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Conditional Language re Credit Reporting May Violate The FDCPA

In Gonzales v. Arrow Financial Services, LLC, the Ninth Circuit Court of Appeal confirmed that a debt collector’s letter suggesting that debts might be reported to credit reporting agencies violates the Fair Debt Collection Practices Act, if the debts are too old to legally be reported. In Gonzales, Arrow purchased a portfolio of debts owed to health clubs. All of these debts were more than seven years old and could not legally be reported to a credit reporting agency. Arrow generally did not report the accounts to credit bureaus. Arrow nevertheless attempted to collect on the portfolio by sending letters to thousands of consumers stating that if Arrow was reporting the consumer’s account to credit bureaus, Arrow would notify the appropriate credit bureaus of the settlement upon payment of the debt by the consumer. The Ninth Circuit held that the language in Arrow’s letter was misleading in violation of the FDCPA because it “suggests that, under some set of circumstances applicable to the recipient, Arrow could and would report the account, and “[a]bsent any possibility that Arrow could report the accounts, there would be no reason for Arrow to assert its intention to make a positive report in the event of payment.”

You can read the entire opinion by clicking here.

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