Don Maurice of Maurice Wutscher has written about a case where a collection agency was faulted for relying on a “widely used disclosure” in a collection letter when attempting to collect on a time-barred debt.
The case, Richardson v. LVNV Funding and First National Collection Bureau, is being tried in U.S. District Court for the Northern District of Illinois, Eastern Division. A copy of the ruling can be accessed here.
The plaintiffs allege that the defendants violated the Fair Debt Collection Practices Act by “sending him a dunning letter that was designed to deceive him into paying off part of a debt, even though he was no longer legally required to pay any of it.”
The defendants filed a motion to dismiss, which was denied by Judge John J. Tharp.
The language in question that caused the suit to be filed was this:
The law limits how long you can be sued on a debt. Because of the age of your debt, LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency.
That language, Maurice points out, stems from a 2012 consent decree between the Federal Trade Commission and Asset Acceptance over claims that the company violated the FDCPA. The decree included a provision that Asset Acceptance would provide that exact disclosure when attempting to collect on time-barred debts.
In this case, the plaintiffs allege that the language is misleading, because it “gives the false impression that LVNV has chosen not to sue him, instead of stating that LVNV cannot sue him because of the age of his debt.”
The judge’s issue with the language is the sentence: The law limits how long you can be sued on a debt. He writes:
Although the preceding sentence indicates to the reader that there is a statute of limitations defense, an unsophisticated consumer may still be confused about whether the defense actually barred the defendants from suing on the debt.
The defendant’s attempt to use the consent decree as justification for the language was not sufficient.
… agency approval serves only as evidence that the fact finder may consider—at a later time—to determine whether the defendants’ letter is misleading to the unsophisticated consumer.
Maurice notes that because the case is ongoing, “it remains to be seen whether the use of the disclosure is ultimately decided to be an FDCPA violation.”