CFPB Sues Asset Acceptance, Encore and Midland for Collection Practices

The Consumer Financial Protection Bureau (CFPB) has Encore Capital Group, Inc. and its subsidiaries, Midland Funding, LLC; Midland Credit Management, Inc.; and Asset Acceptance Capital Corp.

The CFPB says, “Encore and its subsidiaries are currently subject to a 2015 consent order with the Bureau based on the Bureau’s previous findings that they violated the Consumer Financial Protection Act (CFPA), Fair Debt Collection Practices Act (FDCPA), and Fair Credit Reporting Act. The Bureau alleges that Encore and its subsidiaries have violated the terms of this consent order and again violated the FDCPA and CFPA. The Bureau’s complaint seeks injunctions against them, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and civil money penalties.”

The CFPB also says, “The Bureau’s complaint, filed in federal district court in the Southern District of California, specifically alleges that since September 2015, Encore and its subsidiaries violated the consent order by suing consumers without possessing required documentation, using law firms and an internal legal department to engage in collection efforts without providing required disclosures, and failing to provide consumers with required loan documentation after consumers requested it.

The Bureau also alleges that the companies violated the consent order, the CFPA, and the FDCPA by suing consumers to collect debts even though the statutes of limitations had run on those debts and violated the consent order by attempting to collect on debts for which the statutes of limitations had run without providing required disclosures.” – Source

This is a Big Deal

Maybe the CFPB is trying to do something to protect consumers. Going after these large collection operations for suing without documentation, failing to verify the debt, and suing after the statute of limitations had expired, is a big new effort.

The suit states that the group of companies (“Encore”) engaged in legal collections after it had failed to provide required disclosures in 750,000 instances.

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Encore was previously barred from suing consumers on time-barred debts past the statute of limitations but the complaint states it continued to do so.

Besides just filing suit against consumers on out of statute debts, it is alleged Encore also attempted to collect on these debts on violation of its previous order agreeing to not do that.

On more than 425,000 collection letters sent to consumers, the required warning was not included. To comply with the previous Order the following language was to be included in collection letters Encore sent.

“The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.”


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“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it.”

Apparently the use of a foreign outsourced payment partner bit Encore as well. The complaint states, “Beginning in mid-2016, Encore began using a payment processor based in a foreign country to process consumers’ debit-card and credit-card payments to Encore.

Because the payment processor is based in a foreign country, some consumers’ banks charged international-transaction fees for these payments.

Although Encore knew that some consumers would incur these fees, for a period of about six months, Encore did not disclose to consumers that such a fee was possible.

Thousands of consumers incurred tens of thousands of dollars in these fees before Encore began disclosing that consumers may incur these fees.

Consumers have no control over how Encore processes payments and had no reason to believe that their payments to Encore—a domestic company—could result in international-transaction fees.”

You can read the complaint filed below.

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