On March 31, the U.S. District Court for the Southern District of Indiana denied a motion to dismiss where a collection letter sent to the plaintiff stated, “[b]ecause of the age of your debt, our client will not sue you for it,” when in fact there was no possibility of suing on the debt because it was time-barred. The court found the disclaimer in the letter was ineffective because it failed to convey that the debt buyer could not legally sue on the debt or report it on the plaintiff’s credit, instead implying the debt buyer simply had chosen not to do so.
First National Collection Bureau (“FNCB”) was collecting on the debt on behalf of the owner, Jefferson Capital Systems (“Jefferson”). In June 2016, FNCB sent a collection letter to Jodie Pittman, the named plaintiff in the action. The letter contained a disclosure that FNCB’s client would not sue on the debt due to its age. At the time the letter was sent, the statute of limitations on the debt had run and the owner of the debt could no longer sue to collect as a result. Moreover, the debt could not be included on Pittman’s credit report.
Courts have held that attempts by debt collectors to collect time-barred debts violate Section 1692e of the Fair Debt Collection Practices Act. Debt collectors are also prohibited from threatening to take any action that the collector cannot legally take under Section 1692e(5). Pittman sued under the FDCPA, claiming that FNCB and Jefferson used false and/or deceptive or misleading representations in connection with collecting a debt, which is prohibited under Section 1692e(2)(A). Pittman’s claims rest primarily on two points: that the letter falsely implies that paying the debt would somehow improve her financial situation, and that the defendants’ decision not to sue for the time-barred debt is a matter of choice.
The letter did not state that Jefferson could not sue on the debt, and the court found that Jefferson, by choosing to say it will not sue on the debt, implied that it still had that option. The letter also did not state that FNCB could not sue on the debt. The court further pointed out that the letter failed to say that FNCB and Jefferson could not report the debt on Pittman’s credit report due to the debt’s age.