Aker v. Collection Associates, LTD., No. 16-3663 (7th Cir. 2017)Annotate this Case
Medical service providers referred plaintiffs’ debts to defendants, who sent letters, demanding payment of the principal plus 5% interest. Plaintiffs claimed that this violated 15 U.S.C. 1692g(a)(1), the Fair Debt Collection Practices Act, which states that debt collectors must specify the amount of the debt, and that Wisconsin law provides for interest (absent a contractual provision) only if a debt has been reduced to judgment, and any pre-judgment request for interest is forbidden. The Seventh Circuit affirmed summary judgment for the defendants. Wis. Stat. 426.104(4)(b), the “safe harbor” for people who act in ways approved by the Administrator of Wisconsin’s Department of Financial Institutions applies because the defendants sent the Administrator a letter asking whether they were entitled to add 5% interest to debts for the provision of medical services. The Administrator’s silence for 60 days resulted in deemed approval. The defendants were entitled to demand payment of both principal and interest, so the letters did not violate 15 U.S.C. 1692e(2)(A), which prohibits false representations about the character, amount, or legal status of a debt. The federal Act otherwise allows debt collectors to add interest when permitted by law. Plaintiffs’ debts arose under state contract law and are subject to the safe harbor provision.