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Capital Management Confusing Letter FDCPA Debt Collection Alabama Class Action

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Ladder Climbing Out of Debt

Plaintiff Rosita McCamey fell on hard times in 2007, according to the complaint for this class action, and was unable to pay the debt she allegedly owed on a Fingerhut credit card account. Now, in 2017, Jefferson Capital Systems (JCS) and Capital Management Services (CMS) tried to collect on that debt, but did not make clear in its letter that the debt was time-barred and that it could not sue her for the debt or report it to collection agencies.

The class for this action is all persons in Alabama from whom JCS and/or CMS tried to collect a delinquent, time-barred consumer debt, allegedly owed for a Fingerhut account, with  the same form collection letters that JCS or CMS sent to McCamey, from August 22, 2016 to the present.

According to the complaint, JCS buys portfolios of bad consumer debts for pennies on the dollar and then attempts to collect them through other collections agencies—in this case, CMS. Among the debts JCS bought and CMS tried to collect was McCamey’s alleged debt on the Fingerhut Direct Marketing credit card account, which she could no longer be sued for, the complaint says, because the statute of limitations had expired.

In such cases, the Fair Debt Collection Practices Act (FDCPA) requires that debt collectors make clear to the consumer that they can no longer sue the consumer for the debt and that even a small payment may revive the company’s rights to sue.

According to the complaint, however, CMS’s letter said, “As a result of the expiration of the statute of limitations with respect to such debt, legal action may not be brought against the consumer to collect such debt. Any payment by the consumer towards the debt may cause the statute of limitations for such debt to reset.” The complaint alleges that this statement does not meet the requirements of the FDCPA for three reasons:

  • It’s written in the third person and McCamey might not have understood that it applied specifically to her.
  • It sounds as if the company has chosen not to sue, rather than that it cannot sue.
  • It does not inform McCamey that the debt can’t be reported to a credit reporting agency.

The complaint claims that these are important facts which McCamey would need to take into consideration in deciding what to do about the debt, and that the letter must be evaluated in terms of how the “least sophisticated consumer” would understand it. The complaint therefore alleges that the letter violates the FDCPA’s prohibition against false, deceptive, or misleading collection actions as well as against unfair or unconscionable collection actions.

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