Lustig, Glaser & Wilson Opposes Massachusetts Division of Banks Initiative to Require Licensing of Attorney Debt Collectors

Lustig, Glaser & Wilson Debt Collector LicenseDebt collection is a highly regulated area. Under federal law, it is regulated under the Fair Debt Collection Practices Act, 15 U.S.C. 1692. Under Massachusetts state law, it is also regulated by both the Attorney General and the Division of Banks. The latter of these issues licenses for debt collectors.

Until recently, attorneys who are debt collectors have been exempt from having to get a license from the Division of Banks. But in a new opinion letter, Opinion Letter 16-002, attorneys who “regularly” collect debts must apply for a license by August 11, 2016. More than 30 states already require debt collectors to get licenses.

Law firms who fail to apply for a license may be subject to criminal and civil sanctions. Under the Massachusetts debt collection law, any unlicensed debt collector must return any money obtained from a consumer. They will also be deemed to have violated the Massachusetts Consumer Protection Act, called Chapter 93A.

One debt collection law firm, Lustig, Glaser & Wilson, P.C., has strenuously opposed the requirement to obtain a license. The firm has gone so far as to file a lawsuit against the Division of Banks, and has now filed a motion asking the regulation to be declared invalid. No decision has yet been issued.

An article in Massachusetts Lawyers Weekly titled “Law firms fret over need for debt collection license” (subscription required) highlights this conflict. It quotes Attorney Josef Culik’s statement that without a higher standard for debt collectors’ activities, there may be a “race to the bottom” among collection firms.

“Although attorney debt collectors often pay lip service to protecting consumers on their websites or in public statements, it’s clear that protections are still needed,” Attorney Culik said. “Attorney debt collectors should put their money where their mouth is.”

Lustig, Glaser & Wilson, P.C. has also been sued by the Massachusetts Attorney General for illegal debt collection. In this case, separate from LGW’s own lawsuit, the firm is alleged to have committed unfair and deceptive collection practices, including obtaining money from vulnerable consumers whose income is protected by law, such as Social Security, unemployment, or veteran’s benefits

The Division of Banks’ Opinion Letter is here: Opinion Letter 16-002

The AG’s complaint is here: Massachusetts v. Lustig, Glaser & Wilson, P.C.

UPDATE: The Division of Banks has withdrawn its opinion letter, and thus attorneys who are admitted to practice in Massachusetts are not required to obtain a debt-collection license to collect debts in Massachusetts.

CULIK LAW

CULIK LAW

CULIK LAW represents consumers dealing with debt, debt collectors, debt collection lawsuits, credit card debt, harassing debt collection calls, credit reporting errors related to debt, violations of the Fair Debt Collection Practices Act, and protections under Massachusetts laws. We offer a debt consultation so you can tell us about your debt, your concerns, and your goals. We can offer strategies and options that will best fit your needs and to manage or eliminate your debt.