On behalf of Jason Zimmerman and other consumers, Lemberg & Associates (www.stopcollector.com) has won a $350,000 class action award against debt collection agency Portfolio Recovery Associates for violations of the Fair Debt Collection Practices Act (FDCPA). This is the largest reported judgment in a Fair Debt Collection class action case. According to Sergei Lemberg, who was labeled the “most active consumer attorney” of 2012 by debt collection industry insider WebRecon LLC, “We are gratified that the judge saw it fit to impose a significant, meaningful penalty for PRA’s intentional violations of the FDCPA.”
The court ruled that Portfolio Recovery Associates violated the FDCPA by sending 990 consumers debt collection correspondence that simulated legal process. The package consisted of a letter plus a set of legal-looking documents, such as a draft Summons and Complaints. According to Lemberg, “The FDCPA prohibits dissemination of fake legal papers on its face. The court rightfully labeled Portfolio Recovery Associates’ behavior ‘unscrupulous.’”
Portfolio Recovery’s unscrupulous behavior was just one of the factors the court used in determining the $350,000 award. According to Lemberg, “We were pleased that the judge noted that Portfolio Recovery’s FDCPA violations were ‘intentional’ and ‘egregious,’ and that a sizeable award was appropriate.” Indeed, the judge wrote, “The sanction imposed must be sufficient to deter PRA from engaging in abusive practices in the future.”
The court determined that each class member who returned the appropriate claim form would receive $500, that the lead plaintiff, Mr. Zimmerman, would receive $1,500, and that any remaining monies would be awarded “to a non-profit organization working to curb abusive debt collection practices or to increase consumer awareness of such practices.”
Lemberg concluded, “It’s fitting that a portion of the award will go to consumer advocacy organizations. The court’s decision should a clear message to debt collectors that they will be held accountable when they engage in shady practices.”
This release references Zimmerman v. Portfolio Recovery Associates, LLC (U.S. District Court, Southern District of New York, 09 Civ. 4602 (PGG)).
The Boston Herald ran a story featuring a pending class action lawsuit that Lemberg & Associates is bringing on behalf of a client who is suing Kohl’s for allegedly robocalling his cell phone. The suit alleges that Kohl’s violated the Telephone Consumer Protection Act when it called our client’s cell without his consent in an attempt to collect a debt owed by another individual. Our client alleges that he received between 25 and 35 calls during the past four months.
As reported in the Patriot-Ledger, the Massachusetts Supreme Judicial Court has ruled that cashiers can’t ask consumers for their ZIP codes when customers make credit card purchases. The class action lawsuit against Michaels craft store chain charged that Michaels violated the Commonwealth’s consumer protection laws, and that asking for personal information led to the retailer sending unsolicited phone calls and mailings. While Michaels argued that the law was designed to prevent identity theft, the court ruled that the legislative intent was to prevent sellers from sending consumers unwanted solicitations. Although the law doesn’t specifically mention ZIP codes, the court ruled that ZIP codes are personal information.
The New York Post published an article about a class action lawsuit Lemberg & Associates filed on behalf of a client in a spam texting case. Alex Shiyan received several text messages from the Lucille Roberts health club – a women-only club. The suit alleges the Lucille Roberts violated the Telephone Consumer Protection Act by using an automated telephone dialing system to text him without his consent.
A report and recommendation from a magistrate judge means that Butto and Houser v. Collecto, Inc. (U.S. District Court, Eastern District of New York, Case No. 2:10-cv-02906(ADS)(AKT)) is one step closer to receiving class certification. Lemberg & Associates is representing Victoria Butto, who are suing Collecto, Inc. (doing business as EOS/CCA) for unlawful and predatory debt collection practices. The suit alleges that Verizon Wireless turned over Ms. Butto’s debt to Collecto for collection. Collecto sent her a debt collection letter that added collection fees to the amount owed. Collecto had made arrangements with Verizon that they would receive their payments when Collecto had successfully collected on the debts. If Collecto didn’t collect on the debt, they weren’t entitled to any fees. Because no monies had been recovered at the time Collecto sent the letter, it was not entitled to its collection fees. The suit alleges that Collecto therefore misled Ms. Butto by creating a false impression that they incurred collection fees and owed that money, in violation of the Fair Debt Collection Practices Act.
The Report and Recommendation filed by the court recommended that the presiding judge grand class certification to the following: New York consumers who were sent a collection letter by Collecto, Inc. DBA EOS/CCA for a Verizon Wireless account, which included a collection fee for Verizon Wireless service that hadn’t yet been incurred when the letter was sent.
On behalf of a client and others similarly situated, Lemberg & Associates filed a class action lawsuit in Scott v. Westlake Financial Network. The suit alleges that Westlake Financial Network negligently, knowingly, and/or willfully placed automated calls (“robocalls”) to our client’s cell phone in violation of the Telephone Consumer Protection Act (TCPA).
The class representative was subjected to repeated cell phone calls from Westlake Financial Network, in which Westlake Financial Network used an automatic telephone dialing system (ATDS). The TCPA prohibits ATDS calls and calls using an artificial or prerecorded voice to a cell phone without prior express consent by the person being called.
Even though our client asked Westlake Financial Network to stop making robocalls to her cell phone, the company continued to do so. Moreover, she never gave her prior express consent to receive such calls.
According to the complaint filed in U.S. District Court, Northern District of Illinois, the proposed class consists of all people within the U.S. who received one or more cell phone calls from Westlake Financial Network and who didn’t provide prior express consent for such calls.
The suit seeks statutory damages of $500 per call, triple damages of $1,500 per call, and injunctive relief prohibiting future calls from Westlake Financial Network.
If you received a cell phone call from Westlake Financial Network without your consent, call Lemberg & Associates at 855-301-2100.
Lemberg & Associates released the following statement on February 1 in response to the Federal Trade Commission’s study on debt buyers:
Fair debt attorney Sergei Lemberg commended the recently released Federal Trade Commission’s (FTC) study on debt buyers, “The Structure and Practices of the Debt Buying Industry,” but noted that it doesn’t go far enough. “Debt buyers are the underbelly of the debt collection industry, so it’s crucial that the FTC pulled back the curtain to reveal how they do business,” said Lemberg. “Nevertheless, the FTC report only peripherally addressed the heart of the problem – the inadequacies in the way debt buyers handle consumer disputes, the abuse of the court system in seeking summary judgments against consumers, and the disproportionate role that smaller debt buyers play in violations of the Fair Debt Collection Practices Act.”
Debt buyers purchase debt deemed “uncollectible” and charged off by original creditors or purchase debt portfolios from other debt buyers. The FTC study examined data from 90 million consumer accounts purchased by nine of the country’s largest debt buyers, which together accounted for three-quarters of the debt sold in 2008. The FTC found that debt buyers literally paid pennies on the dollar for old debt – four cents per dollar, on average. When debt portfolios are sold, the accuracy of the information is not guaranteed, which led the regulatory agency to estimate that consumers dispute one million debts each year.
Lemberg, who was targeted as the “most active consumer attorney” of 2012 by debt collection industry insider WebRecon LLC, said the findings of the FTC study mirror the experience of many of his clients who attempt to dispute debts. “Often, the debt does not belong to the client or the amount is incorrect,” said Lemberg. “Sometimes, the client has previously disputed the debt, but as the FTC points out, the dispute history of a debt isn’t included when a debt portfolio is sold. And, as the study correctly notes, collectors who work on behalf of debt buyers often ‘validate’ the debt simply by looking at the information on their spreadsheet rather than providing the proper underlying documentation.”
The FTC study noted that, as time passes and debt portfolios are resold, the process of debt collection becomes even more problematic. Further inaccuracies creep into the records and aging debts become time-barred. Each state has a statute of limitations, usually between three and six years, after which time debt collectors aren’t allowed to sue a consumer to recover the money. Lemberg says that this doesn’t stop collectors from trying. “Debt collection agencies – and debt buyers in particular – file tens of thousands of lawsuits against consumers each year yet generally don’t have to prove that the debt is valid or within the statute of limitations,” he said. “To add insult to injury, it is up to the consumer – who often isn’t even aware that he or she is being sued – to prove that the debt is time-barred.” Lemberg noted that this practice often results in summary judgments, whereby debt buyers are given the ability to pursue wage garnishment and recover money from consumer bank accounts. “The current situation is a recipe for disaster. If a debt buyer says John Doe owes money, and John Doe isn’t present to defend himself, the debt buyer can obtain a judgment and freeze John Doe’s bank account,” he said.
While the FTC study found that the largest debt buyers purchased a majority of portfolios from original creditors, a fifth of the debt purchased was between three and six years old and 11 percent was between six and fifteen years old. The FTC issued a caveat, saying, “[M]any purchasers of older debts and debts with larger numbers of past placements with third-party collectors are smaller firms.” This echoes Lemberg’s experience. He said, “Smaller debt buyers get the hard-to-collect leftovers, which often tempts them to cross the line into questionable behavior or even practices that violate the Fair Debt Collection Practices Act.” One such behavior, Lemberg said, is to try and convince unsuspecting consumers to make a small payment on a time-barred account. “People don’t realize that making any payment – whether a penny or a hundred dollars – resets the clock and destroys protections afforded by the statute of limitations,” he said.
Lemberg applauded the Federal Trade Commission study, but said it needs to be expanded. “Smaller debt buyers need to be studied in order to get a true picture of the debt buying industry,” he said. “Debt buyers don’t share information about the debts they are trying collect, and then use the courts to obtain judgments against consumers who may not know they’re being sued. The current process leaves people’s lives in tatters, is an enormous burden on the taxpayer-funded court system, and is simply immoral.”
Debt collection industry insider WebRecon has listed Sergei Lemberg as the “most active consumer attorney” of 2012, saying that he represented 365 consumers during the year. Although seemingly intended as a warning to debt collectors, Lemberg embraces WebRecon’s label. He says, “I’m passionate about empowering our clients to stand up against debt collection agencies that use illegal tactics and break the law. If that makes me a target of the debt collection industry, so be it.”
Taking a moment to reflect on 2012, Lemberg says that he’s gratified that Lemberg & Associates accomplished so much. “I’m not only proud of the clients we’ve helped, but also that we expanded our practice areas and launched three new websites to help consumers learn more about their rights under the Telephone Consumer Protection Act.” The websites, www.do-not-call-complaints.com, suejunkfaxers.com, and suespamtexters.com, explain the TCPA and that consumers rogue telemarketers, junk faxers, and spam texters can be made to pay $500 for each violation – or triple that if they knowingly and willfully violated the law.
According to the Federal Trade Commission, Macy’s Inc., along with Amazon, Leon Max, Sears, and Kmart, have settled FTC charges that the companies violated the Textile Products Identification Act and the agency’s Textile Rules. Macy’s will pay $250,000 to settle charges that the department store advertised and marketed products “as being made of bamboo, when, in fact, they were actually made of rayon.” Together, the companies will pay $1.26 million in penalties.
Lemberg & Associates has alleged that Macy’s engaged in another kind of mislabeling. A class action lawsuit filed by Lemberg & Associates in federal court in Boston alleges that Macy’s routinely violates the FTC Rule, passing off gold-plated sterling silver as “Fine Gold” without providing the adequate qualification. The complaint, Barsukova v. Macy’s, Inc. (U.S. District Court, District of Massachusetts, 1:12-cv-11892), alleges that Barsukova purchased earrings from Macy’s that were labeled and marketed as “Fine Gold,” but that really only had a fine layer of gold covering a sterling silver item.
Specifically, the complaint alleges that “Macy’s breached the terms of the contract by selling much less valuable gold-plated silver that it misrepresented as ‘fine gold’ jewelry”; “Macy’s was unjustly enriched by selling gold-plated jewelry while representing it as fine gold”; “Macy’s breached that duty [of good faith and fair dealing] by failing to deliver goods as promised and advertised.”
Reporting on research from WebRecon, Collections & Credit Risk noted that, as of November 30, Sergei Lemberg was the “most active” consumer attorney in the country. The research is based on the number of lawsuits filed in U.S. district courts, and specifically looks at lawsuits filed for violations of the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, and the Fair Credit Reporting Act.