Today the Consumer Financial Protection Bureau (“CFPB”) took action against Midland Funding (and its parent company Encore Capital) and Portfolio Recovery Associates – the nation’s two largest junk debt buyers – for their illegal collection activities. The CFPB specifically found that Encore Capital and Portfolio Recovery Associates –
- Bought debts that they knew or should have known were inaccurate or were outside the statute of limitations.
- Bought debts that where they knew or should have known that the underlying documents/records were inaccurate.
- Made misrepresentations to consumers such as that their account had been reviewed by an attorney, that a lawsuit was imminent, and misled some consumers into agreeing auto-dialed calls to their cellphones.
- Filed lawsuits that they had no intention to prove the debt was valid if consumers contested it.
- Filed misleading affidavits in their lawsuits against consumers.
- Mislead consumers and courts by stating that an undisputed debt is presumed to be valid under debt collection laws when in fact the federal laws governing debt collection state no such thing.
As a penalty the CFPB has ordered Encore Capital (and subsidiaries Midland Funding and Asset Acceptance) and Portfolio Recovery Associates to pay penalties and offer refunds to consumers totaling $82 million dollars. Further, the CFPB has ordered Encore and Portfolio to –
- Stop collection on debts that it cannot substantiate.
- Review original account-level documents verifying a debt before seeking to collect on it.
- Not file a lawsuit unless they have specific documents and information showing that the debt is accurate and enforceable.
- Not use affidavits to collect debts unless the statements contained within the affidavits specifically and accurately describe the signer’s own personal knowledge of the facts and the documents referenced in the affidavit are attached.
What this Means for You
The action taken today by the CFPB against Encore and Portfolio was badly needed. I have represented hundreds of consumers who have been sued by Encore, Midland Funding, Asset Acceptance, Portfolio Recovery Associates, and dozens of other junk debt buyers who all have the problems described in the CFPB order.
If you currently are being sued by Midland Funding, Asset Acceptance, or Portfolio Recovery Associates I think it is important to get them to admit on the record what steps they did to verify the accuracy of the information on the account before they filed a lawsuit. This Consent Order calls all documentation and affidavits submitted in these cases into question. Often courts will allow documents submitted by Midland Funding and Portfolio Recovery Associates into evidence without much scrutiny.
However, this order makes it clear that courts should be very skeptical of the documents submitted by any of these debt buyers and should require that Rules of Evidence be strictly enforced to ensure that fraudulent or inaccurate documents are not the basis of a judgment.
Schedule a Free Consultation!
John Skiba, Esq.
We offer a free consultation to discuss your debt problem and help you put together a game plan to eliminate your debt once and for all. Give us a call at (480) 420-4028