When Dylan Mutty received a debt collection letter, on or about March 15, 2017, he might have thought it contained a valuable offer. According to the complaint, the letter, from Midland Credit Management, Inc. (MCM), offered him 40% off the amount owed if he paid by a certain date, and 20% off if he initiated a series of installment payments. Unfortunately, the complaint alleges that the letter was deliberately misleading about both the debt and the effect of even a single payment on the debt’s status, in violation of the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA).
The complaint proposes two classes for this action.
After a certain period of time, debts become time-barred or “stale” in that lenders can no longer sue the debtors to try to recover the money. The particular length of time that must pass before the debt becomes time-barred varies from state to state. However, the catch is that even a small payment on the debt can revive creditors’ rights to sue. The Federal Trade Commission (FTC) says that persons collecting on time-barred debt must avoid creating a misleading impression by informing the consumer that (a) the collector cannot sue to collect the debt, and (b) that providing a partial payment would revive that ability to sue.
MCM was not the original lender for Mutty’s debt; the complaint claims MCM is a third-party collector who buys debts from lenders, possibly at very low rates when the debts are stale, and then attempts to collect them. The letter to Mutty, the complaint says, contained the following sentences: “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.” The letter was thus attempting to collect a stale debt but did not inform Mutty that even a small payment might revive MCM’s right to sue.
The complaint alleges that a similar letter, with similar flaws, was sent to a second plaintiff, Robert Gullo. Both letters, the complaint alleges, violate both the FDCPA and the FCCPA.