COLUMBIA, S.C.. – South Carolina residents have received more than $1.4 million as part of a multistate settlement in a debt-buying case.
South Carolina Attorney General Alan Wilson joined 41 states and the District of Columbia last December in reaching a $6 million settlement with Encore Capital Group Inc., one of the nation’s largest debt buyers, and its subsidiaries Midland Credit Management Inc. and Midland Funding LLC.
The settlement resolves investigation by the settling states and the district into Midland’s collection and litigation practices, including whether Midland engaged in robo-signing, or signing affidavits without verifying the accuracy of the information they contained, in actions it filed against consumers.
The settlement requires Midland to reform its affidavit signing and litigation practices. Midland must carefully verify the information in affidavits and present accurate documents in court proceedings. Before Midland files a lawsuit, it must have proper documentation about the debt, including the amount of the debt, proof of an agreement, and an explanation of why any additional fees are justified.
Midland is also required to provide all consumers with accurate information about valid debts it seeks to collect. If a consumer disputes a debt, Midland must review the original account documents before continuing collection efforts, and provide a copy of these documents to the consumer for no charge. Midland must also maintain proper oversight and training over its employees and outside law firms it uses. The settlement agreement also prohibits Midland from reselling debt for two years.
As part of the settlement, Midland will completely eliminate or reduce the balances owed by more than 800 South Carolinians, a total value of more than $1.4 million, in cases in which Midland used an affidavit against them in court between 2003 and 2009. Midland has notified affected consumers by mail of the balance reduction and no further action by affected consumers is necessary.
“This case is about protecting consumers here in South Carolina and across the country from a company that was clearly taking advantage of them,” Wilson said. “Not only are consumers having their debts reduced or eliminated, but the company is changing the way it does business to prevent this from happening again.”
Joining General Wilson in this settlement were attorneys general from Alaska, Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.
Debt buying involves buying and selling overdue debts from creditors and other account owners. While the debt is often purchased for pennies on the dollar, debt buyers seek to collect the full balance from consumers. This can involve filing actions in court against consumers, who are often unable to afford representation. Many of these debt collection cases result in default judgments against the consumer, damaging their credit and potentially leading to garnishment of their wages.