Debt Collectors' Law Firm Accused of Padding Fees is Shuttered
"At a time when many Oregonians are struggling to manage their debt, the Department of Justice is committed to holding unscrupulous debt collectors accountable," Keith Dubanevich, chief of staff for the Oregon Department of Justice, said in a statement.
Oregon's DOJ began investigating Derrick E. McGavic, founding partner of McGavic & Finney PC, and his partner, Kristan Finney, after receiving more than 90 complaints against their law firm. At the same time, the Oregon State Bar was investigating McGavic.McGavic & Finney specialized in representing national debt collectors that buy defaulted consumer debts in large quantities on the secondary market – often for pennies on the dollar, Dubanevich said.
Consumers have rights and protections under state and federal laws even if they accumulate debts and are turned over to a collection agency. Consumer complaints filed with the Oregon Department of Justice accused McGavic of ignoring those protections.
For example, the department alleges McGavic misidentified or confused the identity of creditors in documents to delay consumers' response, which increased fees and interest paid to McGavic and his clients.
Notices issued by McGavic allegedly omitted information related to the amount of the debt and didn't provide proper verification of debts when requested by consumers, Dubanevich said. In addition, McGavic allegedly called debtors many times who had requested in writing not to be called.
The department's investigators also said McGavic had a pattern of falsifying fee affidavits in legal documents by claiming services he didn't perform. In addition, McGavic allegedly provided his office staff with a schedule to be used to arbitrarily increase the fees claimed.
Along with closing down McGavic & Finney, the settlement requires McGavic to pay $70,000 for the costs of the investigation and surrender his license to practice law.
McGavic also won't be allowed to act as a debt collector or operate a law firm or collection agency in Oregon.
Consumer Ally couldn't reach McGavic for comment.
Under the settlement, Kristan Finney can operate a different business or firm, but must follow specific requirements stated in the agreement.
Jet Harris, Finney's attorney, told Consumer Ally in an email Finney disagrees with the investigators' conclusions.
"Ms. Finney denies the allegations stated in the attorney general's press release, and disagrees with the attorney general's characterization of the facts and his conclusions," Harris said. "Ms. Finney has resolved this matter by agreement because it allows her to continue her practice and to serve her clients. Ms. Finney has always been and remains committed to following all laws and standards concerning the collection of debts."
Consumers need to know their rights are if they owe money.
Debt collectors can't call late at night, or keep calling after you've told them in writing to stop, or pester others with repeated calls about you, threaten you or misrepresent what you owe.
See the Federal Trade Commission's "Debt Collection FAQs: A Guide for Consumers" for more information.