Debt Collector for Citibank, Discover Accused of "Junk Lawsuits"
Debt Collector for Citibank, Discover Accused of "Junk Lawsuits"
Nearly 100,000 suits identified as problematic by consumer protection agency
A top debt collection law firm for consumer finance providers such as Discover and Citibank is facing an enforcement action from the Consumer Financial Protection Bureau (CFPB).
The CFPB announced it is bringing an action against the law firm of Forster & Garbus for illegal debt collection practices, including the filing of junk lawsuits designed to intimidate consumers into paying claims.
“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.”
A 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. Forster & Garbus would also be required to pay a penalty of $100,000, which would be deposited into the CFPB’s victims’ relief fund.
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 Credit Acceptance Nightmare
The Consumer Financial Protection Bureau (CFPB) and the New York Attorney General’s Office today announced the filing of a lawsuit against auto lender Credit Acceptance for the company’s practices that allegedly created financial distress, car repossession, and debt collection actions for borrowers. The complaint seeks relief for impacted consumers as well as a civil money penalty to discourage Credit Acceptance from engaging in these practices in the future.
“Credit Acceptance obscured the true cost of its loans to car buyers, leading to severe financial distress for borrowers and subjecting them to aggressive debt collection tactics on loans its own systems predicted that borrowers can’t afford to repay,” said CFPB Director Rohit Chopra. “The CFPB and the New York Attorney General seek to halt Credit Acceptance’s illegal practices and make consumers whole.”