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Encore Capital Group, a San Diego-based debt buyer, has reached an interim settlement agreement with Maryland officials following an order to stop all collection activities in the state after allegedly engaging in "large-scale unlicensed and illegal collection activities."
Maryland's Department of Labor, Licensing and Regulation last month stated that Encore and its subsidiaries – Midland Funding LLC, Midland Portfolio Services LLC and Midland Credit Management Inc. – violated federal and state laws by refusing to validate bad debts when challenged (CCR Newsline, Sept. 18). Midland Credit also had its license to collect in the state suspended by the Commissioner of Financial Regulation.
Encore Capital and its subsidiaries can resume collection activities in the state as long as they comply with state and federal laws, and adhere to terms of the interim agreement signed late last month by both parties.
The interim agreement does not constitute an admission of wrongdoing by Encore Capital. Attempts by Collections & Credit Risk to reach company officials for comment were unsuccessful.
As part of the agreement, Midland Funding must apply to be licensed as a Maryland collection agency. Also, Encore Capital must ensure that any court cases where Midland Credit Management is named as plaintiff falls within the state's statue of limitations period.
The agreement contained other stipulations, including a requirement that Encore Capital provide Maryland officials with a contact for consumers with questions regarding alleged debt. Encore companies also must conduct an internal review of procedures for responding to consumers disputing debt or requesting verification or validation of debt.
Encore Capital and Maryland officials will negotiate possible sanctions, penalties or restitution once the company has supplied the state with audits and reports required by the interim agreement.
Encore Capital is the third-largest debt buyer in the U.S. with more than $240 million in revenue from purchased debt in 2008, according to research conducted by Collections & Credit Risk and CCR Newsline.
