CFPB Sues Debt-Collection Agency Over Deception Allegations

The Consumer Financial Protection Bureau (CFPB) said Friday (May 17) that it has filed a lawsuit in federal court against a debt-collection agency that, the agency said, violated the Fair Debt Collection Practices Act.

The lawsuit targets Forster & Garbus, LLP, a debt-collection law firm based in New York. According to the allegations by the CFPB, the debt-collection firm represented to “consumers that attorneys were meaningfully involved in its lawsuits when, in fact, attorneys were not meaningfully involved in preparing or filing them. The Bureau’s complaint also alleges that Forster & Garbus violated the Consumer Financial Protection Act’s prohibition against deceptive acts and practices by making such representations to consumers through its lawsuits.”

The CFPB said it is seeking “an injunction against Forster & Garbus, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.” Left unspecified was the amount of damages being sought.

The complaint, filed Friday with the U.S. District Court, Eastern District of New York, alleges that “since at least January 2015,” the firm “relied on non-attorney support staff, automation, and both a cursory and deficient review of account files to attempt to collect more than 99,000 debts that consumers allegedly owe to Forster & Garbus’s clients.”

The government watchdog agency said the Fair Debt Collection Protection Act provides consumers with clear protections from harassment by debt collectors. It also lays out straightforward options to address or dispute debts.

Debt collections have been the second largest generator of consumer complaints to the CFPB since it added them to its complaint database in June of 2013. Mortgages have dominated the top spot since the database was rolled out in 2012. One-third of all complaints in 2017 were about debt collections. Consumers complain about agencies hounding them day and night, threatening their relatives and harassing them at work.