In Wahl v. Midland Credit, Inc. — F.3d —-, 2009 WL 426055 (7th Cir. 2009), the Court of Appeals for the Seventh Circuit addressed whether a debt collector used a false and deceptive means to collect a debt because it included in the “principal” balance amounts which the original creditor levied as “interest”. The Court of Appeals described Plaintiff’s argument as follows:
Debt collectors need not say anything more than the amount sought, but if they do elect to specify principal and interest components, they must indicate the principal charges levied by the original account holder, the interest levied by the original account holder, and the interest levied by the debt collector. Otherwise, Wahl claims, the statement is false-because “principal” cannot include any amount of interest. Wahl says the collection letters in this case violated this rule because the “principal balance” included interest charged by BP, a fact that was not disclosed like the interest charged by Midland.
The Court of Appeals rejected the argument, noting that a third party debt collector need only describe as principal the amounts it seeks to collect, notwithstanding the fact that such sums may include interest which the original creditor sought to collect.
But even assuming Wahl’s construction of § 1692e to be right, we see no falsity (technical or otherwise) in Midland’s approach. Wahl says that it is false to de-scribe as a “principal balance” any sum of money that contains interest. As the American Heritage Diction-ary of the English Language (3d ed.1992) explains, when used as an adjective, “principal” describes an original “sum of money owed as a debt, upon which interest is calculated,” and a “balance” is the difference between “the debit and credit sides of an ac-count.” That admittedly makes a “principal balance” the starting or original amount owed, exclusive of interest. Now, with this, Wahl would say she is vindicated. The starting or original amount owed, she would say, was what she actually charged on the BP card. It follows that none of the interest, whether tacked on by BP or Midland, is part of the “principal balance.” And since Midland included the BP interest within the “principal balance” figure, it uttered a falsehood. But this logic ignores Midland’s role in the process entirely. The interest charged by BP was very much part of the principal balance in Midland’s eyes. Midland obtained the entire BP debt,FN3 including interest, so the starting or original amount owed, as far as it was concerned, was indeed $1,149.09.