After three years of litigation, Friedman Law Offices, in collaboration with Legal Counsel for the Elderly, forced debt collectors to pay eligible DC residents $1500 for alleged violations of federal and DC consumer protection statutes. In the class action lawsuit Defendants Midland Funding, and its captive law firm Mann Bracken also agreed not to pursue the collection of any debts purportedly owed by class members. In addition to the cash payments, the Defendants also agreed to pay any unclaimed settlement funds to the Consumer Law Unit of the Legal Aid Society of the District of Columbia to further assist District residents in dealing with unfair and deceptive trade practices.

In the lawsuit, the named Plaintiff, Mildred Werts, described how Midland acquired consumer debt for a few cents on the dollar from debt holders.  Midland then hired the law firm Mann Bracken to pursue the collection of such debts in the District of Columbia, seeking to collect, through the initiation of legal proceedings, the full value of the debt from consumers who supposedly owed money.

There is, of course, nothing wrong with collecting a debt. But here, Ms. Werts claimed that the Defendants not only had incomplete records supporting the validity of any debt, but even sued where evidence suggested the three-year statute of limitations on the purported debt had actually expired. Ms. Werts asserted these untimely suits violated both the Fair Debt Collection Practices Act and the DC Consumer Protection Procedures Act. See Werts v. Midland Funding, LLC et al., Case No. 09-cv-02311 (RLW).

Notably, Mann Bracken has since declared bankruptcy and is no longer in existence. They will not be missed.

Pay Attention, Elections Matter.

As the economy plods along attempting to shake off the worst financial crises the nation has faced in 100 years, there have been scapegoats aplenty. But this is most assuredly one you cannot blame on the lawyers. It is one, however, that you can blame on tort reform.

For years consumer lawyers have cried loud and often about subprime loans marketed to those with no ability to pay through deceptive, unfair and outright fraudulent practices. Quite apart from crushing interest rates that only adjust upwards, home purchases have and continue to be loaded with junk fees ranging from $500 e-mail charges to mortgage broker payments amounting to the thousands. Yet, through all the efforts to challenge such predatory practices, consumer attorneys have been met with a sophisticated array of “tort reforms” all aimed at eliminating any right of the consumer to have access to the courts.

Take the banking industry. Exploding credit card interest rates, exorbitant late fees, overlimit and overdraft charges, to name a few, have been unilaterally imposed and literally stuffed into a consumer’s bill without even knowing such changes have occurred. While such terms contradict every principle of consumer protection laws passed in the 70’s, under the guise of “federal preemption” national banks and credit card companies have essentially eliminated the ability of consumers to challenge any of these practices. Instead, only federal regulators, often coming from the very industry that they purport to regulate, such as the banking regulators’ good friends at the Office of Comptroller of the Currency, can actually challenge the propriety of such practices.

Even where consumers are lucky enough to escape preemption, their efforts to meaningfully challenge a bogus fee are further stymied by arbitration clauses, such as those that exist in every cellular telephone and cable service contract. Better still, such clauses even prohibit the consumer’s participation in any class action designed to provide meaningful relief to all users of these basic consumer services.

Were an arbitration clause miraculously absent, and a class action filed, the case will only find a hearing in the federal courts under the so-called Class Action Fairness Act, where the business industry is procedurally given multiple bites at the apple, all designed to impede any resolution, let alone a timely resolution of any dispute.

When the house of cards collapse because no one has been able to effectively challenge a financial system rife with predatory business practices, business has done a pretty good job of making sure it can declare bankruptcy, or obtain a federal bailout, while the consumer cannot.

To those who contend that consumers can simply exercise their right to take their business elsewhere, it should come as no surprise that the “free market” has left the consumer with no choice at all. Like the gas station on every corner, there is no difference in the predatory practices of any industry player.

This failure is the direct result of eliminating through “tort reform” legislation what the free market has always permitted: private attorneys enforcing the law through private lawsuits in open public proceedings apprising all of the repercussions of failing to follow laws designed to protect consumers and those businesses that play by the rules.

The business lobby’s remarkable success at “tort reform” effectively removed the cop off the beat. In doing so, it eviscerated basic consumer protections in the financial markets. The result was predictable.

As consumers we should be outraged. As citizens, we should do something about it. That’s why elections matter. Make your vote count in November.