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Debt Collector Charged by Texas Attorney General’s Office for Violating State Laws

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A debt collection group and its subsidiaries have been charged with violating Texas’ debt collection laws.

Texas Attorney General Greg Abbott today charged Encore Capital Group and subsidiaries Midland Funding, LLC and Midland Credit Management with falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information, and employing unlawful and deceptive debt collection tactics.

According to state investigators, Midland Funding purchased debt portfolios from many creditors, but the defendants’ debt collection letters contained very little information about the debt they were attempting to collect, provided no supporting documentation, and included no proof that they actually acquired the debt from the original creditor.

Court documents also show that the group sometimes even used incomplete or inaccurate account information, targeted the wrong individuals for collection, and attempted to collect debts that had been fully or partially paid.

If the individuals targeted by Midland Funding refused to comply, the group would hire attorneys to sue the accused debtors, filing more than 60,000 lawsuits in Texas since 2002.

The law may require that debt collectors verify their claims through “sworn affidavits”, many of which Midland Funding reportedly falsified. The attorney general’s office also found that the company used “robo-signers” to supply legally required verifications, which routinely signed more than 300 affidavits per day and did not actually review the underlying credit agreements or the alleged debtor’s payment history.

As a result of Midland Funding’s suspected business practices, the State says some Texans unnecessarily suffered financial hardships, such as improperly decreased credit ratings, loss of job opportunities, or the ability to refinance their home.

The State’s enforcement action seeks to establish a restitution trust fund for money that the defendants unlawfully coerced from Texans. The Attorney General’s Office also seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as penalties that apply under the Texas Finance Code for third-party debt collectors who violate state law.

Similar charges were filed in March of this year against Midland Funding by the Minnesota Attorney General’s Office.

Any Texan believe to have been deceived by improper or unlawful business practices is invited to contact the Office of the Attorney General’s toll-free complaint line at 800-252-8011 or file an online complaint at www.texasattorneygeneral.gov.

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