Feds Sue Debt Collector That Allegedly Misrepresented Attorney Involvement

Image courtesy of Adam Fagen

Under the Fair Debt Collection Practices Act, it is illegal for debt collection firms to use false, deceptive, or misleading representations to collect a debt. One Ohio company apparently didn’t follow this rule when sending consumers letters that claimed attorneys were involved in the collection of their debts, and now it’s facing a lawsuit from federal regulators.

The Consumer Financial Protection Bureau announced Monday that it filed a lawsuit against Weltman, Weinberg & Reis, accusing the debt collection firm of falsely representing in millions of collection letters that attorneys were involved in collection for overdue accounts.

The firm collects on overdue credit card, installment loans, mortgage loans, and student loans debt nationwide, but only files lawsuit in Illinois, Indiana, Kentucky, Michigan, New Jersey, Ohio, and Pennsylvania.

According to the complaint [PDF], starting in 2011 Weltman, Weinberg & Reis began contacting debtors with letters and collection calls that created the false impression that attorneys had reviewed consumers’ files when that wasn’t actually the case.

In the case of the letters, the Bureau claims the collection company used formal law firm letterhead with the phrase “Attorneys at Law” at the top and with the law firm’s name in the signature line.

The letters, which were often generated through an automated process, included a payment coupon that indicated that payment should be sent directly to the firm. In some cases, the letters referred to the possibility of “legal action” against individuals who did not make payments.

“Failure to resolve this matter may result in continued collection efforts against you or possible legal action by the current creditor to reduce this claim to judgment,” the letters stated, according to the CFPB.

The CFPB also alleges that from July 2011 to July 2013, the firm made similar assertions of attorney involvement in calls to account holders.

According to the CFPB, the calls involved the collectors claiming they were from a law firm, specifically noting that it was the “largest collection law firm in the U.S.”

In both the letters and collection calls, the Bureau claims the firm implied that an attorney had made the determination that the consumer owed the debt, that notice should be sent to the borrower, and the account was a candidate for litigation.

However, the CFPB alleges that typically no attorney had reviewed any aspect of the consumer’s individual debt or account. At times, an attorney may have

With the lawsuit, the CFPB is seeking to stop the alleged unlawful practices and reimburse those who have been harmed.