Collection Letter Making Settlement Offer for Time-Barred Debt Can Violate FDCPA Without Legal Action Threat, Third Circuit Rules

A letter sent to collect a time-barred debt that makes a settlement offer can, even without a threat of legal action, violate the Fair Debt Collection Practices Act’s (FDCPA) general prohibition against a debt collector’s use of “any false, deceptive, or misleading representation or means in connection with the collection of a debt,” the U.S. Court of Appeals for the Third Circuit has ruled. The decision is a reminder of the need for debt collectors to review with counsel scripts, letters, and other communications used to collect time-barred debts.