GC Services Accused of Sending Misleading Settlement Offers, IRS Threats

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GC Services Limited Partnership is the defendant in a proposed class action lawsuit that claims it failed to clearly state in collection letters the amount required to settle debts and included threats of tax consequences to induce consumers into paying the full amount. The plaintiffs say they received letters from GC Services that included settlement offers but also indicated that “the amount shown” in the letters could increase due to interest or other fees. The suit claims that this language does not specify whether the settlement offers would change or whether the total balance would change. From the complaint:

“The consequences of misleading a consumer with respect to settling a debt are much greater than misleading about the amount of the debt. A payment of the entire debt would leave pennies or, at most, a few dollars left over for payment later… But where a few remaining dollars or cents of interest prevent settlement, GCS could continue to collect the entire remaining balance of the alleged debt.”

One of the plaintiffs also claims that her letter contained a statement warning her of possible tax consequences related to debt forgiveness. The complaint argues that references to the IRS are “intimidating and misleading” because they falsely imply that any amount of debt forgiveness “will give rise to problems with the IRS.”