The Consumer Financial Protection Bureau and Federal Trade Commission jointly filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit, arguing that a federal district court wrongly dismissed a consumer’s class action complaint against collection agency Northland Group Inc.

The plaintiff, Esther Buchanan, of Michigan, had received a letter from Northland Group offering to settle a debt after Michigan’s six-year limitations for taking legal collection action had passed. 

Buchanan contended in her complaint filed with the U.S. District Court for the Western District of Michigan that the letter, along with statements that the debt would accrue interest and a warning that the collector was “not obligated to renew” the settlement offer, could mislead unsophisticated consumers into believing they could still be subject to legal action.

Buchanan's complaint alleged that Northland Group's letter violated the Fair Debt Collection Practices Act by implying that the consumer could be sued after the statute of limitations had expired. The district court dismissed that complaint on the grounds that the letter could not mislead even the least-sophisticated consumer.

The amicus brief outlines the FTC's "extensive study of the collection industry," including problems associated with collecting debts beyond the statute of limitations. The brief argues that Northland Group's offer to settle and other representations could plausibly cause an unsophisticated consumer to believe the debt could be enforced through litigation and that the complaint therefore should not have been dismissed.

A message seeking comment was left Wednesday afternoon with Northland Group CEO Lance Black. This story will be updated if needed.

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