Thunderbird Collections Hit with Class Action in Arizona

New to ClassAction.org? Read our Newswire Disclaimer

TCS, Inc., which does business as Thunderbird Collections, is on the wrong end of a proposed class action filed in Arizona that alleges the company violated state and federal debt collection laws. The plaintiff claims he was charged more than $2,500 for the early termination of his renter’s lease for an apartment. Prior to this, the case claims, the plaintiff had a negative balance with his original creditor due to overpayment. Upon refusing to pay the more than $2,500 he ostensibly owed, the plaintiff’s supposed balance was transferred to the defendant for collection, according to the suit.

“At that point, [the defendant] imposed an unconscionable collection fee upon [the plaintiff] in the amount of $1,028.49,” the complaint reads, noting the sum represents 40 percent of the balance the plaintiff allegedly owes.

The plaintiff argues the fee imposed upon him by Thunderbird Collections is void under Arizona law because the state does not allow a creditor to assess penalties on a consumer debtor. To legally tack on additional charges to a debt, the suit notes, debt collectors must meet certain requirements set by Arizona courts, namely that: (1) the amount fixed in the contract is a reasonable forecast of just compensation for harm caused by the breach, and (2) that accurate estimation of the harm from the breach is difficult or impossible to accurately determine. From the lawsuit:

“Applying Arizona’s two-pronged test, the amount cannot be a reasonable forecast of harm caused by the breach because a collection fee is only received by the debt collector, a fee which does not benefit the original creditor or make it whole from the breached contract. Second, the collection fees assessed are reasonably calculable, and could not amount to 40% simply for reporting the debt to the credit bureaus and sending out a letter to the plaintiff.”