You may be aware of the sinister debt collection games that Midland Funding plays with consumers, but you may not know that this bad apple is just one part of a rotten tree. Midland Funding’s parent company, Encore Capital Group, is the mastermind behind its aggressive debt collection practices and rampant abuse of the court system.
Here are some facts you should know about Encore Capital Group, and its relationship with Midland Funding.
1. Encore owns one in five bad debts in America.
Encore Capital Group and its three subsidiaries (Asset Acceptance Capital, Midland Funding and Midland Asset Management) buy millions of charge-off accounts from lenders, credit card issuers, and other businesses each year. Encore is actually so big that it owns one in five American consumer debts, and had over 36 million active collections accounts in 2017.
2. Encore is paying pennies for bad debt and making millions.
Encore companies such as Midland Funding pay an average of three to nine cents on the dollar for bad debt. In 2016 alone, Encore bought $900 billion in consumer debt, and recovered nearly three times the amount they spent to get it.
The consumers whose debt they purchase don’t get a price break, however. Not only do Encore companies demand the full amount past due, they add interest penalties of 25 percent or higher to the consumer’s debt load.
3. Encore’s debt collection strategy: demand, intimidate, file suit, collect.
Midland Funding and other Encore companies like Midland Credit Management make money hand over fist by sticking to the formula that has worked well for them so far:
- Pay pennies for the debt.
- Demand the full amount from the consumer.
- Tack on frivolous fees and high interest penalties that raise the collectible amount.
- File a lawsuit.
- Win a default judgment in court when the consumer fails to respond or show up to the court date (more than 90 percent of cases end this way)
They know consumers who are struggling financially are more likely to fear debt collection efforts, or simply ignore them. Therefore, the more aggressive Midland Funding’s approach, the more money Encore makes from each consumer.
4. Encore paid $52 million in fines and consumer refunds following an investigation by the U.S. Consumer Financial Protection Bureau, for filing thousands inaccurate or unsupported debt lawsuits.
Encore and its subsidiaries have clogged the court system with frivolous debt lawsuits for years, and in 2015 they were finally held accountable. They paid $42 million in consumer refunds and $10 million in fines for filing debt lawsuits without proper documentation or evidence, following an investigation by the federal Consumer Financial Protection Bureau.
The lawsuits were part of a strategy used by Midland Funding and other Encore companies to ramp up profits. They gambled that they could easily win more default judgments by boosting the number of lawsuits they filed, since chances were good they’d never have to produce detailed documents or records. And that’s exactly what happened.
The federal settlement covers the period from 2009-2015, when Encore companies filed massive numbers of lawsuits and collected millions from consumers via settlements, court-wage garnishment, bank account garnishment, and other means. But the shocking part is that $52 million later, Encore continues to use the courts in this manner and get away with it.
5. Encore companies like Midland Funding welcome your fear, and count on your silence. That’s how they win.
Encore companies know that regardless of government oversight, the odds are still in their favor. Consumers will continue to ignore debt lawsuits due to fear and anxiety, meaning debt collectors like Midland Funding will continue to win judgments without having to produce a shred of evidence.
The truth is that most people in debt are simply not aware of their rights, or the power they have to fight back. But simply responding to a debt lawsuit at all can shift the odds in your favor. The Fair Debt Collection Practices Act gives consumers specific leverage they can use in court, such as the right to request written verification of the debts in question. Debt collectors also have to provide you with written justification for interest penalties and fees that have been added to the total owed.
What to do if you are sued by Encore or any of its subsidiaries:
- Answer the lawsuit right away.
- Challenge the company to produce supporting documentation for your case (such as written confirmation of the original debt amount, account statements, any contracts you signed with your creditor, and other paperwork).
- Make all requests in writing, and keep a copy for your records.
- If the company can’t come up with the documentation that supports their case, force a settlement or demand they drop the suit.
Silence is not golden when it comes to your debt, or any debt collector’s attempt to make you pay. You must speak up and defend yourself against Encore and Midland Funding’s aggressive debt collection tactics.
If you are facing a debt lawsuit from Encore or Midland Funding Lawsuit and need some advice on your case, contact us for a free consultation.