1.6050P-1(d)(3), forgiveness of Interest is not a reportable event and would not require a  copy of 1099C to be filed with the IRS. The least sophisticated consumer test is an  objective inquiry directed toward "ensuring that the FDCPA protects all consumers, the  gullible as well as the shrewd." Clomon, 988 F.2d at 1318. The FDCPA does not place  considerable – or dispositive – weight on the facts and circumstances surrounding a  debtor's background. By its very nature, however, the least sophisticated consumer test  pays no attention to the circumstances of the particular debtor in question. See Clomon,  988 F.2d at 1318.   10. The Class satisfies all the requirements of Rule 23 of the FRCP for maintaining a class  action:  • Upon information and belief, the Class is so numerous that joinder of all  members is impracticable because there are hundreds and/or thousands of  persons who have received debt collection letters and/or notices from  Defendant that violate specific provisions of the FDCPA. Plaintiff is  complaining of a standard form letter and/or notice that was sent to hundreds  of persons (See Exhibit A, except that the undersigned attorney has, in  accordance with Fed. R. Civ. P. 5.2 partially redacted the financial account  numbers in an effort to protect Plaintiff’s privacy);  • There are questions of law and fact which are common to the Class and which  predominate over questions affecting any individual Class member. These  common questions of law and fact include, without limitation:  a.  Whether Defendant violated various provisions of the FDCPA;  b.  Whether Plaintiff and the Class have been injured by Defendant’s  conduct;  c.  Whether Plaintiff and the Class have sustained damages and are  entitled to restitution as a result of Defendant’s wrongdoing and if  so, what is the proper measure and appropriate statutory formula to  be applied in determining such damages and restitution; and  d.  Whether Plaintiff and the Class are entitled to declaratory and/or  4 injunctive relief.  • Plaintiff’s claims are typical of the Class, which all arise from the same  operative facts and are based on the same legal theories.  • Plaintiff has no interest adverse or antagonistic to the interest of the other  members of the Class.  • Plaintiff will fairly and adequately protect the interest of the Class and has  retained experienced and competent attorneys to represent the Class.  • A Class Action is superior to other methods for the fair and efficient  adjudication of the claims herein asserted. Plaintiff anticipates that no unusual  difficulties are likely to be encountered in the management of this class action.  • A Class Action will permit large numbers of similarly situated persons to  prosecute their common claims in a single forum simultaneously and without  the duplication of effort and expense that numerous individual actions would  engender.  Class treatment will also permit the adjudication of relatively small  claims by many Class members who could not otherwise afford to seek legal  redress for the wrongs complained of herein.  Absent a Class Action, class  members will continue to suffer losses of statutory protected rights as well as  monetary damages. If Defendant’s conduct is allowed proceed to without  remedy they will continue to reap and retain the proceeds of their ill-gotten  gains.  • Defendant has acted on grounds generally applicable to the entire Class,  thereby making appropriate final injunctive relief or corresponding  declaratory relief with respect to the Class as a whole.  5 11. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs  numbered “1” through “10” herein with the same force and effect as if the same were set  forth at length herein.   12. Some time prior to January 2, 2015, an obligation was allegedly incurred by Plaintiff to  Defendant.   13. The aforesaid obligation arose out of a transaction in which money, property, insurance  or services, which are the subject of the transaction, are primarily for personal, family or  household purposes.   14. Plaintiff is a “consumer” as defined by 15 U.S.C. § 1692a(3) of the FDCPA.   15. Defendant collects and attempts to collect debts incurred or alleged to have been incurred  for personal, family or household purposes on behalf of creditors using the United States  Postal Services, telephone and internet.   16. CITIBANK, N.A., directly or through an intermediary, contracted Defendant to collect  CITIBANK, N.A.’s debt.   17. Defendant is a "debt collector" as defined by 15 U.S.C. § 1692a(6) of the FDCPA.   18. In its effort to collect on the CITIBANK, N.A. obligation, Defendant contacted Plaintiff  by written correspondence on January 2, 2015.  (“Exhibit A”).   19. Defendant’s written correspondence to Plaintiff is a “communication” as defined by 15  U.S.C. § 1692a(2).   20. Said communication states as follows:  “Whenever $600 or more is forgiven as a result of  settling a debt for less than the balance owed, the creditor may be required to report the  amount forgiven to the Internal Revenue Service on a 1099C form after which a copy  6 would be mailed to you by the creditor. If you are uncertain of the legal or tax  consequences we encourage you to consult your legal or tax adviser.”   21. Section 1692e of the FDCPA prohibits a debt collector from making false, deceptive, and  misleading statements in connection with the collection of a debt.   22. Section 1692e(10) of the FDCPA prohibits a debt collector from using false  representations or deceptive means to collect a debt alleged due.   23. Advising Plaintiff that Capital Management Services, L.P.'s client, CITIBANK, N.A.,  “may be required to report the amount forgiven to the Internal Revenue Service on a  1099C form after which a copy would be mailed to you” is deceptive and misleading in  violation of the FDCPA.   24. Internal Revenue Code 26 U.S.C. § 6050P, as further defined and clarified by the  Treasury Regulation 1.6050P-1 (a)(1), states “a discharge of indebtedness is deemed to  have occurred…if and only if there has occurred an identifiable event described in  paragraph (b)(2) of this section.” Paragraph (b)(2)(F) of that section defines an  “identifiable event” as “[a] discharge of indebtedness pursuant to an agreement between  an applicable entity and a debtor to discharge indebtedness at less than full  consideration.” 26 C.F.R. § 1.650P-1(b)(2)(F).   25. However, Treasury Regulation 1.6050P-1, outlines certain exceptions to the § 1.650P  reporting requirements. 26 C.F.R. § 1.650P-1(d). The most pertinent of these eight  exceptions to the present case are §§ 1.650P-1(d)(2) and (3), which read, respectively:  (2) Interest. The discharge of an amount of indebtedness that is interest is not  required to be reported under this section.  (3) Non-principal amounts in lending transactions. In the case of a lending  transaction, the discharge of an amount other than stated principal is not required  to be reported under this section. For this purpose, a lending transaction is any  7 transaction in which a lender loans money to, or makes advances on behalf of, a  borrower (including revolving credits and lines of credit).   26. It is therefore entirely possible to forgive $600 or more of the debt and yet not be  required to even file a Form 1099C.   27. Section 1692e of the FDCPA prohibits a debt collector from making false, deceptive, and  misleading statements in connection with the collection of a debt. Advising Plaintiff that  the Internal Revenue Service requires that they be notified with information about  amounts of $600 or more, the statement “Whenever $600 or more is forgiven as a result  of settling a debt for less than the balance owed, the creditor may be required to report the  amount forgiven to the Internal Revenue Service on a 1099C form after which a copy  would be mailed to you” is deceptive and misleading in violation of the FDCPA.   28. Furthermore, a consumer who has had difficulty paying his debts is unlikely to have  income as a result of the settlement of a debt, in that such a person is more likely to be  insolvent (in the sense that his liabilities exceed his assets), and the discharge of  indebtedness by someone who is insolvent is not income.   29. Defendant gives erroneous and/or incomplete tax advice to consumers.   30. The purpose and effect of the statement is to suggest to the unsophisticated consumer that  failure to pay may get the consumer into trouble with the IRS. Good v. Nationwide  Credit, Inc., No 14-4295, 2014 WL 5422103 (E.D.Pa., Oct. 27, 2014); Wagner v. Client  Services, Inc., No. 08-5546, 2009 WL 839073, 2009 U.S. Dist. LEXIS 26604 (E.D.Pa.,  March 26, 2009); Sledge v. Sands, 182 F.R.D. 255 (N.D.Ill. 1998); Kaff v. Nationwide  Credit, Inc., 13-cv-05413-SLT-WP.   31. The false statements mislead the consumer as to the impact of attempting to settle the  matter for less than what Capital Management Services, L.P. claims is owed.   8  32. Section 6050P of the Internal Revenue Code requires that an "applicable entity" report  any cancellation or discharge of indebtedness in excess of $600.00 if, and only if, there  has occurred an identifiable event described in paragraph (b)(2) of that section.   33. Here, there is no basis to conclude that a triggering event has or will occur requiring  Defendant or CITIBANK, N.A. to report such forgiveness on a 1099c.   34. The gratuitous reference in a collection letter that a collector's client will report  forgiveness equal or greater than $600 on an IRS Form 1099C, is a collection ploy which  suggests to the least sophisticated consumer that he or she could get in trouble with the  IRS for refusal to pay the debt.   35. Said letter violated 15 U.S.C. § 1692e, and 1692e(10), by falsely representing that  “Whenever $600 or more is forgiven as a result of settling a debt for less than the balance  owed, the creditor may be required to report the amount forgiven to the Internal Revenue  Service on a 1099C form after which a copy would be mailed to you.” Such a statement  is objectively false. The law prohibits the Defendant from reporting information about the  consumer on a 1099C form unless certain "identifiable events" occur, none of which are  applicable to the Plaintiff herein.   36. Said letter is false and deceptive in that it does not explain that it is only under certain  limited circumstances that a 1099C form may be reported to the IRS.   37. Said letter language is false and deceptive in that it does not explain that the Defendant's  client is prohibited from reporting forgiveness on a 1099C form unless and until both  Plaintiff and Defendant have reached an "agreement" on the amount of the debt and the  amount that is being discharged.  9  38. Said letter is false and deceptive in that it falsely implies to the least sophisticated  consumer that the consumer will have to pay taxes on the difference between what the  Defendant claims is owed and what the consumer agrees to pay.   39. Said letter is false and deceptive in that it falsely implies to the least sophisticated  consumer that the consumer will have to pay taxes on any forgiven amount of $600 or  more without disclosing that 1099C forms are only issued for principal forgiveness not  interest forgiveness.   40. Said letter does not indicate how much of the current debt is interest and how much of it  is principal.   41. Said letter fails to disclose to consumers that there is a distinction between principal and  interest.   42. The false statements mislead the consumer as to the impact of attempting to settle the  matter for less than what the Defendant claims is owed.   43. Said letter violated 15 U.S.C. §§ 1692e, 1692e(5) and 1692e(10) by threatening to engage  in an act which is legally prohibited. Defendant's statement that its client “may be  required to report the amount forgiven to the Internal Revenue Service on a 1099C form”  as contained within the said letter, could be read by the least sophisticated consumer, as a  threat to engage in an act legally prohibited. The language falsely indicates that unless the  consumer paid the full amount that the Defendant alleges is owed, the Defendant is going  to unilaterally engage in conduct that is prohibited by law.   44. Defendant's actions as described herein also violate § 1692e(8), in that the language  contained within the said letter is a threat to report information that the Defendant knows,  or should have known to be false. Defendant is not permitted to report any forgiveness on  10 a 1099C tax form relating to a consumer unless certain "identifiable events" occur. The  threat to report any forgiveness on a 1099C tax form without regard for said "identifiable  events" is a violation of § 1692e(8).   45. The least sophisticated consumer could read this letter to mean that the Defendant is  going to report to the IRS that the entire difference between what the Defendant say is  owed, and what the Plaintiff pays, is taxable. The Defendant's letter fails to disclose to  consumers that there is a distinction between principal and interest.   46. Defendant's actions as described herein are also unfair and unconscionable in violation of  15 U.S.C. § 1692f; as well as harassing and abusive in violation of 15 U.S.C. § 1692d.   47. Defendant's letter gives consumers objectively false and deceptive tax advice.   48. Defendant's letter could mislead the least sophisticated consumer that unless the  consumer pays the entire amount that Defendant alleges is owed on the alleged debt, the  consumer is going to be reported to the IRS.   49. Defendant's letter could mislead the least sophisticated consumer into believing that  unless the consumer pays the entire amount Defendant alleges is owed for the debt, the  consumer is going to have to pay taxes on the entire unpaid balance.   50. Defendant voluntarily chooses to give the tax advice found in Defendant's letter.   51. No tax law or regulation obligates Defendant to include the notice regarding tax form  1099C in their collection letters.   52. Defendant's letter fails to disclose to consumers that there is a distinction between  principal and interest.  11  53. Misrepresentation of a debtor’s rights or liabilities under the Internal Revenue Code in  connection with the collection of a debt is an FDCPA violation. 1   54. The letter violated 15 U.S.C. § 1692e, by falsely representing that “Whenever $600 or  more is forgiven as a result of settling a debt for less than the balance owed, the creditor  may be required to report the amount forgiven to the Internal Revenue Service on a  1099C for after which a copy would be mailed to you.” Such a statement is objectively  false. If $600 or more is forgiven it may not be reported to the IRS. Said letter is false and  deceptive in that it does not explain that it is only under certain limited circumstances that  a 1099C Form may be reported to the IRS.   55. Just like the Second Circuit held in Easterling v. Collecto, Inc., The operative inquiry in  this case is whether the hypothetical least sophisticated consumer could reasonably  interpret Capital Management Services, L.P.'s letter's statement: “Whenever $600 or  more is forgiven as a result of settling a debt for less than the balance owed, the creditor  may be required to report the amount forgiven to the Internal Revenue Service on a  1099C for after which a copy would be mailed to you” as representing, incorrectly, that  the debtor is completely foreclosed from obtaining a settlement that includes forgiveness  of $600.00 or more without the IRS sending the debtor a 1099 (which would create a tax  liability) for the debt in question.  1 Wagner v. Client Services, Inc., 08-5546, 2009 U.S. Dist. LEXIS 26604 (E.D.Pa., March 26, 2009). (Court  refused to dismiss claim that 1099C warning was literally false, where defendant failed to show that plaintiff was  not within one of the exceptions to the reporting requirement.); Good v. Nationwide Credit, Inc., No. 14-4295,  2014 BL 302150 (E.D. Pa. Oct. 24, 2014) (finding that the statement "American Express is required to file a form  1099C with the Internal Revenue Service for any cancelled debt of $600 or more. Please consult your tax advisor  concerning any tax questions" is not true and does not accurately reflect the relevant law the court also found that  the statement's invocation of the IRS was deceptive and materially misleading in violation of the FDCPA.); Kaff v.  Nationwide Credit, Inc., 13-cv-05413-SLT-WP. (1099 language in violation because it failed to apprise debtors  that exceptions could apply to the creditor's mandatory reporting requirement, such as the exceptions for interest  and other non-principal debts.) Many classes have been certified. See Sledge v. Sands, 1998 WL 525433(class  certified), Follansbee v. Discover Fin. Servs., 2000 U.S. Dist. LEXIS 8724 (N.D. Ill. June 14, 2000). (Granting  final approval of the proposed class action settlement and application for attorney fees and incentive award for  confusing debt collection letter about canceled debt tax liability.)  12  56. The wording used in this letter is false and misleading because according to 26 C.F.R. §   57. Moreover, not only is the Defendant's representation in this regard literally false, it is also  fundamentally misleading in that it suggests that the debtor has no possible means of  obtaining a settlement which includes a discharge of $600.00 or more without creating a  tax liability.    58. This is because the least sophisticated consumer could be led to believe:   That unless the consumer pays the entire amount that the letter alleges is owed on  the debt, the consumer is likely to be reported to the IRS.   That unless the consumer pays the entire amount the letter alleges is owed for the  debt, the consumer is likely to have to pay taxes on the entire unpaid balance.   59. In addition, the 2nd Circuit has found that Collection notices are deceptive if they are  open to more than one reasonable interpretation, at least one of which is inaccurate. 2  2 Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 25 (2d Cir. 1989). (Because the collection notice was  reasonably susceptible to an inaccurate reading, it was deceptive within the meaning of the Act.); Clomon v.  Jackson, 988 F.2d 1314,1319 (2d Cir. 1993). (Collection notices are deceptive if they are open to more than one  reasonable interpretation, at least one of which is inaccurate.); Russell v. Equifax A.R.S. 74 F.3d 30, 34 (2d Cir.  N.Y. 1996) (A collection notice is deceptive when it can be reasonably read to have two or more different  meanings, one of which is inaccurate. The fact that the notice's terminology was vague or uncertain will not  prevent it from being held deceptive under § 1692e(10) of the Act.)  13  60. Defendant's collection letter’s capacity to discourage debtors from accepting any   61. settlement that includes forgiveness of $600.00 or more - without the IRS sending the  debtor a 1099C- renders its misrepresentation exactly the kind of "abusive debt collection  practice" that the FDCPA was designed to target. See 15 U.S.C. § 1692(e).   62. Therefore, the statement in the said January 2, 2015 communication concerning tax  consequences is false and misleading, and omits to state material facts, in violation of 15  U.S.C. §§ 1692e, 1692(e)(2), and 1692(e)(10).   63. Plaintiff seeks to end these violations of the FDCPA. Plaintiff and putative class members  are entitled to preliminary and permanent injunctive relief, including, declaratory relief,  and damages.  64. Plaintiff repeats, reiterates and incorporates the allegations contained in paragraphs  numbered “1” through “63” herein with the same force and effect as if the same were set  forth at length herein.   65. 15 U.S.C. § 1692e prohibits a debt collector from using any false, deceptive, or  misleading representation or means in connection with the collection of any debt.   66. While § 1692e specifically prohibits certain practices, the list is non-exhaustive, and does  not preclude a claim of falsity or deception based on any non-enumerated practice.   67. Collection notices are deceptive if they can be reasonably read to have two or more  different meanings, one of which is inaccurate.   68. The question of whether a collection letter is deceptive is determined from the  perspective of the “least sophisticated consumer.”  14  69. For purposes of 15 U.S.C. § 1692e, the failure to clearly and accurately provide the  consumer with complete and accurate information notifying them of their rights and  obligations is unfair and deceptive to the least sophisticated consumer.   70. Because the collection letter in the instant case omits important information and may lead  the consumer to act in a way contrary to his best interests, it is deceptive within the  meaning of 15 U.S.C. § 1692e.   71. The least sophisticated consumer would likely be deceived by Defendant's conduct.   72. The least sophisticated consumer would likely be deceived in a material way by  Defendant's conduct.   73. Defendant has violated § 1692e by using a false, deceptive and misleading representation  in its attempt to collect a debt.   74. Defendant could have taken the steps necessary to bring its actions within compliance  with the FDCPA, but neglected to do so and failed to adequately review its actions to  ensure compliance with the law.   75. Defendant sent a written communication, in the form annexed hereto as Exhibit A to at  least 50 natural persons in the State of New York within one year of the date of this  Complaint.  Plaintiff brings claims, pursuant to the Federal Rules of Civil Procedure (hereinafter  “FRCP”) Rule 23, individually and on behalf of the following nationwide consumer class  (the “Class”):  • All New York consumers who were sent collection letters and/or notices from  Defendant attempting to collect an obligation owed to or allegedly owed to  CITIBANK, N.A., in which Defendant improperly attempted to collect same, in  3 violation of 15 U.S.C. §1692 et seq.  • The Class period begins one year to the filing of this Action.   Violation of 15 U.S.C. § 1692e.  False or Misleading Representations as to the Rights of the Consumer  