Attorney General Shapiro Announces $6 Million Settlement with Debt-Buying and Debt-Collector Companies
Over $256K in debts for PA consumers eliminated
HARRISBURG —Attorney General Josh Shapiro announced today that Pennsylvania and 41 other states and the District of Columbia have reached a $6 million settlement with Encore Capital Group, Inc. and its subsidiaries Midland Credit Management, Inc. and Midland Funding, LLC, which collectively form one of the nation’s largest debt buyers. The settlement requires the companies to make key reforms to how they collect consumers’ debts and eliminates over $256,000 in debts owed by 155 Pennsylvanians.
“The legal action we are taking today is a big step toward making debt collectors and buyers treat consumers fairly,” Attorney General Shapiro said. “There are 155 Pennsylvanian consumers receiving relief through this settlement, and there may be other consumers who are eligible. If you believe you were harmed by Midland’s debt collection practice, I want you to contact my Bureau of Consumer Protection at 800-441-2555 to get help.”
As part of the settlement, Midland will completely eliminate or reduce the judgment balances of 155 Pennsylvania consumers for a total value of $256,770.00 in cases where Midland used an affidavit against them in court between 2003 and 2009. Midland will notify impacted consumers by mail of the balance reduction and no further action is necessary from the consumer. In addition, Midland will set aside $25,000 per state to compensate consumers who may have paid Midland money that the consumer did not owe.
The settlement resolves the states’ investigation into Midland’s collection and litigation practices. Much like the conduct witnessed during the mortgage crisis, the agreement settles claims that Midland signed and filed affidavits in state courts in large volumes without verifying the information printed in them, a practice commonly called robo-signing.
Debt buying involves buying and selling overdue debts from creditors and other account owners. Debt buyers, including Midland, often purchase debts for pennies on the dollar, attempt to recover the full balance from consumers through collection attempts by phone/mail and take consumers to court to collect the debts they purchase. However, people are often unable to afford attorneys to defend the allegations and many cases result in default judgments against the consumer. The outstanding judgments damage consumers’ credit and can put them in jeopardy of having their wages garnished.
As part of the settlement, Midland is required to:
- Reform its affidavit signing and litigation practices. Midland must carefully verify the information contained in affidavits and must present accurate documents in court proceedings. Prior to filing a lawsuit, Midland must have documentation to support the key aspects of its case, including the amount of the debt, proof of an agreement, and an explanation as to why any additional fees are justified.
- Provide consumers with accurate information about valid debts. If a consumer disputes a debt Midland is attempting to collect, the settlement requires Midland to review original account documents before it continues its collection efforts and Midland must provide these substantiating documents to the consumer free of charge.
- Maintain proper oversight and training of its employees and the law firms that it uses. The agreement further prohibits Midland from reselling debt for two years.
Joining Pennsylvania in today’s settlement were attorneys general from Alaska, Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii , Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.
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