In August 2011, a federal judge approved a $5.7 million settlement in a class action lawsuit brought against Encore Capital Group and its Midland subsidiaries. The case revolved around the practice of “robosigning” affidavits, which in turn were used to sue consumers and obtain judgments against them. Because the case was precedent-setting, 38 state attorneys general, the Federal Trade Commission, and consumer advocacy groups filed amicus briefs urging the judge to reject the settlement proposal.
Late in February, the 6th Circuit Court of Appeals voided the settlement, which would have awarded each consumer a measly $17. The appellate court ruled that the lower court judge had abused his discretion in approving the settlement, and that the monetary relief to consumers was “perfunctory at best.” The court also noted that the order meant to prevent Midland from engaging in robosigning behavior was hollow, in that it didn’t prohibit false affidavits and expired after one year. The case was remanded to the district court.
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