'Zombie Debt' Buyer Accused Of Tricking Consumers Into Paying On Stale Debts To Restart Clock On Statute Of Limitations Squeezed By Feds Out Of $2.5M
The New York Times reports:
- The Federal Trade Commission signaled on Monday that it would continue to crack down on debt collectors who harass consumers for money they may not even be legally obligated to pay.
- In the second-largest penalty ever levied on a debt collector, the F.T.C. said that Asset Acceptance, one of the nation’s largest debt collection companies, had agreed to pay a $2.5 million civil penalty to settle charges that the company deceived consumers when trying to collect old debts.(1)
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- Asset Acceptance, based in Warren, Mich., was charged with a variety of complaints, including failing to tell consumers that they could no longer be sued for failing to pay some debts because the debts were too old. The company’s collectors also failed to inform consumers that paying even a small portion of the amount owed would revive the debt — in other words, making a payment would extend the amount of time the collector could legally sue.
- Debt collectors have only a certain number of years to sue consumers. The statute of limitations varies by state, but typically ranges from two to 15 years, Mr. Dolan said, beginning when a consumer fails to make a payment. But borrowers often do not realize that making a payment on the old debt may restart the clock.(2)
For more, see F.T.C. Fines a Collector of Debt $2.5 Million.
For the Federal Trade Commission press release, see Under FTC Settlement, Debt Buyer Agrees to Pay $2.5 Million for Alleged Consumer Deception (Firm Also Will Notify Consumers with "Time-Barred" Debt That It Will Not Sue to Collect).
Go here for more on zombie debts.
(1) For some of the relevant court documents in this matter, see:
- Complaint for Civil Penalties, Injunctive and Other Relief,
- Consent Decree,
- Joint Motion for Entry of Consent Decree.
(2) For more from the FTC on zombie debts, see:
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