that Huspon was harmed “by being asked to pay more money than she actually owed, by being asked to pay more money than the Defendant could legally receive … and by having her options to pay the alleged debt made more expensive and difficult…” by the addition of “an additional, illegal and entirely arbitrary 2.5% fee simply for the privilege of making a payment with a credit card.”

The complaint says the letter violates the FDCPA in falsely representing that they were entitled to charge this amount, in threatening to charge a fee they were not legally entitled to, in attempting to collect an amount they were not expressly authorized to collect, and in making a false and misleading representation. 

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