The Minnesota Attorney General's office recently accused Midland Funding, one of the nation's largest debt buyers, of defrauding the state's courts and citizens by filing "false and deceptive 'robo-signed' affidavits."
"Robo-signing" occurs when an agency does not read or verify the accuracy of the content of a mass-produced legal document, but still signs off on it in order to speed the collection process, according to Attorney General Lori Swanson's office. Swanson said debt buyers who typically cast a wide net to find consumers with old bills may end up pursuing the wrong person or people who have already paid their bills. Sometimes, buyers will go after a person just because they have the same or a similar name to the real debtor, she said. Bad or incorrect information is the basis for one out of 10 lawsuits filed by debt buyers, according to the National Consumer Law Center. Midland was accused of using the robo-signed affidavits as proof of consumer debts in lawsuits it filed in order to get payment from or obtain judgments against "mostly unrepresented citizens," Swanson's office said. Some Midland employees have submitted sworn testimony claiming they signed up to 400 false affidavits per day without reading them, having personal knowledge of the contents or verifying the accuracy of the information, Swanson's office said. The debt-buyer and its parent company, Encore Capital Group, had paid more than $1.8 billion purchase approximately $54.7 billion in consumer debt from credit card companies and other businesses. The company had filed 245,000 lawsuits against individuals nationwide in 2009. Midland has filed more than 15,000 lawsuits in Minnesota since 2008, the attorney general's office stated. While creditors and collectors are within their rights to lawfully collect debt, Midland "put its thumb on the scale of justice to unfairly tilt the collection process in its favor," Swanson said. Encore's chief executive officer, Brandon Black, issued a response to the attorney general's announcement, stating that the company is "committed to working with our consumers to help them regain their financial footing, as evidenced by our recent enactment of the Consumer Bill of Rights that goes well beyond what is required by law." He added that the company "look[ed] forward to having substantive discussions with the attorney general's office and establishing Encore as a model for doing business in the State of Minnesota."