BOSTON — Thomas Rizzo thought he paid off debt owed to a collection law firm associated with Portfolio Recovery Associates LLC six or seven years ago.
Several months later, his check was still not cashed, and he was notified he owed another $5,800.
The current New Ipswich, N.H, resident, who was a Lowell resident at the time, took the matter to Lowell District Court in an attempt to prove he was current.
“I have court documentation stating that I paid them in court,” he said. “I was very thorough in documenting everything.”
While trying to sell his house in 2015, Rizzo discovered that a lien of over $5,000 had been placed on his home because of the debt.
“It just put added burden on my wife and myself at the time,” Rizzo said.
He ended up paying the company’s law firm again from the proceeds of the sale of his home.
The company — one of the country’s largest debt collection companies — will repay thousands of consumers like Rizzo in a $4 million settlement for using misleading debt collection practices, Massachusetts Attorney General Maura Healey said Monday.
The company purchases debts, such as defaulted loans, credit card accounts and car loans, from creditors at a discount, Healey announced in a news release.
In an investigation, the AG’s Office found that the Virginia-based company often pursued debt that had already been paid off, that was too old to be legally enforceable, or despite lacking proof of the actual amount owed. The investigation also found that the company sought debt from consumers living only on exempt income, such as social security.
“This major national debt buyer systematically and repeatedly broke our laws, lied to vulnerable consumers with exempt income, and collected debts they couldn’t even prove were owed,” Healey said in the release.
“This significant settlement will allow us to put money back into the pockets of thousands of Massachusetts families who were subject to this company’s illegal practices,” Healey continued.
The company also failed to notify consumers of their right to request proof of debt owed and failed to provide proof when asked, the AG’s Office found.
Another victim was Gloria Morrissette, a current Lowell resident, who was asked by the company in 2017 to pay debt on clothing she said she returned.
Morrissette received three outfits by mail for a wedding and ended up returning each one. She was later notified that she owed $2,000 on a tank top she said she returned, which originally cost about $15.
Morrissette eventually reached out to Healey’s office, and the debt was settled. According to Healey, she is living solely on income that is considered exempt.
In addition to paying the settlement, the company will also alter its practices, including verifying debt before pursuing collection, informing customers when a debt is too old to be collected, making customers aware of exempt income protections, ceasing to collect debt from those who rely solely on exempt income and refraining from calling consumers more than twice weekly.
Consumers eligible for repayment will be notified by email, the AG’s Office said.
“PRA has fully and voluntarily cooperated with the attorney general and her office throughout this matter. While we deny that PRA’s practices violate Massachusetts or federal law, we have agreed to these terms in order to resolve this matter, avoiding both further cost and delay associated with legal action,” the company said in an email statement Monday morning.
“Most importantly, we are pleased that we have reached agreement with the attorney general regarding enhanced communication and disclosures with our customers,” the statement reads.