Introduction

The case Ashly Alexander; Cedric Bishop v. Carrington Mortgage Services, LLC (23 F.4th 370) adjudicated by the United States Court of Appeals for the Fourth Circuit on January 19, 2022, marks a significant development in consumer debt collection law within Maryland. Plaintiffs Ashly Alexander and Cedric Bishop, representing themselves and similarly situated individuals, initiated a class action lawsuit against Carrington Mortgage Services, LLC (hereinafter "Carrington"), alleging violations of the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA). The crux of the dispute centered around Carrington's imposition of $5 convenience fees on borrowers who opted to pay their monthly mortgage bills online or by phone—practices permitted by the original mortgage agreements which only allowed cash, check, or money order payments.

Summary of the Judgment

The Fourth Circuit Court affirmed the district court's dismissal of parts of the plaintiffs' claims while reversing, vacating, and remanding others. The pivotal decision revolved around whether Carrington qualified as a "collector" under the MCDCA and whether the imposed convenience fees constituted an "amount" prohibited by the Fair Debt Collection Practices Act (FDCPA) as incorporated by the MCDCA.

The court ultimately held that Carrington was indeed a "collector" under the MCDCA and that the $5 convenience fees were "amounts" under the FDCPA, thereby violating the statute. Consequently, the court reversed the dismissal of the plaintiffs' § 14-202(11) claim and remanded the § 14-202(8) claim for further proceedings consistent with the opinion. However, the court upheld the dismissal of the standalone MCPA claim, deeming it insufficiently substantiated.

Analysis

Precedents Cited

The judgment extensively references prior Maryland cases to delineate the scope and interpretation of the MCDCA and MCPA. Notably, the court cited:

• Andrews & Lawrence Pro. Servs. v. Mills, 467 Md. 126, 223 A.3d 947 (2020) - Establishing the remedial nature of the MCDCA and MCPA.
• Chavis v. Blibaum & Assocs., P.A., 476 Md. 534, 264 A.3d 1254 (2021) - Rejecting the necessity to limit §§ 14-202(8) and 14-202(11) to methods of debt collection.
• Aghazu v. Severn Savings Bank, 2017 WL 1020828 (D. Md. Mar. 16, 2017) and Awah v. Capital One Bank, 2015 WL 302880 (D. Md. Jan. 22, 2015) - Affirming the broader definition of "collector" under the MCDCA compared to the FDCPA.
• Weidman v. Exxon Mobil Corp., 776 F.3d 214 (4th Cir. 2015) - Establishing the de novo standard of review for the district court's dismissal of claims.

These precedents collectively underscored the court's approach to interpreting consumer protection statutes in Maryland, emphasizing a broad and liberal construction to maximize consumer protection.

Legal Reasoning

The court's legal reasoning hinged on two primary interpretations:

• Definition of "Collector": The MCDCA defines a "collector" expansively as any person or entity attempting to collect an alleged debt arising from a consumer transaction. The court dismissed Carrington's arguments to the contrary, highlighting that the statute did not distinguish between different methods of debt collection, such as loan servicing versus active debt enforcement. By collecting mortgage payments, regardless of the method, Carrington fell squarely within the definition of a "collector."
• Interpretation of "Any Amount": The court analyzed the FDCPA's prohibition against collecting "any amount" not expressly authorized or permitted by law. It held that the term "any" possesses an expansive meaning, thereby encompassing the $5 convenience fees imposed by Carrington. Furthermore, the court rejected Carrington's narrower interpretation of "permitted by law," insisting that "permit" necessitates affirmative legal authorization rather than mere absence of prohibition.

The court also addressed and dismissed Carrington's tactical arguments aimed at narrowing their liability, reaffirming that remedial consumer protection statutes like the MCDCA and MCPA are intended to be interpreted liberally to effectively safeguard consumers from unfair practices.

Impact

This judgment has substantial implications for debt collection practices within Maryland and potentially across jurisdictions that look to the Fourth Circuit's interpretations:

• Expanded Definition of "Collector": By affirming a broad definition of "collector," the court restricts debt collectors from circumventing statutory protections through minimal operational differences.
• Broad Interpretation of "Any Amount": The inclusive understanding of "any amount" under the FDCPA within the MCDCA prevents creditors from imposing additional fees without explicit authorization, enhancing consumer protections against hidden or ancillary charges.
• Affirmative Authorization Requirement: The necessity for affirmative legal sanction to permit additional fees tightens the regulatory framework governing debt collection, compelling creditors to seek clear statutory permissions before imposing fees.
• Remedial Statutes Emphasis: Reinforcing the liberal construction of consumer protection statutes, the judgment encourages courts to prioritize consumer rights over restrictive interpretations that could limit the statutes' protective scope.

Future cases involving similar disputes will likely reference this judgment to argue for or against the classification of entities as "collectors" and the permissibility of additional fees under consumer protection laws.

Complex Concepts Simplified

Maryland Consumer Debt Collection Act (MCDCA)

The MCDCA is a state law designed to protect consumers from unethical and deceptive practices by debt collectors. It incorporates key provisions of the federal Fair Debt Collection Practices Act (FDCPA) and expands upon them to offer broader protections against unfair debt collection methods.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA is a federal law that sets standards for how debt collectors can interact with consumers. It prohibits practices such as harassment, deception, and improper collection tactics, ensuring that consumers are treated fairly when debt is being collected.

"Collector" Definition

Under the MCDCA, a "collector" is broadly defined to include any person or entity attempting to collect an alleged debt resulting from consumer transactions. This definition does not differentiate between various methods of debt collection, thereby encompassing a wide range of debt collection activities.

"Any Amount" in Debt Collection

The term "any amount" as used in the FDCPA refers to any charge, fee, or sum that is part of the debt being collected. The court interpreted this term expansively, meaning that it includes not just the principal amount but also any additional fees or charges, such as convenience fees, unless they are expressly authorized by the original debt agreement or permitted by law.

"Permitted by Law"

The phrase "permitted by law" requires that any additional amount being collected is explicitly allowed by existing statutes. It does not suffice to merely lack a prohibition; there must be specific legal authorization permitting the collection of such fees.

Conclusion

The Fourth Circuit's decision in Alexander; Bishop v. Carrington Mortgage Services, LLC underscores a stringent interpretation of consumer protection laws within Maryland, particularly regarding the roles and practices of debt collectors. By affirming that Carrington qualifies as a "collector" and that the imposition of additional convenience fees constitutes a violation of the FDCPA as incorporated by the MCDCA, the court has reinforced robust safeguards against potentially exploitative debt collection practices.

This judgment serves as a clarion call for debt collection entities to meticulously adhere to the statutory confines of consumer protection laws, ensuring that any additional fees or charges are either explicitly authorized by the original debt agreements or are granted permission through existing legal frameworks. Moreover, the case highlights the judiciary's role in expansively interpreting remedial statutes to prioritize consumer welfare over lenient regulatory interpretations.

For consumers, this ruling enhances protections against unjust fees and reinforces the legal avenues available for redress against non-compliant debt collection practices. For legal practitioners and debt collection agencies, the decision elucidates the importance of thorough compliance with both federal and state consumer protection statutes to avoid litigation and uphold ethical standards in debt recovery processes.