The Attorney General of Massachusetts yesterday announced a $12 million settlement with a debt collection company yesterday that was accused of a number of violations, such as collecting on debts without sufficient proof that the debts were valid, violating state law limiting the number of calls that could be made to collect on a debt, and failing to prevent a collection law firm it was using from using falsified information about the existence of lawsuits and judgments to collect on time-barred debt.
Who: The settlement was entered into with Encore Capital Group, and its subsidiaries, including Atlantic Credit and Finance, Midland Funding, and Midland Credit Management.
What: The companies were accused of:
- Regularly purchasing portfolios of defaulted loans, credit cards, and other debts without obtaining the underlying documentation, such as account statements and credit agreements.
- Failing to prevent its former debt collection law firm, the Daniels Law Office, from falsifying information about lawsuits and judgments and then allowing other law firms to pursue consumers based on that falsified information.
- Making excessive and harassing phone calls — as many as 15 during a seven-day period — violating state law limiting the number of calls to two during a seven-day period
- Attempting to collect debts where the statute of limitations had expired without notifying consumers of that event.
- Falsely representing to consumers that they were required to make good-faith payments or enter an agreement for a judgment when the consumer had only exempt sources of income, like Social Security disability benefits and pensions.
Penalty: Midland will pay $4.5 million, which includes restitution to consumers in Massachusetts, and stop collecting on $7.5 million of debt — about 4,200 debts in total — that were placed with the Daniels Law Office and for which a judgment could not be verified.
- Midland is also prohibited from collecting on debts or suing consumers unless they can acquire and review all the original documents.
The Last Word: “We allege that Midland engaged in predatory and illegal practices to collect debt from Massachusetts consumers including our most vulnerable residents,” said Maura Healey, the Attorney General of Massachusetts, in a statement. “My office is pleased to return this money to consumers harmed by the company’s illegal actions and we will continue to hold companies that prey on our consumers accountable.”