Alabama Attorney General Settles with Midland Funding

Alabama Attorney General Steve Marshall announced a settlement with Encore Capital Group and subsidiaries Midland Credit Management and Midland Funding yesterday.  The settlement stemmed from allegations that Midland:

Midland used affidavits to get judgments in court against those accounts between 2003 and 2009. 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, the AG’s office said.

The AG’s press release elaborated on the debt buying practice:

Debt buying involves buying and selling overdue debts from creditors and other account owners. Often purchased for pennies on the dollar, debt buyers seek to recover the full balance from consumers through collection attempts by phone and mail. Debt buyers, including Midland, also take consumers to court to collect the debts they purchase. However, people are often unable to afford attorneys to defend the allegations and cases result in default judgments, hurting credit and putting people in jeopardy of having their wages garnished.

Finally, as to future Midland Funding lawsuits against consumers:

The settlement requires Midland to reform its affidavit signing and litigation practices. Midland must carefully verify the information in affidavits and present accurate documents in court proceedings. When Midland files a lawsuit, it must have account documents about the debt before it files the case, including the amount of the debt, proof of an agreement, and an explanation for why any additional fees are justified.

The settlement offers protection to consumers Midland is collecting from, even if they are not being sued. If a consumer disputes a debt Midland is collecting, the settlement requires Midland to review original account documents before it continues its collection efforts. Midland must provide these substantiating documents to the consumer at no charge. The settlement requires that Midland maintain proper oversight and training over its employees and the law firms that it uses. The agreement prohibits Midland from reselling debt for two years.