IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

NACOLA MAGEE, and JAMES PETERSON, )

on behalf of plaintiffs and the class defined )

below, )

)

Plaintiffs, ) 12-cv-1624

)

vs. ) Judge John W. Darrah

)

PORTFOLIO RECOVERY ASSOCIATES. LLC ) Magistrate Judge Morton Denlow

)

Defendant. )

COMPLAINT – CLASS ACTION

INTRODUCTION

1. Pursuant to this Court’s Order of August 15, 2012 granting Plaintiffs leave 

to file an amended complaint in accordance with the Court’s dismissal order, and in further

accordance with the recent opinion issued in McMahon v. LVNV Funding, LLC, et al., 2012 U.S.

Dist. LEXIS 113576 (N.D. Ill. August 13, 2012), Plaintiffs Nacola Magee and James Peterson bring

this action to secure redress from unlawful collection practices engaged in by defendant Portfolio

Recovery Associates (“PRA”). Plaintiffs allege violation of the Fair Debt Collection Practices Act,

15 U.S.C. §1692 et seq. (“FDCPA”). 

2. The FDCPA broadly prohibits unfair or unconscionable collection

methods; conduct which harasses, oppresses or abuses any debtor; and any false, deceptive or

misleading statements, in connection with the collection of a debt: it also requires debt collectors

to give debtors certain information. 15 U.S.C. §§1692d, 1692e, 1692f and 1692g. 

VENUE AND JURISDICTION

3. This Court has jurisdiction under 15 U.S.C. §1692k (FDCPA), 28 U.S.C.

§1331 (general federal question), and 28 U.S.C. §1337 (interstate commerce).

4. Venue and personal jurisdiction in this District are proper because:

1
a. Defendant’s collection communications and activities impacted

plaintiff Magee within this District;

b. Defendant does or transacts business within this District.

PARTIES

5. Plaintiff Nacola Magee is an individual who resides in the Northern

District of Illinois.

6. Plaintiff James Peterson is an individual who resides in Gary, Indiana.

7. Defendant PRA is a limited liability company with offices at 120 

 Corporate Blvd, Norfolk, VA 23502. It does or transacts business in Illinois. 

8. Defendant PRA is engaged in the business of purchasing or claiming to

purchase allegedly defaulted debts originally owed to others and incurred for personal, family or

household purposes.

9. Defendant PRA pays an average of less than ten cents on the dollar for the

debts it purchases.

10. Defendant PRA then attempts to collect the allegedly purchased debts by

filing

suits on them.

11. Defendant PRA has been the plaintiff in 1,000 collection lawsuits that have

been filed in Cook County, Illinois between 9/8/11 and 1/25/12.

12. Defendant PRA regularly uses the mails and telephones in conducting its

business.

13. Defendant PRA is a “debt collector” as defined in the FDCPA.

2
FACTS- Nacola Magee

14. On or about October 3, 2011, PRA sent plaintiff Nacola Magee the letter

attached as Exhibit A.

15. Exhibit A sought to collect a purported credit card debt incurred for personal,

family or household purposes and not for business purposes.

16. Exhibit A offers to settle the alleged debt for three payments of approximately

$200.

17. The letter states “If you complete this payment plan and our company is

reporting our company’s trade line for this account to the three major credit reporting agencies, our

company will report this account as settled.” 

18. The letter states that “Your account was purchased on 7/28/2011 from Capital

One Bank, N.A.” The letter did not state when the debt was incurred, that it was time-barred, or that

making even a small payment could revive the debt.

19. If the debt is owed at all, it was incurred prior to 2004.

FACTS- James Peterson

20. On or about August 22, 2011, PRA sent plaintiff James Peterson the letter

attached as Exhibit B , referring to an account ending in 6581.

21. Exhibit B sought to collect a purported credit card debt incurred for personal,

family or household purposes and not for business purposes.

22. Exhibit B offers to settle the alleged debt through three different settlement

plans. 

23. Exhibit B states that Plaintiff may participate in the “Settlement Option” and

pay the debt in one payment, and save “$1,577.79 off the balance,” but that the payment must be

made “no later than 10/17/2011.” 

24. The second option offered by Exhibit B, the “Settlement Plan,” demands that

3
Plaintiff pay $290 over six months, to save “$1,417.79 off the balance,” but that the payment must

be made “no later than 10/17/2011.” 

25. The final option provided by Exhibit B demands that Plaintiff “pay as little

as $95.00 per month,” but that the first payment must be “due no later than 10/17/2011.” 

26. Below each option, the letter states that “Your account will be considered

‘Settled in Full’ after we post your final payment.”

27. The collection letter states that “Portfolio Recovery Associates purchased the

account referenced above on 07/28/2011,” suggesting it is recent. The collection letter does not

disclose that the statute of limitations had long since expired or that making a small payment could

revive the debt.

28. If the debt is owed at all, it was incurred prior to 2005.

29. On or about August 29, 2011, PRA sent plaintiff James Peterson the letter

attached as Exhibit C, referring to an account ending in 1616.

30. Exhibit C sought to collect a purported credit card debt incurred for personal,

family or household purposes and not for business purposes.

31. Exhibit C offers to settle the alleged debt through three different payment

plans. 

32. Exhibit C states that Plaintiff may pay the debt in one payment of $1,615 and

save “$2,415.20 off the balance,” or pay $305 over six months and save “$2,200.20off the balance,”

or “pay as little as $120.00 per month,” but for any of the settlement options, Plaintiff must pay “no

later than October 17, 2011. 

33. The collection letter states that “Portfolio Recovery Associates purchased the

account referenced above on 07/28/2011,” suggesting that it is recent. The collection letter does not

disclose that the statute of limitations had long since expired or that making a small payment could

revive the debt.

34. If the debt is owed at all, it was incurred prior to 2005.

4
35. Defendant regularly seeks to collect credit card bills.

36. The statute of limitations on a credit card debt in Illinois is five years.

37. The statute of limitations on a credit card debt in Indiana and Wisconsin is

six years.

38. Defendant regularly attempts to collect debts on which the statute of

limitations has expired.

FACTS- Common to Multiple Claims

39. Nothing in Exhibits A, B or C disclosed that the debts were barred by the

statute of limitations.

40. The Federal Trade Commission has determined that “Most consumers do

not know their legal rights with respect to collection of old debts past the statute of limitations . . .

. When a collector tells a consumer that she owes money and demands payment, it may create the

misleading impression that the collector can sue the consumer in court to collect that debt.”

(http://www.ftc.gov/opa/2012/01/asset.shtm) The FTC entered into a consent decree with Asset

Acceptance, one of the largest debt buyers in the United States, requiring that it disclose to

consumers when it is attempting to collect debts that are barred by the statute of limitations. United

States of America (For the Federal Trade Commission) v. Asset Acceptance, LLC, Case No.

8:12-cv-182-T-27EAJ (M.D.Fla.).

41. On August 13, 2012, Judge Kocoras in the United States District Court for

the Northern District of Illinois, in McMahon v. LVNV Funding, LLC, et al., 2012 U.S. Dist. LEXIS

113576 (N.D. Ill. August 13, 2012), held that allegations that “a letter citing the date that

Defendants purchased the debt while omitting the date that the debt was incurred...are sufficient to

survive a motion to dismiss.” Id. at *8.

42. The McMahon court further held that it may be misleading “for a debt

collector to send a dunning letter offering a ‘settlement’ that represents a ‘savings...off your balance’

5
on a time-barred debt,” and that “Whether a settlement offer in a dunning letter is deceptive is a factintensive question that is generally not resolvable at the pleadings stage of a lawsuit. In this case,

an unsophisticated consumer may be deceived into believing that the offer of ‘settlement’ implies

that there is a legally enforceable obligation to pay the debt.” Id. at *9 (internal citations omitted).

43. On August 2, 2012, the Seventh Circuit in Lox v. CDA, Ltd., 2012 U.S. App.

LEXIS 15961 (7th Cir., August 2, 2012) cited with approval the Ninth Circuit case of Gonzalez v.

Arrow Financial Services, LLC, 660 F.3d 1055 (9th Cir. 2011). The Gonzalez court held that “To

the least sophisticated debtor, the phrase ‘if we are reporting the account, the appropriate credit

bureaus will be notified that this account has been settled’” when the account could no longer be

legally reported, “suggests that, under some set of circumstances applicable to the recipient Arrow

could and would report the account” and that “the implication that Arrow could make a positive

report in the event payment is misleading” and “violates 15 U.S.C. §1692e(10).” Id. at1063. 

COUNT I- FDCPA- MISLEADING SETTLEMENT OFFERS ON TIME BARRED

DEBTS

44. Plaintiffs Nacola Magee and James Peterson incorporate by reference

Paragraphs 1-43.

45. Defendant engaged in unfair, deceptive, and misleading acts and practices,

in violation of 15 U.S.C. §§1692e, 1692e(2), 1692e(5), 1692e(10), and 1692f, by sending consumers

collection letters that contain settlement offers on time-barred debts without disclosure of the fact

that the debt is time barred.

46. The settlement offers presented in Exhibits A-C are misleading because the

statute of limitations on the alleged debts had expired and Defendant had no cognizable claim to

recover the debts.

47. The nondisclosure in conjunction with the offers of a “settlement” in Exhibits

A- C implies a colorable obligation to pay and is misleading to the consumer.

48. Section 1692e provides:

6
§ 1692e. False or misleading representations [Section 807 of P.L.] 

A debt collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of any debt. Without

limiting the general application of the foregoing, the following conduct is a

violation of this section: . . .

(2) The false representation of--

 

(A) the character, amount, or legal status of any debt; . . . 

(5) The threat to take any action that cannot legally be taken or that

is not intended to be taken. . . .

(10) The use of any false representation or deceptive means to collect

or attempt to collect any debt or to obtain information concerning a

consumer. . . .

49. Section 1692f provides:

§ 1692f. Unfair practices [Section 808 of P.L.] 

A debt collector may not use unfair or unconscionable means to collect

or attempt to collect any debt. . . . 

CLASS ALLEGATIONS

50. Plaintiffs bring this claim on behalf of a class pursuant to Fed.R.Civ.P. 23(a)

and 23(b)(3). 

51. The class consists of (a) all individuals in Illinois, Indiana and Wisconsin (b)

to whom PRA (c) sent a letter that referred to a “settlement” seeking to collect a debt (d) which debt

was (i) a credit card debt on which the last payment had been made more than five years prior to the

letter in Illinois or (ii) a credit card debt on which the last payment had been made more than six

years prior to the letter in Indiana and Wisconsin (e) which letter was sent on or after a date one year

prior to the filing of this action and on or before a date 20 days after the filing of this action.

52. On information and belief, the class is so numerous that joinder of all

members is not practicable.

53. There are questions of law and fact common to the class members, which

common questions predominate over any questions relating to individual class members. The

7
predominant common questions are (a) whether defendant attempts to collect time-barred debts

without disclosure of that fact and (b) whether such practice violates the FDCPA.

54. Plaintiffs’ claim is typical of the claims of the class members. All are based

on the same factual and legal theories.

55. Plaintiffs will fairly and adequately represent the class members. Plaintiffs

have retained counsel experienced in class actions and FDCPA litigation.

56. A class action is superior for the fair and efficient adjudication of this matter,

in that:

a. Individual actions are not economically feasible.

b. Members of the class are likely to be unaware of their rights;

c. Congress intended class actions to be the principal enforcement

mechanism under the FDCPA.

WHEREFORE, the Court should enter judgment in favor of plaintiffs and the class

members and against defendant for:

(1) Statutory damages;

(2) Actual damages, including all amounts paid on time-barred

debts;

(3) Attorney’s fees, litigation expenses and costs of suit;

(4) Such other and further relief as the Court deems proper.

COUNT II- FDCPA -THREAT OF CREDIT REPORTING

57. Plaintiff Nacola Magee incorporates by reference Paragraphs 1-43.

58. Under federal law, a delinquent debt cannot appear on a person’s credit

report more than 7 years and 180 days after the beginning of the delinquency. The Fair Credit

Reporting Act, 15 U.S.C. §1681c (“FCRA”), provides:

8
§ 1681c. Requirements relating to information contained in consumer

reports 

(a) Information excluded from consumer reports. Except as authorized

under subsection (b), no consumer reporting agency may make any

consumer report containing any of the following items of information: 

 (1) Cases under title 11 of the United States Code or under the

Bankruptcy Act that, from the date of entry of the order for relief or

the date of adjudication, as the case may be, antedate the report by

more than 10 years.

 (2) Civil suits, civil judgments, and records of arrest that, from date

of entry, antedate the report by more than seven years or until the

governing statute of limitations has expired, whichever is the longer

period.

 (3) Paid tax liens which, from date of payment, antedate the report

by more than seven years.

 (4) Accounts placed for collection or charged to profit and loss which

antedate the report by more than seven years.

 (5) Any other adverse item of information, other than records of

convictions of crimes which antedates the report by more than seven

years. . . .

(c) Running of reporting period.

 (1) In general. The 7-year period referred to in paragraphs (4) and

(6) of subsection (a) shall begin, with respect to any delinquent

account that is placed for collection (internally or by referral to a

third party, whichever is earlier), charged to profit and loss, or

subjected to any similar action, upon the expiration of the 180-day

period beginning on the date of the commencement of the delinquency

which immediately preceded the collection activity, charge to profit

and loss, or similar action. . . .

There is an exception for special reports prepared in connection with credit and life insurance

transactions involving more than $150,000 and employment at more than $75,000.

59. At the time Exhibit A was sent, the reporting period with respect to

plaintiff Magee’s debt had expired.

60. Defendant knew or was chargeable with knowledge that the reporting

period had expired.

61. Statements about reporting older debts are both “deceptive” and “unfair”

9
in violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§1692e and 1692f. Gonzales v.

Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011); Lox v. CDA, Ltd., 2012 U.S. App. LEXIS

15961 (7th Cir., August 2, 2012) (citing with approval Gonzalez). 

62. The only reason for referring to credit bureau reporting in Exhibit A is to

induce the consumer to believe that the credit bureau can have them appear on a credit report. 

63. Defendant engaged in unfair and deceptive acts and practices, in violation

of 15 U.S.C. §§1692e, 1692e(2), 1692e(5), 1692e(10), and 1692f, by referring to credit reporting

on debts so old that they cannot be reported on an ordinary credit report.

64. Section 1692e provides:

§ 1692e. False or misleading representations [Section 807 of

P.L.] 

A debt collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of any debt. 

Without limiting the general application of the foregoing, the following

conduct is a violation of this section: . . .

(2) The false representation of– (A) the character, amount, or legal status of any debt; . . . 

(5) The threat to take any action that cannot legally be taken or

that is not intended to be taken. . . .

(10) The use of any false representation or deceptive means to

collect or attempt to collect any debt or to obtain information

concerning a consumer. . . .

 65. Section 1692f provides:

§ 1692f. Unfair practices [Section 808 of P.L.] 

A debt collector may not use unfair or unconscionable means to

collect or attempt to collect any debt. . . . 

CLASS ALLEGATIONS

66. Plaintiff Magee brings this claim on behalf of a class, pursuant to

Fed.R.Civ.P. 23(a) and 23(b)(3). 

67. The class consists of (a) all individuals with addresses in Illinois, Indiana 

10
and Wisconsin (b) with respect to whom defendant Portfolio Recovery Associates, LLC sent or

caused to be sent a letter (directly or by an agent or attorney) (c) to collect a credit card debt (d)

more than seven years after charge-off based on defendant’s records (e) which letter was sent at

any time during a period beginning March 6, 2011 and ending August 26, 2012. 

68. On information and belief, each class is so numerous that joinder of all

members is not practicable.

69. There are questions of law and fact common to the class members, which

common questions predominate over any questions relating to individual class members. The

predominant common questions are:

a. Whether defendant engaged in a practice of suggesting that debts

too old to appear on a credit report would be so reported; and

b. Whether such practices violate the FDCPA.

70. Plaintiff Magee’s claim is typical of the claims of the class members. All 

are based on the same factual and legal theories.

71. Plaintiff Magee will fairly and adequately represent the class members.

Plaintiff Magee has retained counsel experienced in class actions and FDCPA litigation.

72. A class action is superior for the fair and efficient adjudication of this

matter, in that:

a. Individual actions are not economically feasible.

b. Members of the class are likely to be unaware of their rights;

c. Congress intended class actions to be the principal enforcement

mechanism under the FDCPA.

WHEREFORE, the Court should enter judgment in favor of plaintiff and the class

and against defendant for:

11
(1) Statutory damages;

(2) Actual damages;

(3) Attorney’s fees, litigation expenses and costs of suit;

(4) Such other and further relief as the Court deems proper.

s/Daniel A. Edelman

Daniel A. Edelman

Daniel A. Edelman

Cathleen M. Combs

James O. Latturner

Cassandra P. Miller

EDELMAN, COMBS, LATTURNER

& GOODWIN, L.L.C.

120 S. LaSalle Street, 18th Floor

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

12
NOTICE OF ASSIGNMENT

Please be advised that all rights relating to attorney’s fees have been assigned to counsel.

s/Daniel A. Edelman

Daniel A. Edelman

Daniel A. Edelman

EDELMAN, COMBS, LATTURNER

& GOODWIN, LLC

120 S. LaSalle Street, 18th Floor

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

13
CERTIFICATE OF SERVICE

I, Daniel A. Edelman, hereby certify that on August 23, 2012, a true and accurate copy of

the foregoing document was filed via the Court’s CM/ECF system and notification of such filing

was sent to the following parties:

David M. Schultz

dschultz@hinshawlaw.com

Jennifer W. Weller

jweller@hinshawlaw.com

s/Daniel A. Edelman

Daniel A. Edelman

Daniel A. Edelman

EDELMAN, COMBS, LATTURNER

& GOODWIN, LLC

120 S. LaSalle Street, 18th Floor

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

14
EXHIBIT A


EXHIBIT B


EXHIBIT C