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Minneapolis debt collector sued over notice to consumer

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A Minneapolis debt collection agency is facing a lawsuit alleging the agency sent a "deceptive" debt collection notice to a consumer in 2016.

On Nov. 7, 2016, Isxaaq Muhammad received a letter from Reliance Recoveries informing him that his account with Maplewood Allina Health was delinquent. The agency told Muhammad to pay $245.54. The notice added that a 6 percent interest may be charged annually on the past due amount.

But in a complaint filed Monday in U.S. District Court in Minnesota, Muhammad said that nowhere in the letter "does it explain whether interest is in fact being charged, whether it is included in the $245.54 account balance or whether it is separate from the $245.54 account balance."

The lawsuit accuses Reliance Recoveries of violating the Fair Debt Collection Practices Act, a federal law that protects consumers from abusive and deceptive collection tactics, by not clearly disclosing the debt amount that Muhammad owes in its initial communication.

The lawsuit also said that Reliance Recoveries uses a "template" letter to contact debts. It sent collection letters to more than 40 people in Minnesota in the year before the filing of the lawsuit, according to a court document. 

Muhammad and his Bloomington attorney, JD Haas, ask the court to consider the suit a class action.

Attempts to reach Reliance Recoveries by phone and email were not successful.     

The lawsuit seeks $1,000 damages for each person allegedly deceived by the agency.