Washington state Attorney General Bob Ferguson filed a consumer-protection lawsuit against a Renton-based collection agency that he says tried to scare people into thinking they could be sued over old debt.
Letters sent to debtors by Convergent Outsourcing created the impression that Convergent could, and would, sue to collect, when it could not, according to the suit filed this week in King County Superior Court.
The letters did not disclose that the debts were past the statute of limitations, which in Washington is six years after the date of default or last payment on the debt account, according to the suit.
Convergent is a Renton-based collection agency with about 700 employees and $80 million in annual revenues that collects for debt buyers as well as major corporations around the country, including Verizon and PayPal, according to a statement on the lawsuit from the Attorney General’s Office.
The suit alleges that Convergent violated the Consumer Protection Act and the Collection Agency Act when it sent 75,466 deceptive “settlement offer” letters to Washington consumers between January 2013 to February 2015.
In response to these letters, 3,292 Washington consumers made payments to Convergent on these old debts.
Convergent Outsourcing could not be reached for comment on Friday morning.
“Debt collection companies cannot use deception as a means to get around the law,” Ferguson said in an emailed statement on the suit. “I intend to hold this large, sophisticated debt collection corporation accountable for its unlawful conduct putting profits above the law.”
Debt collectors can legally try to collect on old debt but cannot file a collection lawsuit. According to the suit, Convergent’s letters conveyed an implied threat that consumers could be sued if they did not pay, even though that wasn’t legally possible. This added “a false sense of urgency for consumers to respond,” Ferguson alleges.
The Attorney General’s Office has so far obtained three of the “settlement offer” letters Convergent sent Washington consumers. These three letters asked consumers to pay an average “settlement” amount of $300.
Ferguson’s lawsuit asks the court to order Convergent to return to consumers, in Washington and nationwide, all revenue it collected on time-barred debts after sending the “settlement offer” collection letters.
In September 2016, a panel of federal judges in the U.S. Court of Appeals for the Fifth Circuit ruled in another case — an individual consumer’s lawsuit against Convergent — that these letters from Convergent could deceive debtors into believing they could be sued on the debt.
The judges’ ruling states, “While it is not automatically unlawful for a debt collector to seek payment of a time-barred debt, a collection letter violates the [Fair Debt Collection Practices Act] when its statements could mislead an unsophisticated consumer to believe that her time-barred debt is legally enforceable, regardless of whether litigation is threatened.”