SAINT PAUL, Minn. (Legal Newsline) - Minnesota Attorney General Lori Swanson has announced a consent judgment with Midland Funding LLC to resolve allegations of filing unreliable robo-signed affidavits in collection lawsuits.
Midland allegedly used robo-signing to sign hundreds of affidavits a day while falsely claiming to have personal knowledge of the content of the documents, used false statements from notaries to prove certain facts in court, filed affidavits to support ownership of debt without underlying documentation to support the claims and targeted the wrong people for payment of old bills it bought from credit card companies and banks.
The lawsuit represents the first governmental action in the U.S. against a debt buyer for using robo-signed affidavits to support claims in individual lawsuits.
"This lawsuit was about respect for the legal system," Swanson said. "In its rush to quickly collect old debts that it purchased for just a few pennies on the dollar, the company ignored legal requirements designed to protect the rights of an individual in court."
Midland has filed more than 15,000 lawsuits against individuals in Minnesota courts since 2008. Along with Encore Capital Group Inc., Midland's parent corporation, Midland paid more than $2.1 billion to buy approximately 40 million accounts with a face value of approximately $66.4 billion from banks, credit card companies, phone companies and other debt buyers.
Under the terms of the consent judgment, Midland must change the way it does business in several key ways. Before it files a lawsuit, the company must provide individuals with validation of the debt, verify the identity and address of an individual claimed to owe money, and take corrective action if an individual indicates that he or she does not owe the money.
When filing lawsuits, Midland must implement standards to address debt beyond the statute of limitations, change the way it serves lawsuits to ensure people receive notice of the lawsuits and have an opportunity to respond, not use robo-signed documents, implement practices to make sure it does not sue people on debt the company does not own, not pursue default judgments without giving a person written notice, include added specificity so that individuals can meaningfully respond to suits and give individuals a copy of the judgment request.
Midland must also pay $500,000 to the state and resolve outstanding and future consumer complaints made to Swanson's office.