April 24, 2017

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Consumer Financial Protection Bureau Sues Debt Collection Law Firm for Allegedly Misleading Communications

On April 17, 2017, the Consumer Financial Protection Bureau filed suit in the Northern District of Ohio against Weltman, Weinberg & Reis Co., L.P.A. (“Weltman”), a debt collection law firm.  The CFPB’s complaint alleges that the firm misrepresented the level of attorney involvement in its collection efforts in violation of the Fair Debt Collection Practices Act and the Dodd–Frank Wall Street Reform and Consumer Protection Act.

The CFPB alleges that Weltman sent demand letters and made collection phone calls that implied that the firm’s attorneys had reviewed consumer-specific information when that usually was not the case. According to the CFPB’s allegations, the firm’s attorneys usually did not review individual account information to verify a debt’s accuracy or to determine the appropriateness of litigation before Weltman sent demand letters or made collection calls.  The CFPB also alleges that Weltman’s demand letters falsely implied that the letters were from attorneys.

In a statement, CFPB Director Richard Cordray said that the firm’s communications created a false impression of a “level of authority and professional judgment” that is inconsistent with the level of review provided to each consumer’s file. Weltman responded in a statement that the firm was “truthful” and “factually accurate” in its debt collection communications, and charged that the CFPB’s actions were in response to Weltman’s refusal to be “strong-armed” into a consent order.

This is the second action the Bureau has brought against debt collection law firms this year. Earlier this year, the agency entered into a consent order with Works and Lentz, Inc., and Works and Lentz of Tulsa, Inc., alleging similar conduct.

© 2017 Covington & Burling LLP

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About this Author

Luis Urbina, Covington Law Firm, Financial Regulations Attorney
Associate

Luis Urbina advises clients on state and federal financial regulations. He assists banks, lenders, and technology companies with regulatory issues including bank chartering and compliance with consumer protection laws. He monitors developments regarding the Consumer Financial Protection Bureau (CFPB) and regarding the deployment of fintech services, including those dependent on blockchain technology.

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