It isn’t hard to understand why people in debt — particularly elderly and poor people in debt — were such easy prey for the shady debt collectors who went after them.
Those collectors used strong-arm tactics. They demanded money they may not have been owed. They stretched — and then broke — laws designed to protect the vulnerable.
And they raked in cash, by the millions of dollars.
Attorney General Maura Healey will announce Monday that her office has reached a $4 million settlement with Portfolio Recovery Associates to compensate thousands of Massachusetts residents who fell victim to the company’s aggressive debt-collection practices. Her office began to investigate after receiving hundreds of complaints about the company from consumers.
“This is a company that consistently broke our consumer laws and debt collection laws,” Healey said in an interview. “They consistently targeted vulnerable consumers, like the elderly.”
This is how the company’s business model works: It purchases old debts from companies for pennies on the dollar. It then attempts to collect those debts by any means necessary.
In the process, Healey’s office alleges, the company — which has pursued hundreds of thousands of debtors in Massachusetts — routinely ignores multiple laws. Healey’s office found that the company frequently lacked documentation of the debts it was pursuing, meaning that it couldn’t show that the money was actually owed, or the proper amount. It ignored statutes of limitations. And even though certain kinds of income, like Social Security disability, are legally exempt from debt collection, they went after those funds as well, often by offering debtors dubious “hardship offers.”
They acted as if putting the squeeze in elderly disabled people was some kind of special favor.
“If you’re receiving Social Security or disability, that’s money that’s exempt from collection,” Healey said. “There’s a reason for that: It’s because without that, they can’t survive.”
Debt collection has been a big business for years. One of the law firms that Portfolio often uses in Massachusetts — Lustig, Glaser, & Wilson — reached a $1 million settlement with the AG’s office in 2017 after similar complaints of harassing consumers and abusing the court system. Clearly, that wasn’t enough punishment to disrupt the business model.
As part of the new settlement, Virginia-based Portfolio has promised to clean up its act. Specifically, the company has pledged to stop going after exempt income, to obtain documentation that debts are valid before attempting to collect them, and refrain from calling customers more than twice in a seven-day period. Portfolio has also agreed to stop reporting debts it cannot document to credit reporting agencies.
That such basic protections have to be put in place tells you a lot about who Portfolio has been victimizing: people who may not have the legal or financial sophistication to know their rights. People who cannot afford to hire lawyers to fight back.
In this world of haves and have-nots, that is a much bigger population than some might realize.
“Debt is just such a huge issue for this country,” Healey said. “There are millions and millions of people who have at least one debt in collection. Debt is a place where, as in anything else, companies have come in and tried to make money off of it.”
Certainly, there’s nothing illegitimate about collecting debts. But there is plenty wrong with big companies armed with high-priced lawyers who go after people who are essentially defenseless, with no regard for even the most basic ideas of fairness.
And, of course, this company didn’t agree to pay $4 million out of some sense of guilt or shame. They’re paying because they got caught.
Which only leaves me to wonder: How many other bad actors out there haven’t been caught yet?
Anyone who may have a complaint against Recovery Associates — or who has questions about debt collection practices — is urged to contact the attorney general’s office at 617-727-8400.
Adrian Walker is a Globe columnist. E-mail him at firstname.lastname@example.org. Or follow him on Twitter @adrian_walker.