Friday, November 15, 2013

Law Firm Poses as Debt Collector

Law firms cannot pose as debt collectors, without making a bona fide effort to collect the debts from consumers. The Money Store hired the law firm of Moss Codilis Stawiarksi Morris Schneider & Prior LLP (Moss Codilis) in an attempt to collect debts from thousands of borrowers.  The Second Circuit ruled that the law firm was not the debt collector because the Money Store actually controlled the process.  The law firm did not review each collection matter and simply printed the mass mailings to borrowers on the law firm’s letterhead.
 
For clarification purposes, the Second Circuit added a false name exception to the Fair Debt Collection Practices Act (FDCPA).  It ruled that consumer creditors are not immune under the FDCPA when using a third party to appear to be the debt collector.
 
The law firm allegedly sent 88,937 letters between 1997 and 2002 and collected $3 to $4.5 million in fees.  The court found that recipients of the letters were tricked into thinking that an attorney had reviewed their loans and feared legal action if they did not pay.
 
The plaintiffs had filed a claim against Moss Codilis for the misleading representations, and are now eligible to file against The Money Store because of the ruling by the Second Circuit.