Federal Court Rejects Midland Funding Settlement over Debt Collection Abuse

by San Antonio Attorney

A federal appeals court rejected a proposed settlement for a class action lawsuit that would have paid out consumers who claimed to be targets of Midland Funding’s unfair debt collection practices. It would have settled three class action lawsuits against Midland Credit Management Inc., Midland Funding LLC, and Encore Capital Group Inc. over robo-signing practices.

The plaintiffs said that Midland workers robo-signed affidavits stating they have personal knowledge that the debts were owed by the consumers, even though they do not have such knowledge of the information they declared. Court documents proved employees of the credit card collection company had been signing around 200 to 400 affidavits generated by computers every day for debt collection lawsuits. This was a violation of the Fair Debt Collection Practices Act.

The Sixth Circuit Court of Appeals ruled to reverse the district court’s decision that approved the class action settlement and removed the judgment validating the countrywide settlement class. The Sixth Circuit favored the objectors who asserted the proposed settlement was unfair to compensate certain plaintiffs $8,000 in addition to erasing their debts, whereas each Class Member who agreed into the settlement would only get $17.38 and still need to pay their debts.

The appeals court said the district court misused its discretion in approving the settlement.

This is not the first time Midland has been charged with violating federal law in trying to collect consumer debts. The company is under investigation for accusations it contacted consumers on their mobile phones without getting express consent, which violated the Telephone Consumer Protection Act. The law prohibits companies from sending unsolicited text messages or calls to consumers except if they have been permitted to contact them. The TCPA violation can lead to penalties from $500 to $1,500 for each violation.

 

If you believe a credit-card debt collector has violated the FDCPA, you can take legal action against the collector in court. Experienced San Antonio Lawyers can help you prove in court that a FDCPA violation occurred.

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