Unlicensed Debt Collectors

The U.S. District Court for the District of New Jersey has denied a defendant’s motion to dismiss a putative statewide class action complaint that alleged that the defendant violated Section e(10) of the federal Fair Debt Collection Practices Act (FDCPA), which prohibits the “use of any false representation or deceptive means to collect or attempt to collect any debt.”

The court ruled  that the defendant’s communication to the plaintiff attempting to collect a debt falsely represented that the defendant had a legal right to collect the debt – was sufficient to defeat the motion to dismiss and enable the plaintiff to proceed.

The foundation for this ruling was that the defendant was required to have a license under the New Jersey Consumer Finance Licensing Act (NJCFLA) to pursue collection of the debts it purchased. In the court’s view, the defendant’s lack of such a license meant that it had no legal right to collect the debt.

Similarly, in July 2019, the North Carolina attorney general announced a lawsuit filed against multiple debt collection entities and their owner for allegedly collecting or attempting to collect on consumer debts in North Carolina without filing the appropriate registration or obtaining the necessary permits to operate as a debt collection agency in the state.

In the above mentioned case, North Carolina customers allegedly received misleading collection notices from the entities simulating actual court notices and implying the customers had committed criminal offenses. Additionally, the complaint alleges that the entities filed criminal complaints against the customers, containing misleading information and resulting in actual summonses being issued.

The complaint alleges violations of North Carolina’s Unfair and Deceptive Trade Practices Act, Business Corporation Act, Professional Corporation Act, Uniform Partnership Act, and North Carolina’s Prohibited Practices by Collection Agencies Engaged in Collection of Debts from Consumers and seeks among other things, civil penalties, restitution, and injunctive relief.


Maginnis Howard handles unfair and unlicensed debt collection cases arising under the federal Fair Debt Collection Practices Act, the North Carolina Collection Agency Act, and the North Carolina Debt Collection Act.

You can reach our firm’s consumer protection attorneys by phone at 919.526.0450 or by email at info@maginnislaw.com. If you’ve experienced one of these issues under the FDCPA or North Carolina consumer protection law, contact us for a free case review.  You can also subscribe to our mailing list to learn about the rights you have under consumer protection law against large corporations.