Northstar Location Services Pegged with Debt Collection Case

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A proposed class action filed this week in New York claims Northstar Location services, LLC violated the Fair Debt Collection Practices Act (FDCPA) by offering to settle the plaintiff’s supposed debt for $595.79 while at the same time claiming the forgiveness “may have tax consequences.” The issue, according to the lawsuit, is that the settlement offered by the defendant “could not possibly have been reportable,” and therefore constitutes a false statement under the FDCPA, because debt forgiveness for amounts less than $600 does not need to be relayed to the IRS. Moreover, the case argues the defendant’s alleged inclusion of language implicating possible tax consequences for the plaintiff “is a threat that is not intended to be taken” by Northstar.

Later, the complaint alleges Northstar failed to properly disclose that the plaintiff’s balance may increase due to the accrual of interest or fees.