Collections company sued by state over alleged Consumer Protection Act violations

VIDEO: AG suit accuses major collection company of deceptive practices

A lawsuit filed today by the office of Attorney General Bob Ferguson takes aim at Renton-based debt collector, Convergent Outsourcing.

It claims the company sent 75,000 letters to Washington consumers between 2013 and 2015, pushing them to pay for debts that were past the six-year statute of limitations.

“Convergent acted illegally here because those letters that they sent gave the impression that it’s a real debt, it’s an active debt, that they may be able to sue on that debt. And they can’t do any of those things,” says Ferguson.

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Now, the collection of time-barred debt is completely legal. But Ferguson says, in this case, that these collection letters are illegal because they use legal terms like “settlement offer” and give time frames to pay. Ferguson says that makes it appear legal proceedings could be held if the consumer doesn’t pay.

The problem is this: consumers can’t be sued for debts that are past the statute of limitations.

“The very word ‘settle’ implies: we can sue you, this is how we can resolve it through a ‘settlement’. The world knows that word, that word is used in a certain context. And even that word – ‘settlement,’ we propose a way to settle this – courts have said that’s deceptive when you can not legally actually collect on the debt,” says Ferguson.

Still, according to the lawsuit, close to 3,000 Washington consumers paid nearly a million dollars to the company.

So here’s what you need to know: Ferguson says the statute of limitations on debt collection lawsuits is six years after the date of default, or last payment on the account.

If you get a letter you’re not sure about, ask the debt collector to prove it.

“That’s the catch. And you see that in these letters: you must contact us in 30 days or we are going to do bad things to you. Well, if you ignore the letter, they can’t collect that money. It’s time barred,” says Ferguson. “But once you reach out, once you contact – and especially once you make a payment, even just a couple of bucks – now that debt is back on, and you owe it.”

Convergent is a big player in the debt collection industry with $80 million in annual revenues. And the lawsuit claims hundreds of thousands of these collection letters were sent to consumers all  over the country.

We reached out to Convergent for a response. We’ll update this story if we get one.