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Fee Charged to Debtors for Return of Personal Property Found in Repossessed Vehicles Not Covered by Fair Debt Collection Practices Act
Description A company that repossessed vehicles on behalf of creditors was sued for charging a fee to vehicle owners for storing and returning personal property found in the vehicles. The common law of bailment applies, not the FDCPA, the repossessor was not a lender with any interest in the vehicles.
Topic Consumer Protection
Key Words FDCPA, Repossession of Personal Property, Fees
C A S E   S U M M A R Y
Facts A class action suit was filed against a company, ARB, that repossesses motor vehicles on behalf of creditors who have a security interest in the vehicles. A vehicle may contain personal property. When it does, ARB notifies the debtor by letter, telling him that it is holding his or her property in storage and that they must pay a $25 fee to get the property back or it will be destroyed or left in the vehicle when it is shipped back to the lender, who gets the vehicle as collateral. This practice was challenged as a violation of the Fair Debt Collection Practices Act. The trial court held it was not a violation; debtors appealed.
Decision Affirmed. The repossessor was acting as the lenders' agent; it was not seizing the vehicles for its own benefit, so the FDCPA is not relevant. ARB was acting as a constructive bailee for the personal property found in the vehicles. Under the common law, the bailee does not acquire a lien in the bailed good and so has no right to its possession. However, there is a right to compensation for reasonable expenses in taking care of the goods until reclaimed by the owner. If such compensation were not allowed, there would be no incentive to protect the goods.
Citation Nadalin v. Automobile Recovery Bureau, Inc., - F.3d - (1999 WL 130194, 7th Cir.)
or
169 F. 3d 1084 (7th Cir., 1999)

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