                        United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 97-1560
                                  ___________

William E. Duffy,                        *
                                         *
              Plaintiff - Appellant,     *
                                         *
      v.                                 *
                                         *
Kevin W. Landberg, Attorney at Law; *
New Concepts Business Services,          *
sued as New Concepts Business            *
Services, Inc., a Minnesota Corporation, *
                                         *
              Defendants - Appellees.    *   Appeals from the United States
                                         *   District Court for the
      --------------------               *   District of Minnesota.
                                         *
Susan M. Quaderer,                       *
                                         *
              Plaintiff - Appellant,     *
                                         *
      v.                                 *
                                         *
Kevin W. Landberg, Attorney at Law; *
New Concepts Business Services,          *
sued as New Concepts Business            *
Services, Inc., a Minnesota Corporation, *
                                         *
              Defendants - Appellees.    *
                                         *
      --------------------               *
                                         *
Dennis G. Hacken,                        *
                                         *
             Plaintiff - Appellant,   *
                                      *
      v.                              *
                                      *
Kevin W. Landberg, Attorney at Law; *
New Concepts Business Services, Inc., *
a Minnesota Corporation,              *
                                      *
            Defendants - Appellees.   *
                                      *
                                      *
                                      *
Federal Trade Commission,             *
                                      *
            Amicus on Behalf of       *
            Appellant.                *
                                 ___________

                              Submitted: November 20, 1997
                                  Filed: January 20, 1998
                                   ___________

Before BOWMAN, MURPHY, Circuit Judges, and CONMY,1 District Judge.
                          ___________

MURPHY, Circuit Judge.

       William E. Duffy, Susan M. Quaderer, and Dennis G. Hacken sued Kevin W.
Landberg and New Concepts Business Services, Inc. (“New Concepts”) for abusive
practices in seeking to collect payment for dishonored checks in violation of the Fair
Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., and the Minnesota
Prevention of Consumer Fraud Act (Consumer Fraud Act), Minn. Stat. § 325F.68-69.
The district court granted defendants’ motion to dismiss pursuant to Fed. R. Civ. P.

      1
       The Honorable Patrick A. Conmy, United States District Judge for the District
of North Dakota, sitting by designation.

                                         -2-
12(b)(6), holding that plaintiffs’ complaints failed to state a claim under either statute.
Plaintiffs appeal from that part of the judgment dismissing their claim under the
FDCPA. We reverse and remand.

       After Duffy and Quaderer wrote checks to Snyder Drug Stores for $25 and
$24.40, respectively, and Hacken wrote a check to MGM Liquor for $11.38, all three
checks were returned for insufficient funds. New Concepts then sent letters to the
check issuers on behalf of the merchants seeking to collect the face amount of each
check and a $20 service charge. Plaintiffs later received unsigned letters on the
letterhead of “Kevin W. Landberg, Attorney at Law,” which were mailed by New
Concepts but not reviewed in advance by Landberg. These letters stated Landberg had
been retained by the merchants concerning the dishonored checks and demanded
payment of the amount of the check plus a service charge, collection fee, interest, and
civil penalty. The letters indicated that each of the additional charges was assessed
under “Minnesota state law” but offered to settle for a lower total still well in excess
of the dishonored checks. They threatened “further legal action” in the event of
nonpayment to recover all sums demanded, plus all court and service of process costs,
attorney fees, and “such other remedy as the court may grant.”

       Plaintiffs each filed suit against Landberg and New Concepts for abusive debt
collection practices in violation of the FDCPA. They alleged that defendants falsely
represented the amount due, see 15 U.S.C. § 1692e(2)(A), unlawfully attempted to
collect an inflated interest payment, civil penalty, and collection fee, see 15 U.S.C. §
1692f(1), falsely represented that the source of the second collection letter was an
attorney when Landberg had not seen it, see 15 U.S.C. § 1692e(3), (9), and falsely
threatened legal action, see 15 U.S.C. § 1692e(5). Plaintiffs also claimed that
defendants engaged in deceptive practices in violation of the Minnesota Consumer
Fraud Act. Since all three actions alleged similar conduct by Landberg and New
Concepts and raised identical legal issues, they were consolidated for consideration of
dispositive motions.

                                           -3-
        Landberg filed a motion to dismiss the complaints on behalf of the defendants
who argued that their efforts to collect on dishonored checks were not governed by
either the FDCPA or the Consumer Fraud Act. The district court noted that the
FDCPA does not specify the type of transaction that may give rise to a consumer debt,
and it went on to hold that the transaction must involve an offer or extension of credit
to a consumer in order to be covered by the statute, citing Zimmerman v. HBO Affiliate
Group, 834 F.2d 1163, 1168 (3d Cir. 1987). Since the court determined that payment
by check for consumer goods is not a credit transaction, it concluded that the obligation
resulting from the subsequent dishonor of the check was not a debt within the meaning
of the FDCPA. It dismissed the complaints because the challenged debt collection
practices were not covered by the consumer protections in the FDCPA and the
Consumer Fraud Act did not apply since no fraud in the sale of merchandise was
alleged.

       Dismissals under Rule 12(b)(6) are reviewed de novo. See First Commercial
Trust Co. v. Colt’s Mfg. Co., 77 F.3d 1081, 1083 (8th Cir. 1996). The allegations in
the complaint must be treated as true and must be construed in a plaintiff’s favor. See
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); United States v. Mississippi, 380 U.S.
128, 143 (1965). Dismissal is proper only when the complaint on its face reveals
“some insuperable bar to relief.” Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th
Cir. 1995).

       The FDCPA permits consumers who have been subjected to unfair practices by
third-party debt collectors to recover damages, attorney fees, and costs. See 15 U.S.C.
§ 1692k(a). The purpose of the statute is “to eliminate abusive debt collection
practices” and “to insure that those debt collectors who refrain from using [such]
practices are not competitively disadvantaged.” 15 U.S.C. § 1692(e). The statute
defines “debt” as:




                                          -4-
       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 primarily for personal, family, or
       household purposes, whether or not such obligation has been reduced to
       judgment.

15 U.S.C. § 1692a(5).

        Appellants argue that a dishonored check fits within the plain language of this
definition, that the legislative history supports this conclusion, and that the district court
erred in concluding that the statute does not cover third-party collection of a dishonored
check.2 Landberg and New Concepts assert that the district court and the Third Circuit
in Zimmerman were correct in determining that the type of transaction meant in the
definition of debt in the FDCPA is an offer or extension of credit and that the statute
therefore does not apply to their collection activities.

       The FDCPA is clearly worded and broadly defines debt as “any obligation” to pay
arising out of a consumer transaction. It therefore can be applied to appellants’
dishonored checks.3 Their payment obligations arose from transactions for personal or
household goods at a drug and a liquor store. Nothing in the statutory definition suggests
that the only consumer transaction giving rise to a debt under the statute is one involving
an offer or extension of credit. Rules of statutory construction mandate that the
unambiguous term “transaction” be given its ordinary meaning and not that it



       2
        Because we conclude that a debt need not arise from a credit transaction in
order to be covered by the statute, it is not necessary to discuss appellants’ argument
that a merchant extends credit to a consumer by accepting a check.
       3
        Appellees have recently submitted notice that there is a proposal pending in the
Senate to amend the statutory definition by adding a provision that “debt . . . does not
include a draft drawn on a bank for a sum certain, payable on demand and signed by
the maker.” S. 1405, 105th Cong. § 207 (1997). They have made no argument based
on this proposal, however, and it has not been enacted into law.

                                            -5-
be read restrictively to mean “credit transaction” as appellees suggest. See Bass v.
Stolper, Koritzinsky, Brewster & Neider, 111 F.3d 1322, 1325-26 (7th Cir. 1997) (citing
Perrin v. United States, 444 U.S. 37, 42 (1979)).

       Two other courts of appeals have recently held that a dishonored check creates
a payment obligation fitting within the plain meaning of the FDCPA definition of “debt.”
See Bass, 111 F.3d at 1325-26; Charles v. Lundgren & Associates, P.C., 119 F.3d 739,
742 (9th Cir.), cert. denied, 66 U.S.L.W. 3416 (U.S. Dec. 15, 1997) (No. 97-658); see
also Ryan v. Wexler & Wexler, 113 F.3d 91, 93 (7th Cir.), cert. denied, 118 S.Ct. 298
(1997) (following Bass). The reasoning in these cases is persuasive. Since a check
written by a consumer in a transaction for goods or services “evidences the drawer’s
obligation to pay” and this obligation remains even if the check is dishonored, abusive
collection practices related to the dishonored check are prohibited by the FDCPA. Bass,
111 F.3d at 1324-26; Charles, 119 F.3d at 742.

       Since the statutory language is clear, it is not necessary to consult the legislative
history, but that history reflects Congress’ intent not to limit the FDCPA’s protections
to debts arising from credit transactions. See Bass, 111 F.3d at 1326-27. The definition
of “debt” in early versions of the statute included a requirement that credit be offered
and extended, see H.R. 13720, 94th Cong. (1976), but Congress deleted this language
from subsequent drafts, thus refusing to limit the statute’s coverage in the manner sought
by appellees. See Bass, 111 F.3d at 1327. The House Committee Report also sheds
light on the drafters’ intent: “[T]he committee intends that the term ‘debt’ include
consumer obligations paid by check or other non-credit consumer obligations.” H.R.
Rep. No. 95-131, at 4 (1977).4 Although appellees correctly note


      4
       Although the Senate version of the bill was ultimately substituted for the House
version, the definition of “debt” remained substantially the same from the time of the
House Report until final passage. The House definition was: “any obligation of an
individual to pay money arising out of a transaction in which the money, property, or
services which are the subject of the transaction are primarily for personal, family, or
household purposes.” H.R. Rep. No. 95-131, at 17.

                                           -6-
that much of the consideration of the bill focused on credit-related debt, the statute does
not limit its reach to such situations and the legislative history is to the contrary, as
evidenced by the discussion of dishonored check debt during the Congressional hearings
and debate. See Bass, 111 F.3d at 1327 (reviewing statements made during
consideration of FDCPA).

       Landberg and New Concepts argue that because the FDCPA was codified as an
amendment to the Consumer Credit Protection Act (CCPA), 15 U.S.C. §§ 1601 et seq.,
it can only be construed as governing credit transactions. The Bass court rejected this
extrinsic evidence of Congressional intent as unnecessary where the statute is
unambiguous and found it unpersuasive in any event in light of “the contrary intent
evidenced in the Act’s legislative history.” 111 F.3d at 1328. The court noted that other
amendments to the CCPA have addressed consumer financial protections beyond those
related to credit-based transactions and that it is unnecessary to look to the CCPA as an
interpretive guide where the FDCPA has its own purpose and definitions.5 See id.

        In further support of their position, Landberg and New Concepts argue that the
liability arising from a dishonored check is based on state tort and criminal law and
therefore does not arise from a transaction within the meaning of the FDCPA.
Dishonored checks are only criminal or tortious when the drawer knows or intends the
check to be dishonored at the time it is written. See id. at 1329 (distinguishing checks
dishonored due to bank error or miscalculation by the drawer). Moreover, courts
generally will not create a fraud exception where none exists in the text of the statute.




      5
        In following the reasoning in Bass, the Ninth Circuit distinguished its own
precedent using the CCPA as a guide to interpret the FDCPA and noted its earlier case
did not require that FDCPA definitions be restricted or that a term be used consistently
throughout the CCPA. Charles, 119 F.3d at 742 (distinguishing Bloom v. I.C. Sys.,
Inc., 972 F.2d 1067 (9th Cir. 1992)).

                                           -7-
See id. at 1329-30. “[T]he wrong occasioned by debtor fraud is more appropriately
redressed under the statutory and common law remedies already in place, not by a
judicially-created exception that selectively gives a green light to the very abuses
proscribed by the Act.” Id. at 1330.

        The district court did not have the benefit of the Bass and Charles decisions, and
it turned for guidance to the Third Circuit opinion in Zimmerman, 834 F.2d 1163. The
issue in Zimmerman was whether cable television companies were seeking to collect a
debt within the meaning of the FDCPA when they demanded compensation. The Third
Circuit found that this type of liability was not a consumer debt under the statute because
it did not arise from a transaction involving “the offer or extension of credit” in which
a consumer acquired goods or services and deferred payment. Id. at 1168-69. This
reading is contrary to the plain language of the statute as well as the legislative history,
but it was not necessary for the outcome because an obligation arising from theft cannot
be a debt under the statute since it does not arise from a consensual transaction for goods
or services. See Bass, 111 F.3d at 1326. Zimmerman therefore does not control in this
case.

      For these reasons third-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. Accordingly, the judgment dismissing plaintiffs’ complaints under
the FDCPA is reversed, and the case is remanded for proceedings consistent with this
opinion.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                           -8-
