A Catonsville company has agreed to drop several hundred active debt-collection lawsuits against Maryland consumers and either repay or forfeit $665,000 in attorney fees and compound interest it had improperly sought, state financial regulators announced Tuesday.
Sunshine Financial Group, which also will pay a $20,000 fine, did not admit wrongdoing but agreed to take no further collections actions against Maryland consumers without first getting a debt-collection license from the state.
The Maryland Department of Labor, Licensing and Regulation rejected Sunshine Financial's application for a license in July in part because of problems with the amounts the company claimed it was owed.
The company, which buys consumer debt and had sought to collect through court judgments, will have to dismiss its 314 pending cases as part of the settlement.
It agreed to refund improper attorney fees and interest to consumers who have paid off judgments entered against them, and it will forgo those amounts on judgments that have not yet been satisfied and accounts it had not yet tried to collect.
The amounts Sunshine Financial will have to repay or forfeit range from $240 to $14,000, the state said.
"It's a misrepresentation of the amount owed," said Anne Balcer Norton, the state's deputy commissioner of financial regulation.
Sunshine Financial's managing member, J. Scott Morse, declined to comment.
The state's financial regulators have pursued other debt collectors for working without a license. And last week Maryland's Court of Appeals approved rules aimed at preventing debt collectors from winning judgments in District Court without sufficient documentation to prove their cases.
"Maryland is fast becoming recognized as a state which will not tolerate unscrupulous collection tactics," said Peter A. Holland, who runs the University of Maryland School of Law's consumer protection clinic.