STATUTE OF LIMITATIONS
DBA International wishes to remind its members to keep a watchful eye on issues concerning statute of limitations as DBA continues to see a great deal of interest in the subject matter by consumer groups, regulators, legislators, and the courts. There are three basic ways the issue has been presented: (1) requiring consumer notices on correspondence, (2) a prohibition on commencing and/or threatening litigation when the debt is beyond the statute of limitations, and (3) the prohibition on any type of collection activity when the debt is beyond the statute of limitations.
Here are some recent developments and reminders:
- On December 6, 2012, Magistrate Judge David G. Bernthal of the United States District Court for the Central District of Illinois refused to dismiss a case where the plaintiff alleged that the defendant deceptively and unfairly attempted to collect a debt that was beyond the statute of limitations. Judge Bernthal ruled that there were plausible claims under § 1692e (false or misleading representations) and § 1692f (unfair practices) of the Fair Debt Collection Practices Act (FDCPA) to question whether Defendant’s collection letter should have (1) stated that the Plaintiff’s debt was time-barred and (2) provided the dates of the transactions giving rise to the debt. In making his decision, Judge Bernthal commented that “even absent a threat of litigation, an unsophisticated consumer could be deceived by Defendant’s failure to disclose . . . [this information because it] . . . creates the impression that Defendant could sue to collect on the debt”. For a copy of the opinion please click here.
- In January 2012, Asset Acceptance entered into a Consent Decree with the Federal Trade Commission (FTC) which requires Asset Acceptance to provide specific language to consumers on past statute debt. This language has been widely promoted by the FTC and has been used in other consent decrees. For a copy of the Asset consumer statement please click here.
- The FTC has issued consumer advice on Time Barred Debt on their website. For a copy of the FTC consumer advice please click here.
- Currently New York City, New Mexico, and Massachusetts all have specific consumer notice requirements regarding statute of limitations.
- Currently Wisconsin, Mississippi, and North Carolina use the statute of limitations as a bar to any type of collection.
Given the quickly evolving legal and regulatory framework surrounding this topic, DBA encourages its members to discuss issues concerning statute of limitations with their legal counsel.