Yesterday, Encore Capital Group, Inc. (Encore) reached a $ 6 million settlement agreement with several state attorneys general. The case involved Encore, its subsidiaries Midland Funding, LLC and Midland Credit Management, Inc., and 42 states (see list below) and the District of Columbia. In addition to the $ 6 million, Midland must also set aside $ 25,000 per state for restitution to consumers. According to a Illinois Attorney General press release, this investigation revolved around the alleged practice of “robosigning” affidavits used in collection disputes.
The settlement agreement sets out certain requirements for Midland. Much of the agreement deals with requirements which largely mirror the text of the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).
With respect to collection disputes, the agreement requires Midland, among others, to ensure that it has the documentation at the account level before initiating any lawsuits against consumers and that this documentation is available. unrestricted for its selected law firms. Midland must also ensure that any affidavit filed is hand signed and based on the personal knowledge of the depositor when reviewing account records. Midland cannot pay incentives to its employees or third party vendors based on the volume of affidavits executed.
With respect to the general collection activity, the agreement requires Midland to follow certain procedures to verify that the consumer on the account owes the debt, to ensure that the account or consumer in question is not in a special status (v. active duty member), limit who they can sell debt to, perform background checks on new hires, staff teams appropriately who resolve disputes and answer consumer questions, maintain a mandatory training for its employees and monitor calls. The agreement also deals with procedures for prescribed debts.
Bis issued a press release indicating that this regulation will not have a significant impact on the company as funds were set aside in 2015. According to the press release, many of the operational requirements contained in the agreement are already in practice. Ashish Masih, President and CEO of Encore, says talks related to this deal began many years ago when the company was in side business discussions with the Consumer Financial Protection Bureau. “Although we believed our practices were in accordance with applicable laws, we chose to agree to a settlement so that we could all move forward,” Masih explains.
States concerned: Alaska, Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming .
The settlement agreement it is worth reading, especially for debt buyers and entities engaged in collection disputes. Along with the section devoted to an almost verbatim transcript of the FDCPA and FCRA, the agreement details the practices that attorneys general expect. It never hurts to check a company’s policies and procedures against the requirements outlined in the agreement to make sure there are no gaps. Given that this agreement was reached by a majority of state attorneys general, it is likely that these procedures are universal.