Encore Capital Group Inc., a San Diego-based debt buyer, reported increases in net income, revenue and cash collections for the third quarter ended Sept. 30, and revealed details about a new state investigation into its collection practices.
The company reported net income of $15.4 million in the third quarter, up 25% from the same period a year ago. Total revenue in the quarter reached $120.6 million, a 23% increase from a year ago. Gross collections rose 20% to $189.1 million.
Encore reported a 32% increase in collections from its legal division, a 24% increase in collections from company-owned collection sites, and a 40% decline in collections from collection agency outsourcing.
Encore invested $65.7 million to purchase $2 billion in face value debt portfolios in the third quarter, down 15.7% from a year ago. The company noted that it tripled the amount invested in telecom portfolios in the quarter, but that credit card accounts still made up 80% of third quarter purchases.
Encore disclosed in a quarterly filing with the Securities and Exchange Commission that North Carolina state regulators last month issued an investigative demand to the company to produce documents and answer questions concerning the company's collection practices in the state. Encore said it is cooperating fully with North Carolina.
In July, the Office of the Attorney General of Texas filed a petition in District Court accusing Encore of violating of the Texas Deceptive Trade Practices Act and the Texas Debt Collection Act, based on the company’s collection and related practices in the state. Encore reported last week that it had reached an agreement to resolve the matter, but is working on finalizing the details. The proposed settlement anticipates that the company will pay a financial penalty and reimburse certain costs to the state of Texas and provide credits to certain consumers.
Encore has been in a legal battle concerning affidavits it used to validate consumer debt in collection litigation, and that issue was central in the Texas action.
