Ad Astra Recovery Services, Inc., a debt collector and credit furnisher from Kansas, filed a Racketeering Influenced and Corrupt Organizations Act (or “RICO”) suit against Lexington Law Firm and its associated attorneys and entities.
You can read the complaint here.
The suit, filed on May 21, 2018 in U.S. District Court, District of Kansas, alleges that the defendants run a “predatory and fraudulent ‘credit repair’ scheme.” The suit alleges that Lexington Law devised the scheme “to bombard debt collectors with false credit dispute letters with the intention of deceiving [debt] collectors, like Plainitff, and frustrating their efforts to collect legitimate debts.”
In describing the alleged scheme, Ad Astra claims that defendants target and prey on consumers in financial distress. The suit also claims that defendants engage in actions that cannot legally be pursued in violation of several laws including the Fair Credit Reporting Act and Utah’s law requiring that letters from attorney disclose that they are from attorneys.
The complaint brings light to the staggering volume of letters received by debt collectors from entities like defendants. Ad Astra states that it has received 75,000 such letters in the mail and an additional 200,000 electronic disputes in the past four years, all from defendants. The complaint even points to defendant’s own statement that they have secured “9,000,000 credit bureau deletions.”
The complaint compares the stark similarities of the dispute letters, including similar format and spacing, identical fonts used in each letter, signatures that resembled each other but were different than the consumer’s actual signature, and using for too formal and uncommon language.
Notably, the complaint alleges that the CEO of Ad Astra met personally with the directing attorney and principal of Lexington Law to discuss the issue, but that did not stop the high volume of dispute letters.
As expected, this lawsuit will be closely followed by both sides of the industry.