CFPB sues Ohio law firm over "illegal" debt collection practices
Weltman, Weinberg & Reis vows to defend itself
The Consumer Financial Protection Bureau claims that an Ohio law firm is using illegal methods to collect debt and is suing the firm to put a halt to the alleged illegal activity, but the firm says that the CFPB is trying to “strong-arm” it into signing a consent order and will fight the lawsuit.
According to the CFPB, the firm of Weltman, Weinberg & Reis “falsely represented in millions of collection letters sent to consumers that attorneys were involved in collecting the debt.”
Per the CFPB, Weltman, Weinberg & Reis collects debt from various sources, including credit cards, installment loan contracts, mortgages, and student loans. The firm currently has 65 attorneys and more than 650 employees.
The firm is based in Cleveland and collects on debts nationwide, but files collection lawsuits in only seven states: Illinois, Indiana, Kentucky, Michigan, New Jersey, Ohio, and Pennsylvania.
In its lawsuit, the CFPB claims that the law firm made statements on collection calls and sent collection letters “creating the false impression that attorneys had meaningfully reviewed the consumer’s file, when no such review has occurred.”
According to the CFPB, since at least July 21, 2011, the law firm sent millions of demand letters to consumers. And in those letters, the firm falsely represented that lawyers reviewed the authenticity of consumers’ debt before the letters were sent, the CFPB said.
“Typically, no attorney had reviewed any aspect of a consumer’s individual debt or accounts,” the CFPB said in a release.
“No attorney had assessed any consumer-specific information,” the CFPB continued. “And no attorney had made any individual determination that the consumer owed the debt, that a specific letter should be sent to the consumer, that a consumer should receive a call, or that the account was a candidate for litigation.”
Specifically, the CFPB alleges that the firm is violating the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act by doing the following:
- Sent collection letters falsely implying they were from a lawyer: Weltman, Weinberg & Reis sent letters on formal law firm letterhead with the phrase “Attorneys at Law” at the top of the letter and stated the law firm’s name in the signature line. The letters also included a payment coupon indicating that payment should be sent to the firm. Some demand letters referred to possible “legal action” against consumers who did not make payments. Despite these representations, the vast majority of the time, no attorneys had reviewed consumer accounts or made any determination that the consumer owed the debt, that a specific letter should be sent to the consumer, or that the account was a candidate for litigation before these letters were sent.
- Called consumers and falsely implied a lawyer was involved: Weltman, Weinberg & Reis’s debt collectors told consumers during collection calls that they were calling from a law firm. Specifically, sometimes they told consumers that it was the “largest collection law firm in the United States,” or that the debt had been placed with “the collections branch of our law firm.” This implied that attorneys participated in the decision to make collection calls, but no attorney had reviewed consumer accounts before debt collectors called consumers.
“Debt collectors who misrepresent that a lawyer was involved in reviewing a consumer’s account are implying a level of authority and professional judgment that is just not true,” CFPB Director Richard Cordray said in statement.
“Weltman, Weinberg & Reis masked millions of debt collection letters and phone calls with the professional standards associated with attorneys when attorneys were, in fact, not involved,” Cordray said. “Such illegal behavior will not be allowed in the debt collection market.”
In a lengthy statement in response to the CFPB’s lawsuit, Weltman, Weinberg & Reis sad that the firm did nothing wrong and has no intentions of settling with the CFPB.
“We fundamentally disagree with the CFPB's allegations and believe that this lawsuit is the result of our firm's refusal to be strong-armed into a Consent Order," WWR Managing Partner Scott Weltman said in a statement.
“We are a law firm that is legally allowed, under federal and state law, to provide collection and legal services,” Weltman continued.
“We are being truthful with consumers and factually accurate when we use our name and our company's letterhead for proper debt collection activity,” Weltman added.
“WWR has taken every reasonable step to ensure that it collects on consumer debts in compliance with those statutes and to ensure that every statement made to consumers is accurate and not misleading,” Weltman said. “I'd also like to emphasize that the CFPB’s two-and-a-half-year investigation into our firm did not uncover a single instance of consumer harm.”
According to the firm, it “cooperated fully” with the CFPB since it commenced its Civil Investigative Demand in September 2014. Since then, the firm claims it produced “hundreds of thousands of pages of documents and more than 1 million collection phone call recordings” to the CFPB and took part in two investigational hearings.
“This was done at significant cost to WWR, but with the goal of proving to federal regulators that its attention to compliance and its by-the-book ethical practice of law is exemplary,” the firm said.
In its statement, the firm also noted that it has not been the subject of any other formal government actions or disciplinary reviews.
‘The result of the CFPB's investigation of our law firm is based on its interpretation of the law, and not on any actual violation of federal or state laws or regulations as they are written today,” Weltman concluded. “We will continue to vigorously defend WWR's honest, ethical and compliant collection practices, and we look forward to our day in court.”