Minnesota 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.”