American Collections Enterprise, Inc. (ACEI) is a debt collection company that contracted with Capital One bank to provide debt collection services. Under the terms of the collection agreement, Capital One assigned delinquent accounts to ACEI for collection, and ACEI collected these debts on a contingent fee basis.

Under the collection agreement, Capital One gave ACEI the authority to settle any of its accounts at a discount according to a set formula. Pooja Goswami owed approximately $900 on her Capital One credit card and failed to make her payment. Capital One then referred her debt to ACEI for collection on March 20, 2001, and ACEI pursued Goswami’s delinquent account. The debt collection letter offered to settle the outstanding balance due with a 30 percent discount off the balance owed and stated that no other offers would be forthcoming.

Unbeknownst to Goswami, ACEI actually had authority to settle for up to a 50 percent discount under the terms of ACEI’s agreement with Capital One. The Fair Debt Collection Act prohibits misleading statements by debt collectors.

CASE QUESTIONS

1. Is the letter misleading?

2. Is it unethical to tell a partial truth as ACEI did here?

3. Is failure to disclose a fact the same as telling a lie?