MA AG Enters Settlement for Refunds to Thousands of Consumers for Company’s Abusive Debt Collection Practices

On September 22, 2017, Massachusetts Attorney General Maura Healey (AG) announced a settlement with a company to resolve claims that the company used abusive and illegal debt collection practices.  The AG’s complaint alleges that the company added hidden, illegal, and unauthorized late fees and charges to consumers’ accounts—including a $25 late fee and 1.5 percent monthly interest to the outstanding balance—and automatically renewed consumers’ original contracts, a practice which was not properly disclosed.

The complaint also alleges that the company aggressively pursued collection of hidden fees through a third-party debt collection company.  The AG further asserts that when consumers failed to pay or disputed their “past due” or “outstanding” balances, the company would refer them to a large, national debt collection firm.  If consumers failed to pay the firm, the company would initiate small claims actions against them. The company filed more than 1,600 of these actions, obtaining default judgments against consumers, and in some instances, brought post-judgment collection actions resulting in civil arrest warrants for consumers’ failure to appear in court.​

According to the consent judgment, the company must pay $143,514 in restitution to affected consumers and a $150,000 civil penalty.  It must also assist eligible consumers in repairing their credit  This settlement requires the company to change its practices by prohibiting the company from collecting illegal and unauthorized sums and filing actions in distant courts, and by requiring the company to provide consumers notice about the automatic renewal provision in their contracts.