Time-Barred Debts and FDCPA Violation
January 30, 2012: Under FTC Settlement, Debt Buyer Agrees to pay $2.5 Million for Alleged Consumer Deception
One of the nation’s largest consumer debt buyer, Asset Acceptance, LLC, has agreed to pay a $2.5 million civil penalty to settle Federal Trade Commission charges that it made a range of misrepresentations when trying to collect old debs. In addition, Asset Acceptance has agreed to tell consumers whose debt may be too old to be legally enforceable that it will not sue to collect on that debt.
The proposed settlement order resolving this debt includes the following:
(i) Requires that when consumers dispute the accuracy of a debt, Asset Acceptance must investigate the dispute, ensuring that it has a reasonable basis for its claims the consumer owes the debt, before continuing its collection efforts;
(ii) When Asset Acceptance knows or should know debt may not be legally enforceable under state law, referred to as “time-barred” debt, it must disclose to the consumer that it will not sue on the debt and, if true, that it may report nonpayment to the credit reporting agencies;
(iii) Once it has made that disclosure, it may not sue the consumer, even if the consumer makes a partial payment that otherwise would make the debt no longer time-barred;
(iv) Prohibits the company from “parking” or placing debt on a consumer’s credit report when it has failed to notify the consumer in writing about the negative report; AND
(v) Prohibits the company from violating the Fair Credit Reporting Act and the Fair Debt Collections Practices Act, in the ways alleged in the complaint.
The FTC’s action, alleging that Asset Acceptance violated the Fair Debt Collection Practices Act and Fair Credit Reporting Act, is part of the FTC’s continuing efforts to protect consumers adversely affected by the struggling economy.
Asset Acceptance, LLC, is in the business of buying unpaid debts from credit originators (credit card companies, health clubs, telecommunications and utilities providers, etc.), as well as other debt buyers, and attempts to collect them. Asset Acceptance targets accounts that other collectors have pursued and are more than a year past due, and in some cases attempts to collect debt that is more than 10 years old—some too old to be legally enforceable. State statutes of limitations cut off the right to sue to collect the debt after some period of time has passed, depending on the state and type of debt. Many consumers do not know that making a partial payment of a debt may reset the state law’s clock on the collector’s ability to take legal action.
The FTC’s 9-count complaint charged Asset Acceptance with:
(i) misrepresenting that consumers owed a debt when it could not substantiate its representations;
(ii) failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
(iii) providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
(iv) failing to notify consumers in writing that it provided negative information to a credit reporting agency;
(v) failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
(vi) repeatedly calling third parties who do not owe a debt;
(vii) informing third parties about a debt;
(viii) using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
(ix) failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.
The FTC has issued a new publication to help you, the consumers, understand how debt collectors attempt to collect old debts, along with your rights in these cases. “Time-Barred Debts: Understanding Your Rights When it Comes to Old Debts” provides information on when a debt is too old for a collector to sue, what you should do if a debt collector calls about a time-barred debt, and whether you should pay a debt that’s considered time-barred.
If you have been sued for a time-barred debt, the experienced attorneys at The Manning Law Office will defend you against these illegal debt collector behaviors under the FDCPA and the Rosenthal Act. The collections abuse victim in these FDCPA violation cases should receive monetary damages and payment of attorneys’ fees and costs, once the evidence is marshaled. Sue the collector that is harassing you! You must act now because the statute of limitations on this type of case is just ONE year. Call our office at (949) 200-8755 today to get started.
