WASHINGTON – Collection agencies can invite people to pay off an old debt without running afoul of federal law, even if the debtors no longer have a legal obligation to pay it off, a federal judge has ruled.
Denita J. Wallace of Baltimore claimed the notice she received from Capital One Bank last April tried to get her to pay off an old $1,681.27 debt, without pointing out that she was not legally obligated to pay anymore, according to her attorney.
Wallace said that was a violation of the Federal Debt Collection Practices Act, which says a “debt collector may not use a false, deceptive, or misleading representation or meanings in connection with the collection of a debt.”
But U.S. District Judge J. Frederick Motz rejected that argument. He ruled Friday that while Capital One Bank did not disclose the fact that the debt’s statute of limitations had run out, it did not violate the collections practices act.
“No violation of the FDCPA occurs solely because a debt validation notice silent on the time-bar issue is sent to the debtor,” Motz wrote in his ruling. He said it would also have to be shown that “a debt collector has engaged in a course of conduct that tricks a debtor into waiving his legal right to assert a limitations defense.”
But Wallace’s attorney, Randolph Bragg, said he believes collection agencies prey off individuals who are not as “suspicious” as Wallace was when she received her collection notice. He said he “deals with cases like this all the time.”
“We believed that hundreds, maybe thousands of people were getting tricked,” said Bragg. “I’m disappointed in the decision because I think the omission of the facts deceives the consumers.”
Bragg said the notice is misleading because, if Wallace had actually decided to pay off some of the debt out of a moral obligation she may have felt, she would have revived the entire debt. That would have given Capital One Bank the opportunity to sue her for the entire amount of the debt.
A spokesman for Capital One Bank declined to make any official comments regarding the case.
Wallace could not be reached for comment Wednesday afternoon.
Bragg said it is a common practice for banks such as Capital One to purchase expired debts for a small fraction of the full debt in order to try to get the debtor to pay it off.