In Bradley v. Franklin Collection Service, Inc.— F.3d —-, 2014 WL 23738 (11th Cir. 2014), the Court of Appeals for the Eleventh Circuit found that charging a percentage-based collection fee violates the FDCPA unless the instrument creating the obligation allowed it:
Section 1692f prohibits unfair or unconscionable means of collection. Subsection (1) of this section specifically prohibits “collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” 15 U.S.C. § 1692f(1). Bradley argues that the collection fee he paid violates this section of the FDCPA because the fee was really liquidated damages rather than the actual cost of collection. We agree. While the Eleventh Circuit has not previously addressed this issue, we find the Eighth Circuit’s reasoning in Kojetin v. CU Recovery, Inc., 212 F.3d 1318, 1318 (8th Cir.2000) (per curiam), to be persuasive. There, the Eighth Circuit held that the debt collector violated the FDCPA when it charged the debtor a collection fee based on a percentage of the principal balance of the debt due rather than the actual cost of collection. Id. That is what happened here. When Bradley signed Urology’s patient registration form, he only agreed to pay “all costs of collection.” That is, Bradley agreed to pay the actual costs of collection; his contractual agreement with Urology did not require him to pay a collection agency’s percentage-based fee where that fee did not correlate to the costs of collection. Before Urology handed over Bradley’s delinquent account to Franklin, it added a 33–and–1/3% ”collection fee.” Franklin failed to direct this Court to any evidence that the 33–and–1/3% “collection fee”—which was assessed before Franklin attempted to collect the balance due—bears any correlation to the actual cost of Franklin’s collection effort. As such, the 33–and–1/3% fee breaches the agreement between Bradley and Urology, since, contractually, Bradley was only obligated to pay the “costs of collection.” See id. Urology and Franklin cannot alter Bradley’s obligations by the terms of their subsequent agreement. Because there was no express agreement between Urology and Bradley allowing for collection of the 33–and–1/3% fee, that fee violates the FDCPA. See 15 U.S.C. § 1692(e); see also Kojetin, 212 F.3d at 1318. This is not to say that Bradley and Urology could not have formed an agreement allowing for the collection of the percentage-based fee. It is the nature of the agreement between Bradly and Urology, not simply the amount of the fee that is important here. For example, Plaintiff Calma agreed to pay, inter alia, “reasonable collection agency fees.” And, based on this contractual language, Calma declined to argue on appeal that the agreement that he had with UAB West did not cover Franklin’s percentage-based collection fee.Courts examining other contractual language have also suggested that a percentage-based fee can be appropriate if the contracting parties agreed to it. For example, the Seventh Circuit suggested that the following contractual provision may allow the imposition of a percentage-based collection fee when a delinquent account was referred to a third-party collection agency: “You agree to reimburse us the fees of any collection agency, which may be based on a percentage at a maximum of 33% of the debt, and all costs and expenses, including reasonable attorneys’ fees, we incur in such collection efforts.” See Seeger v. AFNI, Inc., 548 F.3d 1107, 1110, 1113 (7th Cir.2008); see also Boatley v. Diem Corp., No. CIV. 03–0762–PHX–SMM, 2004 WL 5315892, *5–6 (D.Ariz. Mar. 24, 2004). But, Bradley’s contract with Urology was not like Calma’s contract with UAB West or the contracts from these other cases. Under the contract at issue here, Bradley agreed to pay the actual costs of collection; he did not agree to pay a percentage above the amount of his outstanding debt that was unrelated to the actual costs to collect that debt.