A Denver-based collection agency must return approximately $475,000 it collected improperly from as many as 5,000 Washington consumers after state Attorney General Bob Ferguson prevailed in a lawsuit alleging unlawful debt-collection practices.

The agency, Machol & Johannes, must also forgive up to $250,000 in fees and costs for hundreds of people, and pay $414,000 to the attorney general’s office to cover the costs of the investigation, according to a statement from Ferguson’s office on the settlement.

Ferguson filed the lawsuit against Machol & Johannes in King County Superior Court in April 2020, after a King County Superior Court judge notified his office that the company had filed a number of improper wage-garnishment applications.

The suit states that the agency violated Washington’s Consumer Protection Act and Collection Agency Act by unlawfully assessing fees and failing to provide consumers with information about legally required garnishment exemptions.

Machol & Johannes did not immediately respond to a request for comment.

As a result of the lawsuit, Washingtonians will receive full restitution or forgiveness for improperly assessed fees and reimbursements for money that could have been exempted from garnishment.

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Machol & Johannes will also refund the portion of consumer debt it kept as payment for its services after garnishing wages in Washington from August 2011 to October 2012, when the company was operating in the state without a license.

The company also is required to return money collected from one Washington consumer who received a garnishment notice during a garnishment moratorium amid the COVID-19 pandemic.

“Washingtonians who owe debts have rights — debt collectors aren’t allowed to take every penny you have,” Ferguson said 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.”

Eligible consumers do not need to contact the Attorney General’s Office or Machol & Johannes to receive restitution or debt relief. Refunds and relief of costs and fees will be determined by data contained in Machol & Johannes’ records. The Attorney General’s Office will mail checks and notices directly to eligible consumers, accompanied by a letter explaining the resolution.

For more information, read the full statement from the Attorney General’s Office at atg.wa.gov/news/.