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.
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