Debt collection cases take up most of the civil case time in District Courts and Small Claims courts in Massachusetts.
In a 2018 case, consumers counter-sued. The party suing us is not a licensed debt collector, they argued.
Massachusetts top court decided in Dorrian v LVNV Funding (2018) that a party with no direct contact with consumers, who uses licensed debt collectors for that, is not a debt collector who must be licensed under G. L. c. 93, § 24 .
LVNV, a “passive debt buyer,” bought debt for investment purposes but had no direct interaction with the debtor consumers. LVNV described the general character of its business as “purchaser of consumer debt and loans.” Through their agents, they brought a lot of lawsuits.
From 2010 to 2015, over 18,000 lawsuits were brought against Massachusetts residents seeking judgment on debts owned by LVNV, as well as 3,500 proofs of claim in bankruptcy court and 6,175 wage garnishment actions involving accounts owned by LVNV.
Their agents were licensed and met the standards to qualify for debt collection licensure under G. L. c. 93, § 24B (a):
“financial responsibility, character, reputation, integrity and general fitness . . such as to command the confidence of the public and to warrant the belief that the business . . . will be operated lawfully, honestly and fairly.” .
LVNV hired agents through a servicing agreement, to undertake all collection and servicing responsibilities with regard to the debts owned by LVNV. LVNV did not participate in any decisions regarding collection activities, including determinations of whether to initiate collection actions in court.
Lack of license by a very busy litigant was no defense for consumers, where the debt owners had hired licensed collectors.