State Announces $1 million Settlement with Debt Buyer and Collection Agency

The Maryland State Collection Agency Licensing Board announced late Monday that it has reached a settlement with a debt buyer and its affiliated collection agency over proper licensing in the state and the filing of debt collection lawsuits.

The settlement calls for the companies to pay a $1 million civil penalty and dismiss thousands of cases already in the state’s legal system.

Maryland’s State Collection Agency Licensing Board is part of the state’s Department of Labor and Licensing Regulations (DLLR). The DLLR said in a press release that LVNV Funding LLC and Resurgent Capital Services, L.P. had agreed to the settlement. In addition to the penalty, the companies will dismiss more than 3,500 cases pending in Maryland district courts having balances of over $7.7 million, and pay 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.

“We are pleased that we have been able to reach such a positive and amicable resolution of all outstanding issues with the DLLR,” said Tom Thurmond, Executive Vice President of Resurgent. “We are committed to working proactively with all regulators in a manner that reflects our dedicated concern for consumer protection and our commitment to ethical corporate behavior.”

Thurmond noted that the settlement agreement was a collaborative effort between the State of Maryland and Resurgent to resolve the matter. Resurgent denied any violation of the law, but nonetheless reached out to the DLLR to fashion a complete resolution of the concerns raised.

“Resurgent and their management team have done a tremendous job addressing the issues brought up by the Maryland DLLR and I am impressed with their efforts in working with them on this resolution and I look forward to working with them on new filings under Maryland Rule 3-306,” said Joseph Murphy of Silverman, Thompson, Slutkin & White LLC, retired Judge of the Maryland Court of Appeals and former Chief Judge of the Maryland Court of Special Appeals who was hired by Resurgent to assist as a consultant in the Maryland matter. “This is truly a company that understands consumer protection and intends to be an industry leader.”

“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,” said Mark A. Kaufman, Maryland Commissioner of Financial Regulation.

Kaufman’s office also noted that Resurgent and LVNV fully cooperated with the state in the resolution, and that the agreement “does not constitute an admission of liability by the companies, and LVNV and Resurgent expressly deny any liability and wrongdoing.”

On October 25, 2011, the DLLR issued a Summary Order to Cease and Desist and Summary Suspension of Collection Agency Licenses against LVNV, Resurgent, and various other affiliated business entities and individuals after it 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.

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