New York Attorney General Eric Schneiderman reached a settlement with Encore Capital Group, Inc. on Friday over allegations that it wrongly filed debt collection suits against New Yorkers.
As part of the deal, the debt collection buyer will vacate approximately 4,500 improperly obtained legal judgments, which amount to approximately $18 million. The uncontested judgments were received from New Yorkers who failed to respond to suits filed by Encore Capital and involved debts that allegedly exceeded the state's statute of limitations.
The company also will pay approximately $675,000 in civil penalties and must change its debt collection methods.
In addition to filing lawsuits on debt that was beyond the statute of limitations in New York, Encore employees also were allegedly "robosigning" affidavits without reviewing them or having personal knowledge of the cases.
“New York has laws in place to ensure no one can prey on consumers, and debt collectors are required to follow those rules,” Schneiderman said. “Today’s settlement ensures that thousands of New Yorkers will see millions in relief from debts that were not enforceable in the first place. We will continue to take action against any company that abuses the power of the court system at the expense of hardworking families.”