Debt Collector Liable Under FDCPA for Failing to Disclose Debt Was Past Statute of Limitations
In the case issue, a debt collector sent a dunning letter to a consumer informing her of the account balance and asking for payment. The letter, however, did not disclose that the statute of limitations on the debt had expired.
The debt collector also did not disclose that if the consumer made a payment — even a partial payment — the statute of limitations would start over.
The court held that receiving a letter without disclosing that the debt was time barred could mislead a reasonable consumer into thinking that the debt was still enforceable. Moreover, a consumer might think that making a partial payment would be better than making no payment. Courts interpreting the Fair Debt Collection Practices Act should use a “least sophisticated consumer” standard for evaluating these claims. Under this standard, the letter was misleading and confusing.
For credit cards, the statute of limitations is generally measured from the last payment date. In Massachusetts, the statute of limitations on contract debt like credit cards is six years, pursuant to Massachusetts General Laws Chapter 260, Section 2.
How can you tell if the statute of limitations has run on a credit card? If you don’t know the last payment date, which most people don’t, the best place to look is on your credit report. Most credit reports will indicate the date of the last payment, which usually determines when the statute of limitations starts running. (There may be other factors, so consult a licensed attorney for a definitive answer.)
The court’s decision is here: Buchanan v. Northland Group, Inc.