Neb. Collection Agency To Pay $500k As Part of FDCPA Settlement

Credit Management Services, a Nebraska collection agency, will pay $198,000 to 11,552 members of a class-action lawsuit as well as pay $315,000 in attorneys fees after the terms of a settlement were finalized this week.

The collection agency was accused of trying to collect pre-judgment interest and attorney’s fees prior to the conclusion of the 90-day window mandated by the Fair Debt Collection Practices Act. The collection agency said in its complaint that at least 90 days had elapsed from the time that notice of the claim was sent to the individual, but the plaintiffs contested that no such notice was ever provided.

Credit Management Services does not have to admit any wrongdoing as part of the settlement, but agreed to stop using the complaint form it had been led to the lawsuit.

A federal judge said the language used by the collection agency violated the “least sophisticated consumer” exception of the FDCPA, which is an attempt to protect those who might be easily confused by legalese that is too confusing or too technical.

The case, Powers v.¬†Credit Management Services, was originally filed back in 2011. A judge ruled in February that the complaint form violated the “least sophisticated consumer” exception and the parties began settlement discussions, which led to an agreement that was reached last month and finalized this week.

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