Collection Attorneys
Forster & Garbus, LLPInformation and Alerts
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Government Actions
CFPB Takes Action to Halt Forster & Garbus LLP From Bombarding Consumers with Junk Lawsuits
The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.
As of 1/11/2023, the Consumer Financial Protection Bureau (CFPB) has reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for illegal debt-collection practices. If approved by the court, the 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.
Forster & Garbus, LLP is a debt-collection law firm based in Commack, New York. Forster & Garbus had major clients including Discover and Citibank. Between 2014 and 2016, at any given time, Forster & Garbus employed roughly 10 or 11 attorneys, in addition to its two named partners. From January 1, 2014 to the filing of the complaint, Forster & Garbus’s clients placed more than 136,700 accounts with the firm for collection.
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.
If entered by the court, the order would require Forster & Garbus to:
--Retain specific documents supporting the debt before filing a debt-collection lawsuit;
--Review documents supporting the debt before filing a debt-collection lawsuit;
--Dismiss certain debt-collection lawsuits;
--Pay $100,000 in penalties.
Important Information
Pending Government Action
The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.
On 9/16/2020, the New York Department of Financial Services (DFS) announced it has filed a statement of charges against debt collector Forster & Garbus LLP ("Forster & Garbus"). DFS alleges that Forster & Garbus, over the course of years, failed to treat consumers as required by the law. Overall, Forster & Garbus did not honor requests by consumers for substantiation of debt, that is, requests for information proving the validity of the debt and Forster & Garbus’s right to collect the debt. New York law requires that substantiation be provided within 60 days of any such request, and describes the particular kinds of documentation a collector must show to substantiate the debt.
These charges are the first to allege violations of New York State's Debt Collection Regulation, Part 1 of Title 23 of the New York Codes, Rules, and Regulations, promulgated in 2015. Forster & Garbus collects, among other types of debt, student loan debt for some of the largest student loan lenders and servicers in the United States. These student loan lenders and services, including Sallie Mae and Navient, have assigned to Forster & Garbus several thousand student loan debt accounts since the promulgation of Debt Collection Regulation.
In the statement of charges announced, the Department alleges that Forster & Garbus failed to comply with substantiation requirements in several ways, including:?
failing to provide any substantiation;
failing to provide substantiation within required timeframes; and
providing insufficient substantiation by omitting, for example, underlying transaction documents.
In failing to comply with the law, Forster & Garbus acted in an unacceptable manner to consumers. In one instance, a consumer questioned whether she actually owed the student loan debts in question, and requested proof of her liabilities. Forster & Garbus responded by suing the consumer. In another instance, Forster & Garbus delayed responding to a consumer's queries for months beyond the law's 60-day response requirement. Another consumer in severe financial distress and on the brink of homelessness questioned whether a debt actually belonged to her. In response, Respondent merely provided a single document -- a judgment -- which clearly amounts to insufficient substantiation under the law.
According to the statement of charges, the company’s conduct violates Section 1.4 of the Debt Collection Regulation. Under Section 408 of the Financial Services Law any such violation carries penalties of up to $1,000 per violation.?DFS alleges that each failure of the company to substantiate a consumer’s debt constitutes a separate violation carrying up to $1,000 in penalties per violation.
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