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DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
A collection operation is facing a Fair Debt Collection Practices Act debt because it offered a “settlement” to a plaintiff during a collection call that would have the plaintiff make a one-time payment for less than the full balance owed to pay off the debt. But the word “settlement” made the plaintiff believe he was either being sued to collect on the unpaid debt or about to be sued. So rather than clarify that on the phone, he opted to sue instead.
The Background: The plaintiff became aware of a debt that was in collection. In October, he called the current creditor, which referred him to the defendant because the account had been placed there for collection. The plaintiff called the defendant, who verified the plaintiff’s identity and then confirmed it had an account for collection and advised the plaintiff about the amount — $935 — and the date of service on the account.
- The plaintiff then asked if the account was being reported to his credit. The defendant responded that the account was not being reported but that it was eligible to be reported and could be at any time. The defendant then informed the plaintiff that if the account was paid off, it would “go away” and not be reported.
- The plaintiff said he didn’t have the money to pay the balance in full, so the defendant offered to settle the account with a one-time payment equal to about 65% of what the plaintiff owed.
- When the plaintiff said even that was unaffordable, the defendant offered to put the plaintiff on a $40 per month payment plan for six months, after which the situation would be reevaluated.
The Claims: The statute of limitations on the debt had expired, the plaintiff claimed in his lawsuit, so the defendant could not file a lawsuit. Therefore, offering to “settle” his account made it appear that a lawsuit either had been filed or was imminent and was a false or misleading representation.
- The plaintiff also claimed that when he checked his credit report, the account in question had been reported as delinquent in July and that the defendant lied when it said it wasn’t being reported.