Midland Credit Hit With Unfair Debt Collection Class Action

Midland Credit Management Inc. faces a class action lawsuit that accuses the debt collector of violating federal law.

Specifically, the class action complaint alleges that Midland Credit sends letters to consumers trying to collect on old debts—meaning debt that has already past the statute of limitations—without properly informing the consumers that they have no obligation to pay on the debt, and that agreeing to pay the debt may make the consumer liable for it again.

Plaintiff Shelly Gabay says that she incurred a debt with FIA Card Services, which was subsequently sold to Midland Credit for collection sometime before October of 2015. Midland Credit allegedly sent a letter to Gabay dated Oct. 2, 2015, which sought to collect on Gabay’s debt of over $14,000 to FIA Card Services.

In the letter, Midland reportedly gave Gabay two options: either pay over $8,400 within five month or make 12 monthly payments totaling a little more than $8,800. In either case, Midland Credit made it look like a good deal by saying it would forgive the rest of the debt, according to the class action complaint.

The Midland Credit debt collection disclosure class action claims that the letter of Oct. 2, 2015, “does not clearly inform Plaintiff that the applicable statute of limitations has expired and therefore any potential liability related to the [FIA Card Services debt] has also already expired.”

In addition, the class action complaint also takes issue with the fact that the “letter does not inform Plaintiff that should she choose to accept any of MIDLAND’s offers to make multiple payments that the applicable statute of limitations could reset or begin anew.”

Both of those omissions are violations of the federal Fair Debt Collection Practices Act, according to the complaint. As proof, the complaint cites to an action by the Federal Trade Commission, which found that “most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations… When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt.”

The class action alleges that Midland Credit “regularly” sends out letters to consumers on old debt, which contain “false, deceptive, or misleading representations” in violation of federal law.

The Midland Credit debt collection disclosure lawsuit seeks to represent a Class of “All New Jersey consumers who were sent letters and/or notices from MIDLAND, concerning a debt owed to MIDLAND FUNDING, LLC which originated with FIA CARD SERVICES, N.A.” which violated federal law within the past year.

The complaint states that at least 30 other consumers in New Jersey received similar letters from Midland Credit. The class action seeks restitution and statutory damages for each violation of the Fair Debt Collection Practices Act.

Plaintiff Shelly Gabay is represented by Joseph K. Jones and Chuck Chulsky of Jones, Wolf & Kapasi, LLC, and Lawrence C. Hersh, attorney at law.

The Midland Credit Debt Collection Disclosure Class Action Lawsuit is Shelly Gabay v. Midland Credit Management Inc., Case No. 2:16-cv-01219, in the U.S. District Court for the District of New Jersey.