State Fines Debt Buyer Over Collection Lawsuits

The state of Maryland announced late Thursday that it has reached a settlement agreement with debt purchasing business units related to West Asset Management (WAM) over debt collection lawsuits the entities filed against consumers in the state.

Maryland’s Commissioner of Financial Regulation, Sarah Bloom Raskin, made the announcement noting that the agreement settled alleged violations of state and federal collection laws related to litigation activities in Maryland State courts. The company will pay an $85,000 civil penalty and has agreed to conform their business practices to ensure that both their litigation-related collection activities, as well as their non-litigation debt collection activities, comply with all applicable state and federal laws.

The announcement released by the state did not detail allegations against the business units named in the lawsuit (Worldwide Asset Management, LLC; Worldwide Asset Purchasing, LLC; and West Asset Purchasing, LLC). But the full settlement agreement alleges that WAM’s debt purchasing sister units were filing debt collection lawsuits in Maryland without being licensed as collection agencies with the state even though they were acting on their own behalf after purchasing the accounts.

West Asset Management itself is licensed as a debt collection agency in Maryland.

The Commissioner also alleged unspecified violations of the Fair Debt Collection Practices Act (FDCPA) and the Maryland Consumer Debt Collection Act.

The companies admitted no wrongdoing in the agreement and further denied all allegations spelled out in the document. But they agreed to “resolve the alleged violations in lieu of an administrative action being filed, thereby avoiding the costs associated with an administrative hearing and any potential appeals.”

Greg Hogenmiller, WAM’s VP and Deputy General Counsel, noted the company disagreed with the Commissioner’s contention that it, acting on behalf of Maryland’s executive branch, had the right to decide if a violation had occurred.  “It was our position that it’s the judiciary’s job to decide whether evidence is sufficient or not and they disagreed,” he told insideARM.com. The two sides never reached an agreement on the point, leading to the settlement.

The units noted that they have completely ceased filing debt collection-related legal actions in Maryland courts, and if they ever decides to file lawsuits in the state, they will become fully licensed as collection agencies before doing so.

The agreement will not impact current or pending collection cases in the courts.

At any rate, the debt buying business related to WAM is in the process of being shuttered. In 2009, WAM’s parent company, West Corp., announced that it will no longer support the purchase of charged-off consumer receivables. The company noted in a recent SEC filing that it has not bought a debt portfolio since the first quarter of 2009.