The Attorney General of Washington yesterday announced an enforcement action against a collection agency for alleged unlawful debt collection practices, including assessing fees and costs to individuals without not collecting any money from them, operating without a license for more than a year, and failing to offer legally required garnishment exemptions to hundreds of Washingtonians. Under the terms of the consent decree, the collection agency will repay individuals approximately $475,000 in restitution and $250,000 in erased fees, along with $414,000 to the AG’s office to cover the costs of the investigation and to help fund additional investigations.
A copy of the consent decree, entered into with Machol & Johannes, can be accessed by clicking here. The Attorney General filed its initial lawsuit against the agency in April 2020.
Along with paying the fines, the agency is also required to develop policies and procedures consistent with Washington’s garnishment laws, make sure exemption claim forms are provided to Washington consumers, release all current garnishments in which individuals were not provided exemption claim forms, and ensure no fees or costs are assessed to consumers.
Under state law in Washington, consumers are entitled to have some of the money in their bank accounts and paychecks exempt from garnishments. Collection agencies are required to provide forms to consumers — before any funds are garnished — allowing consumers to protect that money. The agency in this enforcement action did not offer those forms to “hundreds” of consumers, according to the Attorney General.
The agency was also accused of adding fees to 1,000 accounts even though no money was collected, which is a violation of state law. The agency was also accused of operating in Washington state without a license between August 2011 and October 2012.
“Washingtonians who owe debts have rights — debt collectors aren’t allowed to take every penny you have,” said Bob Ferguson, the Attorney General of Washington, in a statement. “Debt collectors must follow the law. This resolution will make Washingtonians whole, and assures that Machol & Johannes will play by the rules.”