ST. LOUIS (CN) - The 8th Circuit has allowed a class action to proceed against Credico, because the debt collection agency used illegal tactics, such as threatening to sue, in order to scare alleged debtors into settling their accounts.
Credico violated the Fair Debt Collection Practices Act by mailing lead plaintiff Gregory Wilhelm a letter stating, "You will be sued - unless you make arrangements to pay your bill. This letter is no idle threat - the paperwork has been ordered to begin a lawsuit against you. We only send this letter to people we intend to sue!"
Wilhelm said the letter was an empty threat, because he had disputed the debt, so Credico could not legally sue him. The appeals court ruled that even if Credico did not know Wilhelm was disputing the debt, it was supposed to disclose his right to dispute the debt before threatening litigation.
But the court dismissed the claim that Credico illegally tried to collect interest on past-due interest. Wilhelm's account showed a debt of $4,644, consisting of $2,474 in principal and $2,170 in past-due interest. Credico mistakenly recorded the entire amount as the principal and added interest to get $8,808. The court said the mistake was a "bona fide error."
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