Kohl’s Class Action Filed Over Illegal Debt Collection Practices

Kohl’s is facing a proposed class action lawsuit alleging the department store retail chain violates the Fair Debt Collection Practices Act by failing to have required disclosure statements on collection letters.

The Fair Debt Collection Practices Act or FDCPA prohibits a debt collector from using any false, deceptive, or misleading representation in connection with the collection of any debt.

Specifically, a collection is deceptive under the FDCPA if it “can reasonably be read by the least sophisticated consumer to have two or more meanings, one of which is inaccurate.”

The law was enacted in 1977, in response to a growing problem with abusive debt collection practices. The objective of the FDCPA was to eliminate abusive debt collection practices by penalizing businesses that violated the regulations.

Mercantile Adjustment Bureau, on behalf of Kohl’s purportedly sent New York plaintiff Kewal Malhotra a collection letter in an attempt to collect payment on an alleged debt owed by Malhotra. This letter, dated Dec. 11, 2015, names Kohl’s as the creditor and states the payment should be made to Kohl’s.

In addition to this letter, Malhotra claims to have received another collection letter from MAB date Jan. 15, 2016, stating the current and original creditor on his alleged debt is Capital One NA.

According to Malhotra, he is unsure whether the creditor on the alleged debt is Kohl’s or Capital One. If the debit is owed to Capital One, then Kohl’s is a debt collector as defined by the FDCPA. However, if the debt is owed to Kohl’s, then MAB’s collection letter is false.

Additionally, Malhotra states that the letter from Kohl’s fails to contain required disclosure language pursuant to the FDCPA.

“[FDCPA rules] requires that within five days after the initial communication with a consumer in connection with the collection of any debt a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector,” the lawsuit states.

Malhotra asserts that Kohl’s violated the FDCPA by its failure to provide the information required by this provision.

Malhotra further contends that the collection letters are in violation of FDCPA rules because the letters did not have a required statement indicating that if the debt is disputed within the 30-day period, the “debt collector will obtain verification of the debt or a copy of the judgment against the consumer and a copy of the verification or judgment will be mailed to the consumer by the debt collector.”

Perhaps most significant to Malhotra’s case is that the debt collection letters failed to contain a disclosure that upon a consumer’s written request within the 30-day period, the debt collector, as mandated by the FDCPA, is to provide the consumer with the name and address of the original creditor, if different from the current creditor.

Based upon the letters from the defendants, one of the letters, if not both, are false concerning the representation of the creditor to whom the debt is owed, Malhotra’s complaint reads.

Malhotra brings this action individually and also seeks to represent a certified Class of New York residents who Kohl’s and MAB attempted to collect a debt using alleged unlawful practices from one year prior to the date of his complaint.

He is asking the court to enter a judgment against Kohl’s and MAB for violating the FDCPA and seeking damages and attorneys’ fees.

Under the FDCPA, if a collector is proven to have used illegal debt collection practices, a consumer need not prove actual damages in order to recover up to $1,000 in damages plus reasonable attorney fees.

Malhotra is represented by Craig B. Sanders of Barshay Sanders PLLC.

The Kohl’s Illegal Debt Collection Class Action Lawsuit is Malhotra, et al. v. Kohl’s Corporation and Mercantile Adjustment Bureau LLC, Case No. 2:16-cv-06888, in the U.S. District Court for the Eastern District of New York.