15 U.S.C. Section 1692e of 15 U.S.C. makes “false or misleading representations” by a debt collector illegal. This section covers 16 specific practices, including:
Section 1692e(5): “The threat to take any action that cannot legally be taken or that is not intended to be taken.”
Section 1692e(6): “The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to lose any claim or defense to payment of the debt; or become subject to any practice prohibited by this subchapter.”
Can a Debt Collector Threaten to Sue Me?
Under the Fair Debt Collection Practices Act (FDCPA), a debt collector can’t frighten consumers in an attempt to get them to pay. This part of the law (15 U.S.C. Section 1692e(5)) is intended to protect consumers from false threats made by debt collectors. Essentially, it says that, if a debt collector doesn’t actually intend to take a specific action – or if it isn’t allowed to do so under the law – then the debt collector can’t threaten to do it.
The tactic that debt collectors use most often in violating this section of the law is to threaten to file a lawsuit against a consumer without having intent or the legal authority to do so. For example, if your debt is past the statute of limitations and is legally unenforceable, then threatening to sue you violates the FDCPA. If a debt collector threatens to sue you but doesn’t typically use the services of an attorney, then that can constitute a false threat.
If a debt collector has threatened you with a lawsuit, these are among the indicators that it could be an empty threat:
- Your debt is relatively small
- You’ve disputed the debt
- The creditor doesn’t have a track record of suing
- The court that has jurisdiction is located far away from the creditor or collector
- The collector doesn’t have authority to file a lawsuit under state law or under its contract with the creditor
Can a Debt Collector Threaten to Report Me to a Credit Bureau?
If a debt collection agency isn’t legally allowed to report your debt to a credit bureau or doesn’t intend to do so, then it’s illegal under Section 1692e(5).
In Gonzales v. Arrow Financial Services (660 F.3d 1055, 1064 (7th Cir. 2011)), the debt collection agency sent a collection letter that referenced reporting information to a credit bureau. It included this language:
“Upon receipt of the settlement amount and clearance of funds, and if we are reporting the account, the appropriate credit bureaus will be notified that this account has been settled.”
It also had a checkbox that said:
“When my funds clear, and if you are reporting the account, you will notify the appropriate credit bureaus of this settlement.”
In addition, it said:
“As required by law, you are hereby notified that a negative credit report reflecting on your credit record may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligations.”
In reality, the debt collection agency could not legally report the debt to any credit bureau. The debt collection agency argued that, because it used the word “if,” the agency didn’t violate the law. The court disagreed, writing, “a literally true statement can still be misleading.” It went on to rule, “The letters are not overtly threatening. Nevertheless, a threat need not be express; it can be implied.”
In Ruth v. Triumph Partnerships (577 F.3d 790, 799-802 (7th Cir. 2009)), the debt buyer included a notice with a collection letter. The notice said that, unless the consumer opted out, “[W]e may collect and/or share all the information we obtain in servicing your account” with a number of third parties, including direct marketers, retailers, and financial service companies. The court ruled that the notice was a threat to take illegal action.
What Other Kinds of Debt Collector Threats are Illegal?
There are a variety of other threats that are illegal under this section of the FDCPA, including:
- Threatening to criminally prosecute you
- Threatening to report the write-off of your debt to the Internal Revenue Service as income that’s taxable to you
- Falsely stating that a debt collector will investigate all of your assets and implying that they’ll take them if your debt is not paid
- Any threat that violates provisions of other federal laws, such as the Servicemembers Civil Relief Act, the Bankruptcy Code, the Fair Credit Reporting Act, and those governing things like student loans and wage garnishment
- Threats that violate other provisions of the FDCPA, such as threatening to contact your employer
Can Debt Collectors Try to Scare Me by Threatening Harsher Treatment?
Section 1692e(6) of the FDCPA anticipated another shady debt collection tactic, best described as, “You think I’m bad? Wait until I turn you over to the next guy.” In other words, a debt collector can’t make false threats to transfer your account to someone else who will treat you more harshly. It also makes it illegal for a collection agency to threaten to turn your file over to any attorney or repossession agency.
Turn the Tables and Recover Money for Debt Collector Threats
If a debt collector has threatened you with a lawsuit or reporting you to a credit bureau, they may be violating the FDCPA. If so, you can turn the tables and sue them for unfair debt collection practices. You can recover up to $1,000, plus court costs and attorney fees. Get the justice you deserve without paying a dime. Lemberg Law can help.
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.
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