                              In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 14-3774
CARMEN FRANKLIN and JENIFER CHISM,
on behalf of themselves and all
others similarly situated,
                                               Plaintiffs-Appellants,

                                v.

PARKING REVENUE RECOVERY
SERVICES, INC., and
BRYON BELLERUD II, P.C.,
                                              Defendants-Appellees.
                    ____________________

        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
           No. 13 C 02578 — Edmond E. Chang, Judge
                    ____________________

  ARGUED SEPTEMBER 10, 2015 — DECIDED AUGUST 10, 2016
                    ____________________

   Before FLAUM, RIPPLE, and SYKES, Circuit Judges.
   SYKES, Circuit Judge. Carmen Franklin and Jenifer Chism
parked their cars in a Chicago-area lot owned by Metra, the
public commuter railroad, and operated by CPS Chicago
Parking, LLC. (“CPS”). The lot offers parking spaces to the
2                                                          No. 14-3774

public at the rate of $1.50 per day. CPS says the two failed to
pay and sent them violation notices demanding payment of
the $1.50 fee and a $45 nonpayment penalty. When they still
did not pay, CPS referred the matter for collection to Parking
Revenue Recovery Services, Inc. (“Parking Revenue”), which
sent them collection letters for the $46.50 total due.
    Franklin and Chism responded with this class action
against Parking Revenue alleging violations of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq.
The district court entered summary judgment for Parking
Revenue, holding that the FDCPA does not apply because
the unpaid parking obligations are not “debts” as that term
is defined in § 1692a(5).
   We reverse. The obligations at issue here—unpaid park-
ing fees and nonpayment penalties—are “debts” within the
meaning of the FDCPA. That statutory term comprises
obligations “arising out of” consumer “transactions.” Park-
ing in a lot that is open to all customers subject to stated
charges is a “transaction.” The obligation that arises from
that transaction is a “debt,” and an attempt to collect it must
comply with the FDCPA. 1


1 We solicited the views of the Federal Trade Commission on this issue.
The FTC has an interest in protecting consumers from abusive debt-
collection practices. The FTC accepted our invitation and filed a brief as
amicus curiae joined by the Consumer Financial Protection Bureau,
which shares the FTC’s interest in protecting consumers and is author-
ized to enforce the FDCPA. 15 U.S.C. § 1692l(b)(6). In the view of these
federal agencies charged with enforcing the statute, the obligations at
issue here are indeed debts covered by the FDCPA. The agencies take no
position on the ultimate merits. We appreciate their willingness to assist
the court.
No. 14-3774                                                  3

                       I. Background
    In June 2012 Franklin and Chism parked their cars in a
Chicago-area lot owned by Metra (the Commuter Rail
Division of the Regional Transportation Authority) and
operated by CPS, a wholly owned subsidiary of Central
Parking System, Inc. CPS is a private company that contracts
with Metra to manage parking lots adjacent to commuter rail
stations throughout the Chicago area. Under its contract
with Metra, CPS keeps a percentage of the gross revenues
collected from the lots that it operates. The signage and the
pay machine at the lot plainly state that it costs $1.50 for
daily parking. And CPS tells us that the signage also states
that a fee of up to $60 will be assessed to parkers who fail to
pay.
    Franklin and Chism both insist that they paid the $1.50
upon parking, but CPS claims they parked without paying
and now owe the $1.50 parking fee and a $45 nonpayment
penalty. CPS referred the matter to Parking Revenue, which
in turn sent the women collection letters. The letters noted
that Franklin and Chism had previously received one or
more parking-violation notices and demanded payment of
“this debt” within 30 days or alternatively, notification in
writing that they dispute the debt’s validity.
    Franklin and Chism responded with this class action
against Parking Revenue alleging that the collection letters
violated the FDCPA in numerous ways. The suit alleges that
parking in the lot was a “transaction”—Central Parking
offers parking to all comers, which the plaintiffs accepted by
parking in the lot—and the payment obligation therefore
was a debt, the collection of which is governed by FDCPA.
4                                                           No. 14-3774

    The district judge disagreed. He characterized the collec-
tion letters as attempts to collect fines imposed for violating
the parking lot’s rules. The judge said that the payment
obligation was “materially indistinguishable from a ticket
issued for failure to feed a parking meter.” As such, it did
not reflect a consensual transaction; Franklin and Chism
essentially stole the parking spaces from CPS. On this reason-
ing, the judge concluded that the obligations were not debts
within the meaning of the FDCPA and granted Parking
Revenue’s motion for summary judgment. 2
                            II. Discussion
   We review the court’s order granting summary judgment
de novo, evaluating the record in the light most favorable to
Franklin and Chism and drawing all reasonable inferences
from the evidence in their favor. Townsend v. Cooper, 759 F.3d
678, 685 (7th Cir. 2014).
   The FDCPA prohibits various “abusive debt collection
practices,” 15 U.S.C. § 1692(e), including the use of false or
misleading representations, id. § 1692e, and other unfair
practices, id. § 1692f, to collect any debt. Franklin and Chism
contend that Parking Revenue’s collection letters violate the
FDCPA in several ways. 3 Our present concern, however, is

2 The suit also named Bryon Bellerud II, an attorney for Parking Revenue
responsible for sending the collection letters. The judge entered an order
of default against Bellerud because he failed to answer or otherwise
plead. As we’ve just explained, however, the judge later concluded that
the FDCPA is inapplicable.
3Franklin and Chism allege that the letters (1) falsely represented that in
order to avoid a presumption of the debt’s validity, they must dispute the
charges and fees in writing; (2) attempted to collect the additional $45
charge without express authorization to impose the charge; and (3) made
No. 14-3774                                                          5

limited to the threshold question whether the FDCPA even
applies. That question turns on whether the underlying
payment obligations are debts within the meaning of
§ 1692a(5). If they are, then the FDCPA applies and sum-
mary judgment was improper.
    Section 1692a(5) defines a “debt” as “any obligation or
alleged obligation of a consumer to pay money arising out of
a transaction in which the money, property, insurance, or
services which are the subject of the transaction are primari-
ly for personal, family, or household purposes.”
    Two parts of the definition need further explanation.
First, although the statute does not define “transaction,” we
have held that the term is “a broad reference to many differ-
ent types of business dealings between parties.” Bass v.
Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322,
1325 (7th Cir. 1997). Next, the “arising out of” language
limits the FDCPA’s reach to only those obligations that are
created by the contracts the parties used to give legal force to
their transaction. Id. at 1326. This means that, in general,
efforts to collect on obligations that are created by other
kinds of legal authorities, like tort law or traffic regulations,
are not covered by the FDCPA.
   The parties rightly agree that if Franklin’s and Chism’s
obligations arise out of contract law, they are debts covered
by the FDCPA. And it’s clear that contract law is the source
of the obligations at issue here. Indeed, at oral argument
Parking Revenue’s attorney was unable to explain what


false, deceptive, or misleading representations. The judge didn’t reach
the merits of these arguments because he concluded that the FDCPA was
inapplicable.
6                                                  No. 14-3774

source of law other than contract could have created the
obligations that its letters attempted to collect. By parking in
the lot, Franklin and Chism accepted CPS’s offer to park at
the stated cost. At that moment a contract was formed
obligating them to pay the stated price or pay a higher price
if they left the parking lot without paying.
    It matters not that Metra owns the lot, or that the contract
between Metra and CPS sometimes refers to the $45 non-
payment charge as a “fine.” The crucial question is the legal
source of the obligation. Although Metra is a governmental
agency, no municipal ordinance or regulation obligates
park-and-dashers to pay the $45; that obligation comes from
the contract that is formed when a customer parks in the lot.
Metra owns these lots like any other parking-lot proprietor
and contracts with CPS to operate them. That contract
provides that any dispute between “patron[s]” (parkers) and
“[o]perator” (CPS) shall be handled “as a matter of con-
tract.” So the district judge’s analogy to fines assessed for
nonpayment at municipal parking meters was inapt. These
obligations have no source in municipal law.
    The judge’s analogy to theft was also inapt. The judge
thought a car parker’s failure to pay resembled the condition
of the thief that we described in Bass. There we noted that
the FDCPA doesn’t cover a thief’s obligation to pay for the
goods he steals if his obligation is created by tort law (e.g.,
the tort of conversion), see RESTATEMENT (SECOND) OF TORTS
§ 222A (Am. Law Inst. 1965), rather than by contract law, see
Bass, 111 F.3d at 1326. The obligations at issue here, howev-
er, are not premised on the tort of conversion; they are
premised exclusively on the contract that was formed be-
tween Franklin and Chism on one side and CPS on the other.
No. 14-3774                                                  7

This distinction between contract and tort is the reason that
the obligation incurred after paying with a bad check gives
rise to a “debt” under the FDCPA while shoplifting does not.
See id. at 1325. When the check is tendered for payment, a
contract is formed. See id.
    To conclude: The signs at the parking lot offered a park-
ing spot to all comers for $1.50 per day and noted a penalty
for failing to pay. Franklin and Chism each accepted this
offer—and thus formed a contract—when they parked in the
lot. Their obligation to pay the $46.50 is premised entirely on
this contract. Parking Revenue was therefore attempting to
collect debts, and its attempts are regulated by the FDCPA’s
protections.
                                                    REVERSED.
