Newsroom

May 20, 2019

CFPB files lawsuit against debt-collection firm

CFPB HeadquartersThe CFPB has filed a lawsuit against a debt-collection law firm alleging that it brought suits against consumers without investigating or verifying facts.

The bureau's complaint against Forster & Garbus, LLP also alleges that the New York-based firm violated the Fair Debt Collection Practices Act due to misrepresentation and the Consumer Financial Protection Act's prohibition against "deceptive acts and practices."

According to a release issued by the CFPB, the bureau's complaint seeks an injunction against the firm in addition to damages, redress to consumers, disgorgement of ill-gotten gains and the imposition of a civil money penalty.

Earlier this month, the CFPB issued a proposed rulemaking related to third-party debt collection; CFPB Director Kathy Kraninger further explained the bureau's intentions for the rulemaking during a NAFCU-attended town hall.

NAFCU will continue to urge the bureau to exempt credit unions from any rules related to first- and third-party debt collection, as credit unions are not the bad actors in this space. Regulation of certain debt collection practices could have a negative impact on the credit union industry and would make it more difficult for credit unions to offer affordable, high-quality products to their members.

A copy of the complaint, filed in the federal district court in the Eastern District of New York can be viewed here.