Midland Funding Debt Collection Abuse Settlement Struck Down

Midland Funding Debt Collection Abuse Settlement Struck Down
By Mike Holter
A federal appeals court Tuesday struck down a proposed class action lawsuit settlement that would have compensated consumers who were allegedly targets of unfair debt collection practices by Midland Funding.

The settlement would have resolved three class action lawsuits accusing Midland Funding LLC, Midland Credit Management Inc. and Encore Capital Group Inc. of violating the Fair Debt Collection Practices Act by robo-signing lawsuit affidavits.

According to plaintiffs, Midland employees routinely robo-signed affidavits claiming personal knowledge that consumers owed debts, despite having no such knowledge of the facts asserted. Court documents showed Midland employees had been signing between 200 and 400 computer-generated affidavits per day for use in debt-collection actions, without personal knowledge of the accounts, in violation of the FDCPA.

In a decision filed Tuesday, the Sixth Circuit Court of Appeals reversed the district court’s ruling approving the Midland Funding class action settlement and vacated the judgment certifying the nationwide settlement class, finding that the settlement was unfair.

The Sixth Circuit agreed with objectors who argued the proposed deal unfairly compensated the named plaintiffs $8,000 each plus eliminated their debts, while Class Members who opted into the settlement would only receive $17.38 each and still owe their debts.

“This disparity in relief is so great that we conclude the district court abused its discretion in finding that the settlement was fair, reasonable, and adequate,” the appeals court said.

This isn’t the only time Midland Funding has been accused of violating federal law in its attempts to collect debts from consumers.

The company is the target of a separate class action lawsuit investigation into allegations it contacted consumers on their cell phones without prior express permission, in violation of the Telephone Consumer Protection Act.

The TCPA prohibits companies from placing unsolicited cell phone calls or text messages to consumers unless they’ve received prior permission to contact them. Violating the TCPA can result in stiff penalties of $500 to $1,500 per violation. Class Members of TCPA class action lawsuit settlements can receive hundreds – if not thousands – of dollars in compensation.

If you received an unsolicited text message or phone call to your cell phone from Midland Funding or another debt collection agency, you may have a claim to join a class action lawsuit. Visit the TCPA Class Action Lawsuit Investigation for more details about your legal rights.

Updated March 1st, 2013

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