On July 27, 2017, the Massachusetts Attorney General’s office issued a press release announcing a $1 million settlement agreement with the largest debt collection law firm in the state. According to the AG’s press release, the law firm of Lustig Glaser & Wilson, P.C. (LGW) allegedly used unfair and deceptive practices to collect debts from thousands of Massachusetts consumers.
The settlement resolves allegations that LGW regularly sued consumers for debts they they didn’t actually owe or debts that were inaccurate. According to the Massachusetts AG, LGW also engaged in widespread practices in violation of state law and consistently took misused the court system to collect consumer debts.
In 2015, the AG’s Office filed a lawsuit against LGW alleging that the firm knowingly filed thousands of debt collection lawsuits in Massachusetts courts even though they were based on unverified and often inaccurate information supplied by national debt buyers. The complaint also alleged that LGW “filed deceptive lawsuits against consumers, used false and misleading court filings, and demanded payment of time-barred or dismissed debts.”
Furthermore, many of the lawsuits LGW filed were filed against consumers whose only source of income was social security or other types of income that were legally exempt from court-ordered payment. Nevertheless, LGW pursued judgments against these consumers. Between 2011 and 2015, LGW obtained judgments against Massachusetts residents in excess of $125 million.
Under the terms of the consent order, LGW will pay $1 million in restitution and must change its collection practices.
According to the press release, LGW debt collection practices have already undergone significant changes because of this settlement:
- Cease collecting exempt income: LGW allegedly threatened consumers who had exempt income (e.g., social security, disability benefits, and other public assistance), telling them that failure to pay the debt could result in court-ordered payments or garnishment, even though those sources of income are protected. LGW now must make oral disclosures to consumers alerting them that certain income is exempt and that the firm will discontinue collection efforts if the consumer is elderly or disabled and relies exclusively on exempt income.
- Cease collecting on inaccurate and unsubstantiated debts: According to the AG, LGW regularly demanded payments on time-barred debts without sufficient proof that the consumer had incurred the debt or that the amount was accurate. LGW is now required to obtain proper documentation and verify the accuracy of a consumer’s debt before attempting to collect.
- Require attorney review and meaningful attorney involvement: LGW is prohibited from suing any consumer for a debt unless an attorney has conducted a meaningful review of appropriate documentation and concluded that there is sufficient evidence to support its claims. LGW must also cease filing affidavits signed without personal knowledge.
- Cease misuse of collection lawsuits: LGW is prohibited from using court processes, such as payment review hearings and civil arrest warrants, to intimidate consumers who do not have the ability to repay the debt or whose only source of income is exempt.
- Respond appropriately to consumer disputes: Upon receiving notice that a consumer has disputed a debt, LGW must cease collection efforts unless it investigates the disputed debt and provides that consumer proof of the debt.