First Financial Asset Management Sued Over Debt Collection Letter’s ‘Misleading’ Tax Information

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First Financial Asset Management, Inc. is on the receiving end of a proposed class action lawsuit filed by a New York consumer who claims the defendant sent him a collection letter containing misleading tax information. According to the complaint, the defendant’s letter offered the plaintiff a settlement and then stated the following:

“HSBC Bank USA, N.A. is subject to certain IRS reporting requirements for debt forgiveness exceeding $600 of principal. When required, HSBC Bank USA, N.A. will report debt forgiveness on form 1099C.”

The suit argues that these statements are “deceptive” and “completely unnecessary” because the amount of debt forgiveness offered was below the $600.00 threshold. Upon reading the letter, the unsophisticated consumer would be confused as to “the impact of attempting to settle the matter,” the case alleges. From the complaint: 

“Including specific references to the IRS, Form 1099C and the $600 debt forgiveness threshold in Defendant’s postscript statement only further confuses, misleads and deceives the least sophisticated consumer.”