Yesterday, DC Attorney General Karl Racine announced that the District has joined 42 states in a $6 million settlement with the nation's largest debt buyer and collector -- Encore Capital Group, Inc. and its subsidiaries, Midland Credit Management, Inc. and Midland Funding, LLC -- in order to resolve claims involving the company's use of illegal tactics to collect on unverified debts.
The settlement was the result of a multistate investigation uncovering several practices that violated federal and state laws, including the federal Fair Debt Collection Practices Act and Fair Credit Reporting Act. The investigation found that Midland had harmed consumers by failing to verify debt information and to properly document debts prior to filing lawsuits. “Midland illegally attempted to collect debts it had not verified through robo-signing and other illegal practices,” said AG Racine. “Robo-signing especially hurts lower-income consumers who may not have the means to fight a debt collector in court.”
The debt-buying giant is no stranger to District of Columbia consumers. Since the beginning of 2018, Midland Funding LLC has filed more than 1,800 debt collection cases against individual consumers, many of them low-income, in DC small claims court alone.
Since 2012, staff attorneys from Legal Aid's Consumer Law Unit have been present in court to assist low-income consumers during the weekly call of the same small claims debt collection calendar where Midland files its cases in bulk. A significant portion of those cases result in money judgments being entered against DC consumers, often by default. Yesterday's settlement, which provides monetary relief to hundreds of DC consumers and requires Midland to reform its debt collection practices, is an important step in highlighting the need to hold debt collectors to proper standards of proof and to protect consumers against unfair practices at all stages of the collection process.