WASHINGTON— The Consumer Financial Protection Bureau (CFPB) is reporting it has reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for illegal debt-collection practices.
If approved by the court, the CFPB said the proposed settlement would prohibit Forster & Garbus 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 order would also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements, the Bureau said. Forster & Garbus would also be required to pay a penalty of $100,000, which would be deposited into the CFPB’s victims relief fund.
“Forster & Garbus bombarded its customers with sketchy lawsuits on behalf of big lenders like Discover and Citibank,” said CFPB Director Rohit Chopra. “The CFPB will be scrutinizing large financial companies that enlist debt collection outfits operating lawsuit mills.”
About the Firm
Forster & Garbus, LLP is a debt-collection law firm based in Commack, N.Y., and had major clients, including Discover and Citibank. According to the Bureau, between 2014 and 2016, at any given time, Forster & Garbus employed roughly 10 or 11 attorneys, in addition to its two named partners. From Jan. 1, 2014 to the filing of the complaint, Forster & Garbus’s clients placed more than 136,700 accounts with the firm for collection, the Bureau said.
In 2019, the CFPB sued Forster & Garbus alleging that from 2014 through 2016 fewer than a dozen attorneys at Forster & Garbus filed more than 99,000 debt-collection lawsuits, while having documents to support only a fraction of those debts. The CFPB further alleges 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.
The Terms
The CFPB said that if entered by the court, the order would require Forster & Garbus to:
- Retain specific documents supporting the debt before filing a debt-collection lawsuit. “Forster & Garbus would be required to possess documents with specific information about the debt, including the name of the original creditor, evidence that the consumer authorized the debt, the chain of title supporting any sale of the debt, and a break-down of how the debt amount was calculated.”
- Review documents supporting the debt before filing a debt-collection lawsuit. “Forster & Garbus would be required to certify that an attorney whose name will appear on the complaint has reviewed the documentation supporting the debt and ensured that the complaint is consistent with that documentation.”
- Dismiss certain debt-collection lawsuits. “Forster & Garbus would be required to dismiss any pending lawsuit against a consumer if it does not certify its compliance with the specified documentation and meaningful attorney review requirements within 120 days of the court entering the order.”
- Pay $100,000 in penalties. “The order would require Forster & Garbus to pay a $100,000 penalty to the CFPB, which would be deposited into the CFPB’s victims relief fund.”
The full order can be read here.
Still Free in ’23! The Freshest CU Headlines. Right to Your Inbox.
The biggest, best and freshest news reporting in credit unions remains free in ’23! Each morning CUToday.info delivers its daily update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.