In Madden v. Midland Funding, LLC [1] , the U.S. Court of Appeals for the Second Circuit held that a company purchasing a debt account from a National Bank may not be allowed to continue charging the same rate of interest on your account.

The National Bank Act provides for formation of banks that exist without a state charter. National Banks must designate a particular state as their principal location in order to charge that state’s interest rate nationwide.

However, if the national bank sells your account to a debt buyer that is not a national bank, that debt buyer may not continue to charge the issuing bank’s home state interest rate nationwide.

In this recent appellate decision, the court looked at Bank of America debt sold to Midland Funding LLC. Bank of America is a national bank that had selected the Delaware State interest rate to apply on its credit card accounts.

When Midland Funding charged excessive interest of 27% on the charged-off Bank of America account, they were sued in an FDCPA [2] putative class action which the appellate court has not determined may proceed.

Madden’s lawsuit also named Midland Credit Management, the servicer for Midland Funding, and accused both companies of unfair and abusive debt collection tactics. In addition to violating the FDCPA, the debt collection companies are accused of violating New York’s usury law [3], among several others [4].

FIA credit card debt accounts are also issued under the name FIA Card Services. Midland Funding is known to buy accounts from both companies.

Do you need a lawyer experienced in fighting FIA Card Services or Midland collections? Call us for fast help today.

[1] 14-2131-cv-U.S. District Court

[2] Fair Debt Collection Practices Act, 15 U.S.C. §1692

[3]; N.Y. Penal Law §190.40, provides for a maximum interest rate of 25%

[4] N.Y. General Business Law §349; N.Y. General Obligations Law §5‐501