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Collection Law Firms in the Cross-hairs of Regulations

Massachusetts Attorney General Maura Healy filed a lawsuit against Lustig, Glaser & Wilson, P.C. stemming from allegations that the law firm “repeatedly sued consumers for debts they did not owe or debts that were inaccurate,” according to a news release from the attorney general.

The lawsuit was filed less than a week before the Consumer Financial Protection Bureau and Frederick J. Hanna & Associates, P.C., et al. reached a joint settlement in a similar case after nearly two-and-a-half years of investigation.  The settlement between the CFPB and the Hanna firm marked the end of an unprecedented federal lawsuit which the CFPB filed against Hanna in the U.S. District Court for the Northern District of Georgia.

In both instances, the volume of the collection lawsuits looks to have been a major factor in attracting the attention of the regulators.  The CFPB claimed the Hanna firm violated the FDCPA and the Consumer Financial Protection Act in its process of filing consumer lawsuits using affidavits of claim from the creditors in state court debt collection proceedings.  In the Massachusetts case, the Attorney General alleges the firm, “violated the state’s consumer protection laws in pursuit of debts and its use of judicial proceedings.” The complaint includes allegations that the firm filed more than 100,000 debt collection lawsuits in Massachusetts.  Notably, the Massachusetts Attorney General is seeking injunctive relief, restitution to consumers and civil penalties from the Lustig law firm.