CFPB Clarifies Deceptive Practices in Lawsuit Against Debt Collector

When debt collectors contact consumers about debts they owe, the debt collectors are prohibited from using deceptive practices under the Fair Debt Collection Practices Act (FDCPA) in order to convince consumers to pay any debts that they owe. According to a recent report from CNBC, the Consumer Financial Protection Bureau (CFPB) recently filed a claim against a debt collection company, alleging that it “violated federal law by falsely representing to consumers that its attorneys were meaningfully involved in preparing the collection lawsuits against them.” Between 2014 and 2016, the debt collection company, Forster & Garbus, allegedly filed more than 99,000 lawsuits against consumers.

While the debt collection company is based in New York, the CFPB’s decision to file a claim makes clear that debt collection companies that falsely inform consumers that attorneys are involved in filing lawsuits—when there are not actually attorneys involved—may have engaged in deceptive practices prohibited by the FDCPA. In other words, the CFPB’s lawsuit helps to clarify what the CFPB believes constitutes a deceptive collection practice that is prohibited by federal law.

Lawyers Did Not Actually Review the Merits of the Debt Collection Lawsuits
The primary allegation against the debt collection company is that it lied when informing consumers that lawyers were involved in filing lawsuits against those consumers, when lawyers were barely involved in the cases. Specifically, the report indicates that, while lawyers for the debt collection company “signed off on each lawsuit filed against a consumer, they had done little review of the merits of any given lawsuit, including checking the veracity of the listed debt owed.”

With regard to the thousands of lawsuits against consumers, the CFPB alleges that the debt collection company convinced consumers to pay “who may have no longer owed the debt or at least not the amounts claimed in the suits.” In more than 45,000 lawsuits filed by the debt collection company in 2014, and the CFPB alleges that the company only had “original or supporting documentation for less than 20% of them.”

The clients of the firm included credit card companies like Discover and Citibank, in addition to debt buyers. According to the CNBC report, “those debt buyers already agreed to the bureau’s 2015 finding that they had attempted to collect debts . . . that they either knew or should have known were inaccurate.” While the CFPB’s suit also concerns the legality of the debts at the heart of the lawsuits, the more salient part of the CFPB lawsuit is that it makes clear it believes a debt collection company’s decision to lie to consumers about the involvement of attorneys on a debt collection lawsuit is a violation of the FDCPA.

Violations of the FDCPA
What constitutes deceptive or unfair debt collection practices under the FDCPA? The FDCPA prohibits debt collectors from doing any of the following:

  • Misrepresenting the amount of debt owed;
  • Asking consumers to pay interest or fees that are not allowed under the original agreement;
  • Calling before 8:00 a.m. or after 9:00 p.m.;
  • Calling at your place of employment after you have told the debt collector to stop doing so;
  • Using obscene or abusive language;
  • Threatening you with violence if you do not pay your debt;
  • Threatening you with arrest if you do not pay your debt;
  • Telling third parties about the debt you owe without your permission;
  • Contacting third parties to get information about you;
  • Refusing to verify your debt; and
  • Continuing to attempt debt collection without verifying the debt.

Contact an Oak Park Consumer Protection Attorney
If you have concerns about your rights under the FDCPA, you should speak with an Oak Park debt collection lawyer about your situation. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

Wage Garnishment and Bankruptcy in Illinois

Should I Repay Time-Barred Debt?


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