A recently passed bill by the West Virginia Legislature requires debt collectors to make new disclosures in initial letters to consumers. Effective June 6, 2014, section 46A-2-128(f) of the West Virginia Consumer Credit Protection Act (WVCCPA) is amended to require the initial written communication with a consumer to disclose the subject debt is beyond the applicable statute of limitations and whether it can be reported to the credit reporting agencies.
For all debt collectors that seek to collect out of statute debt in West Virginia, care should be taken to update all initial letters being sent to consumers in West Virginia when pursuing debts that are beyond the statute of limitations. To avoid a violation for a letter sent before June 6 but that that may be received on or after that date, debt collectors should modify their collection letters to accommodate recent changes to the law in West Virginia.
The statutory penalty for each violation of the WVCCPA can be nearly $5,000, plus attorney fees and costs. We expect the consumer bar in West Virginia will be actively monitoring whether initial letters are in compliance as of June 6, 2014.
This bill, introduced January 28, 2014, amends subparagraph (f) of section 46A-2-128 of the WVCCPA, which prohibits the use of unfair or unconscionable means to collect or attempt to collect a debt, to read:
(f) When the debt is beyond the statute of limitations for filing a legal action for collection, failing to provide the following disclosure informing the consumer in its initial written communication with such consumer that:
- When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and
- When collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies.
This amendment to the WVCCPA reflects a broader trend to restrict collection of old debts. In January 2012, the FTC settled a time-barred debt enforcement action against a debt buyer, requiring the company to disclose affirmatively when it is attempting to collect on a time-barred debt and also prohibiting the company from suing when a partial payment revives a time-barred claim. The FTC also issued a publication on time barred debts to educate consumers. In October 2012, the CFPB published its “Examination Procedures for Debt Collection,” and included a section calling for review of representations made by the company when collecting time-barred debt. On July 10, 2013, the CFPB issued a bulletin listing deception concerning the “legal status of a debt” as a practice it would “watch closely.”
Just last month, the Seventh Circuit recently ruled that while it is not “automatically improper … to seek repayment of time-barred debts,” offers to “settle” a debt may falsely suggest that the debt is legally enforceable and thereby support claims under the FDCPA. In that case, and a similar case still pending before the Sixth Circuit, the FTC and CFPB jointly filed an amicus brief arguing that an unsophisticated consumer could be misled or deceived by a debt collector’s offer to settle a time-barred debt. The regulators take the position that merely “taking action” on time-barred debt may be considered deceptive and that debt collectors should be required to disclose the age of debts and the consequences of making payments on them.