CFPB Sues Collection Firm for Alleged FDCPA Violations Over Lack of Meaningful Attorney Involvement

The Consumer Financial Protection Bureau today filed suit against Foster & Garbus, a collection law firm, alleging it violated the Fair Debt Collection Practices Act by misrepresenting that attorneys were meaningfully involved in lawsuits.

A copy of the complaint in the case of Bureau of Consumer Financial Protection v. Foster & Garbus can be accessed by clicking here.

The complaint alleges the firm used non-attorney support staff and a “cursory and deficient review” of accounts to collect on 99,000 debts during the past five years. The firm allegedly collected “substantial sums of money from consumers who may not actually owe debts or may not owe debts in the amounts claimed in the collection suits,” according to the complaint.

Between 2014 and 2016, the firm, which had between 10 and 11 attorneys in addition to the named partners, filed 99,000 lawsuits against individuals. Unless a consumer disputed a debt, the defendant did not conduct “any inquiry into the facts surrounding an alleged debt” such as billing or account statements, payment histories, the terms and conditions governing the debt before filing suit.

The complaint details how one of the defendant’s named partners used two computer screens to review cases deemed “suit-worthy” by employees of the firm who were unable to contact or collect from individuals, and who have not filed for bankruptcy, are deceased, or are in the military . On one screen would be a complaint related to a particular account, which is generated using data from the defendant’s systems. On the other screen would be information about the account. The named partner approved 90% of the suits presented to him by collectors, having looked for “obvious” reasons to reject a suit, such as a recent payment or bankruptcy filing.

The file would then go to an associate attorney for review or rejection prior to filing the complaint. That attorney said he would spend a “minute or two” reviewing the complaint and two minutes to reviewing a debtor’s file before making a decision. In 2014, one associate attorney signed 41,498 of the 45,621 complaints it filed that year.

The defendant had original or support documentation for only about 37% of the accounts on which it filed suit against a consumer.

The defendant is charged with violating Section 1692e(3) and 1692e(10) of the FDCPA, which prohibit a debt collector from using any false, deceptive, or misleading representation to collect a debt, including the false representation that any individual is an attorney or that any communication is from an attorney.

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