Under the Fair Debt Collection Practices Act (“FDCPA”), a collection agency is prohibited from misrepresenting itself to a debtor when collecting a debt. Specifically, a collector is forbidden from misrepresenting itself as a member of law enforcement, a government official or a lawyer. While the law seems fairly straight forward, a recent case against Corrective Solutions filed in the United States District Court of California, raises the question of what exactly qualifies as a misrepresentation under the FDCPA.
In this lawsuit, when attempting to collect debts, Corrective Solutions used letterhead from several prosecutors’ offices when sending initial dunning letters. The plaintiff in this lawsuit alleged that sending letters to debtors on government letterhead can be misconstrued as the collection agency representing itself as government or law enforcement officials and threatening legal action if payment was not received.
While violations of this section of the FDCPA may seem fairly straightforward, this issue involving Corrective Solutions has a bit of a grey area. Corrective Solutions is in the business of collecting debts for several district attorneys behalf of the government. Corrective Solutions was engaged by California’s District Attorney (“DA”) to collect on bounced checks through California’s Bad Check Restitution Program. This program was set up by the government to allow debtors who bounced checks to pay off their debts without court involvement. In this program the DA was allowed to contract with private collection agencies, such as Corrective Solutions, to collect on these unpaid checks, but only after proving the debtor intentionally violated the law. Furthermore, the original creditor was required to prove that it contacted the debtor on at least three separate occasions to collect on the bad check before engaging the DA and subsequently a collection agency.
The plaintiff/debtor claims that the DA and Corrective Solutions did not follow the letter of the law by requiring the original creditors to reach out to the debtors for payment and drafted collection letters to debtors using government letterhead. Use of the DA’s letterhead by Corrective Solutions gave the appearance of legal action and was misleading and deceptive to the debtors.
If you believe you have been a victim of a violation of the FDCPA, contact SmithMarco P.C. for a completely free case review.