CFPB files suit against NY's Forster & Garbus

[Brotherskeeper]

Commack, N.Y.-based Forster & Garbus LLP sought to collect on more than 99,000 debts through lawsuits between 2014 and 2016, relying on “nonattorney support staff, automation, and both a cursory and deficient review of account files” to file those suits, according to CFPB complaint filed on 5/17/19.

Federal district court case
Forster & Garbus, LLP
The Consumer Financial Protection Bureau today filed a lawsuit in the federal district court in the Eastern District of New York against Forster & Garbus, LLP, a New York debt-collection law firm.

The Bureau’s complaint alleges that Forster & Garbus violated the Fair Debt Collection Practices Act by representing to consumers that attorneys were behind 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 Bureau’s complaint seeks 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.

CFPB v FORSTER & GARBUS, LLP,

 

[Guest usctrojanalum]

This hits close to home for me as I live in Commack, NY. 

Most interesting is that Forster & Garbus are truly small potatoes in the grand scheme of things. They are a 12 attorney firm and have filed 99,000 lawsuits over 4 or 5 years.

This is unlike the last lawsuit the CFPB brought against Frederick Hanna; who had 400 employees and was filing 100,000 lawsuits per year.  

 

[Brotherskeeper]

 

 

@usctrojanalum

The sold "as is" blurb in the forward flow agreement may still be a problem:

"27. Forster & Garbus’s attorneys do not conduct reviews for warranties or disclaimers of warranties related to debt sales, and did not do so between 2014 and 2016. This means that debt buyers represented by Forster & Garbus may buy and seek to collect debts without any warranty that the debts are valid, accurate, or were owned by the seller. More broadly, this practice suggests that Forster & Garbus is generally unfamiliar with (and fails to conduct significant review of) its clients’ contracts." 

"28. ....Where supporting documentation has not been provided by one of its clients and a consumer has not requested substantiation of a debt, Forster & Garbus has generally not sought to investigate or otherwise verify information, such as the debt’s validity or accuracy, before filing suit. It has not sought payment histories, account applications, billing statements, copies of payments, cash-advance check copies, the terms and conditions governing an account, or consumer correspondence.

29. In 2014, of the 45,621 accounts on which Forster & Garbus filed suit, Forster & Garbus possessed original or supporting documentation for only 8,958 of those accounts—19.6% of accounts.

30. In 2015, of the 34,103 accounts on which Forster & Garbus filed suit, Forster & Garbus possessed original or supporting documentation for only 14,965 of those accounts—43.9% of accounts.

31. In 2016, of the 20,006 accounts on which Forster & Garbus filed suit, Forster & Garbus possessed original or supporting documentation for only 15,113 of those accounts—75.5% of accounts. In 2016, Forster & Garbus began to possess more original or supporting documentation for its accounts before filing suit because clients stopped referring accounts to Forster & Garbus until those clients were able to ensure the firm had sufficient information to permit the firm to sue and obtain judgments under the regulations of the Office of Court Administration. "

[Guest usctrojanalum]

All crazy allegations. Quite frankly, to do what the CFPB states is necessary to comply with the FDCPA would require a huge amount of scale that a small firm like Forster & Garbus wouldn't be able to handle. 

To handle the same case load + meaningfully review documentation on each file prior to filing a lawsuit would require F&G to grow at least 3x's larger than it currently is. And I imagine margins are pretty thin in consumer debt collection already, it probably would not make fiscal sense for their operation to continue.