Minn. AG Accuses Debt Buyer Of Chasing Wrong Folks

ST. PAUL, Minn. (AP) — Minnesota Attorney General Lori Swanson accused a major debt buyer on Monday of hounding people for debts they didn’t owe or had paid years earlier.

Swanson said in a legal filing that Midland Funding LLC and its administrative arm, Midland Credit Management Inc., bought bad debt from banks and other creditors for pennies on the dollar, and then used excessive means to collect on those debts.

Midland and Encore paid less than $2 billion to acquire more than $54.7 billion in debts from credit-card companies and other businesses, Swanson said. The companies then began pursuing the debtors for collection, but crossed the line when they used heavy-handed tactics that frequently targeted the wrong people, she said.

For example, they aggressively hounded people who had similar names or addresses as the real debtors, or people who already paid their debts, the legal filing said.

To speed up the collection process, Midland filed thousands of lawsuits even though the actions were based on supporting affidavits that its employees acknowledged filing without first verifying the information in them, Swanson said. Midland then passed off the documents as alleged proof of the bad debts, she said.

Some debtors who were sued by Midland said they didn’t contest their lawsuits because they couldn’t afford an attorney, she said.

Encore released a statement saying it takes the allegations seriously and will cooperate with Swanson to resolve the matter. The company also said it modified its affidavit process in 2009 as a result of a separate lawsuit and believes its current practices are legally sound.

Swanson was taking action in Minnesota because Midland generated many of the affidavits at its St. Cloud office. She said Monday’s legal filing was the first step in filing a lawsuit in Hennepin County, by asking an Ohio federal judge to clarify whether a pending class-action settlement there precluded additional legal action in Minnesota.

Shares of Encore fell 80 cents, or 3.1 percent, to close Monday at $24.83.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Funy Face

    Yeah, I wish these people would pursue the corrupt politicians and wall street crooks with the same amount of vigor.

    The typical American worker is burned out on scam artists and swindlers from both ends. We should have a ‘don’t pay your bills month” in this country.

  • Norge

    I do know that Lori Swansons office is trying to help people being ripped-off by the big national banks like Bank of America, but…those nationals operate with impunity and arrogance as they know there is little a state AG can do to rein them in. BofA to the best of my knowledge doesn’t even have a branch inside MN, yet after they bought Countrywide Lendings debt for pennies on the dollar they have been darn near impossible to deal with and a major headache for the AG. I would definetly support a “Bring Them Down” movement against BofA and Citi and JPMorgan and all the other cons who took our tax-dollars hand-outs and then paid themselves first. Time to stick it back at them…and BRING THEM DOWN!!

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