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CFPB Settles Pending “Meaningful Attorney Involvement” Lawsuit

  • Written by Steel Rose

On January 11, the Consumer Financial Protection Bureau (CFPB) announced it reached a settlement with law firm Forster & Garbus, LLP in its lawsuit over alleged illegal debt collection practices. Specifically, the CFPB alleged that, from 2014 through 2016, fewer than a dozen attorneys filed more than 99,000 debt collection lawsuits, while having the requisite supporting documents in only a fraction of those cases. In doing so, the CFPB alleged (similar to its previous actions involving the law firms Frederick J. Hanna & Associates and Pressler & Pressler, LLP) that Forster & Garbus falsely represented to consumers that attorneys were meaningfully involved in preparing and filing the lawsuits, violating the Fair Debt Collection Practices Act’s prohibition against using misleading representations in the collection of debts and the Consumer Financial Protection Act’s prohibition against deceptive acts and practices. Under the settlement agreement, the law firm agreed to obtain proper supporting documents before filing collection lawsuits and also to pay a $100,000 civil penalty.

Specifically, under the terms of the Stipulated Final Judgment and Order, Forster & Garbus agreed to:

  • Only file debt collection lawsuits when it has in its possession the requisite supporting documents, which include the name of the original creditor, evidence that the consumer authorized the debt, the chain of title for the debt, and a break-down of how the debt amount was calculated.
  • Ensure that any attorney whose name will appear or has appeared on the complaint in any collections lawsuit has:
    • reviewed the supporting documentation and confirmed the complaint is consistent with those documents;
    • logged into the consumer’s account on Forster & Garbus’ computerized account management system or any other software that would create an electronic record that the attorney of record has accessed a consumer’s file;
    • confirmed the statute of limitations has not run on the account;
    • confirmed that the consumer’s debt was not discharged in bankruptcy or subject to a pending bankruptcy proceeding;
    • confirmed the consumer’s correct identity and current address to determine the appropriate venue for a lawsuit; and
    • certified in writing or in Forster & Garbus’ computerized account management system, or any other software program that creates an electronic record, that the initiation of the collections suit complies with the requirements of the proposed order.
  • Ensure that any pending collections lawsuit complies with the above two requirements or, if unable to do so within 120 days of entry of the order, file a motion to voluntarily dismiss that suit.

The conduct provisions in the Stipulated Final Judgment and Order look substantially similar to those in the Hanna and Pressler cases previously entered into by the CFPB. Notably, in the Stipulated Final Judgment and Order the law firm neither admitted nor denied the complaint’s allegations, except for acknowledging the court’s jurisdiction. To read more click here.