Encore Capital Group has entered into a settlement agreement with 42 states and the District of Columbia and will pay a lump sum of $6 million that will be divided among the states and an additional $25,000 per state for relief from certain consumer claims. The company will also forgive an unnamed number of judgments that were obtained against consumers between 2003 and 2009.
“While we believe our practices were in accordance with relevant laws, we chose to agree to a settlement, so we can all move ahead,” said Ashish Masih, President and CEO of Encore, in a statement.
As part of the settlement, Encore and its subsidiaries, Midland Credit Management and Midland Funding, have agreed to a number of “operational requirements” related to its affidavit signing and litigation practices, requirements that Encore said it has been following for a number of years.
“We believe today’s settlement, and the CFPB agreement before it, actually strengthen our competitive position, as they’ve set the standard for the entire sector,” Masih said. “We are well positioned to continue our industry leadership in this regulatory environment.”
The settlement with the states ties back to another settlement that Encore reached in 2015 with the Consumer Financial Protection Bureau. That settlement levied a penalty of $10 million against Encore, along with ordering the company to refund $42 million in payments back to consumers and stop collecting on $125 million in unpaid debts.
Among the states that participated in today’s settlement are: 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.
Under the settlement, Midland must ensure it has the account-level documents before filing a lawsuit against an individual, including the amount of the debt, proof of an agreement, and an explanation about why any additional fees are justified. Midland is also prohibited from re-selling debts for two years.
“Dealing with aggressive debt collectors can be overwhelming, and consumers are entitled to all of the facts,” said Adam Paul Laxalt, the attorney general of Nevada, in a statement. “This settlement will ensure that Midland modifies its collection practices to best serve our consumers.”
A copy of the settlement can be accessed by clicking here.
The settlement sets forth procedures for collecting debt, handling disputes, requirements related to collection litigation, affidavits, and the collection of time-barred debts.