PROVIDENCE – Rhode Island joined 41 states and the District of Columbia in reaching a $6 million settlement with Encore Capital Group Inc. and its subsidiaries, Attorney General Peter F. Kilmartin announced.
San Diego-based Encore Capital and its subsidiaries, Midland Credit Management Inc. and Midland Funding LLC, are among the nation’s largest buyers of consumer debt, purchasing it from banks, credit unions, retailers and telecommunications companies.
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The practice involves buying overdue debts, often for “pennies on the dollar,” and seeking to recover the full balance from consumers by telephone and mail, according to Kilmartin’s office.
Much like the conduct witnessed during the mortgage crisis, his office said, the agreement settles claims that Midland signed and filed affidavits in state courts to large volumes without verifying the information printed in them, a practice called robo-signing.
“Midland and its subsidiaries employed predatory debt collection practices for years, leaving consumers to fight the measures in court or paying more than they owed,” the attorney general said in a statement. “This settlement restores order to the company’s debt collection processes and provides monetary payments to impacted customers.”
As part of the settlement, Midland agreed to eliminate or reduce the judgement balance of 123 consumers in Rhode Island for a value of about $205,000 in cases in which the company used an affidavit against them in court between 2003 and 2009. Midland also agreed to notify impacted consumers by mail of the balance reduction and that no further action is needed from the consumer.
In addition, Midland agreed to set aside $25,000 for each state to compensate consumers who may have paid the company money that they did not owe. It also agreed to provide $72,308 to the state for consumer protection education.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
