Debt buyer Midland Funding LLC defrauded consumers and the courts by filing false “robo-signed” affidavits to try to prove consumers owed debts, Minnesota Attorney General Lori Swanson alleges in a legal action filed March 28.
In a press release, Swanson's office alleged Midland created “phony, sloppy and fraudulent documents in Minnesota courts,” including unreliable mass-produced affidavits to try to obtain judgments or extract payments from consumers. Many lacked legal representation, and some had no knowledge of any alleged debt, according to Swanson's office.
Midland and its publicly traded parent Encore Capital Group Inc. have paid more than $1.8 billion to obtain 33 million customer accounts with a face value of about $54.7 billion, or an average cost of about 3 cents on the dollar, according to Swanson’s office, citing company regulatory filings.
In a statement responding to Swanson’s allegations, debt buyer Encore Capital said it and its wholly owned subsidiaries, Midland Credit Management, Inc. and Midland Funding LLC, are taking the allegations seriously.
“The complaint appears largely to restate concerns raised in a 2008 lawsuit against the company, which was recently settled in principle,” the statement notes. “As a result of that case, Encore modified its affidavit process in 2009 and believes that its current practices are legally sound. The company looks forward to working with Attorney General Swanson to resolve this matter. Encore and its subsidiaries strive to work with consumers to help them resolve their debt, but because 95% of consumers ignore letters sent by the company, the legal channel is often the only remaining option.”
On March 21, Encore Capital Group launched an industry-first “Consumer Bill of Rights” formalizing the company’s commitment to treating consumers with respect and integrity and calling on the entire industry to adopt the same best practices. (
Robo-signing is the term now commonly used to describe signing off on mass-produced, computer-generated legal documents without reading them or verifying the accuracy of contents "as a way to speed up the collection process," according to Swanson’s office.
Encore is the nation's largest buyer of delinquent credit card and consumer accounts, based on annual revenue, according to PaymentsSource sister publication Collections & Credit Risk. Last month, the company announced that its financial results had beaten quarterly and yearly expectations (
