A federal appeals court in New York has made it harder for lenders to collect debts.

The U.S. Court of Appeals for the Second Circuit ruled June 29 that Citicorp Retail Services Inc. violated the Fair Debt Collection Practices Act when it sent a letter from a lawyer demanding that Robin Young repay the balance on her Bradlees discount store credit card.

"We are disappointed in the decision and are still considering our future options," a Citicorp spokeswoman said.

The debt collections act is intended to prevent creditors from using strong-arm tactics to convince debtors to pay their bills. One provision bars creditors from sending out letters that purport to be from a lawyer but are really from the lender. This provision is premised on the belief that letters from lawyers are considered particularly threatening.

Citicorp hired New York lawyer Maria I. Moir to help it collect the debt from Ms. Young and other cardholders. Ms. Moir used a computer system to identify which Citicorp borrowers should receive dunning letters. The system reviews outstanding balances, time past due, and other measurable standards. Citicorp would periodically run Ms. Moir's program and send letters demanding repayment on her letterhead.

Ms. Young sued Citicorp, arguing that the letter was really from the bank because Ms. Moir did not generate the correspondence personally. The appeals court agreed, saying the letter incorrectly implied that the debt had been referred to a lawyer for collection.

"The letter from Ms. Moir was in no meaningful sense of the word 'from' attorney Moir," the court said. "Nor are we persuaded that Moir's oversight of the computer system is sufficient to establish the letter is from her as opposed to Citicorp."

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