A Massachusetts law firm will pay $100,000 and revamp its business practices to resolve allegations that it violated state and federal debt collection laws.
The settlement, filed in Suffolk Superior Court, stems from allegations that Schreiber & Associates of Danvers, Massachusetts used a variety of unfair and deceptive practices - including harassing and embarrassing consumers, exceeding the number of permissible calls, and making unsubstantiated threats - to collect debts.
"Consumer debt is a growing problem in today's difficult economy," said Attorney General Tom Reilly. "Debt collectors too often ignore a consumer's rights. It's not okay to harass, threaten or mislead someone because they owe a debt."
Reilly said he pursued Schreiber & Associates after an investigation revealed that the company's collection practices violated state and federal debt collection laws, including the Massachusetts Consumer Protection Act, the Massachusetts Debt Collection Regulations, and the Federal Debt Collection Practices Act.
In the filing, Reilly alleges that debt collectors for the law firm used obscene language, harassed and embarrassed consumers, exceeded the number of permissible calls, disclosed debts to persons other than the debtor, made unsubstantiated threats against consumers, provided false or misleading information to consumers and failed to provide proof of the validity of debts.
Reilly said his office has received close to 250 complaints against Schreiber & Associates since 1999.
Under the terms of the settlement, Schreiber will implement new policies and procedures that go beyond the requirements of state and federal law. Among other things, Schreiber must:
• designate a debt collection supervisor to ensure compliance with state and federal law;
• maintain records of all debt collection activities;
• record all telephone conversations with consumers;
• designate a mediation supervisor and implement procedures to mediate disputes with consumers with the assistance of AG Reilly's Consumer Complaint and Information Section;
• provide enhanced training to its debt collectors;
• record and confirm in writing oral payment authorizations from consumers; and
• immediately notify consumers if Schreiber learns that a debt has been paid, is not the consumer's obligation, or is otherwise illegitimate.
"This agreement raises the bar for the entire debt collection industry in Massachusetts," Reilly said. "I am pleased that Schreiber is adopting these best practices and urge other debt collection companies to follow suit."
The settlement requires Schreiber to pay $20,000 in restitution to consumers, $70,000 in penalties, and $10,000 in attorney's fees and costs for the Commonwealth's investigation. Reilly's Office will determine and distribute restitution to injured consumers and contribute any remaining funds to the Local Consumer Aid Fund.
The president and owner of Schreiber & Associates, P.C., Attorney Jeffrey A. Schreiber, is also bound individually by the provisions of the Assurance.
This investigation is part of a larger initiative aimed at protecting consumers from unfair debt collecting practices. Debt collection consistently makes Reilly's annual top-ten list for consumer complaints. It ranked seventh on last year's list.
