On May 17th the Consumer Financial Protection Bureau (CFPB) filed suit against the familiar debt collection firm Forster & Garbus.
This case attempts to tackle the modern speed of debt collection where accounts placed for regular or legal collections are often weak on supporting documentation. And with the more automated mass market attempt to scale collection activities, the CFPB alleges things like professionally reviewing accounts or making supportable factual claims have been pushed aside.
The CFPB states, “Accounts placed with Forster & Garbus have generally been electronically sent to Forster & Garbus with the data needed to populate Forster & Garbus’s templates for communications with consumers, including templates for civil complaints. This data includes the consumer’s name, address, and social security number, the original account number, the date the account was opened, the name of the present creditor, the name of the original creditor, the date of chargeoff, the amount of the debt, and the last payment date.”
With that limited information, the CFPB states collection activity ensued without any fact-checking by the collection company and attorneys. “Historically, unless a consumer disputes a debt, Forster & Garbus has generally not conducted any inquiry into the facts surrounding an alleged debt or requested supporting documentation, such as account applications, billing statements, payment histories, the terms and conditions governing an account, or consumer correspondence, from its clients to corroborate purported debts before filing suit. In addition, Forster & Garbus does not conduct reviews for contractual disclaimers related to debt sales, even though many of Forster & Garbus’s clients are debt buyers.”
It might just be that Forster & Garbus thought some of the cases were easy wins for them since the vast majority of consumers, even when sued, just stick their head in the sand and never deal with the issue. As the lawsuit says, “If the non-attorney personnel do not receive a response from a consumer to demands for payment or an account cannot otherwise be resolved, Forster & Garbus’s non-attorney personnel will identify the account as “suitworthy.”
The CFPB feels that not only did the collection not bother checking the facts of the cases but that the small number of employed attorneys by the firm could never have properly reviewed the cases before filing lawsuits against consumers.
Even though the collection company filed nearly 100,000 lawsuits between 2014 and 2016, the complaint says, “Forster & Garbus’s Collection Suits bore the names and signatures of attorneys despite those attorneys not being meaningfully involved in reviewing the merits of the lawsuits, including conducting any inquiry into the facts, or in preparing the pleadings.”
While Forster & Garbus is criticized in the suit for their process, one thing they look for to not file suit is if the consumer has filed for bankruptcy protection. Another excellent why bankruptcy is a reasonable debt relief option when facing bad money troubles.
One former attorney for the law firm said that while the lawsuits were filed under his name and had his signature on them, “His review of each complaint only took “a minute or two,” and he would allocate roughly two minutes to reviewing a debtor’s file before approving and signing a complaint.”
“At least one former associate attorney with Forster & Garbus did not know, when he worked at Forster & Garbus, whether the information supplied by the firm’s clients was accurate, and he considered the issue outside of his purview. He also did not review any materials other than what he received from the client before signing a complaint. This attorney signed complaints for 41,508 accounts from January 1, 2014 through December 31, 2016.”
The lawsuit filed by the CFPB says Forster & Garbus did not conduct reviews of the accounts placed with them for collection to make sure “the debts are valid, accurate, or were owned by the seller.”
National Collegiate Student Loan Trust Debts
The complaint says, “Forster & Garbus files debt-collection lawsuits on behalf of debt buyers, including: (1) many of the National Collegiate Student Loan Trusts; (2) Asset Acceptance, LLC; and (3) Midland Funding, LLC.”
The National Collegiate Student Loan Trust debts have always been problematic and there are serious questions if supporting documentation to prove the consumer owes the account, exists. Read this.
The CFPB said, “In September 2017, the Bureau took action against the 15 National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc., alleging that they sued consumers for private student-loan debt that the companies could not prove was owed or was too old to sue over.”
You can read the full lawsuit filed, here.