DLLR News

 

Maryland State Collection Agency Licensing Board Reaches Agreement with LVNV Funding LLC and Resurgent Capital Services

 

BALTIMORE, MD (July 2, 2012) - Mark A. Kaufman, Maryland Commissioner of Financial Regulation, today announced that the Maryland State Collection Agency Licensing Board has reached an agreement with LVNV Funding LLC and Resurgent Capital Services, L.P. to settle alleged violations of federal and state debt collection laws. The settlement includes a voluntary penalty of $1 million payable to the state, agreement to dismiss more than 3,500 cases pending in Maryland district courts having balances of over $7.7 million, and credits totaling over $3.8 million which will be applied to the accounts of over 6,200 consumers whose cases have already been adjudicated or settled. LVNV is a consumer debt purchaser that acquires consumer claims in default, while Resurgent is a collection agency that services the consumer claims owned by LVNV and other business entities. They both are part of the Sherman Financial Group LLC family of companies. The Collection Agency Licensing Board is located within the Office of the Commissioner, a division of Maryland's Department of Labor, Licensing and Regulation.

"As Marylanders recover from the recent recession, we are determined to ensure that our residents are treated fairly and afforded the protections that they deserve," said Commissioner Kaufman. "This settlement highlights the continuing efforts of our Collection Agency Licensing Board to oversee collections activities of all types, including those related to collections litigation."

On October 25, 2011, the Agency issued a Summary Order to Cease and Desist and Summary Suspension of Collection Agency Licenses ("Summary Order") against LVNV, Resurgent, and various other affiliated business entities and individuals after the Agency determined that it had reasonable grounds to believe that LVNV and Resurgent had engaged in violations of various Maryland state and federal debt collection laws, including the Maryland Collection Agency Licensing Act, the Maryland Consumer Debt Collection Act, and the federal Fair Debt Collection Practices Act. Conduct at issue included allegedly engaging in collections activities in Maryland without being properly licensed, employing attorneys that filed false or misleading complaints and supporting affidavits in state courts on their behalf, and misrepresenting the amounts of the claims.

Under the terms of the settlement agreement, LVNV and Resurgent will dismiss without prejudice all pending cases filed in the District Court of Maryland prior to the date of the settlement; will provide restitution for consumers in the form of partial credits in cases in which Respondents obtained judgments, as well as in some cases that Respondents settled with the consumer-defendants prior to judgment. In turn, the collection agency licenses of LVNV and Resurgent are to be fully reinstated, and all other Respondents named in the original Summary Order are to be dismissed from the Agency's action. The settlement agreement (PDF document, 1.1MB, download Adobe Acrobat for free) is available online on the Commissioner's website.

Scott Jensen, Interim Secretary of the Department of Labor Licensing and Regulation, "Applauds the Collection Agency Licensing Board, Commissioner Mark Kaufman and his team for their leadership in being at the forefront in aggressively regulating the debt collection industry in Maryland."

The Agency recognizes that LVNV and Resurgent cooperated with the Agency to reach today's agreement. The agreement with LVNV and Resurgent does not constitute an admission of liability by the companies, and LVNV and Resurgent expressly deny any liability and wrongdoing.

The Office of the Commissioner of Financial Regulation is the primary regulator for financial institutions chartered in Maryland, including State-chartered banks, credit unions, and trust companies; and State-licensed financial entities including, consumer finance companies, mortgage lenders, mortgage brokers, mortgage servicers, mortgage loan originators, credit reporting agencies, consumer debt collection agencies, debt management companies, check cashers, credit services businesses, and money transmitters. The Commissioner is represented in legal matters by the Office of the Attorney General.

The Commissioner of Financial Regulation, Mark A. Kaufman, praised the Assistant Attorney General W. Thomas Lawrie as well as Investigator Suzanne L. Elbon of the Commissioner's Enforcement Division, for their efforts on this case.

Dismissals and credits will be submitted to the courts within 15 days of the agreement without any need for action by consumers. For further information, consumers can contact Resurgent Capital Services, L.P. starting July 3, 2012 at 1-866-316-1830.

Settlement Details

All pending debt collection cases filed prior to the Settlement Agreement in the District Courts of Maryland on behalf of any of the Respondents named in the Summary Order, will be dismissed without prejudice. Pursuant to this provision, 3,564 cases are being dismissed without prejudice, and the amount claimed in these cases totals $7,770,564. Respondents will be able to re-file these cases, if appropriate, or continue to collect through traditional means.

For all judgments in debt collection cases ordered by the District Courts of Maryland, Respondents will provide restitution to the consumers in the form of a credit for all pre-judgment interest plus attorneys' fees awarded by the court, with credits being applied to the account balance as of March 12, 2012. If the credit exceeds the balance remaining on the consumers' account, the account shall be considered satisfied in full as of that date. There are 5,793 consumers entitled to credits pursuant to this provision, and the amount of all such credits totals $3,609,367.

For all debt collection cases filed in the District Court of Maryland on behalf of any of the Respondents in which Respondents reached a settlement upon stipulated terms with the Maryland consumer, prior to a judgment being entered by the court, Respondents will provide restitution to the consumer by crediting their accounts with the total amount of the settlement that exceeds the amount claimed by the plaintiffs, which is the amount sued for in the case excluding any interest, attorney fees and court costs, with the credits being applied to the account balance as of March 12, 2012. There are 453 consumers entitled to credits pursuant to this provision, and the amount of all such credits totals $235,824.

View the settlement agreement (PDF document, 1.1MB, download Adobe Acrobat for free).

The Department of Labor, Licensing and Regulation protects and empowers Marylanders by safeguarding workers, protecting consumers, providing a safety net and cultivating a thriving workforce that can meet the demands of Maryland’s dynamic economy. Follow DLLR on Twitter (@MD_DLLR) and Facebook.