Encore Capital Group Inc., a debt buyer notorious to state attorneys general for its collection practices, is promising to change the way subsidiary Midland Funding LLC goes about collecting bills. Facing a lawsuit by the state of Minnesota, Midland agreed to pay a $500,000 settlement but admits no wrongdoing. Midland was accused of “robo-signing” collection lawsuits without verifying the amounts owed, or even including basic information about the debt it was chasing down. The company and its parent operate nationwide, and earned a $61 million profit last year.
Minnesota Attorney General Lori Swanson says the problems she uncovered are not unique to Midland and are prevalent throughout the debt-buying industry. Debt-buying is where companies purchase uncollectable debts from creditors and then attempt to locate and dun the alleged debtors. People have been hounded by collectors trying to get money for these so-called zombie debts that are not owed or were already paid. This is believed to be the first government lawsuit against a debt buyer.
Midland showed no remorse for its business practices in statements issued after the settlement was announced. The company says the Minnesota suit was based in affidavit problems it corrected back in 2009. It claims that consumers are treated respectfully and even boasted of creating the industry’s first-ever “consumer bill of rights” which promises to play a positive role in customer’s financial recovery. Encore says it found no “systemic issues” in the current affidavit process, and the company “confirmed that the underlying consumer debts are valid and that our current affidavit process accurately describes those debts.”
The debt-buying industry has been barraged with complaints to the Federal Trade Commission and state regulators. Consumers have alleged the companies chased after them relentlessly for money they never owed, sued without warning or proper legal service of paperwork, and illegally threatened jail if payment wasn’t made immediately.
Source: Minneapolis Star Tribune, “Debt collector will change practices,” Jennifer Bjorhus, Dec. 12, 2012