On Tuesday morning, Attorney General Bob Ferguson’s office announced that debt collectors Machol & Johannes, LLC were to reimburse Washington consumers approximately $ 475,000. A consent decree states that Machol & Johannes must also forgive up to $ 250,000 in fees and costs to consumers, and pay the Ferguson office $ 414,000. Money donated to Ferguson’s office will cover the costs of the investigation and fund the continued work of the office’s consumer protection division.
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The Attorney General filed a complaint in April 2020 against Machol & Johannes. According to Ferguson’s office, Machol & Johannes were suspected by King County Superior Court for filing large amounts of garnishment claims. A judge informed Ferguson, who then filed a complaint.
The trial specifies:
“Machol & Johannes violated garnishment law by routinely submitting affidavits to Washington courts falsely stating that required proof of consumer shipment was attached to the return when it was not , then by obtaining or attempting to obtain garnishment orders based on the false statements. Machol & Johannes submitted thousands of these false statements to Washington courts between 2015 and at least April 2019. “
Ferguson’s office said it uncovered more illegal practices on the part of the company, including unlawful valuation of fees and failing to properly inform consumers that they can protect some of their assets. accounts against garnishments.
“Washingtonians in Debt Have Rights – Debt Collectors Aren’t Allowed to Take Every Dime You Have”
“Debt collectors must obey the law. This resolution will be unanimous in the Washingtonian and guarantees that Machol & Johannes will respect the rules.
Ferguson’s office press release details the trial resolutions:
- Machol & Johannes failed to offer legally required garnishment exemptions to hundreds of Washingtonians. In Washington State, consumers have the right to exempt money from garnishment. Until 2019, Washingtonians were allowed to protect $ 500 against bank account garnishments. For student loan debts, Washingtonians had the right to protect $ 2,500 from garnishment. Collection agencies are required to offer these protections to consumers via an exemption request form before funds are seized. As part of today’s resolution, Washington consumers who have not been granted exemptions will receive refunds for the money collected up to the exempt amount. The attorney general’s office estimates that this will total about $ 100,000.
- Machol & Johannes added fees to around 1,000 consumer debt accounts, even when they didn’t raise funds. Washington law allows collection agencies to add fees and costs to consumer debt only when the debt collector is able to collect the money. Machol & Johannes will reimburse approximately $ 100,000, plus a total of approximately $ 32,000 in interest to consumers from whom the company collected these charges.
- For about 500 additional consumers whose debts have not been collected, the company will waive fees from their unpaid debt accounts, amounting to about $ 250,000 waived.
- Machol & Johannes was not licensed to operate as a collection agency in Washington from August 2011 to October 2012. Due to its failure to obtain a license, Machol & Johannes will pay $ 238,000. The attorney general will return this money to approximately 4,000 consumers the company has initiated collections against during this period.
Legislation passed in 2019 allows consumers to exempt up to $ 2,000 from garnishment for consumer debt in Washington state. A bill passed in 2021 will automatically exempt $ 1,000 of the $ 2,000 allowed for consumers without them needing to apply for the exemption.
Machol & Johannes, LLC is headquartered in Colorado, has an affiliate office in Bellevue, and operates under a license from Washington as Machol & Johannes, PLLC. According to Ferguson’s office, Machol & Johannes operated in Washington state without a license in 2011 and 2012.
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