Gary King (D)
ALBUQUERQUE, N.M. (Legal Newsline)---Merchants' Credit Guide Company has agreed to pay $30,000 to settle claims by the New Mexico attorney general's office that it attempted to unfairly collect consumer debts.
New Mexico Attorney General Gary King filed a lawsuit against the Chicago-based debt collection company in August 2007, claiming the firm violated the New Mexico Unfair Trade Practices Act by attempting to collect debt that was unenforceable.
The lawsuit also claimed the company failed to inform consumers that the debt was unenforceable because of the statute of limitation.
"In the past few years there has been an explosion in efforts by national debt collection firms to collect old, legally unenforceable debt," King said.
"Sometime these debts are ten years or more old. This is the first time in New Mexico that a large national debt collection firm has agreed to disclose this material information to consumers so that they can make informed decisions about how to respond to the debt collection demands," the Democratic AG added.
King said he intends to contact other national collection agencies to warn them against trying to collect unenforceable debts.
In signing the consent decree, the company did not admit to any wrongdoing.
The Merchants' Credit lawsuit alleged the company attempted to collect debts incurred in the state by New Mexico residents without a license issued by the Financial Institutions Division of the State Regulation and Licensing Department. The company eventually became licensed on April 1, 2005, the attorney general's office said.
Under an agreement signed by Los Lunas District Judge John Pope, Merchants' Credit Guide has agreed to stop collecting all debt that is unenforceable because they were based on unwritten contracts that are more than four years old, or debts based on written contracts that are more than six years old.
From Legal Newsline: Reach reporter Chris Rizo at email@example.com.