Say a customer of a large American bank, let's call him Paul, overdrafts on a debit card from said bank, let's call it ABC Bank. There is no notice of an overdraft at the time the money is withdrawn, and so Paul has no idea that he has just spent more money than he has. Seeing as he has accounts with Big Bank and Amazing Bank as well, he doesn't use ABC Bank much. A few months later, he receives a letter from a collections agency demanding payment for his debt to ABC Bank, and Paul, besides not being aware of his debt up until this notice, is worried the collections will hurt his credit.
Is this legal, considering he wasn't notified of his debt before it was sold or passed to collections?