Can a Debt Collector Lie to Me?

15 U.S.C. Section 1692e(10) prohibits “false or misleading representations” in debt collection, namely:

The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

Is It Illegal For A Debt Debt Collector To Lie To Me?

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector can’t lie to a consumer – either on the phone or in written communication. This part of the law (15 U.S.C. Section 1692e(10)) broadly prohibits debt collectors from using deception to collect a debt – regardless of whether they successfully collect – or to obtain information about a consumer.

In Raimondi v. McAllister & Associates (50 F. Supp. 2d 825, N.D. Ill. 1999), the debt collection agency sent the plaintiff a letter that said, in part, “This is to put you on notice that a professional collector will investigate your financial situations through credit reporting agencies, employers, banks and other lending institutions.” Because a different section of the FDCPA (1692c(b)) prohibits a debt collection agency from contacting a consumer’s employer, the court ruled that threatening to do so was a violation of section 1692e(10).

In United States v. National Financial Services (820 F. Supp. 228 D. Md. 1993), the court ruled that the debt collection agency lied to consumers when it included language in debt collection letters that stated, “Your account will be transferred to an attorney if it is unpaid after the deadline date.” Because the debt collection agency didn’t actually plan to sue the consumers, it was a false threat to recommend legal action. The court noted, “’Your attorney will want to be paid’ dupes the consumer into believing an attorney will be needed to defend an action for nonpayment when, in fact, no such action will be taken.” Other elements of defendant’s debt collection letters also violated Section 1692e(10) of the FDCPA, including the statements, “I am the collection attorney who represents American Family Publishers” and “I have the authority to see that suit is filed against you in this matter.”

What Other Kinds of Lies are Prohibited by the FDCPA?

In addition to a debt collector falsely threatening to sue a consumer, a variety of court rulings illustrate that other kinds of lies are “false or misleading representations” under this section of the FDCPA. These include:

• Using a fictitious or misleading name, such as use of a collection agency name by a creditor or use of an attorney’s letterhead by a collector
• Misrepresenting the imminence of a lawsuit or other collection activities
• Falsely threatening to report the consumer’s debt to third parties, such as the consumer’s employer or a consumer reporting agency
• Stating that, until a debt is paid, it may appear on a consumer’s credit report and adversely impact their credit
• Stating that payment must be made by wire transfer or express mail service, when any method of payment is accepted
• Misrepresenting that the debt collector only has authority to accept the total amount due, rather than partial payment
• Telling a consumer that they must sign a wage assignment to avoid a lawsuit
• Falsely implying that the collector is providing legal advice to the creditor
• Creating the false impression that the IRS required the collector to send a notice
• Failing to reveal the collector’s close association to the creditor
• Deterring the consumer from seeking to stop the collection efforts
• Sending the consumer notice of their debt verification rights in an envelope that appears to be junk mail or a credit card solicitation, thus dissuading the consumer from reading the contents of the letter

What’s the “Least Sophisticated Consumer” Standard?

Sometimes debt collectors use legalese or vague language that’s easily misunderstood to try and scare a consumer into paying. The courts have ruled that a regular person with no relevant knowledge – the “least sophisticated consumer” – must be able to understand the language contained in debt collection communication.

For example, Brown v. Card Service Center revolved around a debt collector that sent a letter to a consumer. The letter said that, unless the consumer made arrangements to pay off their debt within five days, their case “could” be referred to an attorney and a lawsuit “could” be filed. The court found that this was a deceptive debt collection tactic because, in reality, the debt collection agency rarely makes referrals to an attorney and rarely files lawsuits against consumers. The court ruled that the least sophisticated consumer might get the impression that a lawsuit or legal referral would be triggered if they didn’t respond within five days. The bottom line? A debt collection letter is considered to be deceptive when the language “can be reasonably read to have two or more different meanings, one of which is accurate.”

What are Other Examples of False or Misleading Representations?

The courts have ruled on a number of other situations that violate the “false and misleading representations” section of the FDCPA, but that aren’t actually enumerated in the statute. In Tatis v. Allied Interstate, the issue in question was whether or not an offer of settlement for a time-barred debt was false and misleading. A time-barred debt is one that is past the statute of limitations, and is therefore not legally enforceable. The court ruled that settlement offers for stale debts aren’t necessarily deceptive, and that the word “settlement” doesn’t violate the FDCPA. The court did say, however, that “…such letters, when read in their entirety, must not deceive or mislead the least sophisticated debtor into believing that she has a legal obligation to pay the time-barred debt.”

Balon v. Enhanced Recovery Company revolved around a notice that informed the consumer that a discharged debt totaling $600 or more as part of a settlement may be reported as income to the Internal Revenue Service. The court ruled that the letter could have misled or deceived the least sophisticated consumer since discharging the debt might not have been reportable to the IRS and the consumer might believe they would run afoul of the IRS if they didn’t pay the debt or because they accepted debt forgiveness of $600 or more.

Another case had a similar issue with language about the Internal Revenue Service, but was also problematic in another regard. The settlement letter that the consumer received said, “When your final payment is received, we will advise our client so that it may notify any credit reporting agencies to which it reports of the updated status of the account.” The court ruled that this statement could mislead the consumer into believing that credit report updates would only occur after the final payment was made, when in fact that wasn’t the case.

When isn’t a Statement False or Misleading?

Under the FDCPA and relevant caselaw, a statement isn’t false or misleading when it is true and can be readily understood by the least sophisticated consumer. But even a false statement isn’t necessarily against the law. In Jensen v. Pressler & Pressler, the court ruled that a false statement only violates the FDCPA when it has the potential to affect the decision-making process of the least sophisticated consumer. In that case, an information subpoena included the incorrect name of the Clerk of the Superior Court of New Jersey. The court ruled that, while the information was false, it didn’t harm the consumer because it didn’t impact their decision-making process.

Hold Debt Collectors Accountable for Lying

If you’ve been lied to by a debt collector, you have every right to hold them accountable. Under the FDCPA, you can sue a debt collector and receive up to $1,000, plus court costs and attorney fees. This fee-shifting provision of consumer law encourages attorneys to take on small-dollar cases on behalf of consumers with few resources. In other words, taking a debt collector to court doesn’t cost you anything out-of-pocket, because your attorney gets paid by the debt collector once it is found to have violated the law.

Lemberg Law attorneys protect consumers from abusive debt collection agencies. If you are receiving unwanted collection calls at work, then you could have a case against the collection agency. Contact Lemberg Law at 844-685-9200 ☎ or complete our online form for a no-cost, no-obligation consultation.