CFPB Sues Encore, Subsidiaries, for Violating Terms of 2015 Consent Order

The Consumer Financial Protection Bureau today filed a lawsuit against Encore Capital Group, Inc. and its subsidiaries, Midland Funding, LLC, Midland Credit Management, Inc., and Asset Acceptance Capital Corp., accusing the companies of violating the terms of a 2015 consent order by suing consumers without possessing required documentation, using law firms and an internal legal department to engage in collection efforts without providing required disclosures, and failing to provide consumers with required loan documentation after consumers requested it.

A copy of the complaint, filed in the District Court for the Southern District of California, can be accessed by clicking here.

In allegedly violating the terms of the consent order, the CFPB is accusing the defendants of violating the Fair Debt Collection Practices Act and the Consumer Financial Protection Act.

The terms of the 2015 order required the defendants to pay $34 million in restitution to consumers and a civil money penalty fine of $10 million.

Encore is accused of filing “hundreds of lawsuits” without possessing the original account-level documentation, as required by the 2015 consent order. The company is also accused of engaging in legal collections after omitting material elements of a required disclosure in more than 750,000 instances, specifically by forgetting to mention the original account-level documentation would be made available at no cost to the consumer. Encore is also accused of filing more than 100 lawsuits to collect on time-barred debt, which was prohibited under the terms of the 2015 order. The company is also accused of sending 425,000 letters without including a required disclosure regarding the status of the time-barred debts.

The CFPB also accused Encore of failing to disclose that borrowers may incur additional transaction fees when making payments from foreign countries.

In filing the suit, the CFPB is seeking injunctive relief, to permanently enjoin the defendants from committing future violations of the CFPA or the FDCPA, damages, restitution to consumers, disgorgement of ill-gotten gains, and civil money penalties.

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