A federal judge in Pennsylvania has ruled that a recovery agency facing alleged Fair Debt Collection Practices Act violations will see that case go forward.
Enhanced Recovery Company filed a motion to dismiss the case but Judge Stewart Dalzell of the U.S. District Court for the Eastern District of Pennsylvania ruled that Radamed Velez’s lawsuit can proceed.
Velez alleges that Enhanced Recovery last August sent him correspondence related to a consumer debt in the amount of $693 owed to TD Bank USA. The agency allegedly offered to settle the debt for $554. The letter further read, "In addition, any indebtedness of $600 or more, which is discharged as a result of a settlement, may be reported to the Internal Revenue Service as taxable income pursuant to the Internal Revenue Code 6050 and related federal law."
Velez claims the letter and statement violated the FDCPA by containing a "false, deceptive or misleading representation or statement in connection with the collection of a consumer debt, threatened to take an action that [Enhanced Recovery] did not intend to take and utilized a false representation or deceptive means to collect or attempt to collect a consumer debt."
Enhanced Recovery argued that their statement was neither deceptive nor misleading and "accurately reflects the controlling statute and regulation."
Dalzell ruled that if Velez’s allegations were accepted as truth, "Velez’s settlement of the alleged debt, and [Enhanced Recovery’s] cancellation of, could not possibly have been reportable under the relevant exceptions."
"If, in fact, under the circumstances of this case, there could not possibly have been a reportable event, then the statement would be false,” the judge wrote. "Moreover, the statement could mislead or deceive the least sophisticated debtor. A debt collector’s statement is deceptive where it can be reasonably read to have two or more different meanings, one of which is inaccurate, and it is misleading if it states that a certain action is possible even though the debt collector has reason to know that there are facts that make the action unlikely in a particular case."