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.
In Cerrato v. Solomon & Solomon (3:11-cv-623 (JCH)), the U.S. District Court, District of Connecticut, built on the landmark Foti decision in ruling that autodialed calls not answered by the consumer constitute “communication” under the Fair Debt Collection Practices Act. Ms. Cerrato is represented by Lemberg & Associates.
The circumstances of the case are that, over a period of 21 months, Citibank turned three of Ms. Cerrato’s debts over to Solomon & Solomon for collection. After receiving debt collection calls for the first account, Ms. Cerrato sent Solomon & Solomon a cease and desist letter. After receiving the letter, Solomon & Solomon made six more calls to Ms. Cerrato. Ten months later, the debt collection agency began calling her in reference to the third debt, and called her 117 times over the course of six months. Ms. Cerrato faxed the debt collector a cease and desist letter, together with a copy of her previous cease and desist letter.
The Solomon & Solomon clerk who processed the letter noted that communication should stop for the third account, but not the other two. Still, using an autodialer, the debt collection agency called Ms. Cerrato eight more times after Solomon & Solomon received the letter. Ms. Cerrato says that she chose not to answer the calls after her caller ID indicated that they were from the debt collector. The debt collection agency argues that the eight unanswered telephone calls aren’t “communications” under the Fair Debt Collection Practices Act, and thus can’t be held liable for communicating with Ms. Cerrato after receiving a cease and desist letter. Solomon & Solomon argues that “an unanswered telephone call does not constitute a communication because no information was conveyed; Cerrato never spoke to a Solomon representative.”
In an order denying summary judgment, the court rejected Solomon & Solomon’s citation of Wilfong v. Persolve, LLC, and instead looked at Foti v. NCO Financial Systems, Inc. In that case, “the court held that a prerecorded voice message that did not specifically reference a debt still constituted a communication under the FDCPA.” In this opinion, the court looked to the rationale behind the Foti decision, namely that the statute should be construed broadly. Further, in the Foti case, that court noted that simply stating that the call was from NCO Financial Systems was enough to communicate that it concerned a debt. In this case, the court noted that Foti received one telephone message after one letter from NCO, while Ms. Cerrato had received 117 calls prior to the eight unanswered calls. In other words, Ms. Cerrato knew that it was a debt collector calling. The court also drew parallels to the Foti calls that attempted to entice a return phone call: “In Foti, the court found that the debt collector provided enough information to ‘entice’ a return call by providing its name and return phone number and be referencing a matter that required immediate attention. Solomon provided similar information to Cerrato. Its name and telephone number appeared on Cerrato’s caller ID display, and by calling eight times within one month, it is hard to imagine how Cerrato could not realize that Solomon wanted her immediate attention.” The court went on to write that Solomon & Solomon’s argument would mean that “debt collectors could call consumers however often they wish as long as the consumer does not pick up or the debt collector hangs up before reaching the consumer.”
The judge goes on to cite the Merriam-Webster definition of “communication,” noting that it does not require a two-way exchange or any response from the recipient of the communication.
Solomon & Solomon offered contingency arguments, which were also rejected by the court. One argument said that the eight unanswered calls could fall under the FDCPA approved exceptions, namely to notify Ms. Cerrato that Solomon & Solomon would no longer try and collect the debt, or to tell her that they were going to invoke a specific remedy (such as a lawsuit). The court wrote that, because the calls stopped once the debt collection agency noted Ms. Cerrato’s cease and desist letter on all of her accounts, that argument doesn’t hold water.
Solomon & Solomon’s other contingency argument was that even if the calls constituted communications under the FDCPA, it was a bona fide error and the firm doesn’t have any liability.
Apparently, Solomon & Solomon’s computer system has a field that can be used for a code indicating that a consumer has sent a cease and desist letter. The debt collection agency says employees are trained to enter that code into the account. However, they are not trained to put the code on all of the consumer’s accounts. The debt collection agency says that the cease and desist letter listed only one account, while Ms. Cerrato says that her letter referenced all accounts.
The court found that, since Solomon & Solomon had called Ms. Cerrato six times after she had sent a previous cease and desist letter, “there are issues of material fact as to whether Solomon committed a bona fide error,” as well as whether the debt collection agency had developed reasonable procedures to prevent such a mistake to happen.
Solomon & Solomon says that it has procedures in place to train employees on provisions of the Fair Debt Collection Practices Act, and says that it specifically trains and tests employees about the meaning and importance of a cease and desist letter. Ms. Cerrato disputes this, saying that the debt collection agency’s “testing and literature merely states that employees are allowed to contact a debtor one more time after receiving a cease and desist letter.”
Because the motions for summary judgment were denied, the case will proceed.
Advertising text messages are annoying, and they are often against the law. Our new website, suespamtexters.com, explains provisions of federal Telephone Consumer Protection Act that make it illegal for advertisers to send text messages to your cell phone using an autodialer, and the provisions of the CAN-SPAM Act that prohibit companies from sending advertising text messages under certain circumstances. According to Sergei Lemberg, “Text message spam is an ever-increasing problem, and advertisers need to be held accountable.”
At the new site, you can learn about a number of topics pertaining to spam text messaging. You can discover if federal laws apply to your situation, and how the National Do-Not-Call Registry can help in stopping spam text messages. In addition, the resource center explains how you can file a spam text complaint with the Federal Communications Commission and other regulators, as well as how to sue advertisers who violate the law.
According to Lemberg, “Spam texters can be sued in federal court. Indeed, advertisers can be made to pay $500 per text message – or triple that if they knowingly and willfully violated the law.”
If you’re on the receiving end of faxed advertisements that you never asked for and don’t want, Lemberg & Associates can help. Our new website, suejunkfaxers.com, explains the provisions of federal laws that make it illegal for advertisers to send junk faxes to individuals and to businesses. According to Sergei Lemberg, “Junk faxes are annoying, and when you take into account the costs of toner and paper, they can be costly. We hope that suejunkfaxers.com helps people understand their rights with regard to junk faxes, and that we’re here to help.”
The site’s resource center outlines federal junk fax laws, provides a checklist of practices that constitute violations of those laws, and gives advice about how to stop junk faxes to your home or business. In addition, you can get information about how to file a junk fax complaint with the Federal Communications Commission and other regulators, as well as how to sue advertisers who violate the law.
According to Lemberg, “The Telephone Consumer Protection Act enables consumers and businesses to sue advertisers who send junk faxes, and caselaw has determined that these cases can be brought in federal court. In fact, the law says that consumers can recover up to $500 per page – and triple that amount if we can prove that the caller knowingly and willfully violated the law.”
Lemberg & Associates has launched a new website, do-not-call-complaints.com to help educate consumers about their rights under the federal Telephone Consumer Protection Act. According to Sergei Lemberg, “We have seen a tremendous increase in telephone harassment on the part of telemarketers and debt collectors. We hope that do-not-call-complaints.com helps people understand when telephone calls cross the line, and that we’re here to help.”
The new site has an extensive resource center that outlines federal telemarketing laws, explains automated calls (also known as “robocalls”), and provides a checklist of the practices that constitute harassment. It also includes information on the National Do-Not-Call Registry and other do-not-call lists, and explains the practice of caller ID spoofing. In addition, the resource center explains how to go about filing a complaint with the Federal Communications Commission and other regulators, as well as how to sue debt collectors and telemarketers who violate the TCPA.
According to Lemberg, “The Telephone Consumer Protection Act enables consumers to sue, and caselaw has determined that TCPA cases can be brought in federal court. In fact, the law says that consumers can recover up to $500 per call – and triple that amount if we can prove that the caller knowingly and willfully violated the law.”
Two Lemberg & Associates clients overcame a major hurdle in U.S. District Court, Western District of Pennsylvania, when a judge denied the defendants’ motion to dismiss the case. The genesis of Deeters v. Phelan Hallinan & Schmieg, LLP (3:11-cv-00252-KRG) was that the Deeters received a debt collection letter from PHS that included information about the debt, their right to dispute the debt within 30 days. A few days later, they were served with a PHS complaint saying that they were being sued in state court regarding foreclosure. That complaint did not contain a notice of the Deeters’ validation rights or conform to Fair Debt Collection Practices Act provisions.
The Deeters claim that the complaint filed in the state lawsuit overshadowed the warning language in the debt collection letters, and that the conflicting messages would have confused and misled the least sophisticated consumer, in violation the FDCPA. Phelan Hallinan & Schmieg, LLP disagreed, arguing that the case should be dismissed.
In her decision, the judge ruled against Phelan Hallinan & Schmieg, LLP, writing in part:
It is precisely for the purpose of consumer protection for which the FDCPA was enacted, that any subsequent communications after the initial disclosure of validation rights must not overshadow or be inconsistent with the consumer’s right to dispute the debt.
Writing in response to the defendants’ argument that the lawsuit complaint didn’t impact the Deeters’ right to dispute the debt, the judge said:
This argument, however, contains a slight misreading of the law. The law concerned not only with whether collection activities and communications do, in fact, have an effect on the consumer’s right to dispute the debt, but also – and perhaps more importantly – with whether a communication has the potential to effect the debtor’s right as viewed from the perspective of the least sophisticated debtor.
The Deeters also contend that the letters from PHS violated the FDCPA’s provision against using “false, deceptive, or misleading representation or means in connection with the collection of any debt.” This is because the letters included language that said, “a judgment will not be entered against you for a period of thirty days after service of the complaint to assure your opportunity to dispute the validity of the debt.” Phelan Hallinan & Schmieg, LLP argued for dismissal of that portion of the case. The judge rejected their argument, stating:
One possible reading of this clause in light of the right to dispute the debt, would be that on day thirty-one, a judgment would be entered against the debtor. Another possible reading would be that a judgment could be entered against the debtor. Also in question, is if no action is taken, could judgment be entered on the thirty-first day or ninety-first day…. (N)ot only could the least sophisticated debtor be falsely led to believe that one possible outcome was the likely outcome, but he could also read the statement that a judgment will be entered after thirty days as a threat that needed to be acted upon immediately.
Phelan Hallinan & Schmieg, LLP also argued that, if the court didn’t dismiss the case because of their other arguments, it should abstain from considering the case because the same complaints are being litigated in Pennsylvania state court. The judge ruled that the two cases are not parallel, since the federal case pertains to FDCPA violations and the state case pertains to foreclosure practices and property law.
Lemberg & Associates is pleased that the Deeters’ case will move forward.