A federal consumer watchdog last week filed suit against a Long Island debt-collection firm, charging it with improperly filing consumer lawsuits on a “massive scale,” without “meaningful attorney involvement.”
The suit, filed last week by the U.S. Consumer Financial Protection Bureau, alleges Commack-based Forster & Garbus used “high-volume litigation tactics” to collect “substantial sums of money from consumers who may not actually owe debts” or don't owe the amounts claimed in more than 99,000 suits filed between 2014 and 2016.
The suit seeks unspecified fines, damages and legal costs, restitution to customers, disgorgement of ill-gotten gains, and to permanently bar Forster & Garbus from committing future violations.
In a statement, Forster & Garbus’ attorney Joann Needleman said the firm denies the allegations, and noted the firm cooperated in the bureau’s probe.
“Given this, we were deeply disappointed” that the complaint’s allegations “misstated the sworn testimony by F&G attorneys and badly mischaracterized the information and documentation we provided," Needleman's statement said.
“Forster & Garbus is fully committed to defending its ethical and compliance practices and we look forward to our day in court,” she said.
Representatives for the Consumer Financial Protection Bureau didn't return a call seeking comment.
Forster & Garbus, in operation for “several decades,” according to the suit, works primarily to collect personal, family or household debts incurred by credit cards, student loans and home equity loans, among others. Its clients include debt buyers — companies that purchase old, uncollected debts in bulk from original creditors, usually at deeply discounted prices — and other creditors.
The company, which employed 11 lawyers between 2014 and 2016, processed more than 136,700 debt-collection accounts during that time, the suit says. Clients generally send information to the firm electronically for civil complaints to be filed, the suit says.
“Historically,” the suit alleges, “unless a consumer disputes a debt, Forster & Garbus has generally not conducted any inquiry into the facts surrounding an alleged debt” before filing suit. The firm “does not conduct reviews for contractual disclaimers related to debt sales, even though many of Forster & Garbus’s clients are debt buyers.”
Needleman denied those charges. The firm has policies and procedures that ensure all its attorneys “appropriately review information to support pleadings filed in court,” and comply with federal debt-collection laws, Needleman’s statement said. She called it “not surprising” that the complaint did not name specific consumers impacted by the company’s alleged practices.
The bureau charged the firm filed suits bearing the names and signatures of attorneys “despite those attorneys not being meaningfully involved in reviewing the merits of the lawsuits.” Instead, the agency claims, Forster & Garbus “relies on non-attorney staff and automated processes” to identify and prepare lawsuits for filing.
During the three-year period of the complaint, the attorneys' reviews did not include checking applications, billing statements, copies of payments or payment histories, terms and conditions or consumer correspondence, the suit alleges.
The complaint says Forster & Garbus has “generally not sought to investigate or otherwise verify information such as the debt’s validity or accuracy before filing suit."
The firm more recently has begun to gather more information about the cases it pursues because “clients stopped referring accounts” to Forster & Garbus until the firm was able to ensure that it had enough information to sue and win judgments under court rules, according to the lawsuit.