State Suspends ARM Firm's License; Company Responds

The Maryland Department of Labor’s (DLLR) Office of Financial Regulation (FinReg) announced last week that summary orders to cease and desist and summary suspensions of collection agency licenses were issued in a case against LVNV Funding LLC and Resurgent Capital Services L.P.

The State Collection Agency Licensing Board in FinReg said that it found grounds to allege that LVNV and Resurgent engaged in acts or practices constituting violations of the Maryland Collection Agency Licensing Act (MCALA), the Maryland Consumer Debt Collection Act (MCDCA) and the Fair Debt Collection Practices Act (FDCPA).

In a press release, DLLR said that many of the debt collection lawsuits filed by the companies came before it was properly licensed in the state. In addition, the agency accused LVNV and Resurgent of knowingly filing false, deceptive or deficient affidavits; intentionally misrepresenting the amount of the consumer claims; and knowingly collecting unauthorized attorney’s fees and prejudgment interest at unauthorized rates.

“Consumer debt purchasers are increasingly using the court system to pursue consumer claims in default,” said Deputy Commissioner Anne Balcer Norton. “It is the objective of the Office of the Commissioner of Financial Regulation to ensure that businesses involved in this type of debt adhere to licensing requirements and the Maryland Rules of Civil Procedures, as well as to the federal and State debt collection laws.”

Luke Umstetter, Senior Corporate Counsel for Resurgent Capital Services told insideARM that the company strives to remain in compliance with regulations in Maryland.

“We work extremely hard to treat all consumers fairly and with respect,” Umstetter said. “Our successful compliance with both the letter and spirit of all applicable laws and regulations – including maintaining all appropriate licenses and adhering to all state and federal Rules of Civil Procedure in the industry’s constantly shifting regulatory landscape – requires that we remain vigilant in our constant consultation with our local counsel and regulatory authorities for guidance. Given our extensive efforts to operate in a compliant, ethical and sensitive manner, we are very disappointed with any allegations to the contrary and look forward to resolving this matter with the State of Maryland as expeditiously as possible.”

The licensing of debt buyers and collectors in the state of Maryland has been a source of confusion for many operating there, primarily due to contradictory statements from various state agencies.

This was highlighted in the recent settlement of a private class action suit brought against LVNV in Maryland.

“In interpreting an amended statutory provision, LVNV relied on specific guidance from Maryland’s licensing agency, legal counsel, and trade organizations in forming the belief that they did not need to obtain a debt collection license in Maryland,” the company said. “Unfortunately, later interpretation of the statutory language by other parties has called this into question.”

The company said at the time that it decided to settle rather than face an uncertain interpretation in the court that would ultimately rule on the case.