In our third class action lawsuit, Sorel v. Capital One Services LLC, MRS Associates, and Capital One Bank (U.S. District Court, Northern District of New York, Case No. 5:10-cv-01546-NPM-DEP), we examine a letter that Capital One sent to Ronald Sorel, which was dated December 23, 2009. In the upper left hand corner of the letter, it displays what people generally recognize as the Capital One banking logo. In the upper right corner of the first page of the letter, it says “PRE-LEGAL NOTICE” in large type and in all capital letters.
The letter opens with, “Your account is seriously delinquent and meets the guidelines for legal action if payment is not made toward the amount shown above.” It goes on to say:
Lawsuits can have serious consequences. If a judgement is obtained against you, whatever legal actions are deemed advisable to enforce it will be taken. Judgements are a matter of public record, so landlords, lenders and potential employers can see judgements against you. This could make it more difficult for you to rent an apartment, borrow money or even get a job in the future.
Next, it says, “No decision has been made to sue you yet, so you still have options.” The letter then says that Mr. Sorel can make a payment of $1964 or can call to “learn about possible flexible payment options and special offers.” It then gives a toll-free number and a website address (www.capitalone.com/solutions). At the bottom of the page, it says, “NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION.”
If you received this letter, you’d likely think that it was from your financial institution, Capital One. And, you’d assume that if you called the toll-free number listed on the front of the letter, you’d be calling Capital One. Unfortunately, you’d be wrong. The letter was actually from Capital One COLLECTIONS, and the toll-free number was automatically redirected to MRS Associates. In other words, if you thought you were calling your bank, you’d be in for a surprise when a debt collector from MRS Associates answered your call.
You’d only know differently if you read the fine print on the reverse side of the notice. There, it states that Capital One Services, LLC is a subsidiary of Capital One, NA, and then provides a list of disclosures required by various state laws. The disclosures are a variation or amplification of the statement, “This communication is from a debt collector.”
Basically, Capital One and their debt collector “suppliers” have a “Pre-Legal Program,” which we assert has the primary purpose of scaring consumers into paying by making false threats of imminent legal action in combination with concealing that it is a debt collector – rather than the bank – that is trying to collect on the account. They mislead consumers into thinking that Capital One – rather than a third-party collector – retains the accounts.
But that’s not all. At the same time, consumers are sometimes bombarded with telephone calls and correspondence from debt collectors like MRS Associates, demanding payment on the same account. Or, folks dial the phone thinking that they’re going to speak with representatives from Capital One, and are trapped into talking to trained debt collectors.
The thing is, this is an orchestrated effort. In this case, we assert that MRS Associates knew that Capital One was sending the letters, and had even approved the content of the letter. When the letter was sent, Mr. Sorel’s account was either already placed for collection with MRS Associates or was designated for placement with MRS. In addition, MRS Associates knew that the calls from the Capital One letter were going to be routed to MRS. And, we assert, all parties (except Mr. Sorel) knew that the account would not actually be reviewed for legal action until many months or years had passed.
How can we be so sure? Well, Mr. Sorel received a letter from MRS Associates dated December 28, 2009, five days after the Capital One letter was sent. That letter said that his account had been “pre-qualified by Capital One as lawsuit eligible” and “may be subject to litigation.” The MRS Associates letter lists a telephone number to call; when the number is called, the consumer is instructed to call the same number contained in the Capital One letter. In other words, a consumer who believes he should be calling MRS is instructed to call his bank instead, without being aware that his telephone call is subsequently routed back to MRS Associates. To us, it’s clear that both letters are part of a larger debt collection campaign spearheaded by Capital One Bank, in collaboration with Capital One Services and MRS Associates.
Lemberg & Associates filed the class action complaint on behalf of two groups of people: 1) all consumers in Connecticut to whom the Capital One form letter was sent (and wasn’t returned as undeliverable) between December 21, 2009 and December 21, 2010; and 2) all consumers in Connecticut to whom the MRS Associates form letter was sent (and wasn’t returned as undeliverable) between December 21, 2009 and December 21, 2010.
We’re asserting that the letter Mr. Sorel received violates the Fair Debt Collection Practices Act in a number of ways. For example, the FDCPA says, “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and goes on to specify that it’s illegal to falsely represent “the character, amount, or legal status of any debt.” The letter that Mr. Sorel (and untold numbers of other consumers) received falsely represented that the debt remained in the hands of Capital One Bank and Capital One Services when it was actually transferred to MRS Associates for handling. In addition, by using the term “Pre-Legal Notice” and by saying that Mr. Wood’s account “meets the guidelines for legal action,” Capital One and MRS fraudulently represented that a court action was imminent. In reality, Capital One and MRS didn’t intend to launch a lawsuit against Mr. Sorel.
The FDCPA also explicitly states that, “The threat to take any legal action which cannot be legally taken or is not intended to be taken” constitutes false, deceptive, or misleading representation. The letter Mr. Sorel received is also a violation of this provision, since Capital One and MRS wrote that his account met “the guidelines for legal action” and called it a “pre-legal notice,” but didn’t intend to file a lawsuit.
Another provision of the FDCPA says that “false, deceptive, or misleading representation” includes “The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” Both Capital One and MRS Associates threatened legal action without intending to follow through, in an attempt to force consumers into negotiations with seasoned debt collectors.
Yet another clause of the FDCPA says that “false, deceptive, or misleading representation” includes “The failure to disclose in the initial written communication with the consumer…that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.” Although the letter had a statement on the back that complied with various state laws, we’re arguing that the letter did not include the disclosure required by federal law.
The FDCPA also says that “false, deceptive, or misleading representation” includes “The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.” Capital One Services and MRS Associates used the name “Capital One” instead of their own names, thereby violating this provision of the FDCPA.
In addition, the FDCPA says that “A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt”; we allege that Capital One and MRS Associates violated this provision.
The FDCPA is very specific about its requirement that debt collectors include what’s known as a “validation notice” in their communications with consumers. Specifically, it says:
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing:
- the amount of the debt;
- the name of the creditor to whom the debt is owed;
- a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
- a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
- a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
TThe notice that Mr. Sorel and other consumers received did not contain the validation notice required by law. Finally, the FDCPA says that “Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.” We argue that the content of the initial demand letter received by Mr. Sorel overshadows and is inconsistent with his right to dispute the debt.
Our class action lawsuit also alleges violations of Connecticut’s banking laws by engaging in fraudulent, deceptive, and misleading debt collection practices.
Get the Compensation You Deserve!
If a debt collector has sent you a threatening or deceptive letter, please call our offices at 855-301-8100, or complete the form to the right.
