Encore Capital and subs settle with Bureau

The CFPB has filed a proposed stipulated final judgment and order to settle its lawsuit against Encore Capital Group, Inc., and its subsidiaries, Midland Funding, LLC; Midland Credit Management, Inc.; and Asset Acceptance Capital Corp. The companies, which are headquartered in San Diego, California, together form the largest debt collector and debt buyer in the United States. 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 sued Encore and its subsidiaries on September 8 of this year, alleging that Encore and its subsidiaries violated the terms of this consent order and again violated the FDCPA and CFPA in their debt-collection practices. If entered by the court, the settlement will require Encore and its subsidiaries to pay consumer redress and a civil money penalty.

The Bureau’s September 8 complaint, filed in federal district court in the Southern District of California, specifically alleged 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 alleged 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. The Bureau further alleged that the companies violated the CFPA by failing to disclose possible international-transaction fees to consumers, thereby effectively denying consumers an opportunity to make informed choices of their preferred payment methods. The Bureau also alleged that each violation of the consent order constitutes a violation of the CFPA.

If entered by the court, the stipulated final judgment and order will require Encore and its subsidiaries to pay $79,308.81 in redress to consumers and a $15 million civil money penalty. The settlement will also require Encore and its subsidiaries to make various material disclosures to consumers, refrain from the collection of time-barred debt absent certain disclosures to consumers, and abide by certain conduct provisions in the 2015 consent order for five more years.