In July 2013, the ACA International Board of Directors approved initiatives to protect the long term viability of the credit and collection industry. These efforts are funded by a three-year Industry Advancement Fund assessment.

ACA International has filed an amicus curiae brief with the Sixth Circuit Court of Appeals in the case of Buchanan v. Northland Group Inc.

The case stems from a collection letter sent by a collector to a consumer offering a chance to settle a debt after Michigan’s six-year limitation for taking legal action to collect had passed. The consumer filed a class action complaint accusing the collector of violating the Fair Debt Collection Practices Act.

At issue is the district court’s decision that a collector does not mislead a consumer and thus does not violate the FDCPA by making a collection settlement offer without disclosing that the statute of limitations for filing a lawsuit has expired. 

The consumer argued that the collector’s statements in the letter that interest on the debt would still accrue and that it was “not obligated to renew” the settlement offer, along with the collector’s omission of a disclosure that the debt was out-of-statute, could mislead unsophisticated consumers into believing they could still be subject to legal action. The district court disagreed with the consumer and dismissed the case.

The district court stated that to limit a collector from offering payment options as part of an effort to resolve outstanding debt, possibly without litigation, "would force honest debt collectors seeking a peaceful resolution of the debt to file suit in order to advance efforts to resolve the debt — something that is clearly at odds with the language and purpose of the FDCPA.”

The district court followed the Third and Eighth Circuits and district courts elsewhere by upholding the proposition that a collector requesting voluntary repayment of debt beyond the applicable statute of limitations does not violate the FDCPA, so long as its efforts to collect on such debt is not accompanied by actual litigation or threat, either implied or explicit, of future litigation. 

But the Seventh Circuit created a split in the circuits by holding that offers to “settle” time-barred debts may falsely suggest that the debt is actually legally enforceable. (McMahon v. LVNV Funding, LLC and Delgado v. Capital Mgt. Servs., LP, 744 F.3d 1010 (7th Cir. March 11, 2014.)

The Consumer Financial Protection Bureau joined the Federal Trade Commission in filing a joint amicus brief in Buchanan supporting the consumer’s position. The CFPB and the FTC argue that, “actual or threatened litigation is not a necessary predicate for an FDCPA violation in the context of time-barred debt” and “a settlement offer can erroneously lead unsophisticated consumers to believe a debt is enforceable in court even if the offer is unaccompanied by a clearly implied threat of litigation.”

ACA International, the largest association representing collection agencies and creditors, filed a “friend of the court” brief with the Sixth Circuit in Buchanan to provide assistance and insight to the court with respect to the adverse public-policy and due process consequences of a time-barred debt disclosure rule.

ACA’s amicus brief challenges the CFPB’s and the FTC’s position that collectors should be required to disclose to consumers the legal enforceability of debts through lawsuits. ACA members can find concise summaries of recent judicial decisions involving the collection industry at ACA’s Industry Advancement Program Web page.

ACA argues that such a rule imposes a burden and accompanying risk of liability on collectors that does not exist under the FDCPA. In addition, ACA explains that the disclosure requirement suggested by the CFPB will limit legitimate debt-resolution efforts by collectors.

ACA also has asked the Sixth Circuit to not give excessive deference to the CFPB and the FTC, as such deference may violate collectors’ due-process rights. Agency reports, consent decrees and amicus briefs do not provide “fair notice” to collectors with respect to what they need to do to comply with FDCPA regulations. Accordingly, ACA urges the Sixth Circuit to affirm the district court’s decision.   


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