Midland Funding Archives

Minnesota Attorney General Obtains Consent Judgment Against Midland Funding

Thursday, December 13th, 2012 at 6:17 pm  
Leave your comment

robosignMinnesota Attorney General Lori Swanson, who has a strong track record of going after the bad players in the debt collection industry, announced that the court has approved a consent judgment against Midland Funding to settle a robo-signing case brought last year. According to Swanson’s press release, Midland Funding, one of the country’s largest debt buyers, was alleged to have “filed thousands of collections lawsuits against individuals in Minnesota courts, often supported by unreliable ‘robo-signed’ affidavits…. Several Midland employees admitted in sworn testimony to signing up to 400 affidavits per day, either without reading them, without personal knowledge of their contents, and/or without verifying the accuracy of the information contained in them.”

The consent judgment requires that, before filing a lawsuit, Midland must provide consumers with debt validation, verify the address of the consumer, and investigate disputes. It even goes a step further, prohibiting Midland from reselling an unsubstantiated debt and requiring that unsubstantiated accounts be closed and adverse credit reports be corrected.

The judgment also mandates that Midland follow procedures to stop robo-signing practices, to prevent lawsuits on debt that is past the statute of limitations, and to ensure that consumers can respond to lawsuits in a meaningful way. Further, the company will pay $500,000 to Minnesota.

The press release also contains an interesting factoid: “Along with its parent corporation (the publicly traded Encore Capital Group, Inc.), Midland has paid more than $2.1 billion to purchase about 40 million accounts with a face value of about $66.4 billion, or an average of three cents on the dollar to acquire the debt.”

Encore Capital Group Investors Investigate Directors

Tuesday, February 28th, 2012 at 5:00 am  
Comments (1)

In early February, debt buyer Encore Capital Group (Nasdaq: ECPG) announced that its 2011 profit rose to $61 million – an increase of almost 25% over 2011. A few days later, The Shareholders Foundation issued a press release announcing that some members of Encore Capital Group’s board were being investigated by a law firm on behalf of Encore’s shareholders. The release said that the investigation revolves around potential breaches of fiduciary duties, namely allegations that the debt buyer engaged in business practices that violated the Fair Debt Collection Practices Act and state statutes. The release goes on to cite a number of actions taken against Encore Capital Group and its subsidiaries, Midland Credit Management and Midland Funding. Those include various class action lawsuits, an action by the Texas Attorney General, and the North Carolina Department of Justice.

Judge Approves Settlement in Encore Capital Case

Tuesday, August 16th, 2011 at 3:16 pm  
Comments (2)

robosignA federal judge approved a $5.7 million settlement in a bellwether class action suit against Encore Capital Group and its Midland subsidiaries. At issue was the practice of “robo-signing” affidavits, in which debt collection agency personnel attested to the accuracy of documents relating to the debts in question without actually reviewing the documentation. These affidavits were then used to support court cases against consumers and obtain judgments against them.

The practice of “robo-signing” made headlines in the past year in relation to home foreclosures, in which workers claimed they signed several hundred affidavits a day – something that’s impossible to do if they were truly reviewing and attesting to the documentation.

There was widespread concern that the proposed settlement in the Encore/Midland case would set a legal precedent that would make it difficult to bring other robo-signing companies to justice. Indeed, 38 state attorneys general and the Federal Trade Commission filed briefs urging the judge to reject the settlement.

The judge ruled that the settlement – which entitles each of the 1.44 million consumers who are members of the class an award of $17.38 – was fair, in that it included language requiring Encore/Midland to change its policies regarding affidavit signing.

It is a shocking miscarriage of justice to award damages of less than 20 bucks to consumers who were victims of a practice arising out of unmitigated greed and an apparent disregard for those whose lives were impacted by the judgments illegally obtained. The judge ruled that it was fair, and that the consumers who were members of the class had the opportunity to opt out and pursue separate legal action. Missing was an acknowledgment that consumers aren’t lawyers, and aren’t always aware of the implications of remaining a member of a class action. This decision will also likely have a chilling effect on valid lawsuits brought by other plaintiffs who were similarly victimized.

Although two attorneys general are pursuing separate legal actions against Encore, the debt buyer is conducting business as usual. According to a report by Thomson Reuters, Encore’s 2010 annual report indicated that the company had purchased $54.7 billion worth of debt for three cents on the dollar.

Texas Attorney General Files Against Encore Capital Group

Monday, July 11th, 2011 at 2:35 pm  
Leave your comment

Our June 24 post noted that the Federal Trade Commission and 38 state Attorneys General have opposed a proposed settlement in Vasalle v. Midland Funding LLC, its parent company Encore Capital Group, and Midland Credit Management. The judge in the case is scheduled to rule on the proposed settlement today (July 11), but Texas Attorney General Greg Abbott is leaving no stone unturned. On Friday, his office filed suit against Encore Capital Group, Midland Funding, and Midland Credit Management, charging the company with “falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information, and employing unlawful and deceptive debt collection tactics.”

Why are these robo-signing practices so problematic? Debt collection agencies use sworn affidavits as a means of affirming to a judge that a consumer owes the debt in question. The vast majority of consumers don’t appear in court to defend themselves (often because they’re either not aware of a pending lawsuit against them), leaving the judge no option but to consider the affidavit proof and award the debt collection agency a judgment against the consumer. With a judgment in hand, the debt collector can go about enforcing the judgment, which in many cases involves seizing money from the consumer’s bank account.

If the foundation of an affidavit is faulty – if it’s based on erroneous information that a debt collection agency employee never checked into – a judgment has serious consequences for the consumer. A press release issued by the Texas Attorney General noted that Encore and Midland filed more than 60,000 lawsuits in Texas since 2002, and that:

“Court documents filed by the State indicate the defendants sometimes even used incomplete or inaccurate account information, targeted the wrong individuals for collection and attempted to collect debts that had been fully or partially paid. As a result, some Texans unnecessarily suffered financial hardships, such as improperly decreased credit ratings, loss of job opportunities or the ability to refinance their home.”

FTC, AGs Oppose Midland Funding Class Action Settlement

Friday, June 24th, 2011 at 12:00 pm  
Leave your comment

robosignThe Federal Trade Commission has filed an amicus brief in the U.S. District Court for the Northern District of Ohio, opposing a class action settlement in Vassalle v. Midland Funding LLC, its parent company Encore Capital Group, and Midland Credit Management. The lawsuit alleges that the debt buyer and debt collector violated the Fair Debt Collection Practices Act and related state law by engaging in the robo-signing of affadavits.

According to the FTC’s press release, if the court accepts the proposed settlement, “class members will have to give up too much in exchange for too little.” The settlement proposes that class members receive a maximum payment of $10, for which they’d “surrender their rights under the FDCPA and state laws to challenge Midland’s actions related to the company’s use of affidavits in debt collection lawsuits. This would include, the FTC argues, perhaps even the right to challenge improper default judgments obtained by Midland.”

The FTC’s amicus brief follows on the heels of the opposition of 38 state Attorneys General. According to the Wall Street Journal, the AGs argued that “approval of the deal would help the debt collection industry dodge enforcement actions by state officials,” and that Midland and Encore could use the settlement to argue that similar robo-signing lawsuits in other jurisdictions should be thrown out.

The judge in the case is scheduled to rule on the proposed settlement July 11.

Another Step Forward in Reining in Debt Collection Attorneys

Thursday, March 10th, 2011 at 5:00 am  
Leave your comment

We’ve often discussed the ways in which debt collectors routinely use the taxpayer-funded court system to cut costs. Essentially, debt collection attorneys file hundreds (or thousands) of lawsuits against consumers in the hope that the consumer won’t show up to defend himself or herself. If that’s the case, getting a judgment against the consumer is a breeze. Judgment in hand, the debt collector can go about freezing a consumer’s bank account, garnishing his or her wages, and the like.

Some debt collection attorneys try to cut costs even further. According to a story in the Syracuse Post-Standard, Cohen & Slamowitz filed a lawsuit in Syracuse City Court against a consumer who didn’t even live in Syracuse. The reason? The story speculates that it’s cheaper to file lawsuits in upstate New York than it is in New York City or Long Island. However, the law says that a suit must be filed in the consumer’s judicial district. That could mean the consumer’s local court or the New York Supreme Court.

The consumer filed suit against Cohen & Slamowitz, who were collecting on behalf of Midland Funding, saying that the debt collection lawyers violated the Fair Debt Collection Practices Act. The U.S. District Court dismissed the suit, but a federal appeals court found that the term “judicial district” meant “the municipal court where the debtor actually lives or the state Supreme Court for the county of residence.” The appeals court said that the consumer’s lawsuit could move forward.

More Evidence that Debt Collectors are Exploiting the Legal System

Wednesday, December 1st, 2010 at 5:00 am  
Leave your comment

justiceOn several occasions, we’ve discussed a disturbing trend, one where debt collection agencies use the court system as a primary tool in collecting debt. As reported by the Wall Street Journal, this tactic is putting a strain on the taxpayer-funded courts. The Journal quoted one Illinois judge as saying, “There exists a real danger that the courts will be perceived as mere extensions of collection agencies.” That same judge said that there have been as many as 400 debt collection cases on his docket in a single day.

The article goes on to report that Encore Capital Group, parent of Midland Funding, filed 245,000 lawsuits last year, and that approximately 94% of lawsuits result in default judgments. Debt buyers purchased $100 billion worth of debt last year, and often turn to the courts first; the Journal reported that an Indiana small claims court judge placed a limit on how many debt collection cases law firm Bowman, Heintz, Boscia & Vician could file every two weeks…. The limit was 500 cases every two weeks!

Default judgments occur when consumers don’t show up in court, often because they don’t even know they’re being sued. If more than 90% of debt collection cases result in default judgments, it’s clear that the court system isn’t being used fairly or justly, and that the taxpayer is footing the bill for debt buyers to scoop up profits. Indeed, Encore, the parent of Midland Funding, took in almost $243 million last year as a result of default judgments. That’s just wrong.

Litigious Debt Buyers Rake in Money from Minnesotans

Friday, August 6th, 2010 at 5:00 am  
Leave your comment

The Minneapolis Star Tribune recently compiled a list of the most litigious debt buyers, who raked in over $223 million in court judgments against Minnesotans from 2005 to 2009. The top ten were: Midland Funding, Dakota Bluff Financial, LVNV Funding, Asset Acceptance, Arrow Financial Services, North Star Capital, Unifund CCR, Palisades Collections, Portfolio Recovery Associates, and Credit Acceptance Corp.

We’ve often noted that taking consumers to court is a favorite tactic of debt buyers. They purchase debt for pennies on the dollar, file lawsuits against unwitting consumers, and then obtain judgments. Consumers often don’t know that they’re being sued, don’t know how to properly defend themselves, or don’t think that it matters since they don’t have any assets. The thing is, once you have a judgment against you, a debt collection agency can pop up at some point in the future and garnish your wages. It’s important to stay alert and to defend yourself if you’re sued by a debt collection agency.

Why It’s Important to Open Debt Collectors’ Mail

Thursday, May 6th, 2010 at 5:00 am  
Leave your comment

Many smaller newspapers routinely report on community issues, and publish police logs, fire logs, and even public court records. In perusing the online edition of the East Oregonian, from Portland, Oregon, we ran across a list of court actions taken on Monday, May 1. Click on the link in the previous sentence and scroll down, looking at the “Suits Filed” and “Judgments.” You’ll see that some of the biggest debt collection agencies are filing small town lawsuits against consumers. For this one day, the big dog third-party debt collectors who filed lawsuits included Midland Funding, NCO, and Asset Acceptance. Those that had their day in court and were granted judgments against consumers included Arrow Financial Services, along with (we assume) original creditors American Express, Capital One, and Discover Bank. The judgments ranged from $1,600 to $11,700, PLUS interest, costs, and attorney fees.

This is just one day in one small city in America. It brought into sharp relief just how relentless debt collectors are. More importantly, we couldn’t help but wonder whether the consumers named in those suits, and who now have judgments against them (which can lead to wage garnishment, among other things), even knew about the lawsuits or showed up in court to defend themselves.

All too often, people either avoid opening the mail when the sender is a debt collection agency. When they do open the mail, they often can’t make heads or tails of the legalese contained in some of the letters. As a result, they don’t know that they have to respond to a lawsuit. When they don’t show up in court, the judge has no option but to assume that the debt is valid and rule in favor of the debt collector.

The takeaway is two-fold. First, even though you want to avoid it, it’s important to open the mail. Second, if you’re being sued by a debt collector, it’s important to contact a fair debt attorney who can represent you. If the debt collector has violated the Fair Debt Collection Practices Act or Fair Credit Reporting Act, the judge may throw out the case. Even if you choose not to get legal advice, definitely show up for your day in court. The judge will listen to your side of the story, and perhaps you can avoid paying an enormous debt that includes the debt collection agency’s attorney fees.

Midland Funding Faces $8.1 Million Judgment

Wednesday, April 21st, 2010 at 12:50 pm  
Leave your comment

justiceAccording to workbench, last fall a Texas woman won an $8.1 million jury award from Midland Funding LLC. Although the story didn’t receive much news coverage, that kind of award is huge news. Apparently, Chrystal Snow didn’t believe she owed the $9,000 Midland Funding was trying to collect, and she didn’t appreciate the harassing phone calls. She sued Midland Funding under the Texas Fair Debt Collection Act, and the jury awarded $8 million in punitive damages, along with actual damages and mental anguish.

Midland Funding will undoubtedly appeal the jury award, but it’s nice to know that consumers are fighting back. The case also highlights the differences between state laws and the federal Fair Debt Collection Practices Act. The FDCPA doesn’t allow for punitive damage awards; theoretically, it’s the Federal Trade Commission’s job to make debt collection companies who routinely violate the law pay up. However, not all states have separate fair debt laws, so the FDCPA is the course most often taken.