FTC Files Amicus Brief Opposing District Court Finding on Collection of Time-Barred Debt

For Release

The Federal Trade Commission filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit, arguing that a federal district court erroneously dismissed a consumer’s class action complaint against a debt collector. Filed in the U.S. District Court for the Western District of Michigan, the complaint alleged that the collector’s letter violated the Fair Debt Collection Practices Act by implying that the consumer could be sued to collect the debt even though the statute of limitations on filing a collection lawsuit had expired.

The plaintiff, Michigan consumer Esther Buchanan, received a letter from a debt collector offering to “settle” a debt after Michigan’s six-year limitations period for taking legal action to collect on the debt had passed.  Buchanan contends in her complaint that the collector’s letter, coupled with statements that the debt would continue to accrue interest and a warning that the collector was “not obligated to renew” the settlement offer, could mislead unsophisticated consumers into believing that they could still be subject to legal action. The district court dismissed the complaint on the grounds that the letter could not mislead even the least-sophisticated consumer.

The FTC’s amicus brief, filed jointly with the Consumer Financial Protection Bureau, explains the Commission’s extensive study of the debt-collection industry, including the problems associated with collecting debts beyond the statute of limitations. The brief argues that the debt collector’s offer to “settle” and other representations could plausibly cause an unsophisticated consumer to believe that the debt could be enforced through litigation, and that the complaint therefore should not have been dismissed.

The Commission’s vote to join the amicus brief filing was unanimous.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

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