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Consumers ‘Push Back’ Against Collection Agencies

Class action filed against law firm unlicensed to collect debts in state

By DOUGLAS S. MALAN

The phone calls started early in the morning and lasted until about 9 o’clock at night. It got so bad that Jeanne Lemire had to change her number twice.

There also were letters showing up in her mailbox every month. About 15 companies were seeking $70,000 in credit card charges made in Lemire’s name. But Lemire, of Cromwell, never made the purchases. Her identity was stolen in 2006, which led to the calls from creditors.

“It’s been absolutely terrible,” said Lemire, who has been told by credit counselors and attorneys to file for bankruptcy. “I couldn’t sleep at night because I was worrying about what to do and worrying whether what I was doing was going to help. They hound you and hound you.”

Lemire, who is 65 and retired, had some success dealing with the creditors by sending letters explaining the identity theft. But other creditors never let up. In response, Lemire and her current attorney, Daniel S. Blinn of the Consumer Law Group in Rocky Hill, have taken several of them to federal court.

Her lawsuits have alleged that out-of-state collections agencies are breaking state laws that require those agencies to register with the state Department of Banking in order to collect debts here. By virtue of not registering, the collections agencies are exposed to liability under the federal Fair Debt Collections Practices Act.

Only one of her cases has yet to settle—a lawsuit filed in February 2008 against Maryland-based collections law firm Wolpoff & Abramson, which operated a Glastonbury office until March 2007.

1,500 Affected

In March, Senior U.S. District Judge Charles S. Haight Jr., hearing Lemire’s case in New Haven, granted class certification in Jeanne Lemire v. Wolpoff & Abramson, LLP.

It’s a lawsuit that could affect approximately 1,500 people in Connecticut who are being pursued by Wolpoff & Abramson. For Blinn, this case is not novel. He’s handled several of them, including Lemire’s previous lawsuits. “I actually think they’re in decline because collections lawyers put out alerts about these lawsuits,” Blinn said.

But creditors’ attorney Matthew B. Woods, of Goldman, Gruder & Woods in Norwalk, said it’s rare to see debtors initiate actions against creditors over collections practices.

“Debtors are tending to push back more than they used to,” Woods said. “I think [such lawsuits] will increase. It means more billable hours for us, but it’s not so good for our clients.”

The Lemire class is seeking damages, attorneys’ fees and costs. The Fair Debt Collections Practices Act allows for damages of up to $500,000 or 1 percent of the defendant’s net worth, whichever is less.

Wolpoff & Abramson argued against class certification on claims that the collections firm has a negative net worth; that will be hashed out during discovery.

“Our response is that there’s an important public function served by the class action lawsuit,” Blinn said. Class members are being notified of their certification and have the choice of opting of the class and filing an individual lawsuit.

Wolpoff & Abramson has acknowledged that it attempted to collect debts in the state without a license, and the firm has raised two special defenses. One is that it retained a third party vendor to obtain the proper licensing, and that vendor failed to do so.

Additionally, Wolpoff & Abramson challenges the constitutionality of the Connecticut Consumer Collection Agencies Act, which requires licensing of collections agencies. The law firm claims that the statute grants excessive power to regulatory agencies “in conflict of rules properly established by the Judicial Branch.”

Stephen P. Brown of Wilson, Elser, Moskowitz, Edelman & Dicker in Stamford is representing Wolpoff & Abramson. Brown declined comment on the case, as did Wolpoff & Abramson officials.

Registration Required

Under state law, Connecticut bar members are not required to register with the Department of Banking to collect debts. Wolpoff & Abramson was licensed here from November 1998 to June 2005s. But when the firm closed its Glastonbury office in 2007, its Maryland-based lawyers who were attempting to collect debts in Connecticut thereafter were not members of the Connecticut bar.

That oversight created the grounds for Lemire’s lawsuit.

Collection licenses in Connecticut cost $500 and must be renewed every two years. About half of the states in the country require collection agencies to register with state authorities. As of April, state banking officials noted a slight increase from 2008 to 2009 in the number of collection agencies obtaining licenses, from 923 to 954. A large majority of the new licensees are out-of-state agencies.

In Lemire’s case, dealing with identity theft and collections agencies has been exhausting. Finally, though, “the telephone calls and letters have stopped,” she said. But she expects the damage to her credit score will linger for years.

“It messes up your life,” she said. “No one apologizes and no one corrects anything.” •