Thirty-eight state attorneys general are opposing a proposed class-action settlement with debt buyer Encore Capital Group Inc.'s Midland Funding LLC unit over robo-signed affidavits in collection cases.
The settlement would provide up to $5.7 million for 1.4 million class members. San Diego-based Encore previously agreed to settle claims that the company relied on false affidavits to bring collection lawsuits. The proposed settlement, according to the state AGs, is unfair to consumers, the group said in a court filing last week.
The attorneys general, from states including California, Ohio and Massachusetts, also said the agreement unfairly forces class members to release any claims against the company, allowing Midland to pursue claims against plaintiffs. Encore officials did not immediately respond to requests for comment.
"Under any interpretation, the ten-dollar-per-class-member settlement is not fair, reasonable, or adequate to address the harm incurred," the attorneys general, led by New York Attorney General Eric Schneiderman, said in the brief, filed in federal court in Ohio.
Encore, based in San Diego, buys discounted debt from credit card companies and collects on the accounts. At year-end, Encore had invested about $1.76 billion to buy 33 million accounts with a face value of $54.7 billion, or about 3 cents on the dollar.
Ohio Federal District Court Judge David Katz preliminarily approved the settlement in March and set June 1 as the deadline for any objections. A fairness hearing is set for July 11. In May, in a separate case, Minnesota Attorney General Lori Swanson sued Midland for filing robo-signed affidavits (
