AG obtains a settlement in the amount of USD 2.25 million in a debt collection case
Two settlements with a total value of nearly $ 4 million will be financed local consumer programs statewide. Both were negotiated by Maury Healey’s attorney general’s office, which enforces consumer protection laws, including debt collection laws.
The state’s debt collection laws are among the strictest in the country, and two settlements are among the largest of their kind.
In a recent case, Transworld, based outside of Philadelphia, was charged with making excessive phone calls to debtors at their homes and workplaces and for failing to disclose to debtors in some cases that the debts they were trying to recover were too old to be legally collectable .
The Attorney General’s Office also alleged that Transworld had made false and misleading statements in the lawsuits against debtors. In some cases, those who signed affidavits claimed to have personal knowledge of the facts of some debts when in fact they were missing, according to a 17-page settlement document filed with the Suffolk Supreme Court.
In addition, Transworld claimed in some instances in a statement that certain debts were due when the company did in fact “have insufficient documentation to establish a title chain” for that debt, the settlement reads.
“This company has routinely violated state laws and regulations by harassing and misleading vulnerable low-income consumers and student borrowers,” Healey said in a statement. “One of my office’s top priorities is to protect the economic security of the people of Massachusetts, and we will take action against companies that engage in illegal debt collection practices.”
On Tuesday, in a press release, Transworld noted that the company did not plead guilty to the Attorney General’s “findings or conclusions” and said the conduct in question took place in 2014-2016.
“Day-to-day operations will not be affected as the alleged behavior occurred more than four years ago and does not reflect current practice,” said Transworld.
Transworld described the matter as a “distraction” and said resolving it would allow the company to focus on delivering services.
Transworld is one of the largest collectors in the country and serves as the primary collector of private student loans held by NCT, which owns hundreds of thousands of student loans with a face value of around $ 12 billion, according to a court conclusion.
The Attorney General’s Office accused Transworld of violating the state’s debt collection laws, which prohibit more than two calls a week to a consumer’s home and more than two calls a month to a consumer at work.
Transworld “often” tried to recover debts from consumers who were so old that the debt “expired,” meaning the debts were no longer legally enforceable through a trial, the Attorney General’s office said. State laws on debt collection prohibit the collection of lapsed debts, unless the consumer is notified that the debt is time-barred and cannot be legally required to pay.
The terms of the settlement include assurances from Transworld that it will comply with government laws.
The Attorney General’s Office reached a similar settlement in 2016 with Ditech Financial, a national mortgage service that previously operated as GreenTree, according to the 2016 Attorney General’s press release.
According to a press release, Ditech has agreed to pay the state $ 1.4 million for alleged debt collection abuses, including excessive phone calls to borrowers and failure to inform them of their right to document their debt.