Three Debt Collectors Sued Over Allegedly Misleading Representations

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A proposed class action out of Illinois federal court claims Midland Credit Management, Inc.; Midland Funding, LLC; and Encore Capital Group, Inc. made false and misleading representations in a collection letter sent to a consumer.

The lawsuit focuses on an October 2018 letter sent to the plaintiff by Midland Credit Management on behalf of Midland Funding. According to the suit, the letter referenced an outstanding balance on a cell phone account and two credit card debts. The case claims the notice failed to accurately convey the legal status of the obligations when it stated:

“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.”

This statement implied the defendants have chosen not to take action against the plaintiff rather than properly representing that the woman could not legally be sued over the time-barred debts, the complaint argues. The letter, according to the complaint, also failed to disclose that reporting any information to a credit bureau on a time-barred debt was prohibited, not just its payment or non-payment. 

The case takes further issue with the letter’s alleged failure to inform the plaintiff that any payment made on the debts would restart their statutes of limitations and again subject the woman to the risk of litigation.

The collection notice went on to list discounted payment options for “all accounts” owned by Midland, implying that if the plaintiff accepted a settlement offer, all of her accounts would be “in good status” with the company. This “global offer of settlement,” however, did not include two other debts purportedly owned by Midland, the suit says. From the complaint:

“MCM made a false representation of a global settlement to lure Plaintiff into making payments on some of the accounts in hopes of avoiding a lawsuit or further collection activity on all of the accounts.”