On August 25, 2010, Schlanger & Schlanger, LLP filed suit in Federal Court, Eastern District of New York, against debt buyer Portfolio Recovery Associates (PRA), and debt collection law firm Malen & Associates, alleging violations of the Fair Debt Collection Practices Act (FDCPA) and New York General Business Law § 349.

Specifically, the federal complaint alleges that the defendants sued consumer Michael Diaz in Kings County Civil Court (Brooklyn) on a debt that was outside the statute of limitations.  The complaint also alleges that Defendant(s) knowingly misreported the debt to credit reporting agencies, listing the account as significantly more recent than it actually was, and that Malen & Associates failed to meaningfully review the case prior to filing the state court action.

According to the complaint, these actions were part of a “recurring practice that Defendants have taken, not just against Mr. Diaz, but against large numbers of consumers as part of a policy and practice that is designed and has the effect of increasing Defendants’ profits by increasing the number of consumer accounts handled, lowering the cost of handling each account, and increasing Defendants’ success rate with regard to consumer accounts.”

The complaint also includes claims against Malen & Associates for violation of Judiciary Law § 487, alleging that Malen’s representation that it had meaningfully reviewed the state court Complaint and made reasonable inquiry into the matter filed against Mr. Diaz constituted a knowingly false representation made to a court in violation of the law and that Mr. Diaz is entitled to treble his actual damages.

Schlanger & Schlanger, LLP previously represented Mr. Diaz in the underlying state court collection lawsuit that PRA, represented by Malen & Associates, had filed against him.  That action was dismissed on stipulation earlier this year.