Midland, one of the most common plaintiffs in Texas debt suits, has faced two CFPB enforcement actions over lawsuit documentation and old debts, and a 2020 court order extended its obligations.
Encore and its subsidiaries Midland Funding, Midland Credit Management and Asset Acceptance must pay $79,308.81 in consumer redress and a $15 million civil penalty, make specified disclosures, refrain from collecting time-barred debt without certain disclosures, and follow conduct provisions of the 2015 consent order for five more years.
- Case
- Consumer Financial Protection Bureau v. Encore Capital Group, Inc., et al., No. 3:20-cv-01750 (S.D. Cal.)
- Citation
- Stipulated Final Judgment and Order, CFPB v. Encore Capital Group, Inc., No. 3:20-cv-01750 (S.D. Cal. entered Oct. 16, 2020)
- Court or agency
- U.S. District Court for the Southern District of California
- Date
- October 16, 2020
- Law
- FDCPA, Other
Summary
The CFPB sued Encore Capital Group and its subsidiaries on September 8, 2020, alleging they violated a 2015 consent order by suing without required documentation, suing on debts past the statute of limitations, and failing to give required disclosures. The court entered a stipulated judgment on October 16, 2020, with a $15 million penalty and five more years of conduct requirements.
Background
Encore Capital Group, based in San Diego, owns Midland Funding, LLC, Midland Credit Management, Inc., and Asset Acceptance Capital Corp. The CFPB has described the companies together as the largest debt buyer and debt collector in the United States.
In 2015 the CFPB issued a consent order against Encore and its subsidiaries over collection and litigation practices. On September 8, 2020, the CFPB sued them in federal court in San Diego, alleging that they had violated that order and again violated the FDCPA and the Consumer Financial Protection Act.
What the order requires
The CFPB alleged that, since September 2015, the companies:
- sued consumers without having the documentation the 2015 order required;
- used law firms and an internal legal department to collect without giving required disclosures;
- failed to provide loan documents after consumers asked for them;
- sued to collect debts after the statute of limitations had run, and tried to collect time-barred debts without required disclosures; and
- failed to disclose possible international-transaction fees for certain payment methods.
On October 16, 2020, the court entered a stipulated final judgment. It requires the companies to pay $79,308.81 in consumer redress and a $15 million civil money penalty. It also requires certain disclosures to consumers, bars collecting time-barred debt without certain disclosures, and requires the companies to follow conduct provisions of the 2015 consent order for five more years.
Our take
The money is modest for a company of Encore’s size, but the case matters for a different reason. The CFPB went back to court because it alleged the same problems it identified in 2015, namely suing without the documents needed to prove the debt and suing on stale debts.
Those are the same issues that come up again and again in debt-buyer lawsuits. A judgment like this does not prove that any particular lawsuit is defective. It does show that documentation gaps and old debts deserve a close look in every case.
What it means if you’re sued in Texas
Midland Funding and Midland Credit Management are frequent plaintiffs in Texas debt cases. If you are sued, check the date of your last payment and the charge-off date against Texas’s four-year limitations period. Texas Finance Code § 392.307 bars debt buyers from suing after that period has run.
Also look at what is attached to the petition. A debt buyer must prove it owns your specific account and how the balance was calculated. If those records are incomplete, that can be a defense, but you must file an answer by the court’s deadline to raise it.
If you have been sued by Midland, a free case review is available.
Takeaway
If Midland Funding or Midland Credit Management sues you, look closely at the age of the debt and the documents attached to the petition.
Sources
Primary authority
Secondary sources
This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.