Charging illegal debt collection practices – including filing “junk lawsuits” – by a New York debt collection firm, the federal consumer financial protection agency said it has reached a settlement that would sharply curtail any new legal actions by the company.
In a release, the Consumer Financial Protection Bureau (CFPB) said the settlement in its lawsuit against the law firm Forster & Garbus, LLP, would prohibit the firm from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents.
The CFPB said the settlement would also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements. The firm would also be required to pay a penalty of $100,000, which would be deposited into the CFPB’s victims relief fund.
The Commack, N.Y., firm, the CFPB said, included such clients as Discover and Citibank. The agency said between 2014 and 2016 the firm employed roughly 10 or 11 attorneys, in addition to its two named partners. From Jan. 1, 2014, to the filing of the complaint in 2019, Forster & Garbus’s clients placed more than 136,700 accounts with the firm for collection, it said.
The bureau described the firm as a “debt collection mill” that was “bombarding consumers with junk lawsuits,” illegally suing borrowers. CFPB said the firm had documents to support only a fraction of the debts alleged in the lawsuits.
The CFPB further claims 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 (FDCPA) prohibition against collecting debts by using false, deceptive, or misleading representations and the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices.