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Transworld Systems Deceptive Debt Collection Letter FDCPA Class Action

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Plaintiff David Dees allegedly owes a debt for an electric bill, and, according to the complaint for this class action, Transworld Systems, Inc. attempted to collect it using a misleading and deceptive letter, in violation of the Fair Debt Collection Practices Act (FDCPA).

The class for this action is

  • All persons with an Arizona address
  • To whom Transworld mailed a debt collection communication,
  • Between November 6, 2016 and November 6, 2017,
  • Which included the following language: “Your Account May Be Credit Reported,” and/or “if you fail to resolve this collection account, the account may be reported to all national credit bureaus following the expiration of the validation period described below,”
  • But whose account had already been reported by Transworld to at least one national credit bureau on or before the date of the letter.

The letter from Transworld, a third-party debt collector, dated April 11, 2017, opened with the heading “Your Account May Be Credit Reported” and went on to say, “It is our intention to work with you to resolve this collection account. However, if you fail to resolve this collection account, the account may be reported to all national credit bureaus following the expiration of the validation period described below.”

According to the complaint, the letter was deceptive and misleading in two ways. First, the complaint alleges that the heading could have two different meanings—that the account may already be credit reported or that it may be reported in the future. The Ninth Circuit has ruled that a “debt collection letter is deceptive where it can be reasonably read to have two or more meanings, one of which is inaccurate.” The complaint claims that the fact that the debt had already been reported makes that the only accurate reading.

Second, the threat to report the debt to credit agencies after the validation period is deceptive, the complaint claims, because Transworld had in fact already reported the debt to credit agencies. Transworld, the complaint alleges, was attempting to use the threat as leverage to collect the debt, but since no behavior on the part of the recipient could have prevented the action, the statement is deceptive.

The complaint alleges that both of these statements violate the FDCPA, and that the threat to report the debt is also forbidden as an “unfair and unconscionable means” to collect a debt, another thing prohibited by the Act.

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