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Tuesday, September 20, 2022

AG HEALEY SECURES $12 MILLION IN RELIEF FROM DEBT COLLECTION COMPANY AND SUBSIDIARIES OVER UNLAWFUL PRACTICES

AG HEALEY SECURES $12 MILLION IN RELIEF FROM DEBT COLLECTION COMPANY AND SUBSIDIARIES OVER UNLAWFUL PRACTICES 

Settlement Resolves Allegations of Illegal Debt Buying and Debt Collection Practices by Encore Capital Group; Provides Restitution and Debt Relief for Massachusetts Consumers 

BOSTON – Attorney General Maura Healey announced a $12 million settlement, including restitution and debt relief for Massachusetts consumers, with a national debt collection company and its subsidiaries for allegedly engaging in unfair and deceptive debt buying and collection in violation of state laws and the AG’s Debt Collection Regulations.  

The assurance of discontinuance, filed in Suffolk Superior Court, with Encore Capital Group, Inc., and its subsidiaries, Atlantic Credit and Finance, Inc., Midland Funding, LLC., and Midland Credit Management, Inc., alleges that the companies were collecting on debts without sufficient proof that the debts were valid and accurate, using misleading collection tactics to obtain payments from consumers experiencing financial hardship, making repeated and harassing debt collection calls, failing to prevent its collection law firm from using falsified information about the existence of lawsuits and judgments, and attempting to collect debts that were beyond the statute of limitations or “time-barred.”  

“We allege that Midland engaged in predatory and illegal practices to collect debt from Massachusetts consumers including our most vulnerable residents,” AG Healey said. “My office is pleased to return this money to consumers harmed by the company’s illegal actions, and we will continue to hold companies that prey on our consumers accountable.”  

Midland Funding, based in California, is one of the largest debt buyers and debt collection entities in the country. Midland regularly purchased portfolios of defaulted loans, credit card accounts, and other debts and attempted to collect these debts from Massachusetts consumers using its own collectors and debt collection law firms.   

The settlement resolved the AG’s investigation into numerous unfair and deceptive debt buying and debt collection practices by Midland. This includes regularly purchasing debts without obtaining underlying documentation, such as account statements and credit agreements, necessary to ensure the debt is valid and accurate. Midland also additionally failed to prevent its former debt collection law firm, the Daniels Law Office, from falsifying information about lawsuits and judgments against consumers, and Midland then allowed subsequent debt collection law firms to pursue consumers based on this falsified information. 

Midland made excessive and harassing phone calls to consumers in order to collect on consumer debts, in some instances, placing as many as 15 phone calls within a seven-day period. This is a violation of the AG’s Debt Collection Regulations, which prohibit making more than two calls to a consumer within a seven-day period. Midland also frequently attempted to collect debts that were no longer legally enforceable through a lawsuit without providing disclosure of this fact to consumers as required by the AG’s Debt Collection Regulations.   

Midland falsely represented that certain vulnerable consumers were required to make good faith payments or enter an agreement for judgment with payment on a debt when the consumer had only exempt sources of income like social security disability benefits and pensions. Most public benefits as well as earnings below a certain statutory threshold are legally protected from post-judgment collection in order for consumers to purchase basic necessities such as food, medication, and shelter.  

Under the terms of the settlement, Midland is required to pay $4.5 million, which includes restitution to thousands of impacted Massachusetts consumers, and will reform its debt collection practices. Additionally, Midland will cease to collect on over 4,200 debts, totaling approximately $7.5 million, that were previously placed with the Daniels Law Office and for which a judgment could not be verified. 

Midland will be prohibited from collecting on debts or suing any consumer for a debt unless the company can acquire and review all original documents relating to the debt. The company must also come into compliance with the AG’s Debt Collection Regulations pertaining to debt collection calls, time-barred debt, and validation of debts. The company has also agreed to additional protections for consumers who rely on exempt income. Among those protections, the company will not attempt to have consumers enter into court-ordered agreements to pay debts with exempt income and will not seek court payment hearings for consumers with only exempt income. 


A settlement administrator will be sending letters notifying consumers who are eligible for restitution under the settlement and the process for receiving settlement funds. Consumers with questions about the settlement can call 617-727-8400 for assistance.  

The AG’s Office is dedicated to stopping illegal debt collection practices and encourages anyone with questions or concerns about debt collection practices to learn more about fair debt collection or file a complaint online.  

This case was handled by Assistant Attorneys General Peter Downing and Sarah Petrie, of the AG’s Consumer Protection Division

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