A month or so ago, the Consumer Financial Protection Bureau (CFPB) filed suit against Encore Capital Group, Midland Funding, Midland Credit Management, and Asset Acceptance Capital. Details on that suit are here.
It appears the parties have come to a settlement on the matter. Under the proposed agreement, the companies will extend provisions they agreed to in a 2015 flap.
The companies agree NOT to sue unless they have in their possession:
“a. initiating a Legal Collection lawsuit unless in possession of the following:
i. Original Account-Level Documentation reflecting, at a minimum: the Consumer’s name; the last four digits of the account number associated with the Debt at the time of Charge-off; and the claimed amount, prior to any post Charge-off payments (unless the claimed amount is higher than the Charge-off Balance, in which case Defendants must possess (i) Original Account-Level Documentation reflecting the Charge-off Balance and (ii) an explanation of how the claimed amount was calculated and why such increase is authorized by the agreement creating the Debt or permitted by law);
ii. if Defendants are suing under a breach of contract theory, the contractual terms and conditions applicable to the Debt;
iii. a chronological listing of the names of all prior owners of the Debt and the date of each transfer of ownership of the Debt, beginning with the name of the Creditor at the time of Charge-off; and
iv. any one of the following:
- a document signed by the Consumer evidencing the opening of the account forming the basis for the Debt; or
- OALD reflecting a purchase, payment, or actual use of the account by the Consumer.
b. engaging in any Legal Collection without providing the Consumer with certain information about the Debt, unless previously provided, including but not limited to, the following information:
i. the name of the Creditor at the time of Charge-off, including the name under which the Creditor did business with the Consumer;
ii. the last four digits of the account number associated with the Debt at the time of the Consumer’s last monthly account statement, or, if not available, at the time of Charge-off;
iii. the Charge-off Balance;
iv. Defendants’ method of calculating any amount claimed in excess of the Charge-off Balance; and
v. a statement that, upon Defendants’ receipt of a written request, the Consumer will be provided with copies of the documentation referenced in Subsection (a) of this Paragraph. For any disclosure made pursuant to this provision after the Effective Date, Defendants must inform the Consumer that it will provide the requested documentation “within 30 days” of a request and “at no cost.” Provided that, Defendants have to provide such documentation only once per year and that Defendants are not required to provide such documentation in response to a request made more than one year after Defendants have ceased collecting the Debt.”
It is important for consumers to know and understand the documentation these debt buyers, owners, or collectors with these companies have now agreed to provide. That doesn’t mean they will but this is what you can ask for.
Time Barred Debts
Additionally, the companies have agreed to provide notice to consumers if they are attempting to collect and debt outside the Statute of Limitations through litigation or arbitration.
This is what they have agreed to:
“For 5 years after the Effective Date, Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them who have actual notice of this Order, whether acting directly or indirectly, are hereby restrained and enjoined from:
a. collecting or attempting to collect any Time-Barred Debt through litigation or arbitration;
b. collecting or attempting to collect any Time-Barred Debt through any means, including but not limited to telephone calls and written communications, without clearly and prominently disclosing to the Consumer:
i. for those Consumer accounts where the Debt is Time-Barred and generally cannot be included in a Consumer report under the provisions of the Fair Credit Reporting Act, 15 U.S.C. § 1681c(a), but can be collected through other means pursuant to applicable state law, Defendants will include the following statement: “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”; and
ii. for those Consumer accounts where the Debt is Time-Barred but can be collected through other means pursuant to applicable state law and may be included in a Consumer report under the provisions of the Fair Credit Reporting Act, 15 U.S.C. § 1681c(a), Defendants will include the following statement: “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.”
Provided, however, that with regard to telephonic communications, Defendants are not required to make either disclosure to any individual person more than once per 30-day period; or
c. making any representation or statement, or taking any other action that interferes with, detracts from, contradicts, or otherwise undermines the disclosures required by ¶ 9(b).
d. Defendants will be deemed to have complied with the disclosure requirements of ¶¶ 9(b) and (c) if they make a disclosure to Consumers using the relevant language from a model form approved by the Bureau in any final rule issued by the Bureau under the FDCPA or a disclosure that:
i. is required by the laws or regulations of a specific jurisdiction;
ii. complies with those laws or regulations; and
iii. is substantially similar to the disclosure required by ¶ 9(b).”
Here is the full proposed agreement between the parties that has yet to have been signed by the court.
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