                    United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                              Nos. 04-3640/04-3641
                                  ___________

Travis Volden,                         *
                                       *
            Appellant/Cross-Appellee, *
                                       *    Appeal from the United States
     v.                                *    District Court for the District
                                       *    of South Dakota.
Innovative Financial Systems, Inc.,    *
                                       *
            Appellee/Cross-Appellant. *
                                  ___________

                             Submitted: September 15, 2005
                                Filed: March 10, 2006
                                 ___________

Before MELLOY, BEAM, and BENTON, Circuit Judges.
                           ___________

BEAM, Circuit Judge.

      Travis Volden appeals from a grant of summary judgment in favor of
Innovative Financial Systems, Inc. (IFS) for claims made under the Fair Debt
Collection Practices Act (FDCPA) and state-law causes of action for fraud and deceit.
IFS cross-appeals the district court's1 conclusion that IFS is a debt collector for
purposes of the FDCPA. We affirm.




      1
       The Honorable John E. Simko, United States Magistrate Judge for the District
of South Dakota, sitting by consent of the parties pursuant to 28 U.S.C. § 636(c).
I.    BACKGROUND

       IFS is primarily a check guarantee company that contracts with merchants who
accept checks from customers. IFS, in turn, contracts with EFT Network, Inc. (EFT)
to process returned checks through the "automated clearing house" (ACH)–a national
network of banks and financial institutions used to transfer funds electronically to and
from bank customers' accounts. Under this arrangement, a check written to a
merchant is endorsed with a stamp that includes IFS's account information at
Huntington National Bank (HNB), the bank where IFS maintained an account for
purposes of the EFT contract, and deposited at the merchant's bank. If the check is
dishonored by the drawer's bank, after the merchant's bank has credited the
merchant's account for the amount of the check, the Federal Reserve sends it to HNB
as directed by the endorsement. HNB then debits IFS's account for the amount of the
dishonored check, and IFS attempts to collect on the check electronically or by using
conventional methods of phoning or writing letters to the check writer.

       The National Automated Clearing House Association (NACHA) is an
association of financial institutions who use the ACH. NACHA promulgates rules
for use of the ACH that participating financial institutions agree to follow. One of
those rules provides that before a charge for a collection fee for again presenting a
dishonored check can be submitted through the ACH, written authorization by the
owner of the account to be charged must be obtained. As part of its contract with
EFT, IFS agreed (1) to comply with the operating rules of NACHA each time it
initiated an ACH entry with EFT, (2) to obtain written authorization from account
holders in order to collect fees, and (3) that each ACH entry submitted to EFT
represents and warrants that account-holder authorization has been obtained for the
debiting or crediting of the account.

      In June 2002, Volden wrote two dishonored checks to McDonald's restaurants
and two to an establishment called the Crow Bar. The checks totaled $88.68.
McDonald's and the Crow Bar contracted with IFS for their check guarantee services.


                                          -2-
After the checks were returned by the merchants' banks, IFS electronically submitted
them to EFT for re-presentment through the ACH to Volden's credit union. Three of
the four dishonored checks were presented twice. IFS also separately submitted a
$30.00 collection fee plus $1.80 sales tax for each check.2 Each presentment resulted
in a $20.00 charge from Volden's credit union because of insufficient funds.

       When electronic collection failed, IFS sent Volden written notices in July 2002
that his checks had been dishonored and that he should send payment immediately.
In September 2002, IFS sent a follow-up notice, giving Volden four options on how
to proceed. Volden finally paid the entire debt using his credit card and subsequently
brought suit against IFS pursuant to the FDCPA and South Dakota law.

       Volden argued in the district court that IFS was a debt collector under the
FDCPA, making it subject to that Act. Volden also argued that because he had not
authorized IFS to electronically collect fees from his account, as required by the
NACHA rules and by the IFS-EFT contract itself, that IFS had engaged in a false,
deceptive, and misleading practice when it submitted the fee to EFT for collection.
IFS countered that it was not a debt collector, and even if it were, the conspicuously
posted signs at the merchants' cash registers and Volden's signing of the checks
constituted Volden's agreement to be charged the collection fee. The district court
held that per Duffy v. Landberg, 133 F.3d 1120 (8th Cir. 1998) (Duffy I), IFS was a


      2
       South Dakota law provides that

      [i]f a merchant or place of business conspicuously posts a notice on its
      premises . . ., stating that a fee will be assessed against returned checks,
      any person who issues a check or other draft to the merchant or place of
      business which is not honored [due to insufficient funds] is liable for all
      reasonable costs and expenses of collection. . . . The costs and expenses
      provided for in this section are reasonable if they do not exceed thirty
      dollars plus any applicable sales tax.

S.D. Codified Laws § 57A-3-421.

                                          -3-
debt collector within the meaning of the FDCPA. It also held that 15 U.S.C. §
1692f(1) permits collection of a fee if authorized by the debtor or allowed by law.
Since South Dakota Codified Laws section 57A-3-421 authorizes check fees where
signs are posted by merchants, and the court found that both McDonald's and the
Crow Bar had signs posted, the court concluded that IFS could collect the fees. The
court granted summary judgment to IFS.

       Volden appeals, arguing IFS misrepresented facts to a third party in the process
of collecting on a debt, and that its written notices to Volden were not adequate, all
in violation of the FDCPA. IFS cross-appeals the district court's conclusion that it
is a debt collector under the FDCPA.

II.   DISCUSSION

        We review the grant of summary judgment de novo, viewing the evidence in
a light most favorable to the nonmoving party. Peters v. Gen. Serv. Bureau, Inc., 277
F.3d 1051, 1054 (8th Cir. 2002).

      A.     Is IFS a Debt Collector Under the FDCPA?

       We deal first with IFS's cross-appeal, for if IFS is not a debt collector for
purposes of the FDCPA, the statute does not apply, and Volden's federal claims fail.
The FDCPA imposes civil liability only on debt collectors, as they are defined by the
statute. 15 U.S.C. § 1692k. A debt collector is "any person who uses any
instrumentality of interstate commerce or the mails in any business the principal
purpose of which is the collection of any debts, or who regularly collects or attempts
to collect, directly or indirectly, debts owed or due or asserted to be owed or due
another." Id. at § 1692a(6).

        To argue that it is not a debt collector, IFS attempts to divorce the collection
fee it assessed against Volden from the underlying amount of each check it collected.


                                          -4-
After all, IFS asserts, Volden sued it over the collection fee, and not over the
underlying check debt. Viewing the collection fee in isolation, IFS argues that (1) the
collection fee is not a "debt" under the FDCPA because it was not a "transaction" for
personal, family, or household purposes; (2) the collection fee was not a debt in
default at the time of attempted collection, as required by the statutory definition of
"debt collector;" and (3) the collection fee is a first-party obligation for which IFS is
a creditor of Volden, and not a debt collector.

       We are not convinced by IFS's inventive premise. The collection fee cannot
be viewed in a vacuum. It arose as an incident to the underlying debt IFS collected
on the dishonored checks, and thus is not an independent basis on which debt-
collector status under the FDCPA may be determined. The FDCPA bars debt
collectors from using unfair or unconscionable means to collect or attempt to collect
"any debt." 15 U.S.C. § 1692f. The FDCPA indicates that collection fees which arise
by way of an underlying debt are viewed as part of that debt for purposes of
determining conduct that falls under the statute. "The collection of any amount
(including any interest, fee, charge, or expense incidental to the principal
obligation)" is deemed the collection of a debt. Id. at § 1692f(1) (emphasis added).
The definitions section defines "debt collector" using the same "any debt" language.
Id. at 1692a(6) ("The term 'debt collector' means any person who uses any
instrumentality of interstate commerce . . . in any business the principal purpose of
which is the collection of any debts . . . ."). Thus, the collection fees in this case
cannot be viewed apart from the underlying check amounts in an attempt to avoid
debt-collector status under the FDCPA.

       Viewed in this light, IFS's argument that it is not a debt collector fails. First,
the debt IFS collected from Volden was for a transaction for personal, family, or
household purposes. It is undisputed that Volden wrote the checks at issue to
McDonald's and the Crow Bar for personal uses. Second, the debt IFS collected was
also a debt in default at the time of attempted collection. Section 1692a(6)(F)(iii)
excludes from the definition of "debt collector" any person attempting to collect a


                                          -5-
debt "which was not in default at the time it was obtained by such person." The only
reason the checks were referred to IFS was because they were dishonored by Volden's
credit union. Had the checks been honored, IFS would have never obtained them.
This court's decision in Duffy I forecloses any argument that a dishonored check is
not a debt in default. Third, the debt was not a first-party obligation making IFS a
creditor of Volden.

      The term "creditor" means any person who offers or       extends credit
      creating a debt or to whom a debt is owed, but such      term does not
      include any person to the extent that he receives an     assignment or
      transfer of a debt in default solely for the purpose     of facilitating
      collection of such debt for another.

15 U.S.C. § 1692a(4). We agree with those courts that have found that check
authorization services do not become creditors under the Act when they attempt to
collect a defaulted debt assigned to them by another party.        Winterstein v.
CrossCheck, Inc., 149 F. Supp. 2d 466, 470 (N.D. Ill. 2001) ("[Check authorization
service] is not a creditor within the meaning of the FDCPA [where] it receive[s] an
assignment of a debt in default."); Holmes v. Telecredit Serv. Corp., 736 F. Supp.
1289 (D. Del. 1990) (holding that check authorization service was not a creditor
because it received title to dishonored checks from another party after the checks
were already in default). The debt IFS was assigned was in default and, therefore,
IFS was not a creditor of Volden.

      Given (1) the FDCPA's definition of "debt collector," (2) that IFS's principal
business–some eighty percent–is processing dishonored checks, and (3) our decision
in Duffy I, we hold that IFS is a debt collector under the FDCPA. See Duffy, 133
F.3d at 1124 ("[T]hird-party attempts to collect payment on a dishonored check can
be debt collection practices within the meaning of the FDCPA and be subject to its
consumer protections.").




                                        -6-
      B.     Did IFS Use a False, Deceptive, or Misleading Representation
             or Means In Connection with the Collection of a Debt, in
             Violation of the FDCPA?

      Having determined that IFS is subject to the FDCPA, we turn to Volden's
various arguments that IFS made a false, deceptive, or misleading representation in
connection with the collection of Volden's debt. We begin with his assertion that IFS
made a false representation to EFT, making IFS liable to Volden under the FDCPA.

             1.    Was IFS's Submission of Collection Fee a False,
                   Deceptive, or Misleading Representation?

       Section 1692e provides that "[a] debt collector may not use any false,
deceptive, or misleading representation or means in connection with the collection
of any debt." 15 U.S.C. § 1692e. As earlier noted, IFS's contract with EFT states that
IFS "agrees to comply with all rules at the time each entry is initiated by [IFS] with
respect to the most recent Represented Check Entry Program Guidelines . . . and that
each entry [of a collection fee claim to the ACH] shall in no way breach any Federal,
State or local statute or regulation pertaining to electronic funds transfers and/or
electronic check representment . . . including the operating rules of NACHA." It then
states that "[IFS] must obtain written authorization from the account holder in order
to collect a fee." The contract also says that "[IFS] represents and warrants with
respect to all entries that [EFT] originates for [IFS] that (1) each [debtor] has
authorized the debiting or crediting of its account, (2) each entry is for an amount
agreed by the [debtor], and (3) each entry is in all respects properly authorized."
(Emphasis added).

       IFS promised EFT that its entries would comply with applicable law and the
NACHA rules, and that IFS would obtain written permission from account holders
to collect a fee. When IFS submitted Volden's checks to EFT for processing, it
apparently did not have Volden's written authorization to collect the fees, which is
required by NACHA's rules and is a direct requirement of the contract. Thus, by not

                                         -7-
obtaining Volden's written permission, IFS apparently breached the contract with
EFT in two ways. But these breaches, by themselves, are not a false, deceptive, or
misleading representation by IFS to EFT. IFS did not affirmatively tell EFT at the
time it submitted Volden's checks that it had his permission to collect the fee; its
actions breached the contract, the claim for which, if any, belongs to EFT.

       IFS's contract with EFT does, however, state that an implicit representation
flows with the submission of each check collection entry fee. IFS "represents and
warrants" (emphasis added) with each entry submitted that the account holder has
authorized the debiting of the account for the amount to be debited, and that "each
entry is in all respects properly authorized." (Emphasis added). Whether IFS falsely
represented that Volden had authorized collection of the fee, then, turns on the
meaning of "properly authorized" under the contract.

      Regulation E, 12 C.F.R. §§ 205.1 et seq., regulates electronic fund transfers
through the ACH under the Electronic Fund Transfer Act (15 U.S.C. §§ 1693 et seq.).
Supplement I to section 205.3 of Regulation E (entitled "Coverage") states that a
consumer authorizes a check collection fee to be debited electronically from his or
her account "where the consumer has received notice that a fee imposed for returned
checks will be debited electronically from the consumer's account." The record
indicates that both McDonald's and the Crow Bar had posted signs warning
consumers of the check collection fee charged by IFS for returned checks. Thus,
under Regulation E's "notice-equals-authorization" rule, Volden, by paying the
merchants with a check and having notice of the fee, had authorized IFS to debit his
account, and in that sense the collection fee entry was "properly authorized."

          But the contract expressly states that "[IFS] must obtain written authorization
from the account holder in order to collect a fee." (Emphasis added). The contract
states it is governed by Nevada law. Under Nevada law, "[a] contract is ambiguous
if it is reasonably susceptible to more than one interpretation." Margrave v. Dermody
Props., Inc., 878 P.2d 291, 293 (Nev. 1994). While this contract provision does not


                                          -8-
specifically define "properly authorized" for purposes of the re-presentations section,
that term is not reasonably susceptible to more than one interpretation in this case.
The express terms of the contract contemplate written authorization, not implied
authorization per Regulation E, and thus "properly authorized" means written
authorization by the consumer. There is no dispute that IFS did not have Volden's
written authorization. Thus, when IFS submitted the collection fees to EFT, by
definition under the contract, IFS falsely represented to EFT that such submissions
were "properly authorized."

             2.     Was IFS's False Representation "In Connection
                    With" the Collection of a Debt?

       Though IFS, by the terms of the contract, made a false representation, that
representation was made to EFT, not to Volden. Volden argues that the language of
section 1692e does not require that a false representation be made to the consumer.
He argues that the "in connection with" language in the section includes false
representation made to others while in the process of collecting a debt. Volden
directs us to only one district court case in support of his argument. Notwithstanding
this being relatively scant support, even the case provided is distinguishable. See Van
Westrienen v. Americontinental Collection Corp., 94 F. Supp. 2d 1087, 1107-08 (D.
Or. 2000).

       In Van Westrienen, the district court held that under section 1692e, "the
consumer debtor does not have to be the actual recipient of the false statement in
order to press a claim. All that is needed is that a debt collector use a
misrepresentation 'in connection with the collection of any debt.'" Id. (citation
omitted). In that case, a debt collector maintained misleading information on its
website, and in a collection letter referred the plaintiff to the website. There was
conflicting testimony about whether the plaintiff actually viewed the site, but the
plaintiff argued it did not matter since the information on the site was misleading, and
the debt collector referred the plaintiff to the site in its collection letter. The court
agreed, stating "[d]efendants are debt collectors who used the misrepresentations in

                                          -9-
the website 'in connection' with collecting the debt from plaintiffs by inviting them
to view the website." Id. at 1108. Though viewed in a vacuum the district court's
statement seems to broaden the scope of misleading representations beyond the
debtor, the context involves a debt collector directing a debtor to misleading
information.

       We have found only one other case, again from the same court that issued Van
Westrienen, to assert a similarly broad sentiment. In Mathis v. Omnium Worldwide,
No. Civ. 04-1614-AA, 2005 WL 3159663 (D. Or. Nov. 27, 2005), plaintiff brought
suit against a debt collector who persisted in contacting her about her deceased
father's debts. The court rejected the debt collector's argument that plaintiff could not
bring suit under the FDCPA because she was not the consumer who owed the debt.
Citing section 1692e, the court stated that "the statutory language does not require the
prohibited conduct to be directed only at the consumer to be actionable." Id. at *4.
Though this statement by itself might support Volden's argument, the thrust of Mathis
was to clarify that the statutory language of the FDCPA "does not limit causes of
actions to those brought by a 'consumer,' so long as the alleged conduct was directed
at the plaintiff." Id. (emphasis added).

        We do not find Volden's argument persuasive. In the instant case, IFS made
its false representation to EFT, and EFT is not the plaintiff. No false representation
was made directly to Volden by IFS's submission of the collection fees to EFT. The
weight of authority applying section 1692e does so in the context of a debt collector
making a false, deceptive, or misleading representation to the plaintiff. Volden has
not shown that section 1692e contemplates liability for the kind of representation IFS
made to EFT. We find that such actions do not fall within the "general application"
of the section. 15 U.S.C. § 1692e.

       The FDCPA is designed to protect consumers from abusive debt collection
practices such as the use or threat of violence, obscene language, publication of
shame lists, and harassing telephone calls. Peters, 277 F.3d at 1054. Volden admits


                                          -10-
that his only actual damages arise from insufficient fund fees assessed by his own
credit union when IFS's collection fees were presented for payment. But that is
between him and his credit union, no doubt a condition of the contract governing his
account. Volden simply reaped the consequences of writing bad checks. He issued
them having notice that a collection fee would be assessed. Per Regulation E, that
notice authorized IFS to collect the fee electronically from Volden's account.
Collection of that fee did not violate the FDCPA. That IFS contracted with EFT to
follow additional rules does not mean that IFS's responsibilities to Volden under the
FDCPA were somehow enhanced.

             3. Did IFS's Notices Constitute False Representations?

                    a.     Actions That Could Be "Legally" Taken

       Volden uses the contract between IFS and EFT for another of his arguments.
Section 1692e(5) states that the "threat to take any action that cannot legally be taken
or that is not intended to be taken" constitutes a false, deceptive, or misleading
representation. Notices IFS sent Volden about his returned checks stated "Your
check has been electronically represented for payment and a draft will be charged
against your account for the highest service fees allowed by law." (Emphasis added).
Volden argues that because IFS was contractually required to obtain written
authorization to draft his account, and IFS had not done so, IFS could not "legally"
draft his account as the letter states. Thus, Volden argues, the letter constitutes a
threat to take action that cannot "legally" be taken. He cites Picht v. John R. Hawks,
Ltd., 236 F.3d 446 (8th Cir. 2001) and Duffy v. Landberg, 215 F.3d 871 (8th Cir.
2000) (Duffy II) for support.

       Picht did not involve a representation to a debtor about actions that could be
legally taken. In any event, Picht dealt with the proper use of statutory garnishment
law by a debt collector and its attorney. Similarly, Duffy II found a debt collector had
violated section 1692e(5) for misrepresenting state statutory law. IFS's statement did


                                         -11-
not threaten any action prohibited by law. Indeed, as the district court noted, South
Dakota statute specifically provides for the fee IFS collected, and Regulation E
allowed IFS to debit the fee electronically. At most, IFS's statement in the notices
indicated that it would breach or had breached its contract with EFT. But breaching
the contract in this case would not violate any legislative enactment. Volden's
argument is without merit.

                    b.     Identification As a Debt Collector

        Volden asserts IFS violated section 1692e(11) by failing to affirmatively state
in its September 2002 letter to Volden that it was a debt collector. Subsection (11)
defines the failure of a debt collector to disclose in its initial communication that it
is attempting to collect a debt, and "in subsequent communications that the
communication is from a debt collector," as a false, deceptive, or misleading
representation. The September 2002 letter states "Federal law requires us to inform
you that this is an attempt to collect a debt and any information obtained will be used
for that purpose." Though the letter does not say it is from a debt collector, the fact
it says it is sent in an attempt to collect a debt is sufficient for even the
unsophisticated consumer to understand that such a letter is necessarily from a "debt
collector." While the unsophisticated consumer test is meant to protect consumers
of below average sophistication, it also involves an element of reasonableness that
prevents bizarre interpretations of debt collection notices. Peters, 277 F.3d at 1055.
We find the letter "effectively conveys" the fact that it is from a debt collector, and
thus does not violate section 1692e(11). Id. at 1056.

      C.     Did IFS Violated Section 1692g(a)(5)?

       Finally, Volden argues that IFS violated section 1692g(a)(5) by failing to
include a required statement in IFS's written notices. That section states that "a debt
collector shall," within five days following an initial communication if that
communication did not contain the required information, send the consumer a written


                                         -12-
notice that includes "a statement that, upon the consumer's written request within the
thirty-day period, the debt collector will provide the consumer with the name and
address of the original creditor, if different from the current creditor." 15 U.S.C. §
1692(g)(a)(5) (emphasis added).3 The record reflects that IFS's statements do not
contain this precise statement.

      IFS argues, however, that the statement it gave Volden in its initial notice, "[i]f
you notify this office in writing, within 30 days, this office will send you verification


      3
       15 U.S.C. § 1692(g)(a)(1) through (5) states:

      Within five days after the initial communication with a consumer in
      connection with the collection of any debt, a debt collector shall, unless
      the following information is contained in the initial communication or
      the consumer has paid the debt, send the consumer a written notice
      containing–

             (1)    the amount of the debt;
             (2)    the name of the creditor to whom the debt is owed;
             (3)    a statement that unless the consumer, within thirty
                    days after receipt of the notice, disputes the validity
                    of the debt, or any portion thereof, the debt will be
                    assumed to be valid by the debt collector;
             (4)    a statement that if the consumer notifies the debt
                    collector in writing within the thirty-day period that
                    the debt, or any portion thereof, is disputed, the debt
                    collector will obtain verification of the debt or a
                    copy of a judgment against the consumer and a copy
                    of such verification or judgment will be mailed to
                    the consumer by the debt collector; and
             (5)    a statement that, upon the consumer's written request
                    within the thirty-day period, the debt collector will
                    provide the consumer with the name and address of
                    the original creditor, if different from the current
                    creditor.


                                          -13-
of you [sic] debt" (see sections 1692g(a)(3)-(4)), in conjunction with identifying the
McDonald's stores as the creditors to whom the debt is owed (see section
1692g(a)(2)), and the locations of the McDonald's stores, "provided all the
information required" by section 1692g(a)(5). While we agree with Volden that IFS
did not literally comply with the wording specified in part (a)(5), we think that there
was substantial compliance with the debtor-protection purposes of the statute.

      We recognize that the Seventh Circuit appears to take a more strict approach
in Huff v. Dobbins, Nos. 98-2286, 98-2861, 1999 WL 370036 (7th Cir. June 2, 1999),
an unpublished opinion. The overriding issue presented in Huff was, however,
whether section 1692g(a) permits an "attorney exception" to the specific notice
requirements of the section, as argued by the Dobbins law firm. As a peripheral
matter, the Seventh Circuit included a footnote that mentioned the district court's (but
apparently not the parties') notice of the failure of the defendant to recite the precise
words of 1692g(a)(5) in its notice. In answering the major question presented, and
presumably the (a)(5) issue by implication, the court said "[t]he statute 'leaves no
room for deviation in the language of the validation [of debts] notice.'" Id. at *4
(quoting Jang v. A.M. Miller and Assocs., 122 F.3d 480, 482 (7th Cir. 1997)).

       While we substantially agree with the Seventh Circuit, an examination of the
legislative history of the FDCPA prompts us to deviate slightly from the seeming
rigidity of Huff under the circumstances of this case. There is no question that
Volden was at all times fully aware that he had presented the dishonored checks to
two different McDonald's restaurants. He was informed by IFS that the McDonald's
stores (by location) were the creditors to whom the debt was owed. Thus, if Volden
had asked in response to an (a)(5) statement for "the name and address of the original
creditor, if different from the current creditor" the only accurate answer would have
provided Volden absolutely no useful information. Thus, at best for Volden, the
technical and meaningless omission by IFS could not have been seen by Congress as
a purposeful violation of the FDCPA. See, e.g., Richmond v. Higgins, 435 F.3d 825,
829 (8th Cir. 2006). Accordingly, we find no violation.


                                          -14-
       D.    State Claims

       The district court did not reach the merits of Volden's state-law claims for fraud
and deceit under South Dakota Codified Laws §§ 20-10-1 and 20-10-2. Volden asks
us to remand for trial on these issues. Volden did not brief these state-law claims,
though IFS did. Given the foregoing discussions, we find no reason to reverse
summary judgment on the state-law claims.

III.   CONCLUSION

      For the reasons outlined above, we reject the cross-appeal and affirm the grant
of summary judgment to IFS on Volden's claims.
                       ______________________________




                                          -15-
