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Financial Services Law Insights and Observations

Massachusetts AG reaches $4 million settlement with debt collector

State Issues State Attorney General Debt Collection Enforcement

State Issues

On November 11, the Massachusetts attorney general announced a $4 million settlement with a Virginia-based debt collection company to resolve allegations that it engaged in deceptive and unfair debt collection practices. The AG’s release stated that an assurance of discontinuance filed in the Suffolk Superior Court alleges that the company “aggressively” collected on purchased defaulted loans, credit card accounts, car loans, and other consumer debts by using a network of in-house collectors who contacted consumers through multiple letters and phone calls, and used law firms to take consumers to court. An investigation revealed that the company “routinely pursued consumers with only exempt sources of income such as social security, social security disability, and supplemental security income,” and that consumers who informed the company of their reliance on such income “were pressured by the company to pay money they should have been entitled to keep.” Among other things, the AG’s office claimed that the company also (i) collected on debts it could not substantiate; (ii) failed to verify whether the consumer information it reported to credit reporting agencies was accurate; (iii) ignored the statute of limitations when collecting debt; and (iv) failed to notify consumers of their rights to request proof of a debt and to provide proof of a debt upon request. In addition to the $4 million payment, the company has agreed to stop collecting from consumers using only exempt income, will obtain documentation that debts are valid before collecting, will inform consumers when debt is beyond the statute of limitations, and will refrain from calling consumers more than twice in a seven-day period. The company also agreed to stop reporting debts it cannot substantiate to credit reporting agencies and to investigate consumer credit report accuracy disputes.

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