Consumer Debt Collection

Encore Capital Wins Approval of $5.7 million Settlement

Debt buyer Encore Capital Group, Inc. (Nasdaq: ECPG ) announced late Friday that a federal judge has approved a $5.7 million settlement between the company and a class of consumer litigants over Encore’s affidavits used in the legal debt collection process.

The proposed settlement, initially reached in March of this year, was highly contentious as many third parties – including 38 state attorneys general and the Federal Trade Commission – filed briefs with the court to block final approval of the deal.

U.S. District Judge David A. Katz in the Northern District of Ohio approved the settlement Friday.

In August 2009, the federal judge presiding over the Brent litigation issued a ruling in the matter. The court identified what it considered to be areas for improvement in Midland’s affidavit process. At issue was the use of so-called “robo-signing” to validate the debts that were underlying collection cases brought by Midland against consumers. In the proceedings, testimony claimed that at least one employee was signing hundreds of affidavits per day, which brought into question whether the cases were being properly reviewed by a company attorney.

Following that ruling, Encore said it conducted a full review of its affidavit process and enhanced it, consistent with the court’s decision.

The case lingered for another 18 months, as both sides attempted to make alterations to the suit in advance of a final settlement. Encore decided to settle several outstanding cases alleging similar missteps, in part due to the national attention being paid to some mortgage servicers and their use of robo-signed affidavits. After a preliminary settlement agreement was made in February 2011, both sides agreed the next month to a final resolution on a nationwide basis of all outstanding cases related to Midland affidavits. The settlement still had to be approved by Katz, the presiding judge.

When the settlement was announced, consumer advocates universally disapproved. Attorneys general in 38 states filed amicus briefs urging Katz to discard the settlement. They argued that the deal might be used as a precedent in latter actions against Encore over its affidavit process and that the $5.7 million award was “paltry” when the size of the class was considered. The FTC made similar arguments in its own brief filed in June .

FDCPA Statute of Limitations | FDCPA - Fair Debt Collection ...

Defense to the lawsuit.

How long after the debt collector violates the Fair Debt Collection Practices Act is the consumer allowed to file the FDCPA lawsuit?

The answer is 365 days (or “one year”) from the date on which the violation occurred.

It is not always clear to the consumer or even the consumer’s lawyer when the violation “occurred”.

The courts disagree with each other about many important issues concerning the statute of limitations.

Consumers should usually use the first event as the date that the violation “occurred”.

Many consumers receive lawsuit where debt buyer plaintiff attempted to collect a time barred credit card account. Service of process can take days, weeks, or even several months. Plaintiff debt buyers sometimes wait a long time before serving the defendant consumer with the lawsuit.

Suppose the consumer sued the debt collector for violating the FDCPA but the consumer files his or her lawsuit more than a year after the debt buyer filed its lawsuit but less than one year after the consumer received service of process from the debt buyer. Is the FDCPA case timely filed or not?

The issue is when did the violation “occur” — when the debt buyer filed the lawsuit or when the debt buyer served the lawsuit on the consumer?

Many courts have held that the violation “occurred” when the debt buyer filed the time lawsuit attempting to collect the time barred account. (At least one federal court in Florida has applied this restrictive interpretation.)

These courts have rejected the consumer’s argument that the consumer did not discover the violation until he received service of process concerning the collection case.

Other courts have held that a violation occurred when the debt buyer served the lawsuit on the consumer. In these courts’ jurisdiction, the consumer’s case would be considered timely filed.

Consumers who believe that a collection agency has violated their rights should contact an experienced FDCPA lawyer promptly. By consulting with a lawyer while the evidence is still available, the consumer can take steps intended to assure that the evidence is preserved so that it is admissible and the consumer’s case is timely filed under the law in the consumer’s jurisdiction.

If you believe a collection agency may be violating your rights or have questions concerning the FDCPA, you are welcome to contact me by completing the Collection Agency Harassment form in the right hand column.

Consumer debt collection, resolve debts quickly and easily

Consumer debt recovery law

Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration

Fair debt collection

California Civil and Commercial Codes Abstracted