Press Release  AG Healey Secures $2.25 Million From National Debt Collection Company for Misleading and Harassing Students Borrowers and Low-income Consumers

BOSTON — A national debt collection company has agreed to pay $2.25 million and change its business practices to resolve allegations that it used unfair and deceptive debt collection practices against consumers, including student borrowers, Attorney General Maura Healey announced today.

The assurance of discontinuance, filed today in Suffolk County Superior Court with Transworld Systems, Inc., resolves allegations that the company violated the AG’s Debt Collection Regulations by making high volume calls to consumers, regularly attempting to collect on time-barred debts, and using false and misleading affidavits in an effort to collect private student loan debt on behalf of the National Collegiate Student Loan Trusts (NCT).

“This company routinely violated state laws and regulations by harassing and misleading vulnerable, low-income consumers and student borrowers,” said AG Healey. “One of my office’s top priorities is to protect the economic security of Massachusetts residents, and we will take action against companies that engage in illegal debt collection practices.”

Transworld is one of the nation’s largest debt collectors and serves as the primary debt collector for private student loan debt held by NCT. The AG’s investigation found that Transworld excessively contacted consumers both at their homes and places of employment, in violation of the AG’s Debt Collection Regulations which prohibit more than two calls to a consumer’s home in a seven-day period. Debt collectors also cannot call a consumer at work or other non-residential number more than two times a month.

Transworld frequently attempted to collect debts from consumers that were so old that the debt was “time-barred,” meaning that these debts were no longer legally enforceable through a lawsuit. Massachusetts debt collection regulations prohibit the collection of a time-barred debt unless the consumer is provided notice that debt is time-barred and that a consumer cannot be required to pay the debt through a lawsuit, which Transworld failed to do. 

Transworld created false and misleading affidavits to use as evidence against consumers in debt collection lawsuits related to NCT student loan debts. Transworld’s employees who signed the affidavits did not have personal knowledge of the facts in the affidavit or sufficient evidence that NCT owned the loans, despite attesting to that as fact. 

In addition to the $2.25 million payment, Transworld has agreed to significant changes in its business practices, including preventing excessive calls, call attempts, or voicemails to consumers and requiring all law firms collecting on its behalf to take the same preventative measures. The company will also stop collecting on time-barred debt without providing the appropriate disclosures to consumers and will ensure that it does not produce false or misleading affidavits.

The AG’s Office is dedicated to stopping illegal debt collection practices and encourages anyone with questions or concerns about debt collection practices to learn more about fair debt collection, call the AG’s consumer hotline at 617-727-8400, or file a complaint online.  

This matter was handled by Assistant Attorneys General Yael Shavit and Peter Downing, both of the AG’s Consumer Protection Division, with assistance from Investigator Ciara Tran of the AG's Civil Investigations Division.

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