West Virginia Attorney General Darrell McGraw announced on March 8, 2012 that his office had sued Midland Funding, LLC and Midland Credit Management (collectively "Midland") for their fraudulent collection practices. The two Midland entities are affiliates of Encore Capital Group, a mammoth San Diego-based debt buying company with net income in 2011 of $61 million.
McGraw's lawsuit alleges that Midland obtained default judgments against mostly unrepresented consumers by using false, unreliable and mass-produced "robo-signed" affidavits as alleged proof in its cases. The AG's case also alleges that Midland sued people who had the same or similar name as the actual debtor and attempted to collect debts that had already been paid. The alleged objectionable conduct took place over the last four years.
The state seeks to stop the practices in question, obtain restitution for consumers, damages, civil penalties and attorney's fees.
According to a press release from Encore, the filings were a "surprise," and the companies have since reached out to the AG's office to initiate discussions in response. Encore claims that the allegations are an inaccurate portrayal of its subsidiaries' practices.
Encore's purported "surprise" may have been more akin to "hope" that the settlement earlier this year of the 2008 Brent case (which we blogged about here and here), an Ohio class action that asserted similar claims against Encore and the Midland entities, had put an end to such litigation. Regular readers of this blog, however, are likely not surprised at all.