Lawsuit: Berman and Rabin Threatens Debtors with Tax Consequences

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Berman & Rabin, P.A. is facing claims that its collection letters violate the Fair Debt Collection Practices Act (FDCPA) by threatening consumers with false implications of tax consequences if they accept a settlement offer. According to a proposed class action lawsuit, the collection letters included a statement informing recipients that their debt forgiveness may be reported to the IRS if it exceeds a certain amount. The suit argues, however, that the letters failed to mention exceptions to the reporting requirement and are intentionally vague. It claims that the defendant used the IRS statement as a “collection ploy” to induce consumers into paying the full amount of their debts – which is unlawful under the FDCPA. From the complaint:

“[W]here a debt collector has chosen to threaten the debtor with tax consequences, and has done so inaccurately, the false representation causes detrimental harm to the consumer since it concretely thwarts the consumer’s ability to freely navigate a course of action in response to the collection notice.”