The Fair Debt Collection Practices Act (FDCPA) forbids third-party debt collectors from making false representations to consumer debtors. But the complaint for this class action claims that Systematic National Collections, Inc. made a number of false statements in trying to collect a “stale” debt from the plaintiff in this case.
The class for this action is all persons in California who received collection letters from Systematic National Collections, between November 20, 2017 and November 20, 2018, that contains language identical or substantially similar to the letters in this case, for a debt on which the statute of limitations had expired.
The story began when Alphonso Gregory allegedly incurred a debt to San Luis Rey Towing for personal purposes. Later, the debt was placed Systematic for collection.
Systematic apparently did not try to collect the debt until September 20, 2017—twelve years after the debt was incurred and well beyond the four-year statute of limitations. This means that the debt was “stale” or time-barred—that is, no party could legally sue Gregory for the debt. Over the next ten months, the company sent Gregory fourteen letters trying to collect the debt.
The first letters suggested that the company might already have reported the debt to consumer reporting agencies. Then, the complaint quotes the company as saying, in a letter dated November 22, 2017, that it had “chosen to exercise [its] right to report this account to the three major nationwide credit bureaus, TransUnion, Equifax, and Experian…”
In four other letters, the complaint says, the company continued its threats to report the debt. But in two additional letters, the company again claimed that it had already reported the debt. In February 2018, three months after the company first claimed to have reported the debt, Gregory ran his credit report and found that the company had not in fact reported the debt.
In addition to these statements, in a December 6, 2017 letter, the complaint claims the company threatened to take legal action to get Gregory to pay the debt. The company sent two letters in January 2018 again threatening legal action. In fact, according to the complaint, the company “went so far as to threaten Plaintiff with wage garnishment…”
As if those false statements were not enough, the company then imposed what the complaint calls “an inexplicable interest rate” on the debt. The complaint says it began charging interest on the debt and demanding that Gregory pay it.
The FDCPA forbids debt collectors from making false statements, including “[t]he threat to take any action that cannot legally be taken or that is not intended to be taken…” The complaint notes that “[a] collection agency may not report a debt to a credit reporting bureau if the debt is more than seven years old.” Nor can it take legal action on time-barred debts.