Court Rules in Favor of Wis. Cell Phone Customers

UPDATED Monday, December 8, 2008 --- 2:15 p.m.

MADISON, Wis. (AP) -- A debt collection company must pay damages to 7,000 Cingular Wireless customers in Wisconsin for illegally charging fees, a federal appeals court ruled Monday.

Bloomington, Ill.-based Afni, Inc. charged customers collection fees equaling 15 percent of the money they owed Cingular, which has since been bought by AT&T. The 7th Circuit Court of Appeals said that fee was not allowed under Wisconsin law or their cell phone contracts and violated the Fair Debt Collection Practices Act.

The decision upholds a ruling last year by U.S. Magistrate Judge William E. Callahan, Jr. in Milwaukee. Callahan awarded the customers $206,000 in damages, costs and attorneys fees -- but gave the company a chance to appeal. Monday's ruling means the plaintiffs' lawyers can ask for additional costs and fees related to the appeal.

Customers who received debt collection letters from Afni filed suit in 2005 alleging the company's practice of charging collection fees of 15 percent of their original balance was illegal.

Callahan later granted the case class action status, for all Wisconsin customers who received letters after July 7, 2004. The class consists of about 7,020 customers. The procedure for compensating them has not yet been approved.

Callahan ruled the company had no authority to impose collection fees since they were not authorized by the customers' cell phone contracts with Cingular. Wisconsin law only allows third-party debt collectors to charge fees, Callahan added, and not companies who "own" the debt such as Afni, which purchased delinquent accounts from Cingular.

A three-judge panel of the Chicago-based appeals court ruled that Callahan made the correct decision. The judges rejected the company's argument that its mistakes were unintentional, saying company officials did not take enough steps to comply with Wisconsin law.

Allowing the company to win, the court wrote, "would essentially reward a business's ignorance of the law."

Company representatives did not immediately return phone messages.

Copyright 2008 by The Associated Press. All Rights Reserved.


Posted Monday, December 8, 2008 --- 1:00 p.m.

MADISON, Wis. (AP) -- A federal appeals court has given a legal victory to more than 7,000 Wisconsin cell phone customers.

The 7th Circuit Court of Appeals ruled Monday that a company hired to collect unpaid bills of Cingular Wireless customers violated state and federal law.

The appeals court says Bloomington, Ill.-based Afni, Inc. was charging customers a 15 percent collection fee that was not authorized under their contracts or Wisconsin law.

A federal judge had ordered the company to pay $206,000 in damages, costs and attorneys fees if its appeal was not successful. The class consists of about 7,020 Cingular customers who received debt collection letters after July 2004.

Monday's decision upholds the judge's order and lawyers can now ask for additional fees and costs to cover the appeal.

Copyright 2008 by The Associated Press. All Rights Reserved.

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