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Author: Contributor: Sergei Lemberg
Can a Debt Collector Lie About My Debts?
No. Under the FDCPA, a debt collector may not lie about your debts. But sometimes the lying is more a “misrepresentation.” An entire section of the FDCPA is devoted to protecting consumers from misrepresentation, which can range to implying you can be sued for an ancient, time-barred debt to a collection agency sending you letters that appear to come from a lawyer.
Picture this. You’re sitting at the kitchen table opening the mail after a long, stressful day at your new job. Finally, you can get some of these bills paid after a long period of unemployment! You’re feeling pretty good until you open a bill you’ve been putting off paying and your jaw drops. You owe way more than you thought. Your balance has ballooned to three times the amount you believed you owed. Attorney fees, bounced check fees, late fees…it has really added up to a lot, and you’re certain you made more payments than is listed. It makes you feel hopeless, like you’ll never get caught up. You wonder…is this legal?
Maybe not. 15 U.S.C. § 1692 (e)(2)A prohibits “the false representation of the character, amount, or legal status of any debt.” This includes not giving credit for payments and piling on hidden fees such as attorney fees, late fees, bounced check fees, and not disclosing new charges added to the balance of the debt. If you feel the amount you owe has been vastly inflated, it is worth investigating to see if those add-on charges are lawful.
Or consider another common scenario. Magazines that you never ordered on topics you find of little interest like fly fishing and underwater basket weaving have been appearing in your mailbox. You pitch them into the trash along with the rest of the junk. But now a collection agency is sending letters and calling, demanding that you pay for those magazine subscriptions. Must you pay them? Maybe not. Trying to collect for merchandise mailed to you but never ordered is considered “false representation of a debt,” under the FDCPA.
Another common way collection agencies misrepresent a debt is by calling close relatives, like parents, and informing them they are responsible for their family member’s debt even if they were not a co-signer on the loan or credit card. Parents and grandparents often feel responsible for their children well into adulthood, and collection agencies try to cash in by taking advantage of their emotions. Remember, emotions are not facts, and even if you feel responsible for someone else’s debt, you are not legally obligated to pay it, and if a collection agency says otherwise, they are probably violating the FDCPA.
One of the most complicated and confusing aspects of debt collection concerns debts that are past the statute of limitations. These debts can be particularly troubling, as often they happened so long ago the consumer cannot remember them, let alone recall if they had been paid. Old debts can be sold to collection agencies for pennies on the dollar, and they may view collecting old debts as an exciting challenge.
If you have encountered a collection agency attempting to collect on an old debt, it is important that you ask them to send a letter verifying the source of the original debt. Never admit to a collection agency that an old debt belongs to you. In some states, such an admission is enough to start the clock ticking on the statute of limitations and make it collectible.
However, a collection agency may not threaten to file a lawsuit to collect on a debt that is past the statute of limitations. The FDCPA prohibits collection agencies from threatening to sue unless they fully intend to carry out the threat, and debt collectors cannot sue on a time barred debt. Some states have carried this prohibition even further, forbidding collection agencies from offering to settle a time barred debt. In Daugherty v. Convergent Outsourcing, the Fifth Circuit Court of Appeals held that the defendant’s offer to “settle” a debt was deceptive, since it implied that the collection agency could sue the consumer. Therefore, the defendant was found to have violated the FDCPA.
Ways A Debt Collector Can Misrepresent A Debt:
- Trying to collect for merchandise mailed to you but never ordered
- Threatening to sue for time barred debts
- Claiming you are responsible for paying a relative’s debt even though you were not a cosigner
- Continuing to try to collect a disputed debt
Ways Debt Collectors May Misrepresent Money Owed:
- Not giving credit for payments
- Adding unauthorized or mistaken fees such as attorney fees, late fees, bounced check fees, etc.
- Failing to disclose new charges added to the balance of the debt
- Demanding payment for a nonexistent debt
Debt collectors who misrepresent the legal status of a debt also run afoul of the FDCPA. This includes the following:
- Trying to collect on a judgment that doesn’t exist
- Threatening to garnish your wages
- Sending you letters falsely implying a lawsuit has been filed against you.
In Irvin v. Mascott, the court held a collection agency violated the FDCPA and CA state law for multiple reasons, mainly seeking charges against consumers for bad checks in excess of the amount allowed by CA state statute, threatening consumers with being charged with shoplifting for bouncing checks, falsely representing letters from the debt collector as communications from attorneys, falsely threatening penalties for lawsuits they never intended to file, and failing to disclose they were a debt collector. See Irvin. V. Mascott, 112 F. Supp.2d 937 (N.D.C.A. 2000).
Dealing with an aggressive collection agency can be a confusing, stressful experience. Help is available.
About the author:
Contributor: Sergei Lemberg
Sergei Lemberg is a consumer rights attorney, practicing since 2006, whose practice focuses on consumer law, class actions and personal injury litigation. He is known for a United States Supreme Court case (Facebook v. Duguid) defending consumers from autodialers under the Telephone Consumer Protection Act of 1991 to send unsolicited text messages. He is also the author of Defanging Debt Collectors, a book that teaches consumers how to battle debt collectors and win.
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