Courthouse News Service
Courthouse News Service

Courthouse News Service
Monday, June 30, 2008Last Update: 10:17:44 AM

RICO Class Action Accuses Law Office
In Florida Of Running A 'Collection Mill'

     MIAMI (CN) - A federal RICO class action accuses Orlando law office Palmer, Reifler & Associates of extorting money through a computerized system that sends more than 1 million threats of lawsuits a year to people suspected of shoplifting. The law office allegedly signs names of attorneys' throughout the country to its intimidating letters, falsely claiming that the local attorneys have reviewed the case, falsely threatens to sue, and it profits from this "illegal scheme" by working with major retailers, including Wal-Mart, KMart, JC Penny and Walgreens, the complaint states.
     The defendants are accused of abusing "civil recovery statues," which legislatures across the country adopted in the 1980s after lobbying from retailers. The laws allow retailers to seek civil damages and penalties from consumers accused of retail theft. All 50 states have enacted such laws.
     "The Palmer Law Firm has abused this legislation, however, by creating a massive collection mill whereby hundreds of thousands of letters are generated each and every month and sent to consumers across the nation without any attorney review," the complaint states. "These generic form letters are meant to harass, intimidate and coerce consumers into paying a large fine by threatening civil action (which they have no intention of filing) by a local attorney (that has no involvement in the case) and a visit from the 'sheriff' (which they know won't happen)." (Parentheses in complaint.)
     The Palmer firm alleged has constructed a sophisticated computer system that spits out the demand letters after getting electronic files from their retail clients each month, "with the names of consumers detained in the store and a minimal amount of data, including their age, the date of their detention, their address and the amount of the merchandise allegedly at issue. ... The Palmer Law Firm uses the software to automatically generate a form demand letter based on that information that automatically calculates the demand amount and electronically affixes a local attorney's signature to the letter. ... Palmer's Orlando office generates and mails between 80,000 and 120,000 form demand letters each month and over a million letters each year."
     The defendants allegedly pay attorneys around the country, usually sole practitioners, retainers of "a few hundred dollars a month," for the use of their names. "These attorneys do not review the letters before they are sent and have no meaningful interaction with the consumer. Instead, they simply lend their names and bar licenses in exchange for a monthly fee," the complaint states.
     "The Palmer Law Firm has sold this scheme to over fifty (50) retail clients, the largest of which include major retailers Wal-Mart, JC Penney, KMart and Walgreens," and the law office gets 18% to 30% of the money it collects, the complaint states.
     "Like all collection mills, the Palmer Law Firm has created a Web site for consumers to pay these exorbitant, unsubstantiated amounts online at 'Palmer Pay.com' using credit and debit cards and banking accounts."
     Plaintiffs claim the law office tries to duck the Fair Debt Collection Practices Act by claiming that its scheme is not debt collection but "settlement of a tort offense." In fact, the plaintiffs say, this is a common abuse of the FDCPA, and the FTC has sued numerous law offices for just this abuse.
     Plaintiffs' lead attorney is Lance Harke with Harke & Clasby.