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Midland Funding to pay $6 Mil for Unfair Collection Practices

In December 2018, the Attorneys General offices of New Jersey and 41 other states reached an Assurance of Voluntary Compliance and Discontinuance with Encore Capital, Midland Funding LLC and Midland Credit Management. The Assurance is intended as a means of enforcing provisions upon Encore and its affiliates in regard to their debt collection activities within the states that are party to the claims. In exchange for compliance with these provisions, Encore and Midland can expect to be released from any common and civil law claims brought by those involved Attorneys General that relate to the alleged unfair collection of debt.

The Assurance reaffirms that Midland must not act outside the bounds of Fair Debt Collections Practices Act ("FDCPA") as well as the commerce laws of the 42 states involved. In addition to these re-affirmations, the Assurance goes into great detail as to what behavior Midland is prohibited from engaging in.

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What are the assurances?

Midland must abide by the following provisions when engaging in debt collection activity:

  • Midland must have the correct address for the Debtor and must refrain from contact should their mailings be returned as undeliverable.

  • Midland shall not attempt to collect on any account in which they lack knowledge of the account balance at charge off, date of charge off, date of assignment, the current creditor and the last four digits of the current creditor's account number.

  • Midland is required to provide the above mentioned “account level documentation” to the debtor at cost, unless it was sent in previous correspondence.

  • If at any point Midland becomes aware that it is not the owner of an account, collection activity must cease.

  • Midland is prohibited from collecting on an account until it has determined that the debt has not been discharged in a bankruptcy filing.

  • Midland is prohibited from selling debts it owns to other entities which are not subject to the provisions of the Assurance.

Compliance by Midland

In order to ensure compliance with the above regulations, the Assurance requires Midland to abide by specific hiring practices. Midland must conduct mandatory background checks on any employee they hire. Once hired employees at midland must receive mandatory training concerning the FDCPA and State consumer law variations. Midland is also barred from providing incentives to employees based on the number of affidavits prepared in connection with litigation.

A large portion of the Assurance concerns Midland’s ability to pursue litigation on the accounts it owns. The assurance applies many of the above noted restrictions to collections actions to litigation activity, meaning that if Midland cannot collect on the account it can also not litigate on the account in most instances. In addition to those restrictions previously stated, Midland is also barred from pursuing litigation in instances where it lacks the appropriate bills of sale to establish a chain of title. This bill of sale information must be furnished to the debtor prior to the commencement of litigation.

Monetary Compensation

In addition to establishing a rather extensive list of debt collection activities that Midland is now barred from participating in, the Assurance also provides a monetary compensation to the 42 states involved. All told, Midland has agreed to pay out $6,000,000.00 to these States. This money shall be distributed by the respective Attorneys' Generals' offices in order to cover attorney’s fees, contribute toward consumer education, be deposited in a consumer aid fund, or used in connection with a myriad of other consumer protections activities.

Midland is also responsible for contributing a total of $25,000.00 per state for the purpose restitution for those consumers harmed by their previous collection activity. In addition to this restitution, Midland will also provide a $1,850.00 credit to the balance of consumers who fulfilled the following requirements:

  1. Their judgement was obtained in a court in a participating State.

  2. The Consumer disputed the debt with Midland.

  3. Midland filed a collection lawsuit against the Consumer after the Consumer disputed the Debt with Midland and Law Firm requested an affidavit from Midland to support the lawsuit between Jan 1, 2003 and Sept 14, 2009.

  4. The Consumer never made a payment to Midland in connection with the Debt.

How does the FDCPA protect consumers?

The Fair Debt Collection Practices Act is a federal law that prohibits debt collectors from using false, misleading, or deceptive practices when collecting a consumer debt. The FDCPA allows an aggrieved consumer to recover:

  • Up to $1000 in statutory damages
  • Actual Damages
  • Attorneys Fees
  • Costs

At the Law Office of Simon Goldenberg PLLC, we take consumer protection seriously. If you live in New York or New Jersey, our FDCPA lawyers can help you identify whether you have a claim against a debt collector. We can also help you understand your options for debt relief. Call us to learn how we can help. 

Contact our consumer protection law firm at (888) 301-0584 for a free phone evaluation.

*The Law Office of Simon Goldenberg PLLC and it's attorneys were not involved in the matter referenced in this blog. Furthermore, the State of New York is not involved in the aforementioned claim.