The largest debt collection law firm in Massachusetts, Lustig, Glaser & Wilson PC, has paid $1 million to settle a lawsuit brought by the state alleging unfair and unlawful debt collection practices, state Attorney General Maura Healey said Thursday.
The settlement resolves a lawsuit the attorney general brought in 2015. In addition to the monetary settlement, which will be used to compensate Massachusetts consumers who were victimized, the firm has agreed to reform its debt collection practices, Healey said.
“Our message is simple: Companies can collect money that they’re owed, but they can’t break the law or cheat people in the process,” Healey said at a press conference in her Boston office. “What we’ve seen is that some of the biggest players are not focused on getting it right.”
Lustig Glaser released a statement that said the settlement included no findings of wrongdoing, that it wanted to avoid the cost of ongoing litigation, and that it is “fully committed” to adopting the new practices mandated by the agreement. It said it consented to standards that go beyond current law and regulations “to ensure that the needs of certain consumers facing particular hardships can be fairly addressed.”
Since 2011, Lustig has filed around 200,000 debt collection lawsuits in Massachusetts courts and has collected around $125 million in debts, Healey said. While Healey did not say all those claims were illegitimate, she stressed that in many cases, the firm pursued debts from the wrong consumers or for the wrong amounts, and it often lacked the necessary documentation from the debt buyers it represented in order to confirm the legitimacy of those debts.
“We allege that Lustig was doing this over and over and over again to thousands of residents, leaving them terrified and confused,” she said.
Sometimes the firm attempted to collect on debts that had already been repaid, and in some cases they attempted to collect on debts that were 10 or 15 years old and well beyond the point at which they could be collected, Healey said. She described one instance in which the firm went after a 90-year-old woman in an assisted living facility, threatening her with arrest if she did not make it into court, something she was too frail to do.
Healey also brought to the press conference two consumers who had been victimized by Lustig’s practices. A Stoughton woman said the firm had tried to pressure her into signing a judgment that would obligate her to pay a debt she did not believe was hers. And a man from Marblehead described how Lustig went after his adult son, who has a mental disability and whose only source of income is Social Security disability.
Calling the situation “overwhelming, terrifying and impossible to manage,” Ron Grenier described how he and his wife made payments to Lustig from their son’s Social Security disability income because they felt they had no other choice.
Healey said the firm often went after people living in or very close to poverty and people whose sole source of income came from Social Security, disability benefits, or veterans’ benefits — all sources of income that should be exempt from debt collection.
Ruthie Liberman, a vice president of public policy at the community group EMPath, said at the press conference that many of the people her organization tries to help out of poverty were dogged by the firm. Being harassed by debt collectors can be a barrier to finding a new job or an apartment if a wrongful debt collection has dinged a consumer’s credit score, she said. Liberman described a teacher’s aide she helped who lived on a yearly salary of $20,000 and who was pursued for a purchase she said she never made. When EMPath examined her credit report, they found debts made in other people’s names.
“What got us in the gut was when she told us that most nights her dinner consists of a 25-cent can of soup that she buys from the bin of cans at the supermarket that are all banged up,” Liberman said.
On top of the settlement, the firm has also agreed to reform its debt collection practices, Healey said. Lustig will now have to inform consumers about what types of income are exempt from debt collection in the initial notices it sends to consumers, and it will need to procure the appropriate documentation from the debt buyer, confirming that the debt is correct and legitimate.
Healey said at the press conference that her office has yet to determine how many consumers may have been hurt by Lustig’s practices, and she urged potential victims to come forward.
“I anticipate we’ll be able to provide relief to hundreds, if not thousands, of consumers,” Healey said. “It should put notice out there to everybody in this space that we expect you to be fair and square.”