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7th Circuit Nixes Class Action Against Collector

(CN) - A debt collector doesn't violate federal law when it accurately states the amount owed, but breaks down the principal and interest in an arguably false manner, the 7th Circuit ruled.

Barbra Wahl filed a class action against Midland Credit Management, Midland Funding NCC-2 Corp. and the Encore Capital Group, claiming they misstated the principal on her credit card debt.

The debt collectors took over her $66.98 debt to BP Amoco when it had ballooned over seven years to $1,149.09.

Midland's collection letters listed the "principal" as the amount owed when it took over Wahl's debt, rather than the original $66.98 principal.

Wahl claimed Midland violated the Fair Debt Collection Practices Act by not breaking down all the interest and fees on her collection statements.

"Wahl can't win simply by showing that Midland's use of the term 'principal balance' is false in a technical sense; she has to show that it would mislead the unsophisticated consumer," Judge Evans wrote.

"[W]e see no way this language would confuse the reasonable consumer, unsophisticated though she may be."

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