WHAT’S GOING ON IN THE DEBT COLLECTION INDUSTRY?

Jan 13, 2016

“Making money is art, and working is art, and good business is the best art.” – Andy Warhol

A law firm based in Waltham, Massachusetts, has been collecting debts from Massachusetts consumers through unfair and deceptive practices for the last years. Attorney General Maura Healey has filed a lawsuit against the firm in Suffolk Superior Court.

Healey Sues Waltham Law Firm

The firm called “Lustig, Glaser & Wilson PC has collected over $110 million from residents since 2011. Often, these debts were collected based on information that was inaccurate. Using the judicial system, the company harassed consumers to collect money.

According to Roger Bertling, Director of the Consumer Protection Clinic at Harvard Law School, such practices are quite common nowadays.

What do debt-buying companies do? They purchase uncollected debt from banks and credit card companies. Then law firms start the collection process, getting a percentage of the amount collected. As consumer groups state, debt collectors take 30% of the amount obtained.

Debt collectors are classified as high-risk businesses. This makes it difficult to get approved for a merchant account. With EMB, you can open a reliable and cost-effective debt collection merchant account, and enjoy the exceptional credit card processing services delivered by EMB. We offer competitive rates and easy setup.

Going Deeper Into The case

Lustig, Glaser & Wilson is among the state’s largest debt-collection litigators. The firm got a notification from the Massachusetts Division of Banks in November. The firm had to register and get a license. Soon, the it filed a suit against the banking commissioner in Suffolk Superior Court, claiming the regulatory agency had exceeded its authority and state law.

Lustig, Glaser & Wilson had downloaded computer files from debt-buying companies, which included information on debts and debtors in Massachusetts. The spreadsheets provided didn’t show the whole information downloaded, which was necessary for establishing and verifying the debts.

As it was revealed, the consumers had been forced to pay the debts even if they received income only from Social Security, or had only veterans and unemployment benefits. Moreover, the law firm had tried to establish automatic debt payments from a consumer’s bank account. This consumer received money only from disability benefits.

If consumers didn’t pay the amount, the firm filed complaints in district courts. As many consumers didn’t come to dispute the complaints, Lustig, Glaser & Wilson eventually won default judgments. These judgments allowed the firm to provide wages for the debts. As a result, the law firm was allowed to garnish wages for the debts and seek arrest warrants.

As Healey mentioned, the firm had taken unfair advantage of consumers. Many of them couldn’t even afford to turn to a lawyer or didn’t know their rights. Healey is going to impose civil penalties on Lustig, Glaser & Wilson and an order that will make them reimburse the consumers for the losses.

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