In our first class action lawsuit, Wood v. Capital One Services LLC, NCO Financial Systems, and Capital One Bank (U.S. District Court, Northern District of New York, Case No. 5:09-cv-01445-NPM-DEP), we examine a letter that Capital One sent to Gareth Wood, which was dated October 8, 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.” 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. Wood can make a payment of $259 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 NCO Collections. In other words, if you thought you were calling your bank, you’d be in for a surprise when a debt collector from NCO Collections 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.”
Lemberg & Associates filed the class action complaint on behalf of all consumers in New York to whom this type of form letter was sent (and wasn’t returned as undeliverable) between December 15, 2008 and December 15, 2009.
We’re asserting that the letter Mr. Wood 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. Wood (and untold numbers of other consumers) received falsely represented that the debt remained in the hands of Capital One Creditor when it was actually transferred to Capital One Collections and NCO Collections 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 fraudulently represented that a court action was imminent. In reality, Capital One didn’t intend to launch a lawsuit against Mr. Wood.
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. Wood received is also a violation of this provision, since Capital One 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.” By leading Mr. Wood to believe that his bank was sending the letter, we believe Capital One violated this provision.
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 Collections and NCO Collections 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 NCO Collections 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.
The notice that Mr. Wood 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. Wood overshadows and is inconsistent with his right to dispute the debt.
Our class action lawsuit also alleges violations of New York’s laws, specifically those pertaining to engaging in unlawful and deceptive practices and acts and those pertaining to common law fraud.
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.
