CFPB Alleges Encore Capital Group Violates Consent Order; Company Responds


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Encore Capital Group says it is continuing to work with the bureau on policies and practices.

9/9/2020 9:00

The Consumer Financial Protection Bureau filed a lawsuit Tuesday against Encore Capital Group Inc. and its subsidiaries, Midland Funding LLC, Midland Credit Management Inc. and Asset Acceptance Capital Corp.

Encore and its subsidiaries are currently subject to a 2015 consent order with the bureau based on its previous findings that the companies violated the Consumer Financial Protection Act (CFPA), Fair Debt Collection Practices Act and Fair Credit Reporting Act. The bureau alleges that Encore and its subsidiaries have violated the terms of this consent order and again violated the FDCPA and CFPA, according to a news release from the CFPB. The bureau’s complaint seeks injunctions against the companies, as well as damages, redress to consumers, disgorgement of ill-gotten gains and civil money penalties.

Encore Capital Group issued the following statement in response to the complaint:

Earlier today, the Consumer Financial Protection Bureau filed a lawsuit against Encore Capital Group, Inc. and its U.S.-based subsidiaries Midland Funding LLC, Midland Credit Management Inc. and Asset Acceptance Capital Corp. The suit alleges that the defendants failed to implement certain practices required under a consent order entered with the CFPB in September 2015.

“Encore is built on a foundation of treating our consumers fairly and respectfully,” said Greg Call, the company’s executive vice president, general counsel, and chief administrative officer. “Our efforts in 2015 to implement the CFPB’s new requirements under the consent order were quite thorough and effective, but for a very small percentage of transactions our execution was not immediately perfect. We have long since refined our processes, making the necessary changes to improve our operations, and provided appropriate relief for impacted accounts over three years ago.”

Ryan Bell, president of Midland Credit Management, added, “We have great confidence in our systems, practices and approach to working with consumers. We’ve invested heavily for years to build robust compliance functions that lead our highly regulated and swiftly evolving industry. We operate with a Consumer Bill of Rights, which details our commitment to conducting business ethically. We believe we’re well-positioned to continue our industry leadership because of our commitment to the consumer and our unwavering focus on compliance.”

Concluding Encore’s statement, Call said: “We are disappointed that the CFPB has chosen to file this lawsuit on outdated issues, but we will continue to engage with the CFPB and work to ensure that we maintain policies and practices that fully comply with all applicable legal requirements. We believe that there will be no material operational impact as a result of the suit. We fully corrected the issues underlying the allegations in this lawsuit years ago and are unaware of any unresolved consumer impact.”  

According to the CFPB news release, the bureau’s complaint, filed in federal U.S. District Court for the Southern District of California, specifically alleges that since September 2015, Encore and its subsidiaries violated the consent order by suing consumers without possessing required documentation, using law firms and an internal legal department to engage in collection efforts without providing required disclosures, and failing to provide consumers with required loan documentation after consumers requested it.

The bureau also alleges that the companies violated the consent order, the CFPA, and the FDCPA by suing consumers to collect debts even though the statutes of limitations had run on those debts and violated the consent order by attempting to collect on debts for which the statutes of limitations had run without providing required disclosures, according to the news release.

The bureau further alleges that the companies violated the CFPA by failing to disclose possible international-transaction fees to consumers, thereby effectively denying consumers an opportunity to make informed choices of their preferred payment methods. The bureau also alleges that each violation of the consent order constitutes a violation of the CFPA.

The complaint is not a finding or ruling that the defendants have violated the law, according to the CFPB.

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