By: Robert J. Nahoum
THE PROBLEM:
Debt collection is a high volume business. Debt collection law-firms are hired by collection agencies and junk debt buyers to sue consumers for defaulted debt. The lawyers keep a percentage of whatever amounts they recover from the debtors. For this reason, the profit the lawyers earn on any individual file is relatively small. However, collectively, when suing consumers in thousands and thousands of cases, it is a lucrative business for the lawyers who own the debt collection firms.
Because debt collection is a high volume business and because the net profit for the lawyers on individual files is relatively low, debt collection law-firms work very hard to keep their overhead down. One of the ways they do this is by delegating the majority of the legal work to non-attorney administrators and collection agents. These clerical workers use technology to streamline the litigation process. Anyone who has ever had the unfortunate experience of placing a phone call to a debt collection law-firm quickly understands that the person on the other end of the line knows next to nothing about the cases they are working on and even less about the people they are suing.
The question is – is this all legal?
The Rule:
Federal debt collection laws called the Fair Debt Collection Practices Act (FDCPA for short), regulates the collection of consumer debts by third party debt collectors like debt collection law-firms. The FDCPA generally prohibits the use of false, deceptive and harassing debt collection tactics. If a debt collector violates the FDCPA, it can be sued for statutory damages up to $1,000.00, actual damages (like pain and suffering) and the debt collector may have to pay for the consumer’s attorney.
Among the conduct the FDCPA prohibits is the “false representation or implication that any individual is an attorney or that any communication is from an attorney†when it is not.  Even when a debt collection communication is from a law-firm, it has been held that “some degree of attorney involvement [is necessary] before a letter will be considered ‘from an attorney’ within the meaning of the FDCPA.â€
Viewed in the eyes of the “least sophisticated consumer,†the standard applicable under the FDCPA, “the necessity for ‘meaningful’ attorney involvement becomes clear: to the least sophisticated consumers, for whom the FDCPA was enacted, an attorney’s signature implies that an attorney directly controlled or supervised the process through which the letter was sent, and that the signing attorney has personally considered, and formed a specific opinion about, the individual debtor’s case. Where no such review is undertaken, the failure of an attorney’s letter to expressly disclaim that fact runs afoul of the FDCPA.â€
So, under this rule, if no attorney has actually reviewed any particular debt collection communication, to avoid an FDCPA violation, a disclaimer must be given advising the reader that no attorney has actually reviewed the communication.
The issue of meaningful attorney involvement becomes more complicated in debt collection lawsuits where, by necessity, an attorney must have reviewed the communication. For example, a debt collection complaint must bear the signature of an attorney and so cannot simply avoid the requirement by disclaiming attorney involvement. For this reason, the question then becomes – how much attorney involvement is necessary to avoid an FDCPA violation.
A recent New Jersey case against the infamous debt collection law-firm Pressler and Pressler illustrates the problem –
In Bock v. Pressler and Pressler, LLP, it was found that the debt collection law-firm violated the FDCPA when an attorney only reviewed a Complaint for four seconds. In that case it was found that the process by which Pressler prepared and filed complaints was largely automated, using computerized reviews and reviews by non-attorney personnel. While an attorney did ultimately review and approve the complaint at issue, he did so for only four seconds.
The Court in Bock found that the 4 second review was not meaningful and held that “[a] law firm that signs a complaint represents not only that an attorney is involved, but that the attorney has had a certain level of involvement in his or her professional capacity.â€Â Indeed, the “proverbial ‘least sophisticated debtor’ [is entitled] to conclude that an attorney is working vigorously on the creditor’s behalf, is reasonably knowledgeable about the creditor’s case against the debtor, and has exercised his or her professional judgment.â€
A similar case in New York presented with the question – how much attorney review is meaningful for FDCPA purposes – concluded that “the FDCPA establishes a duty of reasonable inquiry on the attorney signing the debt collection letter. […] The signing attorney alone is responsible for exercising professional judgment concerning the existence of a valid debt before issuing a debt collection letter. […] In so doing, independent judgment cannot be surrendered in mere reliance upon generalized law firm or client practices and procedures.â€
“[A] law firm may employ a robust set of overarching procedures, but an attorney’s failure to conduct an independent review of the particular circumstances of an individual debt collection letter will still doom the process. […] [C]omputerized review of accounts cannot substitute for an attorney’s professional judgment, even where the attorney designed the criteria for the computerized review and reviewed the mailing list before issuance of letters.â€
WHAT YOU SHOULD DO:
The FDCPA gives consumers the power to turn the tables on the debt collector. If a debt collector has used false, deceptive or harassing debt collection tactics against you, call a consumer attorney to see if you have a case.  If you do, you can sue the debt collector for statutory damages up to $1,000.00, actual damages (like pain and suffering) and best of all, the debt collector may have to pay for your legal fees. This means an FDCPA case should not cost you a penny out of pocket.
If you need help settling or defending a debt collection law suit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you. With office located in the Bronx, Brooklyn and Rockland County, the Law Offices of Robert J. Nahoum defends consumers in debt collection cases throughout the Tristate area including New Jersey.
The Law Offices of Robert J. Nahoum, P.C
(845) 232-0202
www.nahoumlaw.com
[email protected]