One of the largest debt collection companies in Massachusetts will pay more than $1 million to settle a lawsuit brought forth by Attorney General Maura Healey’s office that alleged unlawful consumer debt collection practices.
The AGO lawsuit claimed that Lustig, Glaster & Wilson PC regularly sued consumers for debts they did not owe or debts that were inaccurate, violating state law, while also exploiting the court system in pursuit of debts. The consent judgement was also entered against the firm’s two owners, Ronald E. Lustig and Kenneth C. Wilson.
“This firm has clogged our court system with more than 200,000 lawsuits against Massachusetts residents. In case after case, the firm has used faulty or inaccurate information to intimidate people into making payments,” Healey said in a statement. “We will not stand by while debt collectors exploit consumers and demand money that doesn’t belong to them. This settlement will make the business of debt collection fairer and more transparent for the people of Massachusetts.”
Not only did the firm agree to pay $1 million in restitution to potentially thousands of Massachusetts residents, but it also said it would change its consumer debt collection practices in the following ways:
- The company will now disclose to vulnerable populations such as the elderly and disabled that certain income is exempt from collection.
- The company must obtain documentation and verify the accuracy of a person’s debt before collecting.
- Lustig can no longer sue consumers for debt unless an attorney has meaningfully reviewed appropriate documentation and determined that there is sufficient evidence to support its claims.
- The company can no longer use court processes such as payment review hearings and civil arrest warrants, to apply pressure and intimidate consumers who have no ability to pay the debt or are living on exempt income.
- Lustig must cease collection unless the company provides consumers proof of the debt.
The AGO first brought forward the lawsuit in December 2015, alleging that beginning in 2011, Lustig filed tens of thousands debt collection lawsuits annually in Massachusetts, based largely on unsubstantiated and often inaccurate debts owned by national debt buyers.
Many of these lawsuits 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.
The lawsuit alleged that to make these practices possible, Lustig relied on spreadsheets provided by national debt buyers, which allowed them to process up to thousands of consumer accounts for collection and litigation in a single day, often with inaccurate and unverified information.
Lustig also filed deceptive lawsuits against consumers, used false and misleading court filings and demanded payment of time-barred or dismissed debts, the lawsuit alleged.
Court documents show that Lustig was primarily after consumer credit card debt.
Some of the accounts placed with Lustig had been initially purchased with contracts stating that consumers’ account balances were “approximate” and “may not reflect credits for payments made by or on behalf of the [consumer] prior to the cut-off date,” according to court documents.
Some consumers, according to court documents, were sued by Lustig naming the wrong entity as the original creditor.
The firm also routinely alleged in collection lawsuits that a consumer made a payment on a debt years after it was charged-off by the original creditor.
“For low-income families, breaking the cycle of poverty is complex enough without getting harassed for unsubstantiated debt,” Ruthie Liberman, vice president of public policy at EMPath, said in a statement. “It can be a barrier to landing a job or finding an apartment. Our thanks to the Attorney General for looking out for them.”