West Virginia Supreme Court Asked to Decide Debt Collector Liability for Third-Party Payment Fees

Case Snapshot

• Court: U.S. District Court for the Northern District of West Virginia; question certified to the Supreme Court of Appeals of West Virginia
• Case: Dye v. Santander Consumer USA Inc. d/b/a Chrysler Capital, No. 1:23-CV-045
• Decision Date: Sept. 29, 2026
• Core Issue: Whether a debt collector can be liable under the WVCCPA for allegedly unlawful third-party payment processing fees without an agency relationship or other basis for vicarious liability.
• Key Allegation: The plaintiff alleges that a $2.75 debit card processing fee and Santander’s involvement in the third-party payment arrangement violated state consumer protection law.
• Court Holding: The district court determined that the unsettled question of West Virginia law warranted certification to the state’s highest court.
• Outcome: The court granted the motion to certify and stayed consideration of pending motions.
• Notable Detail: Santander maintains that it received no portion of the processing fee, while the court identified a separate marketing agreement between Santander and the payment processor.

A federal judge in West Virginia has asked the state’s highest court to clarify whether creditors and debt servicers can face liability for fees charged by third-party payment processors, even when the companies collecting the debt do not directly impose or receive those fees.

The question arises from Dye v. Santander Consumer USA Inc., a proposed class action involving a $2.75 debit card processing fee assessed through an outside payment platform. In a Sept. 29, 2026, memorandum opinion and order, Chief U.S. District Judge Thomas S. Kleeh certified a question to the Supreme Court of Appeals of West Virginia concerning the scope of liability under the West Virginia Consumer Credit and Protection Act (WVCCPA).

The eventual interpretation could have implications for auto lenders, loan servicers, debt collectors, and other financial services companies that offer consumers payment options through independent vendors.

Lawsuit Challenges $2.75 Debit Card Processing Fee

The lawsuit was filed by Casey Dye, who entered into an automobile retail installment agreement in July 2022. Santander Consumer USA Inc., doing business as Chrysler Capital, subsequently assumed servicing rights to the contract.

Chrysler Capital offered several payment methods, including the option to make debit card payments through ACI Payments Inc., a third-party processor.

Dye alleged that the $2.75 processing fee associated with that option violated the WVCCPA because it improperly passed debt collection costs to consumers. She also alleged that Chrysler Capital participated in an arrangement under which ACI compensated the company for promoting its payment services.

Santander disputed liability, arguing that ACI operated as a separate business rather than its agent. The company also maintained that it did not receive any portion of the processing fee collected by ACI.

According to the court’s opinion, ACI’s terms and conditions described its payment processing services as being provided to the consumer rather than Chrysler Capital. The agreement also expressly distinguished ACI’s payment processing activities from the collection of the underlying debt.

The court acknowledged that Dye had other payment methods available that did not carry an additional fee. However, Santander did not dispute that it maintained a separate agreement with ACI to promote and market the processor’s services.

Court Seeks Clarification on Indirect Debt Collection Liability

The central dispute concerns the interpretation of the WVCCPA, particularly its prohibition against unfair or unconscionable debt collection practices.

Unlike the federal Fair Debt Collection Practices Act, which generally excludes creditors collecting their own debts from its definition of a debt collector, the West Virginia statute defines debt collectors more broadly to include persons or organizations engaging directly or indirectly in debt collection.

The federal court certified a question asking whether a debt collector can be held liable for unfair or unconscionable collection practices arising from its use of a third-party vendor without establishing an agency relationship or another basis for vicarious liability.

Dye argued that a debt collector’s own actions in designing, promoting or directing consumers toward a third-party payment service could establish independent liability under the statute.

Santander opposed certification, maintaining that the court could resolve the dispute under existing law and that factual questions would remain regardless of the state Supreme Court’s answer. Santander also argued that its renewed motion to compel arbitration should be addressed first.

Judge Kleeh concluded that existing West Virginia appellate decisions had not resolved whether the statute’s reference to indirect collection activity eliminates the need to establish an agency relationship in these circumstances.

The court stayed its consideration of the parties’ summary judgment motions, Dye’s request for class certification and Santander’s renewed arbitration motion pending resolution of the certified question.

Importantly, the certification order does not establish that the processing fee was illegal or determine whether Santander violated the WVCCPA.

Similar Litigation Raises Broader Questions for Financial Services Companies

The federal court also identified related litigation involving Ally Financial Inc. that could inform the broader interpretation of West Virginia consumer protection law.

In Sheridan v. Ally Financial Inc., a separate case involving third-party payment processing arrangements, the U.S. Court of Appeals for the Fourth Circuit heard oral arguments Sept. 16, 2026.

According to Judge Kleeh’s opinion, the Fourth Circuit panel recognized uncertainty regarding whether an agency relationship is necessary to establish liability under the WVCCPA.

The parallel litigation underscores the importance of determining whether creditors and servicers can face direct statutory liability based on their involvement in a third-party payment arrangement, regardless of whether traditional agency principles apply.

What the Case Means for Receivables Management

For receivables management professionals, the dispute raises compliance questions involving payment processing relationships, convenience fees, and the responsibilities of creditors and servicers when outside vendors facilitate consumer payments.

Organizations using third-party payment platforms may want to examine their vendor agreements, fee disclosures, marketing arrangements, and the extent of their involvement in directing consumers toward particular payment options.

The fact that a processor independently assesses a fee or retains the proceeds may not necessarily resolve questions about the creditor’s or servicer’s own conduct under state consumer protection law.

A ruling recognizing independent liability could expand potential exposure for companies that design, promote, or facilitate fee-based payment arrangements. Conversely, a ruling requiring an agency relationship or another established basis for vicarious liability could clarify the circumstances under which creditors and servicers are responsible for third-party practices.

The West Virginia Supreme Court has not yet resolved the certified legal question, and the underlying allegations against Santander remain undecided.