General Revenue Corporation Sent ‘False and Deceptive’ Student Loan Debt Collection Letter, Class Action Says

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A proposed class action claims General Revenue Corporation’s attempts to collect student loan debts have overstepped the Fair Debt Collection Practices Act (FDCPA).

According to the lawsuit, the defendant has sent debt collection letters in which it improperly informed students that varying late and other charges may be added to their debts. The suit additionally claims General Revenue Corporation has failed to disclose that the demanded amount of collection fees was only an estimate.

The plaintiff, a Huntsville, Alabama resident, says she received in September 2020 a collection letter from General Revenue Corporation pertaining to a student loan obligation for Mount Mercy University. Per the case, the letter sought a total of $3,062.50, which included $2,450.00 in principal and $612.50 in collection fees. The letter also included the following language, according to the suit:

The lawsuit argues that General Revenue Corporation’s statement that late fees and other charges may accrue is “false and deceptive” in that the plaintiff’s contract with Mount Mercy does not allow for the collection of such fees. This language is material, the suit says, because the risk that a debt will increase in the event of nonpayment will directly influence a consumer’s decision to make a payment.

The suit goes on to allege that the defendant has misled students with respect to collection fees. According to the lawsuit, General Revenue Corporation calculates these fees by multiplying a portion of the balance by 25 percent. The resulting amount, however, is not the actual cost of collection but rather an estimate as to what the defendant is entitled to collect if the consumer pays the entire debt, the case says.

“In other words, Defendant provides estimates to the consumer of what it could bill the college in the event it collected the full amount,” the complaint reads.

If General Revenue Corporation collects less than the full amount, the collection fee would be less, the case relays. The lawsuit says the defendant has failed to inform consumers of the fact that the stated collection fee amount is only an estimate, resulting in an interpretation that was “false, deceptive, and misleading.”

The lawsuit was removed from Madison County, Alabama Circuit Court to the state’s Northern District Court on March 16, 2021.

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