CFPB Addresses Debt Collection Mill Lawsuits

Consumers in Illinois and throughout the United States are routinely contacted by debt collectors attempting to recover money for various types of debts. In some cases, debt collectors are attempting to collect on legitimate debts, meaning debts that actually exist and which the consumer owes, and for which the statute of limitations has not run out. However, there are also debt collectors that try to collect on fraudulent debts, or that continue trying to collect on debts that have been discharged in bankruptcy, debts for which the statute of limitations has run, and debts that never belonged to that particular consumer in the first place. According to a recent news release from the Consumer Financial Protection Bureau (CFPB), the agency has reached a settlement with a “debt collection mill” that has been “bombarding consumers with junk lawsuits.”

What should you know about the CFPB news, and what implications could it have for debtors in the Oak Park area?

CFPB Sues for Illegal Debt Collection Practices

According to the CFPB news release, the CFPB filed a lawsuit against Forster & Garbus, LLP, which the news release describes as a “debt collection mill,” and recently settled. As the news release emphasizes, if the proposed settlement is approved, it would prohibit this alleged “debt collection mills” from “filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents.” In addition, the proposed settlement, if approved, would require the debt collector to “dismiss any pending lawsuit where it cannot satisfy these requirements.” The settlement would also require the debt collector to pay a $100,000 penalty, which would go toward victim relief.

The CFPB lawsuit alleged that the debt collector “filed more than 99,000 debt-collection lawsuits” over a roughly three-year period, but had “documents to support only a fraction of those debts.” The lawsuit also alleged that the debt collector violated the Fair Debt Collection Practices Act (FDCPA) by attempting to collect debts from consumers through “false, deceptive, or misleading representations.”

Implications for Future Debt Collection Practices and Consumer Rights

Current CFPB Director Rohit Chopra explained that the debt collector “bombarded its customers with sketchy lawsuits on behalf of big lenders like Discover and Citibank.” While this particular case will only apply to consumers who were targeted by Forster & Garbus, or who were sued by this specific debt collector, the case could have broader implications. Indeed, as Chopra clarified, following the settlement of this lawsuit, the “CFPB will be scrutinizing large financial companies that enlist debt collection outfits operating lawsuit mills.”

You should know that you have rights under the FDCPA. Debt collectors cannot make threats to collect on debts, they cannot make false or deceptive representations to collect on debts, and they cannot contact you at certain times and through certain means once you ask them to stop. If you believe your rights were violated, you should get in touch with a consumer protection lawyer who may be able to assist you.

Contact Our Oak Park Consumer Protection Lawyers

Do you have questions about your rights as a debtor, or questions about debt and bankruptcy? One of our experienced Oak Park consumer protection attorneys can help. Contact the Emerson Law Firm today.



See Related Blog Posts:

How to Keep Your Property in a Consumer Bankruptcy Case

Top Benefits of Bankruptcy in 2023

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