Posts Tagged ‘lawsuit’
Hackensack law firm Forster, Garbus & Garbus has agreed to pay $35,000 to settle claims that it filed hundreds of debt collection suits against consumers without individual attorney review.
The firm allegedly violated the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692e(3), by giving a false impression that an attorney was involved in the filing of those complaints, when in fact they were mass-produced.
The suit, Krug v. Forster, Garbus & Garbus, 10-cv-1844, touches on an inchoate area of law — namely, how much investigation an attorney must perform to determine the validity of an alleged debt before filing a collection suit.
“It’s a new area and the case law hasn’t developed yet,” says the named plaintiff’s lawyer, Philip Stern, head of a Maplewood firm.
A joint motion filed Monday in District Court in Newark seeks approval of the settlement, which calls for Forster Garbus to pay $7,500 to class members and $27,500 in legal fees.
The plaintiffs are debtors who were served with complaints filed by Forster Garbus on behalf of Arrow Financial Services in Special Civil Part in Cumberland County for a one-year period starting in April 2009.
Named plaintiff Karl Krug, of Millville, was alleged to have defaulted on a $4,947 credit card bill to Washington Mutual Bank. The bank sold the debt to Arrow Financial Services of Nile, Ill., which, in turn, retained Forster Garbus in an attempt to collect from Krug.
In April 2009, Forster Garbus sent Krug a dunning letter which stated, in part, that “at this time, no attorney with this firm has personally reviewed the particular circumstances of your account.” In June of that year, a nonattorney at the firm left two phone messages on Krug’s answering machine. On June 5, the firm sued Krug on behalf of Arrow. Partner Glen Garbus signed the complaint.
Krug retained Stern, who won dismissal of the collection case in April 2010 after Arrow was unable to present business records to show the debt was valid. The current suit was filed that month.
Stern says a ruling in the Eastern District of New York, a few months before Krug’s suit was filed, was the first to hold that an attorney violated the FDCPA by filing a collections suit without anything more than a cursory inquiry into whether the debt is valid. In Miller v. Upton, Cohen & Slamowitz , 687 F. Supp. 2d 86 (E.D.N.Y. 2009), which stemmed from an alleged default on a Lord & Taylor charge account, the court rejected the lawyer’s assertions that his general knowledge of credit practices at the retailer and its national collections counsel were a substitute for specific knowledge of an individual file.
Krug’s complaint cited New Jersey Court Rule 1:4-8, which requires a lawyer signing a complaint to have read it and to have conducted a reasonable inquiry that the allegations of the case have factual support.
The suit also claimed that Forster Garbus placed telephone calls to class members that falsely conveyed the impression that the person calling was an attorney, and those calls failed to provide meaningful disclosure of the law firm’s identity as caller or to disclose that the firm is attempting to collect a debt and that any information obtained will be used for that purpose — all in violation of the FDCPA.
Of the $7,500 payable to class members under the settlement, $2,500 is to go to Krug and the rest will be distributed among the roughly 200 class members, who stand to receive around $25 each. Stern says that although the recovery may seem modest, it’s more than the class members would get as damages under the FDCPA if the case were tried.
The pool of $5,000 distributed to class members is greater than would be available if the case was tried, says Stern. The FDCPA limits recovery in such cases to the 1 percent of the defendant firm’s net worth, but Forster Garbus agreed in the settlement to go over the 1 percent limit, says Stern. He is bound to keep the firm’s net worth confidential.
Forster Garbus was represented in the case by Gregg Kahn of Wilson Elser in Newark, who did not return a call. Garbus, a named defendant, also did not return a call.
Source: New Jersey Law Journal
(Philadelphia, PA) -A woman saying she was harassed by Capital One for a disputed $4,000 credit card debt has filed suit after the bank demanded more than $ 286 million dollars. Attorney Craig Thor Kimmel of Kimmel and Silverman, P.C., an Ambler-based consumer law firm, has filed the suit on behalf of Patrice Perry in Philadelphia County, Pennsylvania.
According to the complaint, Capital One first demanded Perry pay $3,845 for purchases on a credit card. Perry disputed the debt and turned the letter over to her family lawyer, who wrote Capital One to cease and desist contacting Perry directly. Disregarding the letter, Capital One allegedly stepped up collection efforts, placing more calls to Perry and claiming that it was doing so because the lawyer did not make a substantial settlement offer to resolve the account. Telephone calls were made to her home and workplace, where she alleges, her employer does not allow personal calls.
Subsequently, Perry received more letters, each demanding different amounts, some higher than others, all threatening legal action if not paid promptly. The letters failed to state how the varying amounts were calculated or if amounts sought were based upon any contract between Capital One and Perry authorizing such charges. After a second cease and desist letter from the family lawyer was disregarded, Capital One in response sent a letter demanding immediate payment of $286,651,237 from Perry. The letter went on to instruct Perry to mail full payment in the envelope provided. It was at this time that Perry’s family lawyer contacted Kimmel, who assumed representation.
The complaint alleges the $286 million demand was so outrageous that it could not be the result of a computer glitch, and that it required human intervention to be sent. Perry alleges the basis for sending it was embarrass, humiliate, intimidate and cause emotional distress, of amounts incapable of being understood.
The lawsuit alleges that Capital One was compelled to cease communication upon receipt of the initial letter from her family lawyer and used false, deceptive and misleading communications to collect a debt.
Perry further claims that Capital One threatened to report the disputed debt to the credit reporting agencies, which would adversely affect her FICO credit score and unnecessarily make her other creditors insecure.
“Harassing calls, disregard for a lawyers written instructions on two occasions, demands for payment of differing and arbitrary amounts and the final letter seeking more than $286 Million, demonstrates serious abuses at the collection office of Capital One.” says Attorney Kimmel. “From this example we see how a financial terrorist works in today’s economic times and that is by escalating tensions, pushing the person to the limit, and making threats, without regard for civility, accuracy or the legal rights of the individual. No one should ever suffer the indignity and humiliation my client has experienced.”
Kimmel advises consumers to be guarded with creditors and debt collectors working for them. He recommends seeking legal advice before paying disputed debts, entering repayment agreements or providing/confirming personal information. Under the federal Fair Debt Collection Practices Act consumers have substantial protection from this type of behavior with the debt collector, who must pay all legal fees of the consumers lawyer”, says Kimmel, “and most states, like Pennsylvania in this case, offer similar protections from creditor abuse of the type Capital One undertook with Ms. Perry.”
For more information regarding consumers’ rights in dealing with debt collection harassment, please visit www.creditlaw.com.
Related Articles in the News:
Debtor strikes back at credit card company
Lawsuit: Capital One Sent Me Letter Demanding $286 Million
Courthouse News post
Across the nation, there is a surge in lawsuits against people who aren’t paying their bills, driven by the debt-buying industry that has surged in the past three years as debt has become cheaper and cheaper to buy amid hard economic times.
On the same day that Midland Funding LLC filed suit against a New York social worker, it filed 109 lawsuits against consumers with delinquent debt in Bronx County Civil Court. The courthouse has handled 4,279 similar cases since the beginning of the year. None of the debtors sued that day had lawyers and only 10% showed in court.
Roughly 94% of collection cases filed against borrowers result in default judgments in favor of the debt buyer, according to industry estimates. The majority of borrowers don’t have a lawyer, some don’t know they are even being sued, and others don’t appear in court, say judges.
The increase in lawsuits creates problems for the legal system and some judges have claimed hearing as many as 400 debt collection cases in a single day. In a number of cases, the debt buyer’s ignore state and federal laws, such as the Fair Debt Collection Practices Act.
A growing number of cases brought by debt buyers are plagued by sloppy, incomplete or even false documentation of debts, according to the 20 judges around the country interviewed by the Journal. According to a deposition filed as part of a lawsuit against Midland Funding, an employee testified that he signs 200 to 400 affidavits a day and very few are checked for accuracy.
Read the entire story here: Boom in Debt Buying Fuels Another Boom—in Lawsuits
Should Facebook be off-limits for debt collectors on the prowl? One Florida woman thinks so.
Melanie Beacham, of St. Petersburg, Fla., filed a complaint against MarkOne Financial, LLC, alleging that employees of MarkOne harassed her and her family members over Facebook to intimidate her into paying an alleged debt. A representative of MarkOne contacted Melanie’s sister and cousin through Facebook and a screen capture included in the complaint shows a message stating, “Please Have Melanie D Beacham call me” and the message included his phone number.
Although MarkOne declined comment because of pending litigation, the company stated that its policy is to use Facebook to locate the person when their profile is fully public and when he or she has not responded to requests through “conventional means”.
The legal issues surrounding the usage of Facebook in debt collection are somewhat vague because the Fair Debt Collection Practices Act (FDCPA) was written decades ago, long before the advent of social media.
Regardless of what kind of medium debt collectors use to reach consumers, they are prohibited from revealing information to third parties and cannot make false, deceptive, misleading or harassing representations.
Read the full story from ABC: Women Sues Debt Collector Over FB Messages.
When Melanie Beacham was on medical leave from her job last summer, she got behind on her car payments.
Although she called the finance company to explain, debt collectors not only telephoned her repeatedly but found another way to make her life difficult, the 34-year-old Florida resident says: Facebook.
Locating her social networking site also helped them find relatives’ Facebook pages. Then, she alleges in a lawsuit, they sent messages on the social networking site to a sister and a cousin of hers, prompting a wider family discussion about Beacham’s financial situation, reports the St. Petersburg Times.
She is seeking damages from Mark One Financial of Jacksonville for harassment and invasion of privacy, as well as a court order prohibiting the company from contacting friends and family members through Facebook or any other social networking site.
A representative of Mark One declined the newspaper’s request for comment.
However, the company’s managing director, Bruce Newmark, told WKMG, speaking generally, that the company will use Facebook to contact a client when it can’t reach an individual by phone.
Beacham’s lawyer, Billy Howard of Morgan & Morgan, says he’s never heard of another case alleging harassment by bill collectors via a social networking site. But, he predicts, there will be more such suits:
“Debt collectors,” he says, “are like any other business. They change according to their environment.”
Article Source: http://www.abajournal.com/news/article/lawsuit_points_to_alleged_new_tool_in_debt-collection_arsenal_facebook
Chicago debt collection law firm Friedman & Wexler has apparently shut down as its fights lawsuits claiming it withheld money from clients.
Calls to the law firm’s main number aren’t being answered, and an e-mail sent to one of its employees says the firm is winding down, the Chicago Tribune reports. The firm handled thousands of checks and wage garnishments for its clients every month.
Several suits have been filed against the firm by former clients who claim the firm and principals Norman Wexler and Mitchell Wexler withheld funds from clients, the story says. One former client, the lending arm of Volkswagen, alleges the firm misappropriated $1.4 million.
The story has details on some of the litigation. A judge in the Volkswagen case issued an injunction in October that freezes the firm’s bank accounts, except for normal operating expenses. In another case filed by the state of Illinois, a judge ordered Norman and Mitchell Wexler to restore more than $900,000 to trust accounts and ordered them jailed when they missed the first installment. They made the payment later that day, their lawyer, George Grumley, told the Tribune. Grumley said the state owes the firm more money in unpaid fees than the firm owes the state.
At least one consumer whose credit card debt was being collected by the law firm was never told of the closing. “What’s going to happen to me?” consumer Dawn Estenor of Denver asked in a Tribune interview. “Is the account going to get sold someone else? Am I going to rack up more interest?”
Story published on the ABA Journal website, original article here.
MORGANTOWN – A man has filed a punitive class action lawsuit against the Kentucky-based law firm that he says illegally sent him a debt collection letter.
Nicholas Davis claims he received a letter from defendant Mapother and Mapother in June 2008 telling him he owed it $861.96. According to Davis’ complaint filed Jan. 11 in Lewis Circuit Court, the letter contained Steven B. Mulrooney’s stamped signature.
In February 2009, Mapother mailed a second letter into Lewis County threatening to proceed with further legal action if it was not paid money, the suit states.
Making Davis angrier, the letters were sent to an incorrect address in Weston and not to his Morgantown home.
“Even a cursory examination of credit report information would have provided Mapother or any other collection agency with the correct address,” the suit states.
However, Mapother claims it and co-defendant Midland Funding sent collection letters to the address Davis supplied to Midland.
“Nowhere in the counts does Plaintiff state either how attempting to contact the debtor at the last address he provided is a violation of any law, nor how there is any duty under any law imposed upon Mapother or Midland to engage in excessive efforts to find new addresses, other than the one provided by the debtor previously, searching for where a debtor might be found,” the suit states.
Davis claims he never should have received letters because West Virginia law requires that any collector or collection agency hold an approved collection agency license and a collection surety bond, neither of which Mapother possessed.
Mapother disputes the claim, saying it is not a collection agency, but instead an attorney-at-law handling claims in its own name.
Davis also argues attorneys must be familiar with a case before signing their name to a debt collection letter, the complaint says.
“If the attorney has not reviewed the consumer file, he or she could not sue as no facts would be known to the attorney and threats of legal action would be deceptive,” his suit states.
But Mapother claims a Second Circuit Court ruling allows attorneys the opportunity to send debt collection letters as long as they include a disclaimer clearly stating that the attorney is not acting as such.
“The Second Circuit made it clear that the disclaimer language complained about in the Complaint, rather than making the letter confusing or deceptive, actually accomplishes the opposite; clearly and unambiguously informing the debtor of the exact role the attorney currently holds,” Mapother’s motion to dismiss states. “For example, a letter from an attorney could easily be misconstrued by the ‘least sophisticated consumer’ as an actual legal process. The disclaimer language makes it clear this is not the case.”
Davis is seeking an unspecified judgment, plus pre- and post-judgment interest, costs, attorney’s fees and statutory damages.
But Mapother and Midland say he should receive no reward.
“When critically examined, the entire Complaint is grossly deficient,” the request for dismissal states. “It is completely lacking in legal and factual support. As the situation stands, it alleges counts that are directly in opposition to the statutory and case law applicable in this case. In such a situation, there is no choice but to dismiss the Complaint for failure to state a claim.”
Mapother and Midland, Kentucky and California corporations respectively, removed the case to U.S. District Court for the Northern District of West Virginia, alleging Davis and the defendants are residents of different states and that Davis is seeking more than $75,000.
Franklin D. Cornette of Cornette Law in Weston will be representing Davis.
E. Taylor George of Mapother and Mapother in Huntington will be representing Mapother and Midland.
Original story from The Record.
