CFPB sues Midland: Again

Encore Capital Group Incorporated is the ‘mother-ship’ of Midland funding. Encore is based out in Delaware but has business deals in San Diego, California Midland funding LLC. Most businesses register in Delaware for tax breaks. The wholly-owned subsidiaries of Encore include Midland credit management and asset, acceptance credit corporations. Since Encore is also registered in San Diego, Midland funding deals with credit reporting and lawsuits. 

Midland’s collection agency is Midland Credit Management, also owned by Encore. If they purchase the debts, Midland funding does not always hire Midland credit management to collect on the debts. It depends on a higher-end kind of debt, sometimes outsourced to a law firm debt collection agency. In some cases, they collect on their debt, but in most cases, they do not. 

Whenever Midland funding is holding on to the debt, holding on to the paper, they essentially own the paper; the purchasing is done through asset acceptance. So, they are the ones that buy the debts from Capital One, Chase, and more, including T-Mobile and Synchrony Banks. 

CFPB (Consumer Financial Protection Bureau) initially filed a lawsuit against Encore in 2015. The original suit found that Encore and all its entities had violated the FDCPA (Fair Debt Collection Practices Act) and FCRA (Fair Credit Reporting Act). Encore was ordered to pay $34 million in restitution as well as $10 million in civil penalties to the CFPB. 

First and foremost, Encore failed to provide OALD (Original Account Level Documentation) within 30 days of the consumer’s request. Secondly, Encore was suing consumers without processing required. They were also suing consumers on time-barred debts. 

Time-barred debts are debts that are outside the statute of limitations where that consumer resides. For example, Texas is four years, and Alabama is six years; different states have different statutes of limitations, and when a debt collector can sue a consumer for unpaid debt. Thirdly, Encore was attempting to collect on time-barred debt without providing proper disclosures. 

The CFPB mandates that if the debt is time-barred, the consumers cannot be sued. But this information was not included in the disclosures. At the end of the court case, the CFPB won and issued Encore’s order to pay the fines and stop their current malpractices. 

Encore did not change over the years, and the new suit was based on the same malpractices. They considered the previous case a slap on the wrist. 

Encore violated the CFPA (Consumer Financial Protection Act), the FDCPA and the FCRA by doing the same things again. Following are the recent counts;

Count 1 – Violating the CFPA by Violating the Order

The order was violated by suing consumers without processing OALD, engaging in legal collections without first providing the disclosures required by the order, failing to provide OALD within 30 days of a consumer’s request, suing consumers on time-barred debts, and attempting to collect on time-barred debts without providing disclosures. 

Count 2 – Deceptive Acts and Practices 

Encore promised and misled over 250 consumers that they would provide OALD when requested, but they did not. 

Count 3 – Violations of the FDCPA

Section 807 of the FDCPA prohibits debt collectors from using any false, deceptive, or misleading representations or means to collect any debt. Section 807(2)(A) prohibits false representations of the legal status of a debt. Section 807(5) prohibits threats to take action that cannot be legally taken or intended to be taken. 

Count 4 – Violating the CFPA by Violating the FDCPA

What action is CFPB requesting for this time around? 

This time around, the CFPB is requesting the court to grant the following motions;

1. Permanently enjoin Encore from committing future violations.
2. Grant additional injunctive relief as the court deems just and proper.
3. Award damages or other monetary relief to all the victims.
4. Encore pays redress to consumers’ harm.
5. Order disgorgement of defendants’ ill-gotten games. 
6. Impose money civil penalties.
7. And most importantly, order Encore to pay the Bureau’s court costs incurred. 

To summarize, CFPB wants Encore to pay back all the profits or do something with the profit they have accumulated from their malpractices. The court will side with CFPB as this has happened before. 

Credit repair agencies should ask the consumer if they have received any documentation from Midland. Moreover, it should be considered a failure to comply if Midland offers bogus explanations for not providing OALD or demanding deletions for the same thing. The notices on time-barred debts disclosures should be looked into as well. They should also ask the consumers if they have ever received disclosures recently and in the past from Midland.